What changed in this filing

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Item 9A. Controls and Procedures

2022-02-15 compared with 2021-02-12 · 423 added, 425 removed, 1020 unchanged (45% of the section changed)

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Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures” as of the end of the period covered by this Annual Report, pursuant to Rules 13a-15(b) and 15d-15(b) under the Exchange Act.

Management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures”

as of the end of the period covered by this Annual Report, pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act.

In connection with that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective and designed to provide reasonable assurance that the information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms as of December 31, 2021.

For the purpose of this review, disclosure controls and procedures means controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.

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Opinion on Internal Control over Financial Reporting

We have audited Ultragenyx Pharmaceutical Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Ultragenyx Pharmaceutical Inc (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We have audited Ultragenyx Pharmaceutical Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Ultragenyx Pharmaceutical Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Ultragenyx Pharmaceutical Inc.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and our report dated February 11, 2021 expressed an unqualified opinion thereon.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders’

equity and cash flows for each of the three years in the period ended December 31, 2021, and our report dated February 15, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control

over financial reporting based on our audit.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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/s/ Ernst & Young LLP

San Jose, California

Redwood City, California

February 15, 2022

Other Information

Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated herein by reference to information in the proxy statement for our 2021 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates (the “2021 Proxy Statement”), including under the headings “Proposal No.

1—Election of Class II Directors,” “Information About Our Executive Officers,” “Corporate Governance—Global Code of Conduct,” “Proposal No.

1—Election of Class II Directors—Nomination of Directors,” “Board of Directors and Committees,” and, as applicable, “Delinquent Section 16(a) Reports.” We have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions, or Code of Ethics.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable

Di rectors, Executive Officers and Corporate Governance

The information required by this Item is incorporated herein by reference to information in the proxy statement for our 2022 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates (the “2022 Proxy Statement”), including under the headings “Proposal No.

1—Election of Class III Directors,”

“Information About Our Executive Officers,”

“Corporate Governance—Global Code of Conduct,”

“Proposal No.

1—Election of Class III Directors—Nomination of Directors,”

“Board of Directors and Committees,”

and, as applicable, “Delinquent Section 16(a) Reports.”

We have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions, or Code of Ethics.

Our Code of Ethics is posted on our corporate governance website located at www.ultragenyx.com .

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Executive Compensation

The information required by this Item is incorporated herein by reference to information in the 2021 Proxy Statement, including under the headings “Executive Compensation,” “Director Compensation,” “Board of Directors and Committees—Compensation Committee Interlocks and Insider Participation,” “Executive Compensation—Risk Management and Mitigation,” and “Executive Compensation—Compensation Committee Report.”

The information required by this Item is incorporated herein by reference to information in the 2022 Proxy Statement, including under the headings “Executive Compensation,”

“Director Compensation,”

“Board of Directors and Committees—Compensation Committee Interlocks and Insider Participation,”

“Executive Compensation—Risk Management and Mitigation,”

and “Executive Compensation—Compensation Committee Report.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to information in the 2021 Proxy Statement, including under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

The information required by this Item is incorporated herein by reference to information in the 2022 Proxy Statement, including under the headings “Security Ownership of Certain Beneficial Owners and Management”

and “Equity Compensation Plan Information.”

Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to information in the 2021 Proxy Statement, including under the headings “Certain Relationships and Related-Person Transactions,” “Corporate Governance,” and “Board of Directors and Committees.”

The information required by this Item is incorporated herein by reference to information in the 2022 Proxy Statement, including under the headings “Certain Relationships and Related-Person Transactions,”

“Corporate Governance,”

and “Board of Directors and Committees.”

Principal Accountant Fees and Services

The information required by this Item is incorporated herein by reference to information in the 2021 Proxy Statement, including under the heading “Proposal No.

2—Ratification of the Selection of Independent Registered Public Accounting Firm.”

Exhibits and Financial Statement Schedules

The following documents are filed as part of this Annual Report.

The information required by this Item is incorporated herein by reference to information in the 2022 Proxy Statement, including under the heading “Proposal No.

2—Ratification of the Selection of Independent Registered Public Accounting Firm.”

Ex hibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report.

(1) Consolidated Financial Statements

Consolidated Financial Statements—See Index to Consolidated Financial Statements at page F-1 of this Annual Report.

(2) Consolidated Financial Statement Schedules

Consolidated Financial Statement schedules have been omitted in this Annual Report because they are not applicable, not required under the instructions, or the information requested is set forth in the Consolidated Financial Statements or related notes thereto.

Exhibit Description

Incorporated by Reference

Exhibit Description

Amended and Restated Certificate of Incorporation

Amended and Restated Bylaws

Reference is made to Exhibits 3.1 and 3.2

Form of Common Stock Certificate

Form of Indenture

Description of Common Stock

Collaboration and License Agreement, ef fective as of August 29, 2013, between Ultragenyx Pharmaceutical Inc.

Open Market Sales Agreement, dated May 7, 2021, by and between Ultragenyx Pharmaceutical Inc.

and Jefferies LLC

Collaboration and License Agreement, effective as of August 29, 2013, between Ultragenyx Pharmaceutical Inc.

and Kyowa Hakko Kirin Co., Ltd.

Amendment No.

1 to Collaboration and License Agreement, e ffective as of August 24, 2015, between Ultragenyx Pharmaceutical Inc.

1 to Collaboration and License Agreement, effective as of August 24, 2015, between Ultragenyx Pharmaceutical Inc.

and Kyowa Hakko Kirin Co., Ltd.

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(formerly, Kyowa Hakko Kirin Co., Ltd.)

Exhibit Description

Incorporated by Reference

Amendment No.

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and Kyowa Kirin Co., Ltd.

Amendment No.

11 to Collaboration and License Agreement, effective as of December 17, 2021 between Ultragenyx Pharmaceutical Inc.

and Kyowa Kirin Co., Ltd.

License Agreement, dated as of September 20, 2012, between Ultragenyx Pharmaceutical Inc.

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(as assignee of Dimension Therapeutics, Inc.)

Second Amendment to Option and License Agreement, dated December 17, 2021, by and between REGENXBIO, Inc.

and Ultragenyx Pharmaceutical Inc.

Amended and Restated Collaboration Agreement and License Agreement, dated June 3, 2019, between Ultragenyx Pharmaceutical Inc.

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and The Trustees of the University of Pennsylvania

Commercial Supply and Services Agreement – Drug Substance, effective December 7, 2017, between Ultragenyx Europe GmbH and Rentschler Biopharma SE

Commercial Supply and Services Agreement – Drug Product, effective January 31, 2018, between Ultragenyx Europe GmbH and Rentschler Biopharma SE

Commercial Supply and Services Agreement –

Drug Substance, effective December 7, 2017, between Ultragenyx Europe GmbH and Rentschler Biopharma SE

Commercial Supply and Services Agreement –

Drug Product, effective January 31, 2018, between Ultragenyx Europe GmbH and Rentschler Biopharma SE

Supply Agreement, dated as of November 19, 2012, between Ultragenyx Pharmaceutical Inc.

and CREMER OLEO GmbH & Co KG

Exhibit Description

Incorporated by Reference

M aster Services Agreement, dated April 8, 2019, between Ultragenyx Pharmaceutical Inc.

Master Services Agreement, dated April 8, 2019, between Ultragenyx Pharmaceutical Inc.

and Aenova Haupt Pharma Wolfratshausen GmbH

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and RPI Finance Trust

Equity Purchase Agreement, dated as of June 18, 2019 by and among Ultragenyx Pharmaceutical Inc.

and Arcturus Therapeutics Ltd.

2011 Equity Incentive Plan (including forms of Stock Option Grant Notice and Stock Option Agreement thereunder)

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Form of Non Statutory Stock Option Agreement (Employees)(ex-U.S.)

Form of Non-Statutory Stock Option Agreement (Directors)

Form of Restricted Stock Unit Agreement (Employees)

Form of Restricted Stock Unit Agreement (Employees)(ex-U.S.)

Form of Non-Statutory Stock Option Agreement (Directors)

Form of Restricted Stock Unit Agreement (Directors)

Form of Performance Stock Unit Agreement (Current Employees)

Form of Performance Stock Unit Agreement (New Employees)

Form of Non-Statutory Stock Option Agreement (Annual Grant for Directors)

Form of Restricted Stock Unit Agreement (Annual Grant for Directors)

Form of Non-Statutory Stock Option Agreement (Grant for New Directors)

Form of Restricted Stock Unit Agreement (Grant for New Directors)

Form of Performance Stock Unit Agreement (2020)

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Form of Restricted Stock Unit Agreement (Inducement Plan)(ex-US)

Ultragenyx Pharmaceutical Inc.

Deferred Compensation Plan

Amendment No.

1 to the Ultragenyx Pharmaceutical Inc.

Deferred Compensation Plan

Executive Employment Agreement, dated as of June 15, 2011, between Ultragenyx Pharmaceutical Inc.

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Kakkis, M.D., Ph.D.

Exhibit Description

Incorporated by Reference

Offer Letter, dated as of October 31, 2011, between Ultragenyx Pharmaceutical Inc.

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and Thomas Kassberg

Transition Letter Agreement, dated as of March 5, 2020, between Ultragenyx Pharmaceutical Inc.

and Shalini Sharp

Amendment, dated as of August 28, 2020 to Transition Letter Agreement between Ultragenyx Pharmaceutical Inc.

and Shalini Sharp dated as of March 5, 2020

Amendment No.

2, dated as of October 8, 2020, to Transition Letter Agreement between Ultragenyx Pharmaceutical Inc.

and Shalini Sharp dated as of March 5, 2020, as amended on August 28, 2020

Offer Letter, dated as of August 28, 2020 between Ultragenyx Pharmaceutical Inc.

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and Condiotti Enterprises, Inc.

Exhibit Description

Incorporated by Reference

Addendum Two to Standard Lease, dated as of March 7, 2012, between Ultragenyx Pharmaceutical Inc.

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and ARE-MA Region No., LLC.

Exhibit Description

Incorporated by Reference

Lease Agreement, dated December 15, 2019, between Ultragenyx Pharmaceutical Inc.

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President and Chief Executive Officer

(Principal Executive Officer)

February 15, 2022

POWER OF ATTORNEY

PO WER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Emil D.

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February 15, 2022

Siegall, Ph.D.

/s/ Corsee D.

Sanders, Ph.D.

February 15, 2022

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Financial Statements:

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent R egistered Public Accounting Firm

To the Stockholders and the Board of Directors of Ultragenyx Pharmaceutical Inc.:

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We have audited the accompanying consolidated balance sheets of Ultragenyx Pharmaceutical Inc.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and 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 at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

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These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Limited historical data is available for use in developing such estimates which are periodically reviewed and adjusted as necessary.

Auditing the Company’s net product sales was complex due to the Company’s limited history of product sales and the growth of sales in international markets.

The Company’s estimates of government mandated rebates, chargebacks and estimated product returns depend on the identification of key customer contract terms and conditions, as well as estimates of sales volumes to different classes of payors.

The revenue recognition process can be complex and involves significant judgment to identify and assess the terms and conditions of customer agreements and related government regulations that could affect revenue recognition, as the Company’s revenue expands with new customers and new markets.

Auditing the Company’s net product sales was complex due to the Company’s limited history of product sales and the growth of sales in international markets.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of recording product sales and related rebates, chargebacks and returns.

We also tested management’s controls related to the identification and assessment of the terms and conditions of customer agreements and the completeness and accuracy of data utilized in the controls, and the calculations supporting management’s estimates.

To test net product sales, our audit procedures included, among others, tracing a sample of revenue transactions recognized during the year to source documentation.

We also confirmed a sample of outstanding receivable balances directly with the Company’s customers.

To test management’s estimates of rebates, chargebacks and returns, we obtained management’s calculations for the respective estimates and performed one or more of the following procedures:

tested management’s estimation process to assess whether the recorded reserve balances are within a reasonable range of estimate, performed retrospective reviews, assessed subsequent events, and tested a sample of credits issued throughout the year.

We also confirmed a sample of outstanding receivable balances directly with the Company’s customers.

To test management’s estimates of rebates, chargebacks and returns, we obtained management’s calculations for the respective estimates and performed one or more of the following procedures:

Liability related to the sale of future royalties

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The Company estimates an imputed interest on the unamortized portion of the liability and records interest expense relating to the transaction.

Auditing the Company’s liability related to the sale of future royalties was complex due to the subjective judgments required to forecast the expected royalty payments subject to the agreement.

Specifically, the forecasted revenues of Crysvita in the European market involved significant estimation uncertainty.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for the liability related to the sale of future royalties, including controls over the Company’s estimates of projected sales of Crysvita in the European market .

To test management’s estimates of the future royalties and the imputed effective interest rate, we performed audit procedures that included, among others, evaluating the reasonableness of management’s assumptions related to the treatable patient population, estimated pricing and reimbursement, and the rate of adoption.

We compared the significant assumptions with historical trends of actual sales, analyst expectations and performed sensitivity analyses of estimated future royalties to evaluate the impact of the changes in the future royalties on the implied effective interest rate.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2010.

San Jose, California

We have served as the Company’s auditor since 2010.

Redwood City, California

February 15, 2022

ULTRAGENYX PHARMACEUTICAL INC.

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BA LANCE SHEETS

(In thousands, except share and per share amounts)

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Liability related to the sale of future royalties

Other liabilities

Total liabilities

Commitments and contingencies (Notes 8 and 14)

Stockholders’ equity:

Preferred stock, par value of $ 0.001 per share— 25,000,000 shares authorized;

outstanding as of December 31, 2020 and 2019

Common stock, par value of $ 0.001 per share— 250,000,000 shares authorized;

Stockholders’

Preferred stock, par value of $ 0.001 per share—

25,000,000 shares authorized;

outstanding as of December 31, 2021 and December 31, 2020

Common stock, par value of $ 0.001 per share—

250,000,000 shares authorized;

69,344,998 and 66,818,520 shares issued and outstanding as of December 31, 2021

and 2019, respectively

and December 31,2020, respectively

Additional paid-in capital

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Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’

Total liabilities and stockholders’

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED ST ATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

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Interest income

Gain from sale of priority review vouchers

Change in fair value of equity investments

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Net loss per share, basic and diluted

Shares used in computing net loss per share, basic and diluted

Weighted-average shares used in computing net loss per share, basic and diluted

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEM ENTS OF COMPREHENSIVE LOSS

(In thousands)

Year Ended December 31,

Other comprehensive income:

Other comprehensive income (loss):

Foreign currency translation adjustments

Transfer of currency translation adjustments balance to other income related

to the liquidation of foreign subsidiaries

Unrealized gain on available-for-sale securities

Other comprehensive income:

Unrealized gain (loss) on available-for-sale securities

Other comprehensive income (loss):

Total comprehensive loss

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ULTRAGENYX PHARMACEUTICAL INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATE MENTS OF STOCKHOLDERS’

(In thousands, except share amounts)

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offering, net of issuance costs

Stock-based compensation expense

Issuance of common stock under equity plan awards, net of tax

Other comprehensive income

Balance as of December 31, 2018

Issuance of common stock in connection with underwritten

public offering, net of issuance costs

Issuance of common stock in connection with at-the-market

offering, net of issuance costs

Stock-based compensation expense

Stock-based compensation

Issuance of common stock under equity plan awards, net of tax

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offering, net of issuance costs

Stock-based compensation expense

Stock-based compensation

Issuance of common stock upon exercise of warrants and under

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Balance as of December 31, 2020

Issuance of common stock in connection with at-the-market

offering, net of issuance costs

Stock-based compensation

Issuance of common stock under

equity plan awards, net of tax

Other comprehensive loss

Balance as of December 31, 2021

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STA TEMENTS OF CASH FLOWS

(In thousands)

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Depreciation and amortization

Foreign currency remeasurement (gain) loss

Change in fair value of equity investments

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Non-cash interest expense on liability related to the sale of future royalties

Gain from sale of priority review vouchers

Changes in operating assets and liabilities:

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Proceeds from sale of marketable debt securities

Proceeds from sale of equity investment

Proceeds from sale of equity investments

Proceeds from maturities of marketable debt securities

Proceeds from sale of priority review vouchers

Net cash used in investing activities

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Effect of exchange rate changes on cash

Net increase in cash, cash equivalents, and restricted cash

Net (decrease) increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of year

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Stock-based compensation capitalized into ending inventory

Costs of property and equipment included in accounts payable, accrued, and other

Costs of property, plant and equipment included in accounts payable, accrued, and other liabilities

Non-cash interest expense on liability related to the sale of future royalties capitalized into ending property, plant and equipment

See accompanying notes.

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Notes to Consolidated Financial Statements

Organization and Basis of Presentation

Organizat ion and Basis of Presentation

Ultragenyx Pharmaceutical Inc.

(the Company) is a biopharmaceutical company incorporated in California on April 22, 2010.

The Company subsequently reincorporated in the state of Delaware in June 2011.

(the Company) is a biopharmaceutical company incorporated in Delaware.

The Company is focused on the identification, acquisition, development, and commercialization of novel products for the treatment of serious rare and ultra-rare genetic diseases.

The Company has three commercially approved products.

Crysvita ® (burosumab) is approved in the United States by the U.S.

The Company operates as one reportable segment.

The Company has four commercially approved products.

Crysvita® (burosumab) is approved in the United States (U.S.) by the U.S.

Food and Drug Administration (FDA) and in Canada for the treatment of X-linked hypophosphatemia (XLH) in adult and pediatric patients one year of age and older, and is approved in the European Union (EU) and the United Kingdom, for the treatment of XLH with radiographic evidence of bone disease in children one year of age and older, adolescents, and adults.

In Brazil and Mexico, Crysvita is approved for treatment of XLH in adult and pediatric patients one year of age and older.

Crysvita was approved by the FDA on June 18, 2020 for the treatment of fibroblast growth factor 23 (FGF23)-related hypophosphatemia in tumor-induced osteomalacia (TIO), associated with phosphaturic mesenchymal tumors that cannot be curatively resected or localized in adults and pediatric patients 2 years of age and older.

In Brazil, Colombia, and Mexico, Crysvita is approved for treatment of XLH in adult and pediatric patients one year of age and older.

Crysvita is also approved in the U.S.

by the FDA for the treatment of fibroblast growth factor 23 (FGF23)-related hypophosphatemia in tumor-induced osteomalacia (TIO), associated with phosphaturic mesenchymal tumors that cannot be curatively resected or localized in adults and pediatric patients 2 years of age and older.

The Company has also received FDA approval for Mepsevii® (vestronidase alfa), the first medicine approved for the treatment of children and adults with mucopolysaccharidosis VII (MPS VII), also known as Sly syndrome.

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In Brazil, Mepsevii is approved for the treatment of MPS VII for patients of all ages.

Dojolvi, formerly known as UX007, was approved by FDA on June 30, 2020 for the treatment of pediatric and adult patients severely affected by long-chain fatty acid oxidation disorders (LC-FAOD).

Dojolvi®, formerly known as UX007, is approved in the U.S., Canada, and Brazil for the treatment of pediatric and adult patients severely affected by long-chain fatty acid oxidation disorders (LC-FAOD).

On January 7, 2022, the Company announced a collaboration with Regeneron Pharmaceuticals (Regeneron) to commercialize Evkeeza® (evinacumab) outside of the U.S.

Evkeeza is approved in the U.S.

and the European Economic Area (EEA) for the treatment of homozygous familial hypercholesterolemia (HoFH).

In addition to the approved products, the Company has the following ongoing clinical development programs:

DTX401 is an adeno-associated virus 8 (AAV8) gene therapy product candidate for the treatment of patients with glycogen storage disease type Ia (GSDIa);

and DTX301 is an AAV8 gene therapy product candidate in development for the treatment of patients with ornithine transcarbamylase (OTC) deficiency, the most common urea cycle disorder.

UX143 (setrusumab) which the Company began collaborating on the development with Mereo BioPharma 3 Limited (Mereo) beginning in January 2021, is a fully human monoclonal antibody that inhibits sclerostin, a protein that acts on a key bone-signaling pathway and inhibits the activity of bone-forming cells for the treatment of patients with osteogenesis imperfect (OI).

GTX-102 is an antisense oligonucleotide, or ASO, which the Company is collaborating on the development with GeneTx Biotherapeutics LLC (GeneTx) 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.

DTX301 is an AAV8 gene therapy product candidate in development for the treatment of patients with ornithine transcarbamylase (OTC) deficiency, the most common urea cycle disorder;

UX143 (setrusumab), which is subject to the Company's collaboration agreement with Mereo BioPharma 3 (Mereo), is a fully human monoclonal antibody that inhibits sclerostin, a protein that acts on a key bone-signaling pathway and inhibits the activity of bone-forming cells for the treatment of patients with osteogenesis imperfect (OI);

GTX-102 is an antisense oligonucleotide (ASO), which the Company is collaborating on the development with GeneTx Biotherapeutics LLC (GeneTx) 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;

UX701 is an AAV type 9 gene therapy designed to deliver stable expression of a truncated version of the ATP7B copper transporter following a single intravenous infusion to improve copper distribution and excretion from the body and reverse pathological findings of Wilson liver disease;

The Company operates as one reportable segment.

UX053 is a messenger RNA (mRNA) product candidate designed for the treatment of patients with Glycogen Storage Disease Type III (GSDIII), a disease caused by a glycogen debranching enzyme (AGL) deficiency that results in glycogen accumulation in the liver and muscle.

The Company has sustained operating losses and expects such annual losses to continue over the next several years.

The Company’s ultimate success depends on the outcome of its research and development and commercialization activities, for which it expects to incur additional losses in the future.

Management recognizes that the Company will likely need to raise additional capital to fully implement its business plans.

Through December 31, 2020, the Company has relied primarily on its sale of equity securities, its sale of future royalties, and strategic collaboration arrangements, to finance its operations.

Through December 31, 2021, the Company has relied primarily on its sale of equity securities, its revenue from commercial products, its sale of future royalties, and strategic collaboration arrangements, to finance its operations.

The Company will likely raise additional capital through the issuance of equity, borrowings, or strategic alliances with partner companies.

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All intercompany balances and transactions have been eliminated.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Use of Estimates

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Actual results could differ from those estimates.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Cash, Cash Equivalents, and Restricted Cash

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Cash equivalents consist primarily of amounts invested in money market accounts.

Restricted cash primarily consists of money market accounts used as collateral for the Company’s obligations under its facility leases and the gene therapy building construction project.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statement of cash flows (in thousands):

Restricted cash primarily consists of money market accounts used as collateral for the Company’s obligations under its facility leases and the gene therapy building construction project.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the amounts shown in the Consolidated Statements of Cash Flows (in thousands):

Cash and cash equivalents

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Marketable Debt Securities

All marketable debt securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities.

All marketable debt securities have been classified as “available-for-sale”

and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities.

Management determines the appropriate classification of its investments at the time of purchase and reevaluates such designation as of each balance sheet date.

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In June 2019, the Company entered into an amendment to the Research Collaboration and License Agreement and an Equity Purchase Agreement with Arcturus Therapeutics Holdings Inc.

Pursuant to the Equity Purchase Agreement, the Company purchased 2,400,000 shares of common stock and received an option to purchase an additional 600,000 shares of common stock, which was exercised in May 2020.

In December 2020, the Company sold 800,000 shares .

Pursuant to the Equity Purchase Agreement, the Company purchased 2,400,000 shares of Arcturus common stock and received an option to purchase an additional 600,000 shares of Arcturus common stock, which was exercised in May 2020.

During the years ended December 31, 2021 and 2020 , the Company sold 1,700,000 shares and 800,000 shares, respectively, of Arcturus common stock .

The Company elected to apply the fair value option to account for the equity investment in Arcturus.

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In October 2020, the Company entered into a Research Collaboration and License Agreement, Stock Purchase Agreement and Investor Agreement, with Solid Biosciences Inc.

Pursuant to the Stock Purchase Agreement, the Company purchased 7,825,797 shares of Solid’s common stock.

The investment is being accounted at fair value based on quoted market prices.

The changes in fair value of the equity investments and an option to purchase additional stock are included in the Consolidated Statements of Operations.

License and Research Agreements” for additional details on the transaction.

The changes in fair value of the equity investments are included in the Consolidated Statements of Operations.

See “Note 7.

License and Research Agreements”

for additional details on the transaction.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Concentration of Credit Risk, Credit Losses, and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, and investments.

The Company’s cash, cash equivalents, and investments are held by financial institutions that management believes are of high credit quality.

The Company’s investment policy limits investments to fixed income securities denominated and payable in U.S.

The Company’s cash, cash equivalents, and investments are held by financial institutions that management believes are of high credit quality.

The Company’s investment policy limits investments to fixed income securities denominated and payable in U.S.

dollars such as U.S.

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The Company has not experienced any losses on its deposits of cash and cash equivalents and its accounts are monitored by management to mitigate risk.

The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents, corporate issuers, and other financial instruments, to the extent recorded in the balance sheets .

Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments — Credit Losses, (Topic 326):

Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments —

Credit Losses, (Topic 326):

Measurement of Credit Losses on Financial Instruments, which changed the impairment model for most financial assets and certain other instruments.

For trade receivables and other instruments, the Company uses a new forward-looking

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

expected loss model that generally results in the earlier recognition of allowances for losses.

For trade receivables and other instruments, the Company uses a new forward-looking expected loss model that generally results in the earlier recognition of allowances for losses.

For available-for-sale debt securities with unrealized losses, the losses are recognized as allowances rather than as reductions in the amortized cost of the securities.

The Company is exposed to credit losses primarily through receivables from customers and collaborators and through its available-for-sale debt securities.

The Company’s expected loss allowance methodology for the receivables is developed using historical collection experience, current and future economic market conditions, a review of the current aging status and financial condition of the entities.

Specific allowance amounts are established to record the appropriate allowance for customers that have a higher probability of default.

Balances are written off when determined to be uncollectible.

The Company’s expected loss allowance methodology for the debt securities is developed by reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition.

credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’

current status and financial condition.

The Company considered the current and expected future economic and market conditions surrounding the novel coronavirus (COVID-19) pandemic and determined that the estimate of credit losses was not significantly impacted.

The adoption of the guidance did not have a material impact on the Condensed Consolidated Financial Statements and related disclosures and there was no allowance for losses on available-for-sale debt securities which were attributable to credit risk for the year ended December 31, 2020.

The adoption of the guidance did not have a material impact on the Consolidated Financial Statements and related disclosures and there was no allowance for losses on available-for-sale debt securities which were attributable to credit risk for the years ended December 31, 2021 and 2020.

The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs.

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Depreciation and amortization begins at the time the asset is placed in service.

Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready to be placed in service, at which point the interest costs are amortized as depreciation expense over the life of the underlying asset.

Maintenance and repairs are charged to operations as incurred.

Upon sale or retirement of assets, the cost and related accumulated depreciation or amortization are removed from the balance sheet and the resulting gain or loss, if any, is reflected in operations.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The useful lives of property, plant, and equipment are as follows:

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Intangible Assets

The Company’s intangible assets consist of acquired in-process research and development (IPR&D) and contractual payments made for certain milestones achieved with collaboration partners.

IPR&D assets represent capitalized incomplete research projects that the Company acquired through business combinations.

Such assets are initially measured at their acquisition date fair values and are tested for impairment, until the completion or abandonment of the associated research and development efforts.

If and when development is complete, which generally occurs when regulatory approval to market a product is obtained, the associated assets will be deemed finite-lived and will be amortized over a period that best reflects the economic benefits provided by these assets.

When development of the project is complete, which generally occurs when regulatory approval to market a product is obtained, the associated assets will be deemed finite-lived and will be amortized over a period that best reflects the economic benefits provided by these assets.

The contractual payments made for certain milestones achieved was recorded as an intangible and are amortized over its estimated useful life.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The Company tests its definite and indefinite-lived intangible assets for impairment annually during the fourth quarter and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

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The Company records accruals for estimated costs of research, preclinical and clinical studies and manufacturing development.

These costs are a significant component of the Company’s research and development expenses.

A substantial portion of the Company’s ongoing research and development activities are conducted by third-party service providers, including contract research organizations.

These costs are a significant component of the Company’s research and development expenses.

A substantial portion of the Company’s ongoing research and development activities are conducted by third-party service providers, including contract research organizations.

The Company accrues the costs incurred under its agreements with these third parties based on actual work completed in accordance with agreements established with these third parties.

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The Company records its share of collaboration revenue, net of transfer pricing related to net sales in the period in which such sales occur, if the Company is considered as an agent in the arrangement.

The Company is considered an agent when the collaboration partner controls the product before transfer to the customers and has the ability to direct the use of and obtain substantially all of the remaining benefits from the product.

Funding received related to research and development services and commercialization costs is generally classified as a reduction of research and development expenses and selling, general and administrative expenses, respectively, in the consolidated statement of operations, because the provision of such services for collaborative partners are not considered to be part of the Company’s ongoing major or central operations.

The Company also records royalty revenues under certain of the Company’s license or collaboration agreements in exchange for license of intellectual property.

The Company is considered an agent when the collaboration partner controls the product before transfer to the

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

customers and has the ability to direct the use of and obtain substantially all of the remaining benefits from the product.

Funding received related to research and development services and commercialization costs is generally classified as a reduction of research and development expenses and selling, general and administrative expenses, respectively, in the Consolidated Statements of Operations, because the provision of such services for collaborative partners are not considered to be part of the Company’s ongoing major or central operations.

The Company also records royalty revenues under certain of the Company’s license or collaboration agreements in exchange for license of intellectual property.

If the Company does not have any future performance obligations for these license or collaboration agreements, royalty revenue is recorded as the underlying sales occur.

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For the periods covered in the financial statements presented, there have been no material changes to prior period estimates of revenues and expenses.

The terms of the Company’s collaboration and license agreements may contain multiple performance obligations, which may include licenses and research and development activities.

The Company sold the right to receive certain royalty payments from net sales of Crysvita to RPI Finance Trust (RPI), an affiliate of Royalty Pharma, as further described in “Note 9.

Liability Related to the Sale of Future Royalties”.

The Company records the royalty revenue from the net sales of Crysvita in the applicable European territories on a prospective basis as non-cash royalty revenue in the Consolidated Statements of Operations over the term of the arrangement.

The terms of the Company’s collaboration and license agreements may contain multiple performance obligations, which may include licenses and research and development activities.

The Company evaluates these agreements under ASC 606, Revenue from Contracts with Customers (ASC 606), to determine the distinct performance obligations.

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Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint.

Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved.

Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved.

Total consideration may include nonrefundable upfront license fees, payments for research and development activities, reimbursement of certain third-party costs, payments based upon the achievement of specified milestones, and royalty payments based on product sales derived from the collaboration.

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Under ASC 606, revenue from product sales is recognized at the point in time when the delivery is made and when title and risk of loss transfers to these distributors.

The Company also recognizes revenue from sales of certain products on a “named patient” basis, which are allowed in certain countries prior to the commercial approval of the product.

The Company also recognizes revenue from sales of certain products on a “named patient”

basis, which are allowed in certain countries prior to the commercial approval of the product.

Prior to recognizing revenue, the Company makes estimates of the transaction price, including any variable consideration that is subject to a constraint.

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These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are reviewed periodically and adjusted as necessary.

The Company’s estimates of government mandated rebates, chargebacks, estimated product returns, and other deductions depends on the identification of key customer contract terms and conditions, as well as estimates of sales volumes to different classes of payors.

If actual results vary, the Company may need to adjust these estimates, which could have an effect on earnings in the period of the adjustment.

Non-cash collaboration royalty revenue

Effective January 1, 2020, the Company sold the right to receive certain royalty payments from net sales of Crysvita in the European territories to RPI Finance Trust (RPI), an affiliate of Royalty Pharma, as further described in “Note 10.

Liability Related to the Sale of Future Royalties”.

The Company adopted Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842) as of January 1, 2019 using the modified retrospective method.

The results for years ended December 31, 2019 and 2020 are presented under ASC 842.

The results for the year ended December 31, 2018 were not adjusted and continue to be reported in accordance with historical accounting under prior lease guidance, ASC 840, Leases (Topic 840) .

The Company also elected the package of practical expedients under the transition guidance that will retain the historical lease classification and initial direct costs for any leases that existed prior to adoption of the new guidance and the practical expedient to not separate lease and non-lease components.

If actual results vary, the Company may need to adjust these estimates, which could have a material effect on earnings in the period of the adjustment.

Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases .

The Company determines if an arrangement includes a lease at inception.

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The lease terms may include options to extend or terminate the lease.

The Company recognizes the options to extend the lease as part of the right-of-use lease assets and lease liabilities only if it is reasonably certain that the option would be exercised.

Lease expense for minimum lease payments is recognized on a straight-line basis over the non-cancelable lease term.

As a result of the adoption of the new guidance, effective January 1, 2019, the Company recorded a right-of-use lease asset of $ 16.2 million, a current lease liability of $ 4.5 million, and a non-current lease liability of $ 17.0 million and no cumulative effect adjustment was made to the retained earnings as of the adoption date.

In addition, as of the adoption date, the Company derecognized a net deferred rent obligation of $ 5.2 million.

Leases” for further disclosure.

The Company recognizes the options to extend the lease as part of the right-of-use lease assets and lease liabilities only if it is

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

reasonably certain that the option would be exercised.

Lease expense for minimum lease payments is recognized on a straight-line basis over the non-cancelable lease term.

The Company has elected to not separate lease and non-lease components.

See “Note 8.

Leases”

for further disclosure.

Comprehensive Loss

Comprehensive loss is the change in stockholders’ equity from transactions and other events and circumstances other than those resulting from investments by stockholders and distributions to stockholders.

The Company’s other comprehensive loss is comprised of unrealized gains and losses on investments in available-for-sale securities and foreign currency translation adjustments.

Comprehensive loss is the change in stockholders’

equity from transactions and other events and circumstances other than those resulting from investments by stockholders and distributions to stockholders.

The Company’s other comprehensive loss is comprised of unrealized gains and losses on investments in available-for-sale securities and foreign currency translation adjustments.

Research and Development

Research and development costs are expensed as incurred and consist of salaries and benefits, stock-based compensation expense, lab supplies and facility costs, as well as fees paid to other nonemployees and entities that conduct certain research and development activities on the Company’s behalf.

Amounts incurred in connection with license agreements are also included in research and development expense.

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Stock-Based Compensation

Stock-based awards issued to employees, including stock options, restricted stock units (RSUs), and performance stock units (PSUs) are recorded at fair value as of the grant date and recognized as expense on a straight-line basis over the employee’s requisite service period (generally the vesting period).

PSUs vest only if certain specified criteria are achieved and the employees’ continued service requirements are met;

PSUs vest only if certain specified criteria are achieved and the employees’

continued service requirements are met;

therefore, the expense recognition occurs when the likelihood of the PSUs being earned is deemed probable.

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A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Due to the Company’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance.

In conjunction with Dimension acquisition, a deferred tax liability was recorded reflecting the tax impact of the difference between the book basis and tax basis of acquired IPR&D.

Such deferred income tax liability is not used to offset deferred tax assets when analyzing the Company’s valuation allowance as the acquired IPR&D is considered to have an indefinite life until the Company completes or abandons development of the acquired IPR&D.

The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement.

The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.

To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

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The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1 —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities;

Level 3 —Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s financial instruments consist of Level 1, Level 2, and Level 3 assets.

Level 1 —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 3 —Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s financial instruments consist of Level 1, Level 2, and Level 3 assets.

Where quoted prices are available in an active market, securities are classified as Level 1.

1 unchanged sentence

Government treasury bills are classified as Level 1.

Level 2 assets consist primarily of corporate bonds, asset backed securities, commercial paper and U.S.

Government agency securities based upon quoted market prices for similar movements in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

Level 2 assets consist primarily of corporate bonds, asset backed securities, commercial paper, U.S.

Government Treasury and agency securities, and debt securities in government-sponsored entities based upon quoted market prices for similar movements in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

Where applicable these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third party data providers, including but not limited to, benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.

The Company determines the fair value of its equity investments in Arcturus and Solid by using the quoted market prices, which are Level 1 fair value measurements.

T he fair value of the option to purchase additional shares of Arcturus common stock was based on unobservable inputs that are significant to the measurement of the fair value of the asset and is supported by little or no market data;

accordingly, the fair value of the option is considered a Level 3 financial asset.

The Company measures the Level 3 financial asset by applying the Black-Scholes option pricing method and utilizes the following inputs:

stock price, strike price, volatility, risk free interest rate, and expected term.

The expected term is the Company’s estimated period to purchase additional stock.

The option was exercised in May 2020 and converted to Arcturus common stock.

The following table sets forth the fair value of the Company’s financial assets and liabilities remeasured on a recurring basis based on the three-tier fair value hierarchy (in thousands):

December 31, 2021

1 unchanged sentence

Money market funds

Time deposits

Certificates of deposits and time deposits

Corporate bonds

2 unchanged sentences

Government Treasury and agency securities

Debt securities in government-sponsored entities

Investments in Arcturus and Solid common stock

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

December 31, 2020

1 unchanged sentence

Money market funds

Repurchase agreements

Time deposits

3 unchanged sentences

Government Treasury and agency securities

Equity investment in Arcturus

Investments in Arcturus and Solid common stock

In July 2020, the Company invested $ 2.5 million in a private diagnostic company in the form of a convertible promissory note that matures in two years , if not converted earlier.

The Company was also issued a warrant to purchase up to $ 1.0 million of the entity’s preferred stock.

The Company was also issued a warrant to purchase up to $ 1.0 million of the entity’s

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

preferred stock.

The fair value of the warrant to purchase shares of the entity was based on unobservable inputs that are significant to the measurement of the fair value of the asset and is supported by little or no market data;

accordingly, the warrant is considered a Level 3 financial asset and is remeasured on a nonrecurring basis.

The Company measured the fair value of the warrant by applying the Black-Scholes option pricing method and utilizing the following inputs:

stock price, strike price, volatility, risk-free interest rate, and expected term.

The Company will recognize interest income on the convertible promissory note based on the effective interest rate method over the life of the note.

As of December 31, 2020, the balance of the convertible promissory note was $ 2.1 million, including $ 0.2 million in interest receivable, and was recorded in other assets, and the allocated fair value of the warrant was $ 0.6 million and was recorded in equity investments.

In December 2020, the Company invested $ 1.4 million in Mazi Therapeutics, Inc.

(Mazi), a private pharmaceutical company founded by a current employee of the Company, in the form of a convertible promissory note that matures in two years , if not converted earlier.

accordingly, the warrant is considered a Level 3 financial asset and is remeasured on a nonrecurring basis using a Black-Scholes option pricing model.

As of December 31, 2021 and 2020 , the balance of the convertible promissory note was $ 2.4 million and $ 2.1 million, respectively, including $ 0.5 million and $ 0.2 million, respectively, in interest receivable, and was recorded in other assets, and the allocated fair value of the warrant was $ 0.6 million and $ 0.6 million, respectively, and was recorded in equity investments.

In December 2020, the Company invested $ 1.4 million in a private pharmaceutical company in the form of a convertible promissory note (Note).

In October 2021, pursuant to a qualified financing event, the outstanding balance of the Note was fully converted into 606,506 shares of preferred stock.

The equity investment is recorded at cost less impairment, if any, adjusted for observable price changes in orderly transactions for identical or similar investments.

As of December 31, 2021, the carrying value of the investment was $ 2.1 million.

Balance Sheet Components

3 unchanged sentences

Gross Unrealized

Estimated Fair Value

Money market funds

Time deposits

Certificates of deposit and time deposits

Corporate bonds

2 unchanged sentences

Government Treasury and agency securities

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Debt securities in government-sponsored entities

December 31, 2020

1 unchanged sentence

Amortized Cost

Estimated Fair Value

Money market funds

Repurchase agreements

Time deposits

3 unchanged sentences

Government Treasury and agency securities

At December 31, 2020, the remaining contractual maturities of available-for-sale securities were less than two years .

At December 31, 2021 , the remaining contractual maturities of available-for-sale securities were less than three years .

There have been no significant realized gains or losses on available-for-sale securities for the periods presented.

2 unchanged sentences

Inventory consists of the following (in thousands):

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Work-in-process

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The construction-in-progress balance primarily relates to the construction costs for the gene therapy manufacturing plant in Bedford, Massachusetts.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Accrued Liabilities

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Intangible Assets, net

Subsequent to the acquisition of Dimension Therapeutics, Inc.

(Dimension) in November 2017, the Company recognized IPR&D assets of $ 129.0 million and a contract asset of $ 13.5 million.

The estimated fair value of these intangible assets was measured using Level 3 inputs as of the acquisition date.

The Company has IPR&D assets of $ 129.0 million and $ 129.0 million as of December 31, 2021 and 2020, respectively.

IPR&D assets represent the fair value of acquired programs to develop an AAV gene therapy for OTC deficiency and to develop an AAV gene therapy for glycogen storage disease type Ia.

The fair value of IPR&D assets acquired was determined based on the discounted present value of each research project’s projected cash flows using an income approach, including the application of probability factors related to the likelihood of success of the program reaching final development and commercialization.

Additionally, the projections consider the relevant market sizes and growth factors, estimated future cash flows from product sales resulting from completed products and in-process projects and timing and costs to complete the in-process projects.

1 unchanged sentence

IPR&D assets are considered to be indefinite-life until the completion or abandonment of the associated research and development efforts.

The contract asset represented the fair value of the agreement with Bayer HealthCare LLC to research, develop, and commercialize AAV gene therapy products for treatment of hemophilia A.

The fair value of the contract asset was determined based on the discounted present value of the estimated net future income and was amortized to research and development expense over the research term which was completed in 2019.

Subsequent to the FDA approval of Dojolvi for the treatment of LC-FAOD in June 2020, the Company recorded $ 2.3 million from contractual payments for the achievement of regulatory milestones to certain collaboration partners as intangible assets, which is being amortized over its useful life of seven years .

2 unchanged sentences

No impairment charges have been recognized on intangible assets.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The following table disaggregates total revenues from external customers by collaboration and license revenue and product sales (in thousands):

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Total revenues

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The following table disaggregates total revenues based on geographic location (in thousands):

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The following table presents the activity and ending balances for sales-related accruals and allowances (in thousands):

Year Ended December 31,

Balance of product sales reserve at beginning of year

1 unchanged sentence

The following table presents changes in the contract assets (liabilities) for the years ended December 31, 2021 and 2020 (in thousands):

Balance of contract assets at beginning of period

Balance of contract liabilities at beginning of period

Balance of contract liabilities at end of period, net

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

See Note 7 for additional details on contract assets (liabilities) activities.

The Company’s largest accounts receivable balance was from a collaboration partner and was 71 % and 87 % of the total accounts receivable balance as of December 31, 2020 and 2019, respectively.

The Company’s largest accounts receivable balance was from a collaboration partner and was 71 % and 71 % of the total accounts receivable balance as of December 31, 2021 and 2020 , respectively.

License and Research Agreements

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(KKC or formerly Kyowa Hakko Kirin Co., Ltd.

Under the terms of this collaboration and license agreement, as amended, the Company and KKC collaborate on the development and commercialization of Crysvita in the field of orphan diseases in the United States and Canada, or the profit-share territory, and in the European Union, United Kingdom, and Switzerland, or the European territory, and the Company has the right to develop and commercialize such products in the field of orphan diseases in Mexico and Central and South America, or Latin America.

and Canada, or the profit-share territory, and in the European Union, United Kingdom, and Switzerland, or the European territory, and the Company has the right to develop and commercialize such products in the field of orphan diseases in Mexico and Central and South America, or Latin America.

Development Activities

In the field of orphan diseases, and except for ongoing studies being conducted by KKC, the Company is the lead party for development activities in the profit-share territory and in the European territory until the applicable transition date.

the Company is also the lead party for core development activities conducted in Japan and Korea, for which the core development plan is limited to clinical trials mutually agreed to by the Company and KKC.

The Company shares the costs for development activities in the profit-share territory and the European territory conducted pursuant to the development plan before the applicable transition date equally with KKC.

KKC is responsible for 100 % of the costs for development activities in Japan and Korea.

In April 2023, which is the transition date for the profit-share territory, and on the applicable transition date for the European territory, KKC will become the lead party and be responsible for the costs of the development activities.

In April 2023, which is the transition date for the profit-share territory, KKC will become the lead party and be responsible for the costs of the development activities.

However, the Company will continue to share the costs of the studies commenced prior to the applicable transition date equally with KKC.

Crysvita was approved in the European Union and United Kingdom in February 2018 and was approved by the FDA in April 2018.

The collaboration and license agreements are within the scope of ASC 808, which provides guidance on the presentation and disclosure of collaborative arrangements.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Collaboration revenue related to sales in profit-share territory

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As KKC is the principal in the sale transaction with the customer, the Company recognizes a pro-rata share of collaboration revenue, net of transfer pricing, in the period the sale occurs.

The Company concluded that its portion of KKC’s sales in the profit-share territory is analogous to a royalty and therefore recorded its share as collaboration revenue, similar to a royalty.

Royalty revenue related to sales in European territory

KKC has the commercial responsibility for Crysvita in the European territory.

In December 2019, the Company sold its right to receive royalty payments based on sales in the European territory to Royalty Pharma, effective January 1, 2020, as further described in “Note 10.

Liability Related to the Sale of Future Royalties.” Prior to the Company’s sale of the royalty, the Company received a royalty of up to 10 % on net sales in the European territory, which was recognized as the underlying sales occur.

In December 2019, the Company sold its right to receive royalty payments based on sales in the European territory to Royalty Pharma, effective January 1, 2020, as further described in “Note 9.

Liability Related to the Sale of Future Royalties.”

Prior to the Company’s sale of the royalty, the Company received a royalty of up to 10 % on net sales in the European territory, which was recognized as the underlying sales occur.

Beginning in 2020, the Company records the royalty revenue as non-cash royalty revenues.

During the year ended December 31 , 2020, there was a change in estimate of the revenue reserves related to sales made prior to January 1, 2020, as a result of which, the Company recorded $ 1.5 million as royalty revenue in European territory.

The Company’s share of collaboration and royalty revenue related to Crysvita was as follows (in thousands):

During the years ended December 31, 2021 and 2020 , there was a change in estimate of the revenue reserves related to sales made prior to January 1, 2020, as a result of which, the Company recorded $ 0.2 million and $ 1.5 million, respectively, as royalty revenue in the European territory.

The Company’s share of collaboration and royalty revenue related to Crysvita was as follows (in thousands):

Year Ended December 31,

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The Company is considered the principal in these territories as the Company controls the product before it is transferred to the customer.

Accordingly, the Company records revenue on a gross basis related to the sale of Crysvita once the product is delivered and the risk and title of the product is transferred to the distributor.

The Company recorded product sales of $ 10.4 million, $ 4.3 million, and $ 0.6 million for the years ended December 31, 2020, 2019, and 2018, respectively, net of estimated product returns and other deductions.

Accordingly, the Company records revenue on a gross basis related to the sale of Crysvita once the product is delivered and the risk and title of the product is transferred.

The Company recorded product sales of $ 21.4 million, $ 10.4 million, and $ 4.3 million for the years ended December 31,

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

2021, 2020, and 2019, respectively, net of estimated product returns and other deductions.

KKC has the option to assume responsibility for commercialization efforts in Turkey from the Company, after a certain minimum period.

Under the collaboration agreement, KKC manufactures and supplies Crysvita, which is purchased by the Company for sales in the above territories, and is based on 35 % of the net sales through December 31, 2022 and 30 % thereafter.

Under the collaboration agreement, KKC manufactures and supplies Crysvita, which is purchased by the Company for sales in Latin America based on 35 % of the net sales through December 31, 2022 and 30 % thereafter.

The Company also pays to KKC a low single-digit royalty on net sales in Latin America.

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The Company had accounts receivable from KKC in the amount of $ 20.2 million and $ 16.4 million from profit-share revenue and royalties and other receivables recorded in prepaid and other current assets of $ 16.0 million and $ 9.6 million and accrued liabilities of $ 2.3 million and $ 2.4 million from commercial and development activity reimbursements, as of December 31, 2021 and 2020, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Saint Louis University License Agreement

In November 2010, the Company entered into a license agreement with Saint Louis University (SLU).

Under the terms of this license agreement, SLU granted the Company an exclusive worldwide license to make, have made, use, import, offer for sale, and sell therapeutics related to SLU’s beta-glucuronidase product for use in the treatment of human diseases.

The Company made a milestone payment of $ 0.1 million upon approval of Mepsevii for treatment of MPS 7.

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In September 2012, the Company entered into a license agreement with Baylor Research Institute (BRI).

Under the terms of this license agreement, BRI exclusively licensed to the Company its territories for certain intellectual property related to Dojolvi (triheptanoin) for the treatment of LC-FAOD.

For the years ended December 31, 2020 and 2019, the Company paid $ 2.0 million and $ 0.8 million, respectively, for the attainment of various development milestones related to the development of LC-FAOD.

Under the terms of this license agreement, as amended, BRI exclusively licensed to the Company its territories for certain intellectual property related to Dojolvi (triheptanoin) for the treatment of LC-FAOD.

For the year ended December 31, 2020, the Company paid $ 2.0 million for the attainment of various development milestones related to the development of LC-FAOD.

The Company may be obligated to make additional future payments of up to $ 2.5 million contingent upon attainment of various development milestones relating to the development of LC-FAOD and $ 7.5 million contingent upon attainment of various sales milestones.

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For each disease indication, the Company is obligated to pay an annual maintenance fee of $ 0.1 million and up to $ 9.0 million upon achievement of various milestones, as well as mid to high single-digit royalties on net sales of licensed products and mid-single-digit to low double-digit percentage sublicenses fees, if any.

In March 2020, the Company entered into a license agreement with REGENX, for an exclusive, sublicensable, worldwide license to REGENX’s NAV AAV8 and AAV9 vectors for the development and commercialization of gene therapy treatments for a rare metabolic disorder.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

rare metabolic disorder.

In return for these rights, the Company made an upfront payment of $ 7.0 million, which was recorded as an in-process research and development expense during the year ended December 31, 2020.

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Bayer will have worldwide rights to commercialize the potential future product.

Bayer is responsible for funding certain research and development services performed by the Company in the performance of its obligations under the annual research plan and budget.

Bayer was responsible for funding certain research and development services performed by the Company in the performance of its obligations under the annual research plan and budget.

Under the terms of the agreement with Bayer, the Company is eligible to receive development and commercialization milestone payments of up to $ 232.0 million, as well as, royalty payments ranging in the high single-digit to low double-digit percentages, not exceeding the mid-teens, of net sales of licensed products.

The Company achieved the first milestone in December 2017, the second milestone in April 2018, and has received $ 15.0 million for such milestones to date.

As of the acquisition date of Dimension on November 7, 2017 , the Company valued the contract under ASC 805 and recorded an intangible asset of $ 13.5 million.

The intangible asset was amortized to research and development expense over the research term and was completed in 2019 .

The Company recorded research and development expense of $ 0.2 million and $ 12.3 million for the years ended December 31, 2019 and 2018, respectively, for the amortization of the intangible asset.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The Company evaluated the agreement under ASC 606 and recorded a contract liability as of November 7, 2017 of $ 2.5 million.

It was determined that the performance obligations under the agreement include (i) research and development services to be provided over the research term, (ii) a development and commercialization license, and (iii) the Company’s participation in certain committees.

It was determined that these performance obligations are not distinct in the context of the contract and therefore are a single performance obligation.

The Company calculated the transaction price by including the unconstrained milestones along with the estimated payments for research and development services and recorded $ 0.5 million and $ 23.5 million as collaboration and license revenue for the years ended December 31, 2019 and 2018, respectively, by measuring the progress toward complete satisfaction of the performance obligation using an input measure.

The Company has no further obligations under the contract.

The Company may record future milestone payments as revenue if it becomes probable that a significant reversal in the amount of revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved.

University of Pennsylvania

The Company has an agreement with University of Pennsylvania School of Medicine (Penn) to sponsor certain research related to liver and hemophilia gene therapy.

In consideration for funding such research, Penn granted the Company an option to obtain a worldwide, non-exclusive or exclusive, royalty-bearing license, with the right to sublicense, under certain patent rights conceived, created or reduced to practice in the conduct of the research.

The Company is required to reimburse Penn for filing, prosecuting and maintaining such patent rights unless and until the Company declines to exercise its option.

Penn provides the Company with task-based, scientific reports of progress and results of the research, and granted the Company a royalty-free, nontransferable, non-exclusive right to copy and distribute any research reports furnished to the Company for any reasonable purpose, provided the results are not made publicly available until certain conditions are met, and the right to use, disclose and otherwise exploit the research results for any reasonable purpose, subject to similar restrictions on our public disclosure of the research results.

Otherwise, the sponsored research agreement contains customary confidentiality provisions.

The Company also has a research, collaboration, and license agreement with Penn, which provides the terms for the Company and Penn to collaborate with respect to the pre-clinical development of gene therapy products for the treatment of certain indications.

The Company has a research, collaboration, and license agreement with University of Pennsylvania School of Medicine (Penn) which provides the terms for the Company and Penn to collaborate with respect to the pre-clinical development of gene therapy products for the treatment of certain indications.

Under the agreement, Penn granted the Company an exclusive, worldwide license to certain patent rights arising out of the research program, subject to certain retained rights, and a non-exclusive, worldwide license to certain Penn intellectual property, in each case to research, develop, make, have made, use, sell, offer for sale, commercialize and import licensed products in each indication for the term of the agreement.

The Company will fund the cost of the research program in accordance with a mutually agreed-upon research budget and will be responsible for clinical development, manufacturing and commercialization of each indication.

The Company may be obligated to make milestone payments of up to $ 5.0 million for each indication, if certain development milestones are achieved over time, as well as low to mid-single-digit royalties on net sales of each licensed product.

The Company may also be obligated to make milestone payments of up to $ 25.0 million per approved product if certain commercial milestones are achieved.

The Company may be obligated to make milestone payments of up to $ 5.0 million for each indication, if certain development milestones are achieved over time.

The Company may also be obligated to make milestone payments of up to $ 25.0 million per approved product if certain commercial milestones are achieved, as well as low to mid-single-digit royalties on net sales of each licensed product.

Arcturus Research Collaboration and License Agreement

In October 2015, the Company entered into a Research Collaboration and License Agreement with Arcturus.

The Company and Arcturus are collaborating on the research and development of therapies for select rare diseases.

As consideration for entering into the arrangement, the Company paid Arcturus an upfront fee of $ 10.0 million.

In October 2015, the Company entered into a Research Collaboration and License Agreement with Arcturus Therapeutics Holdings Inc.

(Arcturus) to collaborate on the research and development of therapies for select rare diseases.

Arcturus was responsible for conducting certain research services, funded by the Company, and the Company was responsible for development and commercialization costs.

Pursuant to the agreement, the Company incurred $ 0.4 million, $ 0.8 million, and $ 1.9 million for the years ended December 31, 2020, 2019, and 2018, respectively, in research and development expense for the funding of certain research services received from Arcturus.

In June 2019, the Company entered into an Equity Purchase Agreement and an amendment to the Research Collaboration and License Agreement to expand the field of use and increase the number of disease targets to include mRNA, DNA and siRNA therapeutics for up to 12 rare diseases.

Pursuant to the agreements, the Company paid $ 6.0 million in cash upfront to Arcturus and purchased 2,400,000 shares of Arcturus’ common stock at a stated value of $ 10.00 per share, resulting in a total of $ 30.0 million of consideration paid at the close of the transaction.

As a result, the Company received expanded license rights;

the Arcturus common stock;

an option to purchase an additional 600,000 shares of Arcturus’ common stock at $ 16.00 per share.

The Company also received the right to nominate one member to the Arcturus Board of Directors as well as one Board observer.

In May 2020, the Company exercised the option to purchase 600,000 shares for a total purchase price of $ 9.6 million.

Under the amended license agreement, certain early-stage milestone payments are reduced and the total potential milestone payments are increased due to the expanded number of targets.

Arcturus is also entitled to reimbursement of related research expenses and royalties on commercial sales.

The Company recorded the common stock investment at $ 13.9 million on the transaction date, which was based on the quoted market price on the closing date.

The Company elected to apply the fair value option to account for the equity investment in Arcturus.

The Company also accounted for the option to purchase additional shares of Arcturus common stock at fair value, which was recorded at $ 0.5 million on the transaction date based on the Black-Scholes option pricing method.

The remaining $ 15.6 million of the total $ 30.0 million paid as consideration was attributed to the additional license rights obtained and was recorded as in-process research and development expense.

In December 2020, the Company sold 800,000 shares of Arcturus’ common stock at a weighted-average price of $ 100.81 per share and net proceeds of $ 79.8 million.

On a product-by-product basis, the Company is obligated to make development and regulatory milestone payments of up to $ 24.5 million, and commercial milestone payments of up to $ 45.0 million, if certain milestones are achieved.

For the year ended December 31, 2021, the Company achieved a $ 1.0 million development milestone related to UX053, which was paid with a corresponding credit received from Arcturus for prior research and collaboration activities.

The Company is also obligated to pay Arcturus royalties on any net sales of products incorporating the licensed intellectual property that may range from a mid single-digit to low double-digit percentage.

Pursuant to the agreement, the Company incurred nil , $ 0.4 million, and $ 0.8 million for the years ended December 31, 2021, 2020, and 2019, respectively, in research and development expense for the funding of certain research services received from Arcturus.

In June 2019, the Company entered into an Equity Purchase Agreement and an amendment to the Research Collaboration and License Agreement (License Agreement) to expand the field of use and increase the number of disease targets to include mRNA, DNA and siRNA therapeutics for up to 12 rare diseases.

Pursuant to the agreements, the Company paid $ 6.0 million in cash upfront to Arcturus and purchased 2,400,000 shares of Arcturus’

common stock at a stated value of $ 10.00 per share, resulting in a total of $ 30.0 million of consideration paid at the close of the transaction.

As a result, the Company received expanded license rights under the License Agreement, Arcturus common stock, and an option to purchase an additional 600,000 shares of Arcturus’

common stock at $ 16.00 per share.

In May 2020, the Company exercised its option to purchase 600,000 shares of Arcturus common stock for a total purchase price of $ 9.6 million.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The changes in the fair value of the Company’s equity investment in Arcturus were as follows (in thousands):

During the years ended December 31, 2021 and 2020 , the Company sold 1,700,000 shares and 800,000 shares of Arcturus common stock, at a weighted-average price of $ 47.44 and $ 100.81 , respectively.

As of December 31, 2021 and 2020 , the Company held 500,000 shares and 2,200,000 shares, respectively, of Arcturus common stock.

Due to the decrease in ownership and in accordance with the terms of the Equity Purchase Agreement, the Company no longer had the right to have its director nominee included in the annual slate of Arcturus director nominees and as a result, the Company’s director designee resigned from the Arcturus board of directors effective August 25, 2021.

The Company will continue to apply the fair value option to account for the equity investment.

The changes in the fair value of the Company’s equity investment in Arcturus were as follows (in thousands):

Arcturus common stock

Option to purchase additional shares of Arcturus common stock

Acquisition of equity investment in

Arcturus in June 2019

Change in fair value

Option to purchase Arcturus common stock

December 31, 2019

3 unchanged sentences

December 31, 2020

In August 2019, the Company entered into a Program Agreement and a Unitholder Option Agreement with GeneTx to collaborate on the development of GeneTx’s GTX-102, an ASO for the treatment of Angelman syndrome.

Change in fair value

Sale of shares

December 31, 2021

Pursuant to the terms of the Unitholder Option Agreement, the Company made an upfront payment of $ 20.0 million for an exclusive option to acquire GeneTx, which was exercisable any time prior to 30 days following FDA acceptance of the IND for GTX-102.

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Although GeneTx is a variable interest entity, the Company is not the primary beneficiary as it currently does not have the power to direct the activities that would most significantly impact the economic performance of GeneTx.

Prior to product regulatory approval, all consideration paid to GeneTx represents rights to potential future benefits associated with GeneTx’s in-process research and development activities, which have not reached technological feasibility and have no alternative future use.

Accordingly, for the years ended December 31, 2020 and 2019, the Company recorded the option extension payment of $ 25.0 million and $ 20.0 million upfront payment as an in-process research and development expense, respectively.

Accordingly, for the years ended December 31, 2020 and 2019, the Company recorded the option extension payment of $ 25.0 million and a $ 20.0 million upfront payment as an in-process research and development expense, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Daiichi Sankyo

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(Daiichi Sankyo).

Pursuant to the License Agreement, the Company granted Daiichi Sankyo a non-exclusive license to intellectual property, including know-how and patent applications, with respect to its HeLa producer cell line (PCL) and HEK293 transient transfection manufacturing technology platforms for AAV-based gene therapy products.

Pursuant to the License Agreement, the Company granted Daiichi Sankyo a non-exclusive license to intellectual property, including know-how and patent applications, with respect to its P roducer Cell Line (PCL) and HEK293 transient transfection manufacturing technology platforms for AAV-based gene therapy products.

The Company retains the exclusive right to use the manufacturing technology for its current target indications and additional indications identified now and in the future.

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however, the Company has the option to co-develop and co-commercialize rare disease products at the IND stage.

Ultragenyx may also provide strategic consultation to Daiichi Sankyo on the development of both AAV-based gene therapy products and other products for rare diseases.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Under the terms of the License Agreement, Daiichi Sankyo made an upfront payment of $ 125.0 million and will pay an additional $ 25.0 million upon completion of the technology transfer of the HeLa PCL and HEK293 platforms, as well as single-digit royalties on net sales of products manufactured in either system.

The Company may also provide strategic consultation to Daiichi Sankyo on the development of both AAV-based gene therapy products and other products for rare diseases.

Under the terms of the License Agreement, Daiichi Sankyo made an upfront payment of $ 125.0 million and an additional $ 25.0 million payment upon achievement of the milestones related to technology transfer of the PCL and HEK293 platforms in the fourth quarter of 2021.

Daiichi Sankyo is also obligated to pay a single-digit royalties on net sales of products manufactured in the technology platforms.

Daiichi Sankyo will reimburse the Company for all costs associated with the transfer of the manufacturing technology.

The Company also entered into a Stock Purchase Agreement with Daiichi Sankyo, pursuant to which Daiichi Sankyo purchased 1,243,913 shares of the Company’s common stock in exchange for $ 75.0 million in cash during the first quarter of 2020.

The fair market value of the common stock issued to Daiichi Sankyo was $ 55.3 million based on the stock price of $ 44.43 per share on the date of issuance, resulting in a $ 19.7 million premium on the Stock Purchase Agreement .

In March 2020, the Company also entered into a Stock Purchase Agreement (SPA) with Daiichi Sankyo, pursuant to which Daiichi Sankyo purchased 1,243,913 shares of the Company’s common stock in exchange for $ 75.0 million in cash.

Daiichi Sankyo is also subject to a three-year standstill and restrictions on sale of the shares (subject to customary exceptions or release).

In June 2020, the Company executed a subsequent license agreement (the Sublicense Agreement) with Daiichi Sankyo for transfer of certain technology in consideration for an upfront payment of $ 8.0 million and annual maintenance fees, milestone payments, and royalties on any net sales of products incorporating the licensed intellectual property.

The License Agreement, the Sublicense Agreement, and the Stock Purchase Agreement are being accounted for as one arrangement because they were entered into at or near the same time and negotiated in contemplation of one another.

The Company evaluated the License Agreement and the Sublicense Agreement under ASC 606 and determined that the performance obligations under the agreements are (i) intellectual property with respect to its HeLa PCL and HEK293 transient transfection manufacturing technology platforms together with the initial technical assistance and technology transfer services, which are expected to be completed in the fourth quarter of 2021, and (ii) the transfer of any know-how and improvements after the completion of the initial technology transfer through the end of the three year technology transfer period ending March 2023.

The Company determined that the total transaction price of the License Agreement was $ 183.7 million which was comprised of the $ 19.7 million premium from the Stock Purchase Agreement , the $ 125.0 million upfront payment, the $ 25.0 million in unconstrained milestone payments, $ 8.0 million from the Sublicense Agreement, and the $ 6.0 million estimated reimbursement amount for delivering the license and technology services.

The License Agreement, the Sublicense Agreement, and the SPA are being accounted for as one arrangement because they were entered into at or near the same time and were negotiated in contemplation of one another.

The Company evaluated the License Agreement and the Sublicense Agreement under ASC 606 and determined that the performance obligations under the agreements are (i) intellectual property with respect to its PCL and HEK293 transient transfection manufacturing technology platforms together with the initial technical assistance and technology transfer services, which were substantially completed in the fourth quarter of 2021, and (ii) the transfer of any know-how and improvements after the completion of the initial technology transfer.

As of December 31, 2021, the Company has determined that the total transaction price of the License Agreement was $ 183.3 million which was comprised of the $ 19.7 million premium from the Stock Purchase Agreement, the $ 125.0 million upfront payment, the $ 25.0 million in unconstrained milestone payments, $ 8.0 million from the Sublicense Agreement, and the $ 5.6 million estimated reimbursement amount for delivering the license and technology services.

Total revenue recognized under the license agreement through December 31, 2021 is $ 174.2 million.

The Company allocated the total transaction price to the two performance obligations on a relative stand-alone selling price basis.

Revenue allocated to the intellectual property and the technology transfer services will be recognized over an initial period which is estimated to end in the fourth quarter of 2021, measuring the progress toward complete satisfaction of the individual performance obligation using an input measure.

Revenue allocated to the intellectual property and the technology transfer services is being recognized over an initial period which is substantially complete and was based on measuring the progress toward complete satisfaction of the individual performance obligation using an input measure.

Revenue for know-how and improvements after the completion of technology transfer will be recognized on a straight-line basis over the remaining technology transfer period, which ends in March 2023, as it is expected that Daiichi Sankyo will receive and consume the benefits consistently throughout the period.

The estimated period to complete the technology transfer services and the related milestones payments, if any, are subject to revised estimates which could be impacted by limitations or delays from the COVID-19 pandemic, successful scale-up of the manufacturing, and other changes that may impact timing.

Royalties from commercial sales will be accounted for as revenue upon achievement of such sales, assuming all other revenue recognition criteria are met.

For the year ended December 31, 2020, the Company recognized $ 89.2 million in revenue related to this arrangement.

Accordingly, the Company had recorded $ 66.6 million as contract liabilities, net, as of December 31 , 2020.

The Company recorded an accounts receivable related to the License Agreement of $ 1.2 million as of December 31, 2020.

For the years ended December 31, 2021 and 2020 , the Company recognized $ 85.0 million and $ 89.2 million, respectively, in revenue related to this arrangement.

The Company had recorded contract liabilities of $ 9.1 million and $ 66.6 million and an accounts receivable related to the above agreements of $ 0.1 million and $ 1.2 million, respectively, as of December 31, 2021 and 2020.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Solid Biosciences, Inc.

In October 2020, the Company entered into a strategic Collaboration and License Agreement with Solid Biosciences Inc., or Solid, and received an exclusive license for any pharmaceutical product that expresses Solid’s proprietary microdystrophin construct from AAV8 and variants thereof in clade E for use in the treatment of Duchenne muscular dystrophy and other diseases resulting from lack of functional dystrophin, including Becker muscular dystrophy.

The Company will collaborate to develop products that combine Solid’s differentiated microdystrophin construct, the Company’s HeLa PCL manufacturing platform, and the Company’s AAV8 variants.

Solid will also provide development support and was granted an exclusive option to co-invest in products the Company develops for profit share participation in certain territories.

In October 2020, the Company entered into a strategic Collaboration and License Agreement with Solid Biosciences Inc.

(Solid), and received an exclusive license for any pharmaceutical product that expresses Solid’s proprietary microdystrophin construct from AAV8 and variants thereof in clade E for use in the treatment of Duchenne muscular dystrophy and other diseases resulting from lack of functional dystrophin, including Becker muscular dystrophy.

The Company is collaborating to develop products that combine Solid’s differentiated microdystrophin construct, the Company’s PCL manufacturing platform, and the Company’s AAV8 variants.

Solid is providing development support and was granted an exclusive option to co-invest in products the Company develops for profit share participation in certain territories.

On a product-by-product basis, the Company may be obligated to make development milestone payments of up to $ 25.0 million, regulatory milestone payments of up to $ 65.0 million, and commercial milestone payments of up to $ 165.0 million, if such milestones are achieved, as well as royalties on any net sales of products incorporating the licensed intellectual property that range from a low to mid-double-digit percentage.

The royalty rate changes to mid to high double-digit percentage if Solid decides to co-invest in the product.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The Company also entered into a Stock Purchase Agreement and the Investor Agreement with Solid, pursuant to which, the Company purchased 7,825,797 shares of Solid’s common stock for an aggregate purchase price of $ 40.0 million.

Subject to the terms of the Investor Agreement, the Company is restricted from selling, transferring or otherwise disposing of the shares without the prior approval of Solid until the earlier of (i) 18 months following the closing of the transaction, (ii) the termination of the Collaboration and License Agreement and (iii) certain other specified events.

The Company also agreed to customary standstill restrictions in accordance with the terms of the Investor Agreement until the earlier of (a) 24 months after the closing of the transaction and (b) certain specified events.

The Company’s investment in Solid is being accounted at fair value, as the fair value is readily determinable.

The Company recorded the common stock investment at $ 26.8 million on the transaction date, which was based on the quoted market price on the closing date.

Although Solid is a variable interest entity, the Company is not the primary beneficiary as it does not have the power to direct the activities that would most significantly impact the economic performance of Solid.

Prior to the achievement of certain development milestones, all consideration paid to Solid represents rights to potential future benefits associated with Solid’s in-process research and development activities, which have not reached technological feasibility and have no alternative future use.

Accordingly, the remaining $ 13.2 million of the total $ 40.0 million paid as consideration was attributed to the license rights obtained and was recorded as in-process research and development expense during the year ended December 31, 2020.

The changes in the fair value of the Company’s investment in Solid’s common stock were as follows (in thousands):

Solid common stock

3 unchanged sentences

December 31, 2020

As described in “Note 2.

Summary of Significant Accounting Policies”, the Company adopted Topic 842 as of January 1, 2019.

Prior period amounts have not been adjusted and continue to be reported in accordance with historic accounting under Topic 840 .

Change in fair value

December 31, 2021

The Company leases office space and research, testing and manufacturing laboratory space in various facilities in Novato and Brisbane, California, in Cambridge and Woburn, Massachusetts, and in certain foreign countries, under operating agreements expiring at various dates through 2028 .

3 unchanged sentences

The variable lease expense primarily consists of common area maintenance and other operating costs.

The Company recognizes rent expense on a straight-line basis over the noncancelable term of its operating leases.

Prior to adoption of Topic 842 , under Topic 840 , rent expense was $ 6.4 million during the year ended December 31, 2018.

The components of lease expense were as follows (in thousands):

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31,

3 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities for the year ended December 31, 2021 was $ 11.8 million and was included in net cash used in operating activities in the Consolidated Statements of Cash Flows.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Future minimum lease payments under non-cancellable leases as of December 31, 2021 were as follows (in thousands):

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Lease liabilities, current

Lease liabilities, non-current

Lease liabilities , non-curre nt

Lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term.

As of December 31, 2021 , the weighted-average remaining operating and financing lease terms were 3.84 years and 3.88 years, respectively, and the weighted-average discount rates used to determine the lease liability for operating and financing leases were 6.64 % and 5.44 %, respectively.

Gain from Sale of Priority Review Vouchers

In January 2018, the Company completed the sale of a Rare Pediatric Disease Priority Review Voucher (PRV) it received in connection with the approval of Mepsevii for $ 130.0 million.

In June 2018, the Company also completed the sale of the PRV it received in connection with the approval of Crysvita for $ 80.6 million, net, which was shared equally with KKC.

As the PRVs did not have a carrying value, the gain recognized was equal to the net proceeds received.

The Company recorded $ 170.3 million for its portion of the net proceeds for the year ended December 31, 2018, as a gain from the sale of the priority review vouchers.

Liability Related to the Sale of Future Royalties

In December 2019, the Company entered into a Royalty Purchase Agreement with RPI and RPI paid $ 320.0 million to the Company in consideration for the right to receive royalty payments effective January 1, 2020, arising from the net sales of Crysvita in the European Union, the United Kingdom, and Switzerland under the terms of the Company’s Collaboration and License Agreement with KKC dated August 29, 2013, as amended.

In December 2019, the Company entered into a Royalty Purchase Agreement with RPI.

Pursuant to the agreement, RPI paid $ 320.0 million to the Company in consideration for the right to receive royalty payments effective January 1, 2020, arising from the net sales of Crysvita in the European Union, the United Kingdom, and Switzerland under the terms of the Company’s Collaboration and License Agreement with KKC dated August 29, 2013, as amended.

The agreement with RPI will automatically terminate, and the payment of royalties to RPI will cease, in the event aggregate royalty payments received by RPI are equal to or greater than $ 608.0 million prior to December 31, 2030, or in the event aggregate royalty payments received by RPI are less than $ 608.0 million prior to December 31, 2030, when aggregate royalty payments received by RPI are equal to $ 800.0 million.

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The Company periodically assesses the expected royalty payments using a combination of historical results, internal projections and forecasts from external sources.

To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments is materially different than its original estimates, the Company will prospectively adjust the amortization of the liability and the effective interest rate.

For the three months ended December 31, 2020, the effective annual interest rate was approximately 9.8 %.

There are a number of factors that could materially affect the amount and timing of royalty payments from KKC in the applicable European territories, most of which are not within the Company’s control.

Such factors include, but are not limited to, the success of KKC’s sales and promotion of Crysvita, changing standards of care, delays or disruptions related to the COVID-19 pandemic, the introduction of competing products, pricing for reimbursement in various European territories, manufacturing or other delays, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of Crysvita, significant changes in foreign exchange rates as the royalty payments are made in U.S.

dollars (USD) while significant portions of the underlying European sales of Crysvita are made in currencies other than USD, and other events or circumstances that could result in reduced royalty payments from European sales of Crysvita, all of which would result in a reduction of non-cash royalty

The Company's effective annual interest rate was approximately 9.6 % as of December 31, 2021.

dollars (USD) while significant

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

revenue and the non-cash interest expense over the life of the arrangement.

portions of the underlying European sales of Crysvita are made in currencies other than USD, and other events or circumstances that could result in reduced royalty payments from European sales of Crysvita, all of which would result in a reduction of non-cash royalty revenue and the non-cash interest expense over the life of the arrangement.

Conversely, if sales of Crysvita in Europe are more than expected, the non-cash royalty revenue and the non-cash interest expense recorded by the Company would be greater over the term of the arrangement.

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of future royalties

Proceeds from sale of future royalties

in December 2019

December 31, 2019

Non-cash collaboration royalty revenue

Non-cash interest expense

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At-the-Market Offerings

In July 2017, the Company entered into an additional ATM sales agreement with Cowen whereby the Company could sell up to $ 150.0 million in aggregate proceeds of common stock from time to time, through Cowen as its sales agent.

During the years ended December 31, 2020, 2019, and 2018, the Company sold 283,333 , 468,685 , and 640,257 shares of common stock, respectively, resulting in net proceeds of approximately $ 20.4 million, $ 24.8 million, and $ 38.1 million, respectively, after commissions and other offering costs.

As of June 30 , 2020 , the Company completed the sale of all available amounts under the ATM facility.

In July 2017, the Company entered into an at-the-market (ATM) sales agreement with Cowen and Company, LLC (Cowen) whereby the Company could sell up to $ 150.0 million in aggregate proceeds of common stock from time to time, through Cowen as its sales agent.

During the years ended December 31, 2020 and 2019, the Company sold 283,333 and 468,685 shares of common stock, respectively, resulting in net proceeds of approximately $ 20.4 million and $ 24.8 million, respectively, after commissions and other offering costs.

T he Company has completed the sale of all available amounts under this ATM facility.

In May 2021, the Company entered into an Open Market Sale Agreement with Jefferies LLC (Jefferies) pursuant to which the Company may offer and sell shares of the Company’s common stock having an aggregate offering proceeds up to $ 350.0 million, from time to time, in ATM offerings through Jefferies.

For the year ended December 31, 2021 , the Company sold 1,050,372 shares under the arrangement resulting in net proceeds of approximately $ 78.9 million.

Underwritten Public Offering

In January 2018, the Company completed an underwritten public offering in which 5,043,860 shares of common stock were sold, which includes 657,895 shares purchased by the underwriters pursuant to an option granted to them in connection with the offering, at a public offering price of $ 57.00 per share.

The total proceeds that the Company received from the offering were approximately $ 271.0 million, net of underwriting discounts and commissions.

In February 2019, the Company completed an underwritten public offering in which 5,833,333 shares of common stock were sold, which included 760,869 shares purchased by the underwriters pursuant to an option granted to them in connection with the offering, at a public offering price of $ 60.00 per share.

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Common Stock Warrants

As of December 31, 2019 and 2018, there was an aggregate of 149,700 of common stock warrants outstanding with exercise price of $ 3.01 and expiration dates in 2020 and 2021 .

As of December 31, 2019, there was an aggregate of 149,700 of common stock warrants outstanding with exercise price of $ 3.01 and expiration dates in 2020 and 2021 .

In March 2020, all of the outstanding common stock warrants were exercised.

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The 2014 Plan provides for automatic annual increases in shares available for grant, beginning on January 1, 2015 through January 1, 2024 .

Under the terms of the 2014 Plan, awards may be granted at an exercise price not less than fair market value.

In February 2021, the Company adopted the Employment Inducement Plan (the Inducement Plan), with a maximum of 500,000 shares available for grant under the Inducement Plan.

Under the terms of the 2014 Plan and Inducement Plan, awards may be granted at an exercise price not less than fair market value.

For employees holding more than 10 % of the voting rights of all classes of stock, the exercise prices for awards must be at least 110 % of fair market of the common stock on the grant date, as determined by the board of directors.

The term of an award granted under the 2014 Plan may not exceed ten years .

The term of an award granted under the 2014 Plan and Inducement Plan may not exceed ten years .

Typically, the vesting schedule for option grants to the employees provides that 1/4 of the grant vests upon the first anniversary of the date of grant, with the remainder of the shares vesting monthly thereafter at a rate of 1/48 of the total shares subject to the option.

Typically, the vesting schedule for RSU grants provides that 1/4 of the grant vests upon the annual anniversary of the date of grant over the period of four years .

As part of the acquisition of Dimension, the Company assumed an equivalent 639,897 options to purchase shares of common stock of the Company from the equity plans of Dimension.

No further grants subsequent to the acquisition are available under these equity plans.

As of December 31, 2020, an aggregate of 10,878,499 shares of common stock have been authorized for issuance under the 2011 Plan, the 2014 Plan, and the assumed equity awards from the Dimension plans.

As of December 31, 2021 , an aggregate of 12,462,795 shares of common stock have been authorized for issuance under the 2011 Plan, the 2014 Plan, and the Inducement Plan.

Stock Option Activity

The following table summarizes activity under the Company’s stock option plans, including the 2011 Plan, the 2014 Plan, the assumed equity awards from the Dimension plans and related information:

The following table summarizes activity under the Company’s stock option plans and related information:

Options Outstanding

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(In thousands)

Outstanding — December 31, 2017

Outstanding —

December 31, 2018

Options granted

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Options cancelled

Outstanding — December 31, 2018

Outstanding —

December 31, 2019

Options granted

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Options cancelled

Outstanding — December 31, 2019

Outstanding —

December 31, 2020

Options granted

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Options cancelled

Outstanding — December 31, 2020

Vested and exercisable — December 31, 2020

Vested and expected to vest — December 31, 2020

The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock.

Outstanding —

December 31, 2021

Vested and exercisable —

December 31, 2021

Vested and expected to vest —

December 31, 2021

The total intrinsic value of options exercised during the years ended December 31, 2021, 2020, and 2019 was $ 38.3 million, $ 56.9 million, and $ 6.5 million, respectively.

Cash received from the exercise of options was $ 36.6 million, $ 88.1 million, and $ 7.7 million as of December 31, 2021, 2020, and 2019, respectively.

The weighted-average estimated fair value of stock options granted was $ 70.84 , $ 35.22 , and $ 37.15 per share of the Company’s common stock during the years ended December 31, 2021, 2020, and 2019, respectively.

The total estimated grant date fair value of options vested during the years ended December 31, 2021, 2020, and 2019 was $ 48.1 million, $ 45.4 million, and $ 45.3 million, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The weighted-average estimated fair value of stock options granted was $ 35.22 , $ 37.15 and $ 33.32 per share of the Company’s common stock during the years ended December 31, 2020, 2019, and 2018, respectively.

The total estimated grant date fair value of options vested during the years ended December 31, 2020, 2019, and 2018 was $ 45.4 million, $ 45.3 million, and $ 51.7 million, respectively.

Restricted Stock Units

The following table summarizes activity under the Company’s Restricted Stock Units (RSUs) from the 2014 Plan and related information:

The following table summarizes activity under the Company’s Restricted Stock Units (RSU) plans and related information:

RSUs Outstanding

Weighted- Average Grant Date Fair Value

Unvested — December 31, 2017

Unvested —

December 31, 2018

RSUs cancelled

Unvested — December 31, 2018

Unvested —

December 31, 2019

RSUs cancelled

Unvested — December 31, 2019

Unvested —

December 31, 2020

RSUs cancelled

Unvested — December 31, 2020

The fair value of the RSUs is determined on the grant date based on the fair value of the Company’s common stock.

Unvested —

December 31, 2021

The fair value of the RSUs is determined on the grant date based on the fair value of the Company’s common stock.

The fair value of the RSUs is recognized as expense ratably over the vesting period of one to four years .

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Performance Stock Units

In December 2017, the Company began granting performance stock units (PSUs) to certain employees.

The following table summarizes activity under the Company’s PSUs from the 2014 Plan and related information:

The following table summarizes activity under the Company’s Performance Stock Units (PSUs) from the 2014 Plan and related information:

PSUs Outstanding

Weighted- Average Grant Date Fair Value

Unvested — December 31, 2017

Unvested —

December 31, 2018

PSUs cancelled

Unvested — December 31, 2018

Unvested —

December 31, 2019

PSUs cancelled

Unvested — December 31, 2019

Unvested —

December 31, 2020

PSUs cancelled

Unvested — December 31, 2020

Unvested —

December 31, 2021

The fair value of the PSUs is determined on the grant date based on the fair value of the Company’s common stock, except for certain PSUs with a market vesting condition, for which fair value is estimated using a Monte Carlo simulation model.

PSUs are subject to vest only if certain specified criteria are achieved and the employees’

continued service with the Company after achievement of the specified criteria.

For certain PSUs, the number of PSUs that may vest are also subject to the achievement of certain specified criteria, including both performance conditions and market conditions.

As of December 31, 2021, the specified criteria were deemed probable of achievement or already achieved.

Stock-based compensation for PSUs is recognized over the service period beginning in the period the Company determines it is probable that the performance criteria will be achieved.

The total grant date fair value of the PSUs vested during the years ended December 31, 2021, 2020, and 2019 was $ 9.2 million, $ 10.3 million, and $ 3.2 million, respectively, with an aggregate intrinsic value of the shares of $ 18.9 million, $ 14.4 million and $ 4.2 million, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The fair value of the PSUs is determined on the grant date based on the fair value of the Company’s common stock.

PSUs are subject to vest only if certain specified criteria are achieved and the employees’ continued service with the Company after achievement of the specified criteria.

For certain PSUs, the number of PSUs that may vest are also subject to the achievement of certain specified criteria.

As of December 31, 2020, the specified criteria were deemed probable of achievement or already achieved.

Stock-based compensation for these PSUs is recognized over the service period beginning in the period the Company determines it is probable that the performance criteria will be achieved.

The total grant date fair value of the PSUs vested during the years ended December 31, 2020 and 2019 was $ 10.3 million and $ 3.2 million, respectively, with an aggregate intrinsic value of the shares of $ 14.4 million and $ 4.2 million, respectively.

Employee Stock Purchase Plan

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Eligible employees may purchase common stock at 85 % of the lesser of the fair market value of common stock on the offering date or the purchase date with a six-month look-back feature.

ESPP purchases are settled with common stock from the ESPP’s previously authorized and available pool of shares.

During the year ended December 31, 2021 , the Company issued 69,738 shares of common stock under the ESPP.

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Each of these inputs is subjective and generally requires significant judgment to determine.

Expected Term —The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

Expected Volatility —The Company’s expected volatility is based on historical volatility over the look-back period corresponding to the expected term.

Risk-Free Interest Rate —The risk-free interest rate is based on the U.S.

Expected Volatility —The Company’s expected volatility is based on historical volatility over the look-back period corresponding to the expected term.

Risk-Free Interest Rate —The risk-free interest rate is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividend —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock.

Therefore, the Company used an expected dividend yield of zero.

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Expected dividend rate

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Defined Contribution Plan

The Company sponsors a retirement plan in which substantially all of its full-time employees in the United States and certain other foreign countries are eligible to participate.

The Company sponsors a retirement plan in which substantially all of its full-time employees in the U.S.

and certain other foreign countries are eligible to participate.

Eligible participants may contribute a percentage of their annual compensation to this plan, subject to statutory limitations.

The Company recorded $ 5.5 million, $ 4.3 million, and $ 3.6 million as contribution expenses for the years ended December 31, 2021, 2020, and 2019 , respectively.

The components of the Company’s loss before income taxes were as follows (in thousands):

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31,

Total loss before income taxes

The components of the Company’s income tax provision were as follows (in thousands):

Year Ended December 31,

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Liability related to sale of future royalties

Basis difference in equity investments

Gross deferred tax assets

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Net deferred tax liabilities

As of December 31, 2020 and 2019, the Company had approximately $ 750.2 million and $ 549.9 million of federal net operating loss carryforwards available to reduce future taxable income that will begin to expire in 2032 .

As of December 31, 2020 and 2019, the Company had approximately $ 616.8 million and $ 520.2 million of state net operating loss carryforwards available to reduce future taxable income that will begin to expire in 2031 .

As of December 31, 2020 and 2019, the Company had federal research tax credit carryforwards of $ 17.7 million and $ 11.7 million available to reduce future tax liabilities that will begin to expire in 2030 .

As of December 31, 2020 and 2019, the Company had state research credit carryforwards of $ 34.5 million and $ 25.5 million available to reduce future tax liabilities that will be carried forward indefinitely.

As of December 31, 2021 and 2020 , the Company had approximately $ 1,085.4 million and $ 750.2 million, respectively, of federal net operating loss carryforwards available to reduce future taxable income that will begin to expire in 2031 .

As of December 31, 2021 and 2020 , the Company had approximately $ 777.0 million and $ 616.8 million, respectively, of state net operating loss carryforwards available to reduce future taxable income that will begin to expire in 2031 .

As of December 31, 2021 and 2020 , the Company had federal research tax credit carryforwards of $ 22.9 million and $ 17.7 million, respectively, available to reduce future tax liabilities that will begin to expire in 2030 .

As of December 31, 2021 and 2020 , the Company had state research credit carryforwards of $ 44.6 million and $ 34.5 million, respectively, available to reduce future tax liabilities that will be carried forward indefinitely.

As of December 31, 2021 and 2020 , the Company had federal Orphan Drug Credits of $ 208.1 million and $ 179.8 million available to reduce future tax liabilities that will begin to expire in 2031 .

The Company’s ability to use net operating loss and tax credit carryforwards to reduce future taxable income and liabilities may be subject to annual limitations pursuant to Internal Revenue Code Sections 382 and 383 as a result of ownership changes in the past and future.

As a result of ownership changes in 2012 and 2011, $ 3.6 million of federal net operating loss carryforwards, $ 3.6 million of state net operating loss carryforwards, and $ 0.2 million of federal tax credits are permanently limited.

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Based upon information available through the reporting date, the Company is not aware of any other changes in ownership that would result in material limitations under Section 382 as of December 31, 2021.

The valuation allowance increased by $ 74.3 million and $ 125.1 million during the year ended December 31, 2020 and 2019, respectively.

The valuation allowance increased by $ 139.5 million and $ 74.3 million during the years ended December 31, 2021 and 2020, respectively.

The Company recorded unrecognized tax benefits for uncertainties in income taxes.

A reconciliation of the Company’s unrecognized tax benefits follows (in thousands):

Balance at beginning of year

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Notes to Consolidated Financial Statements (continued)

The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized.

The Company has elected to include interest and penalties as a component of tax expense.

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The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next year.

It is the Company’s intention to reinvest the earnings of its non-U.S.

subsidiaries in their operations.

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The Company files income tax returns in the U.S.

federal, California, and other state tax jurisdictions.

federal, forty state tax jurisdictions, and ten foreign countries.

The federal and state income tax returns from inception to December 31, 2021 remain subject to examination.

6 unchanged sentences

Manufacturing and Services

Land and Building Construction

Leases” for lease commitments.

The terms of certain of the Company’s licenses, royalties, development and collaboration agreements, as well as other research and development activities, require the Company to pay potential future milestone payments based on product development success.

The amount and timing of such obligations are unknown or uncertain.

These potential obligations are further described in “Note 7.

License and Research Agreements”.

See “Note 8.

Leases”

for lease commitments.

Contingencies

3 unchanged sentences

Guarantees and Indemnifications

The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws.

The term of the indemnification period lasts as long as a director may be subject to any proceeding arising out of acts or omissions of such director in such capacity.

1 unchanged sentence

however, the Company currently holds director liability insurance.

This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid.

The Company believes that the fair value of these indemnification obligations is minimal.

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Cumulative foreign currency translation adjustment

Unrealized gain on securities available-for-sale

Total accumulated other comprehensive income

Quarterly Financial Data (unaudited)

The following table presents certain unaudited quarterly financial information.

This information has been prepared on the same basis as the audited financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein (in thousands, except per share data):

September 30,

Operating expenses

Change in fair value of equity investments

Net income (loss)

Net income (loss) per share, basic

Net income (loss) per share, diluted

September 30,

Operating expenses

Change in fair value of equity investments

Net loss per share, basic and diluted

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Subsequent Event

In December 2020, the Company entered into a License and Collaboration Agreement with Mereo BioPharma 3 Limited (Mereo) to collaborate on the development of setrusumab.

Under the terms of the agreement, the Company will lead future global development of setrusumab in both pediatric and adult patients with Osteogenesis Imperfecta, and was granted an exclusive license to develop and commercialize setrusumab in the U.S., Turkey, and the rest of the world, excluding the European Economic Area, United Kingdom, and Switzerland (the Mereo territory), where Mereo retains commercial rights.

Each party will be responsible for post-marketing commitments and commercial supply in their respective territories.

Upon the closing of the transaction under the agreement in January 2021, the Company made a payment of $ 50.0 million to Mereo and will be required to make payments of up to $ 254.0 million upon the achievement of certain clinical, regulatory, and commercial milestones.

The Company will pay for all global development costs as well as tiered double-digit percentage royalties to Mereo on net sales in the U.S., Turkey, and the rest of the world, and Mereo will pay the Company a fixed double-digit percentage royalty on net sales in the Mereo Territory.

Unrealized gain (loss) on securities available-for-sale

Total accumulated other comprehensive income (loss)

Subsequent Events

On January 7, 2022, the Company announced a collaboration with Regeneron to commercialize Evkeeza for HoFH outside of the U.S.

Under the terms of the agreement, Regeneron received a $ 30.0 million upfront payment and is eligible to receive up to $ 63.0 million in future milestone payments, contingent upon the achievement of certain regulatory and sales milestones.

Pursuant to the terms of the agreement, the Company received the rights to develop, commercialize and distribute the product in countries outside of the U.S.

and will make payments to Regeneron based on net sales of the product.

The Company will share in certain costs for global trials led by Regeneron and also have the right to opt into other potential indications.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures