ULTRAGENYX PHARMACEUTICAL INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and related notes in Item 1 and with the audited Consolidated Financial Statements and the related notes included in our Annual Report on Form 10-K for the year endedDecember 31, 2022 , or "Annual Report". OverviewUltragenyx Pharmaceutical Inc. , we or the Company, is a biopharmaceutical company focused on the identification, acquisition, development, and commercialization of novel products for the treatment of serious rare and ultra-rare genetic diseases. We target diseases for which the unmet medical need is high, the biology for treatment is clear, and for which there are typically no approved therapies treating the underlying disease. Our strategy, which is predicated upon time- and cost-efficient drug development, allows us to pursue multiple programs in parallel with the goal of delivering safe and effective therapies to patients with the utmost urgency.
Approved Therapies and Clinical Product Candidates
Our current approved therapies and clinical-stage pipeline consist of four product categories: biologics, small molecules, gene therapy, and nucleic acid product candidates. See section entitled "Recent Program Updates" below for a description of recent updates to certain of our approved therapies and clinical-stage pipeline products. Our biologic products include the approved therapies Crysvita® (burosumab), Mepsevii® (vestronidase alfa), and Evkeeza® (evinacumab) as well as UX143 in clinical development:
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Crysvita is an antibody administered via subcutaneous injection that targets fibroblast growth factor 23, or FGF23, developed for the treatment of XLH, a rare, hereditary, progressive, and lifelong musculoskeletal disorder characterized by renal phosphate wasting caused by excess FGF23 production. There are approximately 48,000 patients with XLH in the developed world, including approximately 36,000 adults and 12,000 children. Crysvita is the only approved treatment that addresses the underlying cause of XLH. Crysvita is approved in theU.S. , certain countries inLatin America , the EU and certain other regions for the treatment of XLH in adult and pediatric patients one year of age and older. Crysvita is also approved in theU.S. and certain other regions for the treatment of FGF23-related hypophosphatemia in tumor-induced osteomalacia, or TIO, associated with phosphaturic mesenchymal tumors that cannot be curatively resected or localized in adults and pediatric patients 2 years of age and older. There are approximately 2,000 to 4,000 patients with TIO in the developed world. TIO can lead to severe hypophosphatemia, osteomalacia, fractures, fatigue, bone and muscle pain, and muscle weakness. We are collaborating with Kyowa Kirin Co., Ltd., or KKC (formerly Kyowa Hakko Kirin Co., Ltd., or KHK), and Kyowa Kirin, a wholly owned subsidiary of KKC, on the development and commercialization of Crysvita globally.
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Mepsevii is an intravenous, or IV, enzyme replacement therapy, developed for the treatment of Mucopolysaccharidosis VII, also known as MPS VII or Sly syndrome, a rare lysosomal storage disease that often leads to multi-organ dysfunction, pervasive skeletal disease, and death. MPS VII is one of the rarest MPS disorders, affecting an estimated 200 patients in the developed world. Mepsevii is approved in theU.S. , certain countries inLatin America , the EU and certain other regions for the treatment of children and adults with MPS VII.
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Evkeeza is a fully human monoclonal antibody that binds to and blocks the function of angiopoietin-like 3, or ANGPTL3, a protein that plays a key role in lipid metabolism. Evkeeza is an approved therapy for the treatment of homozygous familial hypercholesterolemia, or HoFH, a rare inherited condition. HoFH occurs when two copies of the familial hypercholesterolemia, or FH,-causing genes are inherited, one from each parent, resulting in dangerously high levels (>400 mg/dL) of LDL-C, or bad cholesterol. Patients with HoFH are at risk for premature atherosclerotic disease and cardiac events as early as their teenage years. Evkeeza is approved in theU.S. , where it is marketed by our partner Regeneron Pharmaceuticals, or Regeneron. It is also approved in the European Economic Area, or EEA, as a first-in-class therapy for use together with diet and other low-density lipoprotein-cholesterol, or LDL-C, lowering therapies to treat adults and adolescents aged 12 years and older with clinical HoFH. There are approximately 3,000 to 5,000 patients with HoFH in the developed world outside of theU.S.
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UX143 (setrusumab) is a fully human monoclonal antibody that inhibits sclerostin, a protein that acts on a key bone-signaling pathway by inhibiting the activity of bone-forming cells and promoting bone resorption. Setrusumab is being studied for the treatment of OI, and has received orphan drug designation from theU.S. Food and Drug Administration , 21 -------------------------------------------------------------------------------- or FDA, andEuropean Medicines Agency , or EMA, rare pediatric disease designation from the FDA, and was accepted into the EMA's Priority Medicines program, or PRIME, program. UX143 is subject to our collaboration agreement with Mereo, and is the lead clinical asset in our bone endocrinology franchise. There are an estimated 60,000 patients in the developed world affected by OI.
Our small molecule products include the approved therapy Dojolvi® (triheptanoin):
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Dojolvi is a highly purified, synthetic, 7-carbon fatty acid triglyceride specifically designed to provide medium-chain, odd-carbon fatty acids as an energy source and metabolite replacement for people with long-chain fatty acid oxidation disorders, or LC-FAOD, which is a set of rare metabolic diseases that prevents the conversion of fat into energy and can cause low blood sugar, muscle rupture, and heart and liver disease. Dojolvi is approved in theU.S. and certain other regions as a source of calories and fatty acids for the treatment of pediatric and adult patients with molecularly confirmed LC-FAOD. There are approximately 8,000 to 14,000 patients in the developed world with LC-FAOD.
Our clinical-stage gene therapy pipeline includes UX111, DTX401, DTX301, and UX701:
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UX111 (formerly ABO-102) is an adeno-associated virus 9, or AAV9, gene therapy product candidate for the treatment of patients with Sanfilippo syndrome type A, or MPS IIIA, a rare lysosomal storage disease with no approved treatment that primarily affects the central nervous system, or CNS. There are approximately 3,000 to 5,000 patients in the developed world affected by Sanfilippo syndrome type A. The UX111 program has received Regenerative Medicine Advanced Therapy, or RMAT, Fast Track, Rare Pediatric Disease, and Orphan Drug designations in theU.S. , and PRIME and Orphan Medicinal Product designations in the EU.
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DTX401 is an adeno-associated virus 8, or AAV8, gene therapy clinical candidate for the treatment of patients with glycogen storage disease type Ia, or GSDIa, a disease that arises from a defect in G6Pase, an essential enzyme in glycogen and glucose metabolism. GSDIa is the most common genetically inherited glycogen storage disease, with an estimated 6,000 patients in the developed world affected by GSDIa. A Pediatric Investigation Plan, or PIP, was accepted by the EMA. The DTX401 program has received RMAT, Fast Track, and Orphan Drug designations in theU.S. , and PRIME and Orphan Medicinal Product Designations in the EU.
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DTX301 is an AAV8 gene therapy product candidate designed for the treatment of patients with ornithine transcarbamylase, or OTC, deficiency. OTC is part of the urea cycle, an enzymatic pathway in the liver that converts excess nitrogen, in the form of ammonia, to urea for excretion. OTC deficiency is the most common urea cycle disorder, and there are approximately 10,000 patients in the developed world with OTC deficiency, of which we estimate approximately 80% are classified as late-onset, our target population. DTX301 has received Orphan Drug Designation in both theU.S. and in the EU and Fast Track Designation in theU.S.
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UX701 is an AAV type 9 gene therapy product candidate designed to deliver stable expression of a truncated version of the ATP7B copper transporter following a single intravenous infusion to patients with Wilson disease. It is estimated that Wilson disease affects more than 50,000 individuals in the developed world. UX701 has received Orphan Drug Designation in theU.S. and in the EU.
Our clinical-stage nucleic acid pipeline includes GTX-102 for the treatment of Angelman syndrome, and UX053 for the treatment of GSDIII:
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GTX-102 is an antisense oligonucleotide, or ASO, that is being developed for the treatment of Angelman syndrome, a debilitating and rare neurogenetic disorder caused by loss-of-function of the maternally inherited allele of the UBE3A gene. There are an estimated 60,000 patients in the developed world affected by Angelman syndrome. GTX-102 has received Fast Track Designation, Orphan Drug Designation and Rare Pediatric Disease Designation from the FDA.
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UX053 is an mRNA product candidate designed for the treatment of patients with GSDIII, a disease caused by a glycogen debranching enzyme, or AGL, deficiency that results in glycogen accumulation in the liver and muscle. UX053 has received Orphan Drug Designation in theU.S. and in the EU. 22 --------------------------------------------------------------------------------
The following table summarizes our approved products and clinical product candidate pipeline:
[[Image Removed: img215925227_0.jpg]]Recent Program Updates
Crysvita for the treatment of X-Linked Hypophosphatemia, or XLH, and Tumor Induced Osteomalacia, or TIO
InApril 2023 , commercialization responsibilities for Crysvita inNorth America transitioned from us to KKC. Pursuant to theSeptember 2022 amendment to the collaboration agreement between the parties, we will continue to support KKC in their commercialization efforts in theU.S. through a cost share arrangement throughApril 2024 , subject to the limits and conditions set forth in the amendment. 23 --------------------------------------------------------------------------------
UX143 (setrusumab) for the treatment of Osteogenesis Imperfecta, or OI
InFebruary 2023 , we announced that enrollment was completed in the Phase 2 portion of Orbit, a pediatric and young adult Phase 2/3 study. This phase of the study is intended to determine an optimized dose, based on increases in collagen production using serum P1NP levels, and establish an acceptable safety profile. Data from the Phase 2 study is expected to include percent change in serum P1NP, the available three- and six-month lumbar spine bone mineral density, or BMD, and safety information. These data are currently expected in mid-2023 and will be used to determine the Phase 3 dose strategy. Also in mid-2023, we intend to adapt the study into a pivotal Phase 3 study, evaluating fracture reduction over an estimated 15 to 24 months as the primary endpoint, subject to regulatory review. Separately, we plan to initiate Cosmic, a Phase 2 study of patients under age five with OI in the second quarter of 2023. The primary endpoint is expected to be the annualized rate of fractures.
GTX-102 for the treatment of Angelman Syndrome
As ofMay 2023 , the dose escalation phase of this study has been completed and we recently transitioned to dosing patients in the expansion cohorts in sites outside of theU.S. The study has also expanded geographically with multiple new sites activated inEurope andAustralia . Approximately 40 patients will be enrolled across Cohort A (ages four toJanuary 2023. As of this filing, 14 patients have had at least six months of exposure to GTX-102 including nine patients with more than one year of continuous therapy. The next data update is expected in the second half of 2023.
In the
DTX401 for the treatment of Glycogen Storage Disease Type Ia, or GSDIA
InMay 2023 , we announced the last patient had been dosed in the Phase 3 study of DTX401. The Phase 3 study has a 48-week primary efficacy analysis period and enrolled approximately 50 patients eight years of age and older, randomized 1:1 to DTX401 (1.0 x 10^13 GC/kg dose) or placebo. The primary endpoint is the reduction in oral glucose replacement with cornstarch while maintaining glucose control. We currently expect to share results from this Phase 3 study in the first half of 2024.
DTX301 for the treatment of Ornithine Transcarbamylase, or OTC, deficiency
We are currently in the process of randomizing and dosing patients in our 64-week Phase 3 study of DTX301. The patients in the study will be randomized 1:1 to DTX301 (1.7 x 10^13 GC/kg dose) or placebo. We currently plan to enroll approximately 50 patients 12 years of age and older. The co-primary endpoints are the percentage of patients who achieve a response, as measured by discontinuation or reduction in baseline disease management, and the 24-hour plasma ammonia levels.
UX701 for the treatment of Wilson disease
We are currently enrolling and dosing patients in the first stage of the pivotal Cyprus2+ study of UX701 for the treatment of Wilson disease. During this stage, the safety and efficacy of up to three dose levels of UX701 will be evaluated over the course of 52 weeks and a dose will be selected for further evaluation in stage 2. Completion of Stage 1 enrollment is expected in the second half of 2023 with data on safety and potentially initial signs of clinical activity expected in the first half of 2024.
UX053 for the treatment of Glycogen Storage Disease Type III, or GSD III
We have completed dosing in the single ascending dose, or SAD, stage of the Phase 1/2 study of UX053 for the treatment of GSDIII with no safety issues observed. We decided to not enroll patients in the multiple ascending dose cohorts at this time to allow greater focus on our other late-stage and larger indication clinical programs. The data from the SAD cohort are being analyzed and are expected in the second quarter of 2023.
Corporate Update
InMarch 2023 , we announced thatEric Crombez , M.D., had been promoted to the role of Chief Medical Officer and Executive Vice President, effective onMay 1, 2023 . In this role, Eric is succeedingCamille Bedrosian , M.D., who will remain with the Company in a full-time strategic advisory role. 24 --------------------------------------------------------------------------------
Financial Operations Overview
We are a biopharmaceutical company with a limited operating history. To date, we have invested substantially all of our efforts and financial resources in identifying, acquiring, and developing our products and product candidates, including conducting clinical studies and providing selling, general and administrative support for these operations. To date, we have funded our operations primarily from the sale of our equity securities, revenues from our commercial products, the sale of certain future royalties, and strategic collaboration arrangements. We have incurred net losses in each year since inception. Our net loss was$164.0 million and$152.3 million for the three months endedMarch 31, 2023 and 2022, respectively. Net loss for the three months endedMarch 31, 2023 and 2022 included losses of$0.3 million and$9.3 million , respectively, resulting from changes in fair value of our equity investments, and$15.6 million and$6.6 million , respectively, in interest expense on liabilities for sales of future royalties. Substantially all of our remaining net losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations. For the three months endedMarch 31, 2023 our total revenues increased to$100.5 million , compared to$79.9 million for the same period in 2022. The increase was driven by an increase in revenue for our approved products and higher Crysvita collaboration revenue in the profit-share territory, partially offset by a decrease in collaboration and license revenue from the Daiichi Sankyo arrangement.
As of
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance withU.S. generally accepted accounting principles, or GAAP. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no material changes in our critical accounting policies during the three months endedMarch 31, 2023 , as compared to those disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Significant Judgments and Estimates" in our Annual Report.
Results of Operations
Comparison of the three months ended
Revenue (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Collaboration and license
revenue:
Crysvita collaboration revenue in
profit-share
territory $ 49,906 $ 45,164 $ 4,742 10 %
Daiichi Sankyo 1,479 3,249 (1,770 ) -54 %
Total collaboration and license
revenue 51,385 48,413 2,972 6 %
Product sales:
Crysvita 21,234 9,394 11,840 126 %
Mepsevii 8,480 4,861 3,619 74 %
Dojolvi 14,303 12,429 1,874 15 %
Evkeeza 212 - 212 100 %
Total product sales 44,229 26,684 17,545 66 %
Crysvita royalty revenue 4,882 4,838 44 1 %
Total revenues $ 100,496 $ 79,935 $ 20,561 26 %
For the three months ended March 31, 2023 , our share of Crysvita collaboration
revenue in the profit-share territory increased by $4.7 million , as compared to
the same period in 2022. The increase primarily reflects the continuing increase
in demand for Crysvita due to an increase in the number of patients on therapy.
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For the three months ended March 31, 2023 , the collaboration and license revenue
from the Daiichi Sankyo arrangement decreased by $1.8 million , as compared to
the same period in 2022. The decrease in the three months period ended March 31,
2023 was related to the relative progress toward complete satisfaction of the
individual performance obligation using an input measure of the technology
transfer period, which was completed as of March 31, 2022 .
The increase in product sales of $17.5 million for the three months ended March
31, 2023 , compared to the same period in 2022 was primarily due to an increase
in demand for Crysvita in Latin America due to an increase in the number of
patients on therapy, continued increase in demand for our other approved
products, and an increase in sales of our products under our named patient
program in certain countries.
Cost of Sales (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Cost of sales $ 12,257 $ 6,100 $ 6,157 101 %
Cost of sales related to our approved products increased by
Research and Development Expenses (dollars in thousands)
Research and development expenses include internal and external costs incurred for research and development of our programs and program candidates and expenses related to certain technology that we acquire or license through business development transactions. These expenses consist primarily of clinical studies performed by contract research organizations, manufacturing of drug substance and drug product performed by contract manufacturing organizations, materials and supplies, fees from collaborative and other arrangements including milestones, licenses and other fees, personnel costs including salaries, benefits and stock-based compensation, and overhead allocations consisting of various support and infrastructure costs. Commercial programs include costs for disease monitoring programs and certain regulatory and medical affairs support activities for programs after commercial approval. Clinical programs include study conduct and manufacturing costs related to clinical program candidates. Translational research includes costs for preclinical study work and costs related to preclinical programs prior to IND filing. Infrastructure costs include direct costs related to laboratory, IT, and equipment depreciation costs, and overhead allocations for human resources, IT and other allocable costs.
The following table provides a breakout of our research and development expenses by major program type and business activities:
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Commercial programs $ 15,847 $ 13,064 $ 2,783 21 %
Clinical programs:
Gene therapy programs 35,144 40,280 (5,136 ) -13 %
Nucleic acid and other biologic
programs 30,854 20,474 10,380 51 %
Translational research 20,424 20,327 97 0 %
Infrastructure 19,538 16,384 3,154 19 %
Stock-based compensation 18,120 16,907 1,213 7 %
Other research and development 25,771 15,719 10,052 64 %
Total research and development
22,543 expenses 16 % Total research and development expenses increased$22.5 million for the three months endedMarch 31, 2023 , compared to the same period in 2022. The change in research and development expenses was primarily due to:
•
for commercial programs, an increase of
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for gene therapy programs, a decrease of
•
for nucleic acid and other biologic programs, an increase of
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the continued progress of the GTX-102 program acquired from
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for infrastructure, an increase of$3.2 million , primarily related to increased expenses for support of our clinical and research program pipeline, expansion of laboratory space, depreciation of laboratory-related leasehold improvements and equipment, and IT-related expenses;
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for stock-based compensation, an increase of
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for other research and development expenses, an increase of
We expect our annual research and development expenses to moderate in the future as we advance our product candidates through clinical development. The timing and amount of expenses incurred will depend largely upon the outcomes of current or future clinical studies for our product candidates as well as the related regulatory requirements, manufacturing costs, and any costs associated with the advancement of our preclinical programs.
Selling, General and Administrative Expenses (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022
Change Change
Selling, general and administrative
14 %
Selling, general and administrative expenses increased by $9.3 million for the
three months ended March 31, 2023 , compared to the same period in 2022. The
increases in selling, general and administrative expenses were primarily due to
increases in personnel costs resulting from an increase in the number of
employees to support our commercial activities, commercialization costs, and
professional services costs.
We expect selling, general and administrative expenses to decrease in the future as we continue to support our approved products and multiple clinical-stage product candidates, with expected decreases in commercial activities due to transition of Crysvita commercial responsibilities to our partner in the profit-share territory.
Interest Income (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Interest income $ 6,290 $ 494 $ 5,796 *
* Not meaningful
Interest income increased by
Change in Fair Value of Equity Investments (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Change in fair value of equity
investments $ (334 ) $ (9,329 ) $ 8,995 -96 %
For the three months ended
For the three months ended
As ofDecember 31, 2022 , we have sold all our equity investments in Arcturus. Given the historic volatility of the publicly traded stock price of Solid, the fair value adjustments of our equity investments may be subject to wide fluctuations which may have a significant impact on our earnings in future periods. 27 -------------------------------------------------------------------------------- Non-cash Interest Expense on Liabilities for Sales of Future Royalties (dollars in thousands) Three Months Ended March 31, Dollar % 2023 2022 Change Change Non-cash interest expense on liabilities for sales of future royalties$ (15,636 ) $ (6,584 ) $ (9,052 ) 137 % The non-cash interest expense on liabilities for sales of future royalties increased by$9.1 million for the three months endedMarch 31, 2023 , compared to the same period in 2022. This was primarily due to the partial sale of North American Crysvita royalties toOCM LS23 Holdings LP , an investment vehicle for Ontario Municipal Employees Retirement System, or OMERS, inJuly 2022 , which resulted in higher interest expense. To the extent the royalty payments are greater or less than our initial estimates or the timing of such payments is materially different than our original estimates, we will prospectively adjust the effective interest rate.
Other Income (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Other income $ 308 $ 289 $ 19 7 %
Other income increased by a nominal amount for the three months ended
Provision for Income Taxes (dollars in thousands)
Three Months Ended March 31, Dollar %
2023 2022 Change Change
Provision for income taxes $ (495 ) $ (558 ) $ 63 (11 )%
The provision for incomes taxes decreased by a nominal amount for the three
months ended
Liquidity and Capital Resources
To date, we have funded our operations primarily from the sale of our equity securities, revenues from our commercial products, the sale of certain future royalties, and strategic collaboration arrangements. As ofMarch 31, 2023 , we had$714.6 million in available cash, cash equivalents, and marketable debt securities. We believe that our existing capital resources will be sufficient to fund our projected operating requirements for at least the next twelve months. Our cash, cash equivalents, and marketable debt securities are held in a variety of deposit accounts, interest-bearing accounts, corporate bond securities, commercial paper,U.S government securities, asset-backed securities, debt securities in government-sponsored entities, and money market funds. Cash in excess of immediate requirements is invested with a view toward liquidity and capital preservation, and we seek to minimize the potential effects of concentration and credit risk. InMay 2021 , we entered into an Open Market Sale Agreement withJefferies LLC , or Jefferies, pursuant to which we may offer and sell shares of our common stock having an aggregate offering proceeds up to$350.0 million , from time to time, in at-the-market, or ATM, offerings through Jefferies. As ofMarch 31, 2023 , net proceeds from shares sold under the arrangement were approximately$78.9 million . No shares were sold under this arrangement for the three months endedMarch 31, 2023 . The following table summarizes our cash flows for the periods indicated (in thousands): Three Months Ended March 31, 2023 2022 Cash used in operating activities$ (156,867 ) $ (117,521 ) Cash provided by (used in) investing activities 111,304 (37,362 ) Cash (used in) provided by financing activities (722 ) 1,612 Effect of exchange rate changes on cash 211 (108 )
Net decrease in cash, cash equivalents and restricted cash
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--------------------------------------------------------------------------------Cash Used in Operating Activities
Our primary use of cash is to fund operating expenses, which consist primarily of research and development and commercial expenditures. Due to our significant research and development expenditures, we have generated significant operating losses since our inception. Cash used to fund operating expenses is affected by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. Cash used in operating activities for the three months endedMarch 31, 2023 was$156.9 million and primarily reflected a net loss of$164.0 million ,$4.9 million for non-cash royalty revenues related to the sale of future royalties toRPI Finance Trust , or RPI, an affiliate of Royalty Pharma, and$3.0 million for the amortization of the discount on purchased marketable debt securities, offset by non-cash charges of$32.0 million for stock-based compensation,$5.2 million for depreciation and amortization,$0.3 million for a change in fair value of equity investment in Solid, and$15.6 million for non-cash interest incurred on the liabilities for sales of future royalties to RPI and OMERS. Cash used in operating activities also reflected a$2.5 million decrease due to an increase in accounts receivable, primarily related to an increase in sales of our approved products, a$0.5 million decrease due to an increase in prepaid expenses and other assets primarily due to an increase in receivables due from collaboration partners, partially offset by a decrease in prepaid manufacturing, a$34.0 million decrease due to a decrease in accounts payable, accrued liabilities, and other liabilities primarily due to the payout of the 2022 annual bonus and decreases in manufacturing accruals related to timing of invoicing, partially offset by an increase in accounts payable related to timing differences, and a decrease of$1.5 million in contract liabilities, net, related to the revenue recognized from the license agreements with Daiichi Sankyo, offset by a$0.2 million increase due to a decrease in inventory. Cash used in operating activities for the three months endedMarch 31, 2022 was$117.5 million and primarily reflected a net loss of$152.3 million and$4.8 million for non-cash royalty revenues related to the sale of future royalties to RPI, offset by non-cash charges of$29.4 million for stock-based compensation,$1.9 million for the amortization of the premium paid on purchased marketable debt securities,$4.1 million for depreciation and amortization,$9.3 million for a change in fair value of equity investments in Arcturus and Solid, and$6.6 million for non-cash interest incurred on the liability related to the sale of future royalties to RPI. Cash used in operating activities also reflected a$1.5 million decrease due to an increase in inventory for Mepsevii, a$16.2 million decrease due to a decrease in accounts payable, accrued liabilities, and other liabilities primarily due to the payout of the 2021 annual bonus, partially offset by an increase in accounts payable and general accrued liabilities related to timing differences, and a decrease of$3.2 million in contract liabilities, net, related to the revenue recognized from the license agreements with Daiichi Sankyo, offset by a$9.1 million increase due to a decrease in prepaid expenses and other assets primarily due to a decrease in receivables due from collaboration partners.
Cash Provided by (Used in) Investing Activities
Cash provided by investing activities for the three months endedMarch 31, 2023 was$111.3 million and was primarily related to proceeds from the sale of marketable debt securities of$10.7 million and maturities of marketable debt securities of$191.6 million , offset by purchases of property, plant, and equipment of$25.0 million , purchases of marketable debt securities of$62.0 million , and purchases of mutual funds related to our nonqualified deferred compensation plan of$4.0 million . Cash used in investing activities for the three months endedMarch 31, 2022 was$37.4 million and was primarily related to purchases of property, plant, and equipment of$32.2 million , purchases of marketable debt securities of$203.7 million , and the payment to Regeneron for an intangible asset of$30.0 million , offset by proceeds from the sale of marketable debt securities of$39.4 million and maturities of marketable debt securities of$189.0 million .
Cash (Used in) Provided by Financing Activities
Cash used in financing activities for the three months ended
Cash provided by financing activities for the three months endedMarch 31, 2022 was$1.6 million and was primarily comprised of$1.8 million in net proceeds from the issuance of common stock pursuant to equity plan awards.
Funding Requirements
We anticipate that, excluding non-recurring items, we will continue to generate
annual losses for the foreseeable future as we continue the development of, and
seek regulatory approvals for, our product candidates, and continue with
commercialization of approved products. We will require additional capital to
fund our operations, to complete our ongoing and planned clinical studies, to
commercialize our products, to continue investing in early-stage research
capabilities to promote our pipeline growth, to continue to acquire or invest in
businesses or products that complement or expand our business, including future
milestone payments
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--------------------------------------------------------------------------------thereunder, and to further develop our general infrastructure, including construction of our GMP gene therapy manufacturing facility, and such funding may not be available to us on acceptable terms or at all.
If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce the scope of, or terminate one or more of our clinical studies, research and development programs, future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Our future funding requirements will depend on many factors, including the following:
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the scope, rate of progress, results and cost of our clinical studies, nonclinical testing, and other related activities;
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the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates, products that we have begun to commercialize, and any products that we may develop in the future, including the construction of our own GMP gene therapy manufacturing plant;
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the number and characteristics of product candidates that we pursue;
•
the cost, timing, and outcomes of regulatory interactions and approvals;
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the cost and timing of establishing our commercial infrastructure, and distribution capabilities;
•
the impact of macroeconomic conditions, including the general economic slowdown and potential recessionary environment on our business operations and operating results" and
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the terms and timing of any collaborative, licensing, marketing, distribution, acquisition and other arrangements that we may establish, including any required upfront milestone, royalty, reimbursements or other payments thereunder. We expect to satisfy future cash needs through existing capital balances, revenue from our commercial products, and a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, and other marketing and distribution arrangements. Please see "Risk Factors-Risks Related to Our Financial Condition and Capital Requirements."
Contractual Obligations and Commitments
Material contractual obligations arising in the normal course of business primarily consist of operating and finance leases, manufacturing and service contract obligations, and building construction and improvement agreements.
Future minimum lease payments under non-cancellable leases as of
Manufacturing and service contract obligations primarily relate to manufacturing of inventory for our approved products. As ofMarch 31, 2023 , we had obligations of approximately$25.4 million , of which$17.8 million are due within one year. Building construction and improvement agreements relate to the construction and fit-out of the Company's leased properties. As ofMarch 31, 2023 , we had obligations of approximately$9.9 million , of which$1.0 million are expected to be due within one year. We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities. The terms of certain of our licenses, royalties, development and collaboration agreements, as well as other research and development activities, require us to pay potential future milestone payments based on product development success. The amount and timing of such obligations are unknown or uncertain. 30
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