Operator: Good day and thank you for standing by. And welcome to the UroGen Pharma Q4 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Vincent Perrone, Head of Investor Relations. You may begin.
Vincent Perrone: Thank you, operator. Good morning, everyone, and welcome to UroGen Pharma’s fourth quarter and year-end 2022 financial results and business update conference call. Earlier this morning, we issued a press release providing an overview of our recent corporate highlights and preliminary financial results for the quarter ended December 31, 2022. The press release can be accessed on the Investors portion of our website at investors.urogen.com. Joining me on the call today are Liz Barrett, President and Chief Executive Officer; Dr. Mark Schoenberg, Chief Medical Officer; Jeff Bova, Chief Commercial Officer; and Don Kim, Chief Financial Officer. During today’s call, we will be making certain forward-looking statements.
These may include statements regarding our ongoing commercialization activities related to JELMYTO, anticipated seasonality for JELMYTO in 2023, our ongoing and planned clinical trials, commercial and clinical milestones in the year ahead, the potential of UGN-102 to transform the treatment paradigm as the first non-surgical treatment for low-grade intermediate risk non-muscle invasive bladder cancer, market opportunities, potential future commercialization activities for UGN-102 if approved, data presentations, regulatory filings, future research and development efforts, our corporate goals, our optimism regarding multiple avenues available to us to further strengthen our balance sheet and 2023 financial guidance, among other things. These forward-looking statements are based on current information, assumptions and expectations that are subject to change.
A description of potential risks can be found in our earnings press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements, and UroGen disclaims any obligation to update these statements. I will now turn the call over to Liz. Liz?
Liz Barrett: Thank you, Vincent and thank you everyone for joining us today. Looking back on 2022, I’m proud of our progress and more enthusiastic than ever about the future of UroGen. We returned to growth in Q4, delivering our strongest quarter ever for JELMYTO, ending the year with $64.4 million in net product revenues representing a 34% increase from full year 2021. This goes well for UGN-102 as we continue to think of JELMYTO as proof of concept and the gateway for the much larger market of bladder cancer. That belief is substantiated by the incredible momentum we experience in our UGN-102 clinical trial. In just 20 months, we’ve enrolled over 500 patients between both the ATLAS and the ENVISION Phase 3 trials. In fact, we completed enrollment of ENVISION, our pivotal study for UGN-102 for the treatment of low-grade intermediate risk non-muscle invasive bladder cancer in less than a year.
We firmly believe that this has the potential to transform the way urologists treat patients and based on how quickly we enrolled the trial that we have a base of urologists who are eager to elevate their practice. We are planning to provide top line data from both of our Phase 3 studies of UGN-102 midyear. We will provide an update on complete response and durability in ATLAS, while also providing the primary endpoint of complete response rate in the ENVISION study. Assuming positive results, these studies will form the basis of our FDA submission in 2024 once durability has matured. UGN-102 is designed to address a much larger patient population and administration is much simpler without the need for fluoroscopy. Therefore, if approved, we anticipate UGN-102 will prove to be our main growth driver in the future.
At the end of last year, we shared long-term follow-up data from the JELMYTO OLYMPUS pivotal trial and the Phase 2b OPTIMA II study of UGN-102. In each of these, we observed a greater than two year median duration of response along with a recently completed small home installation study. We are optimistic about the upcoming data from ATLAS and ENVISION will further establish the potentially transformative nature of our products. Before turning the call over to my colleagues, I would like to quickly address our balance sheets. We’ve now come to better understand the adoption coverage on JELMYTO and expect revenue growth in 2023 to reflect growth of 20% to 30% over 2022 and revenues of $76 million to $86 million. While we ended the year strong with $100 million in cash, we continue to reduce cash spend and focus on our core assets, especially given the market potential for UGN-102, we’re optimistic that we will be in a position to explore multiple avenues to further strengthen our balance sheet when necessary.
Overall, I’m very enthusiastic about the progress we’ve made in 2022 and the road ahead as we plan for an FDA submission of UGN-102 in 2024. We believe JELMYTO and UGN-102 together represented $1 billion revenue opportunity for UroGen and remain focused on solid execution to turn that belief into a reality. With that, I’ll pass the call over to Mark to further update you on our clinical development program. Mark?
Mark Schoenberg: Thank you, Liz, and welcome everyone. My comments will underscore Liz’s remarks and reinforce our excitement as we advance our lead pipeline program, UGN-102 and highlight recent real world data from JELMYTO. As you may recall, we commenced the international multi-center registrational ENVISION study for UGN-102 in January of 2022. The study is intended to evaluate the efficacy and safety of UGN-102 as primary chemo ablative therapy in patients with recurrent low- grade intermediate risk, non-muscle invasive bladder cancer. As Liz noted, we expect to report out this data by the end of this summer. The quickness with which we were able to complete this trial is a testimony to the interest from urologists for a new alternative for treating bladder cancer.
Our confidence in the potential outcome of ENVISION stems from its similarity to the Phase 2 OPTIMA II trial of UGN-102, which demonstrated a 65% CR rate and duration of response at 12 months of 72.5% using Kaplan-Meier analysis. UGN-102 also has key similarities with JELMYTO. Both products utilize mitomycin allow for local delivery and sustained exposure to mitomycin for up to six hours, and importantly, both low-grade NMIBC and low grade UTUC share many biological and clinical similarities, which leads to common clinical features including the responsiveness to chemotherapy. UGN-102 however has many important advantages over JELMYTO, which we believe will have a direct impact on its use. It does not require special equipment for procedures and is designed to be instilled in the bladder via urethral catheter in an outpatient setting, a common and routine procedure in most urology practices.
This advantage will be critical as low-grade intermediate-risk NMIBC. It’s eight to 10 times more common and a condition that is routinely managed by 80% to 90% of urologists inferring a significantly larger addressable patient population. We recently shared results from a small study that demonstrated the suitability of UGN-102 installation at home by a visiting nurse under the supervision of a treating physician. Six of eight or 75% of patients who received six weekly doses of UGN-102 achieved a complete response defined as no detectable disease after three months of starting treatment. Treatment related adverse events were mild to moderate and the few serious adverse events were not treatment related. We anticipate a small subset of older patients with social challenges may benefit from being treated at home versus in clinic, and the results from this study provide us with added confidence that our novel investigational therapeutic has the potential to address genuine unmet needs for low-grade bladder cancer patients.
In December, we shared new and supportive long-term follow-up data from the OPTIMA II study of UGN-102 at the Annual Society of Urologic Oncology meeting. The study showed a greater than 24 month median duration of response with UGN-102 in 15 of 25 evaluable patients. Long-term follow up data from JELMYTO’s pivotal trial were also presented at SUO. The study showed a greater than 28 month median duration of response in 16 of 23 evaluable patients. Together, these studies added to the growing body of evidence supporting the potential for long-term recurrence free survival associated with RTGel delivery of mitomycin to the bladder and urinary tract to treat low-grade urothelial cancer. 2023 is shaping up to be an important year for UGN-102 with multiple near-term catalysts, including top line data from the ATLAS trial, the precursor to ENVISION which enrolled 282 patients who completed treatment with either UGN-102 or primary TURBT, top line results from the Phase 3 envisioned trial mid-year and assuming positive results from the Phase 3 trial, preparing for an NDA submission with the FDA in 2024, the goal would be to target priority review, which if granted may potentially result in approval at the end of 2024 or early 2025.
If approved, UGN-102 will be the only primary non-surgical therapy addressing the nearly 80,000 new patients in the U.S. alone who will undergo repetitive endoscopic resection and are burdened with the risks of surgery and anesthesia as their only recourse for disease control. As a practicing neurologist who cares for bladder cancer patients. This would be a transformative therapeutic advance that I believe will be welcomed by my colleagues and patients alike. Meanwhile, our Phase 1 trial with UGN-301, our in-licensed anti-CTLA-4 antibody for intravesical administration using RTGel technology, continues to enroll. UGN-301 is in development for the use in combination with other immunomodulators, including UGN-201, our proprietary TLR7 agonist, and other potential chemotherapy and immunotherapies to treat high-grade non-muscle invasive bladder cancer.
This study is aimed at identifying the suitable dose for a subsequent Phase 2 trial. The first arm of this study evaluating dose ranges of UGM-301 as monotherapy is expected to be completed in the second half of 2023. We viewed UGN-301 as a cornerstone checkpoint inhibitor for a variety of potential combination therapies targeting high-grade NMIBC. In closing, 2023 will be an important year as we look to build upon the foundation of real world evidence and clinical data supporting our increasingly compelling and well established technology and product portfolio of innovative nonsurgical therapies for urothelial cancers. And with that, I’ll hand the call over to Jeff to provide a commercial update. Jeff?
Jeff Bova: Thank you, Mark. Q4 represented our strongest quarter performance ever for JELMYTO. I’d like to take a moment to highlight a few of the underlying factors which contributed to our performance in the fourth quarter. Adoption metrics continue to demonstrate encouraging trends in new and repeat accounts, indicating clinical conviction from JELMYTO adopters and growth in new users. Activated sites on March 1, 2023 were 983, compared to 930 on November 1st of last year. And repeat accounts were 214, compared to 177 for the same period. This is a 21% increase over the last period. Reimbursement remains at approximately 99% across all coverage types. In Q4, we saw strengthening of the JELMYTO ramp and an increase in uptake in several key territories.
This was driven in part by strategic adjustments to our sales strategy discussed last quarter, including the addition of operation support to facilitate logistical efficiencies and alignment of our field sales team with the appropriate drug and device skillset. We expect the benefits of our revised strategy to deliver sustainable growth in developing territories and are encouraged by the impact seen thus far. Our performance in Q4 also reflects operational efficiencies from the September 2022 label update, which extended the stability period of JELMYTO admixture from eight to 96 hours. We’ve seen an immediate positive impact to several logistical challenges, including allowing for delivery of the admixture the day before installation, enabling HCP preferred or early morning installation.
This has led to a shift of approximately 50% of doses today prior delivery, facilitating expansion of the geographical coverage of our mixing partners and optimizing our territory business manager’s time in the field. The growing body of outcomes from real world evidence data continues to reinforce JELMYTO’s efficacy and safety. In addition to supporting a multi-modal approach of JELMYTO across multiple use cases, the recent independent multi-center retrospective analysis has answered a number of questions not addressed by OLYMPUS, arming our commercial organization with a deeper understanding of JELMYTO’s use across various practice patterns. Further, outcomes from this study add to the growing body of real world data demonstrating a favorable safety profile and additional benefits of integrated administration, which now represents approximately 60% of JELMYTO installations.
After two years of market experience with JELMYTO, we expect to see stability going forward with respect to quarterly variability or seasonal dynamics as we get back to a new sense of normal. Looking ahead, we expect typical payer dynamics in play in Q1 resulting from deductible resets followed by stronger demand in the second quarter, slight delay in Q3 as we expect PEP conversions to slow in the summer months, followed by a stronger Q4 as PEP conversions return to baseline. JELMYTO is undeniably gaining traction and adoption appears to be accelerating as the product becomes increasingly proven easier to administer and incorporated across multiple practice patterns. This reinforces our optimism and lays the foundation for the potentially much larger opportunity with UGN-102 in low-grade, intermediate-risk non-muscle invasive bladder cancer.
With 95% overlap in the prescriber base and well-established practice patterns, we expect a seamless integration of UGN-102 into our commercial efforts if approved. With that, I will turn the call over to Don to discuss our financial results. Don?
Don Kim: Thank you, Jeff, and thank you to everyone for joining today’s call. We finished the year with growing momentum delivering our strongest quarter ever for JELMYTO net sales. On an annualized basis, revenue from JELMYTO sales grew 34% in 2022. For the fourth quarter of 2022, we reported JELMYTO net revenues over $18.1 million, compared to $16.1 million for the same period in 2021. On a full year basis, we delivered JELMYTO net revenues in line with the consensus estimates of $64.4 million, compared to $48 million for the year 2021. Our performance reflects our strengthening ramp and growing adoption of JELMYTO. For the fourth quarter of 2022, research and development expenses was $14.4 million, as compared to $13.1 million for the prior year quarter.
Full year 2022 R&D expenses were $52.9 million as compared to $47.6 million for the full year 2021. The increase in R&D expenses of $5.3 million is primarily attributable over to higher research and development expenses in 2022 related to Phase 3 ENVISION study for UGN-102, research into ingredients scale-up and production efficiency for JELMYTO, partially offset by lower stock-based compensation expenses in 2022. Fourth quarter of 2022, selling, general, and administrative expenses were $21.6 million as compared to $21.4 million for the prior year quarter. Full year 2022 selling, general and administrative expenses were $82.9 million as compared to $87.5 million for the full year 2021. The decrease in SG&A related expenses of $4.6 million, resulted primarily from a decrease in stock-based compensation and compensation related costs in 2022 offset by brand marketing related expenses.
For the fourth quarter of 2022, we reported financing expenses related to the prepaid forward obligation to RTW Investments of $5.1 million. Financing expense related to the prepaid forward obligation to RTW Investments totaled $21.6 million for the full year 2022. The cash payout rate for 2023 will be 13% based on $64.4 million of global net product sales of JELMYTO in 2022. We anticipate full year 2023 JELMYTO net revenues to be in the range of $76 million to $86 million. Full year operating expense is expected to be in the range of $135 million to $145 million, including non-cash share-based compensation expense of $6 million to $11 million subject to market conditions. We will continue to scrutinize all expenses in support of our efforts to prioritize cash preservation.
Financing expense related to the prepaid forward obligation to RTW Investments is expected to be in the range of $21 million to $26 million, of which approximately $9.8 million to $11.1 million will be paid in cash. In addition to RTW financing expense, interest only payments on the $100 million term loan facility with the funds managed by Pharmakon Advisors will be made quarterly and continue to accrue at a rate of LIBOR plus 8.25% in 2023. We ended the year with $100 million in cash and cash equivalents, which is expected to finance operations into the first half of 2024. To echo Liz, we are committed to diligently and proactively managing our balance sheet in support of our commercial and clinical development activities. We’ll continue to watch revenues and monitor expenses closely while also routinely evaluating our cash position and capital market environment to the needs to opportunistically strengthen our balance sheet arise.
With that, I’d like to turn the call back to Liz for closing remarks.
Liz Barrett: Thank you, Don. I’d simply like to close by pressing my pride in all that we have accomplished and continue to execute on from the leadership right through to the entire UroGen team. I’d also like to express my sincere thanks to those individuals as well as to the patients and clinicians that are realizing the benefits of JELMYTO adoption and the diligence of the investigators and patients participating in our ongoing clinical trials. Finally, I’d like to thank and reiterate our commitment to our shareholders. We see the importance of the goal that we are trying to achieve. We look forward to keeping you all apprised as the important events continue to unfold over the weeks and months ahead. I’ll now turn the call over to the operator for a Q&A session. Operator?
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Operator: And thank you. And one moment for our next question. And our first question comes from Leland Gershell from Oppenheimer. Your line is now open.
Leland Gershell: Hey, good morning guys. Thanks for taking the questions and congrats on the progress. Two questions for me. First for Mark. As we’ll wait for the durability data from ENVISION, obviously, early next year after we get the response top line and any reasons we should think that would differ than what we saw from what we saw in OPTIMA II? And then second question for Liz. You’ve just teeing off the comment you made about the size of the UGN-102 market opportunity providing potential opportunities to strengthen the balance sheet. Just wondering if that should lead us to think about any sort of development or strategic arrangements you may be contemplating down the road with UGN-102 as you get to commercial? Thanks.
Liz Barrett: Okay, thanks, Leland. Mark, why don’t you answer and then I’ll come back.
Mark Schoenberg: Yes. Sure, Liz. Thanks, Leland. Good morning. So the short answer is no. Just to remind the listeners, in OPTIMA about 25% of the cohorts studied were patients with de novo disease. The remainder of those patients who had recurrent disease. In ENVISION, all patients will have had recurrent disease. When we evaluated this question as to whether or not there was a difference between new and recurrent responses to UGM-102 in the OPTIMA cohort, we were not able to discern a difference based on that cohort. So our expectation is that in the ENVISION trial, we will see very similar results to what we reported in OPTIMA.
Liz Barrett: And to answer your question, Leland, I mean, to be honest with you, we’re looking we are always opportunistically looking at everything. So whether it be BD, a strategic partnership, other forms of capital. So we just we want to make sure that we keep doing the diligence around our expenses and we have further identified areas where we can really reduce expenses to make sure our cash keeps us through 2023 and into 2024, so that we’re not forced to do anything. But look, it would be great to be able to do some sort of strategic partnership with a company if we thought it was the right thing and if we thought it was really going to accelerate our growth. And so, we’ll continue to look at that as well as a lot of other options as well. But nothing has been decided. We haven’t we just feel like given that the data is coming up this summer, that’s probably a good time to think about doing something. So thanks for the question.
Leland Gershell: Great, thanks for the color.
Operator: And thank you. And one moment for our next question. And our next question comes from Mitchell Kapoor from HCW. Your line is now open.
Mitchell Kapoor: Hi, everyone. This is Mitchell on for Ram. Thanks for taking our questions. The first one is I just wanted to ask about the main driver of JELMYTO uptake now and how that’s differed since the original launch? And how does the company intend to optimize the value ex-U.S.?
Liz Barrett: Jeff, you want to take that and then I’ll take the ex-U.S. question.