What changed in this filing

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Item 9A. Controls and Procedures

2023-02-17 compared with 2022-02-15 · 440 added, 397 removed, 1046 unchanged (44% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

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”

Management carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal 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.

Based on this evaluation, our Principal Executive Officer and Principal 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, 2022.

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.

In designing and evaluating the disclosure controls and procedures, our management recognizes 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 applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management’s Annual Report on Internal Control Over Financial Reporting

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Management believes that the COSO framework is a suitable framework for its evaluation of financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of our internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 and has concluded that such internal control over financial reporting is effective.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 and has concluded that as of such date, our internal control over financial reporting was effective.

Our independent registered public accounting firm, Ernst & Young LLP, has audited the financial statements included in this Annual Report and has issued a report on the effectiveness of our internal control over financial reporting.

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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, 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.

as of December 31, 2022 and 2021, 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, 2022, and the related notes, and our report dated February 16, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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/s/ Ernst & Young LLP

Redwood City, California

San Mateo, California

February 16, 2023

3 unchanged sentences

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.”

Except as set forth below, the information required by this Item is incorporated herein by reference to information in the proxy statement for our 2023 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, or the “2023 Proxy Statement”, including under the headings “Nominees and Incumbent Directors,”

“Executive Officers,”

““Board of Directors and Committees,”

and, as applicable, “Delinquent Section 16(a) Beneficial Ownership 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 .

Our Code of Ethics is posted on our website located at https://ir.ultragenyx.com/ under “Corporate Governance”.

We intend to disclose future amendments to certain provisions of the Code of Ethics, and waivers of the Code of Ethics granted to executive officers and directors, on the website within four business days following the date of the amendment or waiver.

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“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.”

and “Board of Directors and Committees”

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

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Description of Common Stock

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

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

and Jefferies LLC

35 unchanged sentences

and Kyowa Kirin Co., Ltd.

Amendment No.

12 to Collaboration and License Agreement, effective as of September 29, 2022, between Ultragenyx Pharmaceutical Inc.

and Kyowa Kirin Co., Ltd.

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

4 unchanged sentences

and Saint Louis University

License Agreement, dated October 30, 2013, by and between Dimension Therapeutics, Inc.

License Agreement, dated October 30, 2013, between Dimension Therapeutics, Inc.

and REGENXBIO Inc.

(f/k/a ReGenX Biosciences, LLC), as amended

Option and License Agreement, dated March 10, 2015, by and between Dimension Therapeutics, Inc.

Option and License Agreement, dated March 10, 2015, between Dimension Therapeutics, Inc.

and REGENXBIO Inc.

First Amendment to Option and License Agreement, dated March 18, 2019, by and between REGENXBIO, Inc.

First Amendment to Option and License Agreement, dated March 18, 2019, between REGENXBIO, Inc.

and Ultragenyx Pharmaceutical Inc.

(as assignee of Dimension Therapeutics, Inc.)

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

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

and Ultragenyx Pharmaceutical Inc.

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

and Bayer Healthcare LLC

Research, Collaboration and License Agreement, dated as of May 5, 2016, by and between Dimension Therapeutics, Inc.

Research, Collaboration and License Agreement, dated as of May 5, 2016, between Dimension Therapeutics, Inc.

and The Trustees of the University of Pennsylvania, as amended

3rd Amendment to Research, Collaboration and License Agreement, entered into as of October 30, 2017, by and between Dimension Therapeutics, Inc.

3rd Amendment to Research, Collaboration and License Agreement, entered into as of October 30, 2017, between Dimension Therapeutics, Inc.

and The Trustees of the University of Pennsylvania

1 unchanged sentence

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 Master Service Agreement –

Drug Product, effective February 22, 2021, between Ultragenyx Pharmaceutical Inc.

and BSP Pharmaceuticals S.p.A

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

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and RPI Finance Trust

Royalty Purchase Agreement, dated as of July 14, 2022, by and among Rare Delaware Inc., Ultragenyx Pharmaceutical Inc.

and OCM LS23 Holdings LP

Unit Purchase Agreement, dated as of July 15, 2022, by and among Ultragenyx Pharmaceutical Inc., GeneTx Biotherapeutics LLC, the Unitholders and Deborah A.

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

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

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Amendment No.

1 to Executive Employment Agreement, dated August 8, 2014, by and between Ultragenyx Pharmaceutical Inc.

1 to Executive Employment Agreement, dated August 8, 2014, between Ultragenyx Pharmaceutical Inc.

Kakkis, M.D., Ph.D.

Amendment No.

2, dated September 13, 2022, to Executive Employment Agreement between Ultragenyx Pharmaceutical Inc.

Kakkis, M.D., Ph.D.

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

1 unchanged sentence

Amendment No.

1 to Offer of Employment, dated as of August 8, 2014, by and between Ultragenyx Pharmaceutical Inc.

1 to Offer Letter, dated as of August 8, 2014, between Ultragenyx Pharmaceutical Inc.

and Thomas Kassberg

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

Amendment, dated as of, October 9, 2020 to the Offer Letter between Ultragenyx Pharmaceutical Inc.

Dier dated August 28, 2020

Amendment No.

2, dated September 13, 2022, to Offer Letter between Ultragenyx Pharmaceutical Inc.

and Thomas Kassberg

Offer Letter, dated as of April 26, 2016, between Ultragenyx Pharmaceutical Inc.

and Karah Parschauer

Amendment, dated September 13, 2022, to Offer Letter between Ultragenyx Pharmaceutical Inc.

and Karah Parschauer

Offer Letter, dated as of February 20, 2015, between Ultragenyx Pharmaceutical Inc.

and Dennis Huang

Amendment, dated September 13, 2022, to Offer Letter between Ultragenyx Pharmaceutical Inc.

and Dennis Huang

Offer Letter, dated as of June 11, 2015, between Ultragenyx Pharmaceutical Inc.

Amendment, dated September 13, 2022, to Offer Letter between Ultragenyx Pharmaceutical Inc.

Offer Letter, dated as of January 15, 2018, between Ultragenyx Pharmaceutical Inc.

and Camille Bedrosian, M.D.

Offer Letter, dated May 16, 2017, by and between Ultragenyx Pharmaceutical Inc.

Amendment, dated September 13, 2022, to Offer Letter between Ultragenyx Pharmaceutical Inc.

and Camille Bedrosian, M.D.

Offer Letter, dated May 16, 2017, between Ultragenyx Pharmaceutical Inc.

and Erik Harris

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and Erik Harris

Amendment No.

3, dated September 13, 2022, to Offer Letter between Ultragenyx Pharmaceutical Inc.

and Erik Harris

Form of Indemnification Agreement

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and Condiotti Enterprises, Inc.

Addendum #3 to Standard Lease, effective as of February 12, 2014, by and between Ultragenyx Pharmaceutical Inc.

Addendum #3 to Standard Lease, effective as of February 12, 2014, between Ultragenyx Pharmaceutical Inc.

and Condiotti Enterprises, Inc.

Addendum #4 to Standard Lease, effective as of March 9, 2015, by and between Ultragenyx Pharmaceutical Inc.

Addendum #4 to Standard Lease, effective as of March 9, 2015, between Ultragenyx Pharmaceutical Inc.

and Condiotti Enterprises, Inc.

Addendum #5 to Standard Lease, effective as of April 7, 2015, by and between Ultragenyx Pharmaceutical Inc.

Addendum #5 to Standard Lease, effective as of April 7, 2015, between Ultragenyx Pharmaceutical Inc.

and Condiotti Enterprises, Inc.

Addendum #6 to Standard Lease, effective as of April 29, 2019, by and between Ultragenyx Pharmaceutical Inc.

Addendum #6 to Standard Lease, effective as of April 29, 2019, between Ultragenyx Pharmaceutical Inc.

and Condiotti Enterprises, Inc.

Lease Agreement between Marina Boulevard Property, LLC and Ultragenyx Pharmaceutical Inc., dated as of December 8, 2015

Indenture of Lease between Dimension Therapeutics, Inc.

and Rivertech Associates II, LLC, dated March 11, 2014, as amended

Second Lease Amendment to the Lease between Dimension Therapeutics, Inc.

and Rivertech Associates II, LLC, dated April 28, 2017

Third Lease Amendment to the Lease between Ultragenyx Pharmaceutical Inc.

and Rivertech Associates II, LLC, effective December 31, 2018

Lease Agreement, by and between Dimension Therapeutics, Inc.

Lease Agreement, dated as of December 8, 2015, between Marina Boulevard Property, LLC and Ultragenyx Pharmaceutical Inc.

Indenture of Lease, dated March 11, 2014, between Dimension Therapeutics, Inc.

and Rivertech Associates II, LLC

Second Lease Amendment, dated April 28, 2017, to the Lease between Dimension Therapeutics, Inc.

and Rivertech Associates II, LLC

Third Lease Amendment, dated December 31, 2018, to the Lease between Ultragenyx Pharmaceutical Inc.

and Rivertech Associates II, LLC

Lease Agreement, dated November 2, 2015, between Dimension Therapeutics, Inc.

and ARE-MA Region No.

20, LLC, dated November 2, 2015, and Consent to Assignment to Ultragenyx Pharmaceutical Inc.

20, LLC, and Consent to Assignment to Ultragenyx Pharmaceutical Inc.

First Amendment to Lease Agreement, dated March 20, 2018, between Ultragenyx Pharmaceutical Inc.

and ARE-MA Region No.

Second Amendment to Lease Agreement, made July 1, 2018, between Ultragenyx Pharmaceutical Inc.

Second Amendment to Lease Agreement, dated July 1, 2018, between Ultragenyx Pharmaceutical Inc.

and ARE-MA Region No.

Third Amendment, dated July 29, 2019, to the Lease Agreement dated October 30, 2015 by and between Ultragenyx Pharmaceutical Inc.

Third Amendment to the Lease Agreement, dated July 29, 2019, between Ultragenyx Pharmaceutical Inc.

and ARE-MA Region No., LLC.

Amended and Restated Fourth Amendment, dated August 4, 2020, to the Lease Agreement dated October 30, 2015 by and between Ultragenyx Pharmaceutical Inc.

Amended and Restated Fourth Amendment, dated August 4, 2020, to the Lease Agreement between Ultragenyx Pharmaceutical Inc.

and ARE-MA Region No., LLC.

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and ARE-San Francisco No.

First Amendment, dated September 20, 2020, to the Lease Agreement dated December 15, 2019 between Ultragenyx Pharmaceutical Inc.

First Amendment, dated September 20, 2020, to the Lease Agreement between Ultragenyx Pharmaceutical Inc.

and ARE-San Francisco No.

Second Amendment, dated October 21, 2020, to the Lease Agreement dated December 15, 2019 between Ultragenyx Pharmaceutical Inc.

Second Amendment, dated October 21, 2020, to the Lease Agreement between Ultragenyx Pharmaceutical Inc.

and ARE-San Francisco No.

Third Amendment, dated July 27, 2022, to the Lease Agreement between Ultragenyx Pharmaceutical Inc.

and ARE-San Francisco No.

Office Lease, dated April 19, 2019, between Ultragenyx Pharmaceutical Inc.

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and 32 Leveroni LLC

Lease, dated August 18, 2022, between Ultragenyx Pharmaceutical Inc.

and Brickbottom I QOZB L.P.

Subsidiaries of Ultragenyx Pharmaceutical Inc.

1 unchanged sentence

Power of Attorney (included on the signature page of this report)

Certification of Chief Executive Officer of Ultragenyx Pharmaceutical Inc., as required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer of Ultragenyx Pharmaceutical Inc., as required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification by the Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 36 of Title 18 of the United States Code (18 U.S.C.

Certification of Principal Executive Officer and Principal Financial Officer of Ultragenyx Pharmaceutical Inc., as required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification by the Principal Executive Officer and Principal Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 36 of Title 18 of the United States Code (18 U.S.C.

XBRL Instance Document, formatted in Inline XBRL

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The cover page from this Annual Report on Form 10-K, formatted in Inline XBRL

Confidential treatment has been granted with respect to certain portions (indicated by asterisks) of this exhibit.

Omitted portions have been filed separately with the SEC.

* Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

* Certain identified information has been omitted by means of marking such information with asterisks in reliance on Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.

# Indicates management contract or compensatory plan.

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President and Chief Executive Officer

(Principal Executive Officer)

(Principal Executive Officer and Principal Financial Officer)

February 16, 2023

1 unchanged sentence

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

Kakkis, M.D., Ph.D.

Dier, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and any of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Kakkis, M.D., Ph.D., as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and any of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

1 unchanged sentence

President and Chief Executive Officer and Director

(Principal Executive Officer)

February 15, 2022

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

(Principal Executive Officer and Principal Financial Officer)

February 16, 2023

/s/ Theodore A.

Senior Vice President, Corporate Controller

Senior Vice President and Chief Accounting Officer

(Principal Accounting Officer)

3 unchanged sentences

February 16, 2023

/s/ William Aliski

William Aliski

February 15, 2022

/s/ Deborah Dunsire

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February 16, 2023

/s/ Amrit Ray, M.D.

February 16, 2023

Amrit Ray, M.D.

/s/ Shehnaaz Suliman

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Net product sales

Description of the Matter

The Company sells approved products through a limited number of distributors.

As discussed in Note 2, when recognizing revenue, the Company makes an estimate of the transaction price, including an assessment of whether to constrain any variable consideration.

Product sales are recorded net of estimated government-mandated rebates and chargebacks, estimated product returns, and other deductions at the time revenue is recorded.

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.

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.

Liability related to the sale of future royalties

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Liabilities for sales of future royalties

Description of the Matter

As discussed in Note 9, the Company entered into a royalty purchase agreement in 2019, in which the Company sold its right to receive royalty payments arising from the net sales of Crysvita in the European market in exchange for $320 million.

The proceeds from the transaction were recorded as a liability that is being amortized using the effective interest method over the estimated life of the arrangement.

In order to determine the amortization of the liability, the Company is required to estimate the total amount of future royalty payments to be paid to the counterparty, subject to the capped amount, over the life of the arrangement.

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.

As discussed in Note 10, the Company has entered into two royalty purchase agreements, under which the Company sold its rights to receive royalty payments arising from the net sales of Crysvita in the European and North American markets in exchange for $320 million and $500 million, respectively.

The proceeds from each transaction were recorded as liabilities that are being amortized using the effective interest method over the estimated lives of the respective arrangements.

In order to determine the amortization of the liabilities, the Company is required to estimate the total amount of future royalty payments to be paid to the respective counterparty, subject to the capped amount, over the life of the arrangement.

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

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

Specifically, the forecasted revenues of Crysvita involve significant estimation uncertainty given the limited historical Crysvita sales data.

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.

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

To test management’s estimates of the future royalties and the imputed effective interest rates, we performed audit procedures that included, among others, evaluating the reasonableness of management’s assumptions related to the treatable patient populations, 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 changes in the future royalties on the implied effective interest rates.

/s/ Ernst & Young LLP

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

Redwood City, California

San Mateo, California

February 16, 2023

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Deferred tax liabilities

Liability related to the sale of future royalties

Liabilities for sales of future royalties

Other liabilities

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Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

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Change in fair value of equity investments

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

Non-cash interest expense on liabilities for sales of future royalties

Other income (expense)

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public offering, net of issuance costs

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 income

Balance as of December 31, 2019

Issuance of common stock in connection with underwritten

public offering, net of issuance costs

Issuance of common stock in connection with license agreement,

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Balance as of December 31, 2021

Stock-based compensation

Issuance of common stock under

equity plan awards, net of tax

Other comprehensive loss

Balance as of December 31, 2022

See accompanying notes.

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Stock-based compensation

Acquired in-process research and development

Amortization of premium (discount) on marketable debt securities, net

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Non-cash collaboration royalty revenue

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

Non-cash interest expense on liabilities for sales of future royalties

Changes in operating assets and liabilities:

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Purchase of property, plant, and equipment

Acquisition, net of cash acquired

Purchase of marketable debt securities

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Proceeds from maturities of marketable debt securities

Payment for intangible asset

Net cash used in investing activities

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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

Non-cash interest expense on liabilities for sales of future royalties capitalized during the year into ending property, plant and equipment

See accompanying notes.

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Organizat ion and Basis of Presentation

Ultragenyx Pharmaceutical Inc.

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

Ultragenyx Pharmaceutical Inc., or 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 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, Colombia, and Mexico, Crysvita is approved for treatment of XLH in adult and pediatric patients one year of age and older.

The Company operates as one reportable segment and has four commercially approved products.

Crysvita® (burosumab) is approved in the United States, or U.S., the European Union, or EU, and certain other regions for the treatment of X-linked hypophosphatemia, or 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.

In the European Union and the United Kingdom, Mepsevii is approved under exceptional circumstances for patients of all ages for the treatment of non-neurological manifestations of MPS VII.

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

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).

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

Mepsevii® (vestronidase alfa) is approved in the U.S., the EU and certain other regions, as the first medicine for the treatment of children and adults with mucopolysaccharidosis VII, or MPS VII, also known as Sly syndrome.

Dojolvi® (triheptanoin) is approved in the U.S.

and certain other regions for the treatment of pediatric and adult patients severely affected by long-chain fatty acid oxidation disorders, or LC-FAOD.

Evkeeza® (evinacumab) is approved in the U.S.

and the European Economic Area, or EEA, for the treatment of homozygous familial hypercholesterolemia, or HoFH.

In January 2022, the Company licensed exclusive rights from Regeneron Pharmaceuticals, or Regeneron, to commercialize Evkeeza® (evinacumab) outside of the U.S.

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);

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;

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.

UX111 (formerly ABO-102) is an AAV9 gene therapy product candidate for the treatment of patients with Sanfilippo syndrome type A, or MPS IIIA, a rare lysosomal storage disease.

In May 2022, the Company announced an exclusive license agreement with Abeona Therapeutics Inc., or Abeona, for UX111 whereby the Company assumed responsibility for the UX111 program, as further described in Note 8;

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

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

UX143 (setrusumab), which is subject to the Company ’

s collaboration agreement with Mereo BioPharma 3, or 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, or OI;

GTX-102 is an antisense oligonucleotide, or ASO, which the Company is developing through GeneTx Biotherapeutics LLC, or 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.

In July 2022, the Company executed its option to acquire GeneTx as further described in Note 7;

UX701 is an adeno-associated virus 9, or AAV9, 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;

UX053 is a messenger RNA, or mRNA, product candidate designed for the treatment of patients with Glycogen Storage Disease Type III, or GSDIII, a disease caused by a glycogen debranching enzyme, or 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.

The Company’s ultimate success depends on the outcome of its research and development and commercialization activities.

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

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.

Through December 31, 2022, the Company has relied primarily on its sale of equity securities, its revenues from commercial products, its sale of future royalties, and strategic collaboration arrangements, to finance its operations.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

However, if such financing is not available at adequate levels, the Company would need to reevaluate its operating plans.

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All intercompany balances and transactions have been eliminated.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Use of Estimates

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP).

generally accepted accounting principles, or GAAP.

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities and the reported amounts of expenses in the Consolidated Financial Statements and the accompanying notes.

On an ongoing basis, management evaluates its estimates, including those related to clinical trial accruals, fair value of assets and liabilities, income taxes, stock-based compensation, and the liability related to the sale of future royalties.

On an ongoing basis, management evaluates its estimates, including those related to clinical trial accruals, fair value of assets and liabilities, income taxes, stock-based compensation, revenue recognition, and the liabilities for sales of future royalties.

Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances.

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Cash and cash equivalents

Restricted cash included in prepaid expenses and

other current assets

Restricted cash included in prepaid expenses and other current assets

Restricted cash included in other assets

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Equity Investments

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 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.

The option to purchase additional Arcturus stock was accounted for at fair value using the Black-Scholes option pricing method prior to the exercise of options.

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 are included in the Consolidated Statements of Operations.

See “Note 7.

License and Research Agreements”

for additional details on the transaction.

The Company records investments in equity securities, other than equity method investments, at fair market value, if the fair value is readily determinable.

Equity securities with no readily determinable fair values are recorded using the measurement alternative of cost adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer less impairment, if any.

Investments in equity securities are recorded in Equity investments on the Company's Consolidated

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Balance Sheets.

Unrealized gains and losses are reported in Change in fair value of equity investments on the Company’s Consolidated Statements of Operations.

The Company regularly reviews its non-marketable equity securities for indicators of impairment.

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

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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 Consolidated Balance Sheets.

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

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

For trade receivables and other instruments, the Company uses a 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’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.

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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 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.

There was no allowance for losses on available-for-sale debt securities which were attributable to credit risk for the years ended December 31, 2022 and 2021.

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

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Furniture and office equipment

Computer equipment

Computer equipment and software

Not applicable

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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.

Finite-lived intangibles consist of contractual payments made for certain milestones achieved with collaboration partners.

The contractual payments are recorded as intangible assets and are amortized over their estimated useful lives.

The Company reviews its definite-lived intangible assets when events or circumstances may indicate that the carrying value of these assets is not recoverable and exceeds their fair value.

The Company measures fair value based on the estimated future undiscounted cash flows associated with these assets in addition to other assumptions and projections that the Company deems to be reasonable and supportable.

Indefinite-lived intangibles consist of acquired in-process research and development, or IPR&D.

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

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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.

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.

If it is determined that the asset becomes impaired, the carrying value is written down to its fair value with the related impairment charge recognized in Consolidated Statements of Operations in the period in which the impairment occurs.

The Company has not recorded any impairments of intangible assets.

The Company tests its 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.

If it is determined that an intangible asset becomes impaired, the carrying value is written down to its fair value with the related impairment charge recognized in Consolidated Statements of Operations in the period in which the impairment occurs.

The Company has not recorded any impairments of intangible assets to date.

Goodwill represents the excess of purchase price over fair value of net assets acquired in a business combination and is not amortized.

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The Company determines the actual costs through obtaining information from external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Revenue Recognition

Collaboration and License Revenue

The Company has certain license and collaboration agreements that are within the scope of Accounting Standards Codification (ASC) 808, Collaborative Agreements , which provides guidance on the presentation and disclosure of collaborative arrangements.

The Company has certain license and collaboration agreements that are within the scope of Accounting Standards Codification, or ASC, 808, Collaborative Agreements , which provides guidance on the presentation and disclosure of collaborative arrangements.

Generally, the classification of the transactions under the collaborative arrangements is determined based on the nature of contractual terms of the arrangement, along with the nature of the operations of the participants.

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

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.

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 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.

In order to record collaboration revenue, the Company utilizes certain information from its collaboration partners, including revenue from the sale of the product, associated reserves on revenue, and costs incurred for development and sales activities.

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

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 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.

The Company sold the right to receive certain royalty payments from net sales of Crysvita in certain territories to RPI Finance Trust, or RPI, an affiliate of Royalty Pharma, and to OCM LS23 Holdings LP, an investment vehicle for Ontario Municipal Employees Retirement System, or OMERS, as further described in “Note 10.

Liabilities for Sales of Future Royalties”.

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

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

The Company analogizes to ASC 606 for the accounting for distinct performance obligations for which there is a customer relationship.

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Provisions for returns and other adjustments are provided for in the period the related revenue is recorded, as estimated by management.

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.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are reviewed

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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.

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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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

reasonably certain that the option would be exercised.

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.

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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’

Stock-based awards issued to employees, including stock options, performance stock options, or PSOs, restricted stock units, or RSUs, and performance stock units, or 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).

PSOs and 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.

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

Stock compensation expense on awards expected to vest are recognized net of estimated forfeitures.

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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.

In conjunction with the acquisition of Dimension Therapeutics, Inc., or Dimension, 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.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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.

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In periods when we have incurred a net loss, options and warrants to purchase common stock are considered common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect is antidilutive.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Fair Value Measurements

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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.

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):

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

December 31, 2022

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Debt securities in government-sponsored entities

Investments in Arcturus and Solid common stock

Investment in Solid common stock

December 31, 2021

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Money market funds

Time deposits

Certificates of deposits and time deposits

Corporate bonds

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Government Treasury and agency securities

Debt securities in government-sponsored entities

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

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 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

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Debt securities in government-sponsored entities

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

December 31, 2021

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Money market funds

Time deposits

Certificates of deposit and time deposits

Corporate bonds

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Government Treasury and agency securities

Debt securities in government-sponsored entities

At December 31, 2022 , 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.

All marketable securities with unrealized losses at December 31, 2021 have been in a loss position for less than twelve months or the loss is not material and were temporary in nature.

We do not intend to sell the investments that are in an unrealized loss position before recovery of their amortized cost basis.

The unrealized losses on the Company’s investments in marketable debt securities were caused by increases in market yields on these investments.

The contractual terms of these investments do not permit the issuers to settle the securities at a price less than the par value.

Accordingly, it is expected that the securities will not be settled at a price less than the amortized cost basis of these investments.

The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis.

Inventory consists of the following (in thousands):

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Work-in-process

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Property, plant, and equipment, gross

Less accumulated depreciation

accumulated depreciation

Property, plant, and equipment, net

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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

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

Indefinite-lived Intangibles

The Company has IPR&D assets of $ 129.0 million as of December 31, 2022 and 2021.

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.

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

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 .

The Company recorded research and development expense of $ 0.3 million, $ 0.2 million, and $ 0.2 million for the years ended December 31, 2021, 2020, and 2019, respectively, related to the amortization of the intangible assets.

The Company tests the intangible assets for impairment annually during its fourth quarter.

No impairment charges have been recognized on intangible assets.

Finite-lived Intangibles

Subsequent to the FDA approval of Dojolvi for the treatment of LC-FAOD in 2020, the Company recorded $ 4.8 million for the attainment of various development and commercial milestones as finite-lived intangible assets which are amortized over a weighted-average useful life of 5.7 years.

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

Upon closing of the transaction in January 2022, the Company paid Regeneron a $ 30.0 million upfront payment.

As the upfront payment was related to the Company’s usage of intellectual property related to Evkeeza for HoFH, the upfront payment was recorded as an intangible asset, which is amortized over its useful life of 10.5 years.

The Company's intangible assets were as follows:

December 31, 2022

Gross Carrying Amount

Weighted-Average Life (Years)

Accumulated Amortization

Net Carrying Amount

Indefinite-lived intangibles

Finite-lived intangibles

Total intangible assets

December 31, 2021

Gross Carrying Amount

Weighted-Average Life (Years)

Accumulated Amortization

Net Carrying Amount

Indefinite-lived intangibles

Finite-lived intangibles

Total intangible assets

The Company recorded costs of sales of $ 3.2 million, $ 0.3 million and $ 0.2 million for the years ended December 31, 2022, 2021, and 2020, respectively, related to the amortization of the intangible assets.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The expected amortization of the intangible assets, as of December 31, 2022, for each of the next five years and thereafter is as follows:

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

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North America

Latin America

Total revenues

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Balance of product sales reserve at end of year

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

The following table presents changes in the contract assets (liabilities) for the years ended December 31, 2022 and 2021 (in thousands):

Year Ended December 31,

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.

See Note 8 for additional details on contract liabilities activities.

The Company’s largest accounts receivable balance was from a collaboration partner and was 68 % and 71 % of the total accounts receivable balance as of December 31, 2022 and 2021 , respectively.

GeneTx Acquisition

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

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.

Pursuant to the agreement, upon acceptance of the IND, which occurred in January 2020, the Company elected to extend the option period by paying an option extension payment of $ 25.0 million during the quarter ended March 31, 2020, which was recorded as an in-process research and development expense.

In April 2022, the parties entered into an amendment to the Unitholder Option Agreement, or the Amendment, which provided the Company with an additional, earlier option to acquire GeneTx for an option exercise price of $ 75.0 million based on the earlier of receipt of interim data in the Phase 1/2 study or a specified date, such option, the Interim Option.

During the exclusive option period, GeneTx was responsible for conducting the program based on the development plan agreed upon between the parties and, subject to the terms in the Program Agreement, had the decision-making authority on all matters in connection with the research, development, manufacturing and regulatory activities with respect to the Program.

In July 2022, the Company exercised the Interim Option to acquire GeneTx and entered into a Unit Purchase Agreement, or the Purchase Agreement, pursuant to which the Company purchased all the outstanding units of GeneTx.

In accordance with the terms of the Purchase Agreement, the Company paid the option exercise price of $ 75.0 million and an additional $ 15.6 million to acquire the outstanding cash of GeneTx, and adjustments for working capital and transaction expenses of $ 0.6 million, for a total purchase consideration of $ 91.2 million.

Additionally, the Company may make payments of up to $ 190.0 million upon the achievement of certain milestones, including up to $ 30.0 million in milestone payments upon achievement of the earlier of initiation of a Phase 3 clinical study or product approvals in Canada and the U.K., up to $ 85.0 million in additional regulatory approval milestones for the achievement of U.S.

and EU product approvals, and up to $ 75.0 million in commercial milestone payments based on annual worldwide net product sales.

In addition, the Company will also pay tiered mid- to high single-digit percentage royalties based on licensed product annual net sales.

If the Company receives and resells an FDA priority review voucher, or PRV, in connection with a new drug application approval, GeneTx is entitled to receive a portion of proceeds from the sale or a cash payment from the Company if the Company choses to retain the PRV.

The transaction was accounted as an asset acquisition, as substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable in-process research and development intangible asset.

Prior to the achievement of certain development and regulatory milestones, the acquired in-process research and development intangible asset has not yet reached technological feasibility and has no alternative future use.

Accordingly, the Company recorded the acquisition price of $ 75.0 million, net of cash and working capital acquired, as in-process research and development expense during the year ended December 31, 2022 .

License and Research Agreements

Kyowa Kirin Co., Ltd.

Collaboration and License Agreement

In August 2013, the Company entered into a collaboration and license agreement with Kyowa Kirin Co., Ltd.

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

In August 2013, the Company entered into a collaboration and license agreement with Kyowa Kirin Co., Ltd., or KKC (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 U.S.

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

Collaboration revenue related to sales in profit-share territory

Collaboration Revenue Related to Sales in the Profit-share Territory

The Company and KKC share commercial responsibilities and profits in the profit-share territory until April 2023.

Under the collaboration agreement, KKC manufactures and supplies Crysvita for commercial use in the profit-share territory and charges the Company the transfer price of 35 % of net sales through December 31, 2022, and 30 % thereafter.

Under the collaboration agreement, KKC manufactures and supplies Crysvita for commercial use in the profit-share territory and charges the Company a transfer price of 35 % of net sales through December 31, 2022, and 30 % thereafter.

The remaining profit or loss after supply costs from commercializing products in the profit-share territory are shared between the Company and KKC on a 50 / 50 basis until April 2023.

Thereafter, the Company will be entitled to receive a tiered double-digit revenue share in the mid-to-high 20 % range.

In April 2023, commercialization responsibilities for Crysvita in the profit-share territory will transition to KKC and KKC will be responsible for the commercialization of Crysvita in the territory at and after April 2023.

Thereafter, the Company will be entitled to receive a tiered double-digit revenue share from the mid- 20 % range up to a maximum rate of 30 %.

In September 2022, the Company entered into an amendment to the collaboration agreement which clarified the scope of increased participation by KKC in support of the Company’s commercial activities prior to April 2023 and granted the Company the right to continue to support KKC in commercial field activities in the U.S.

through April 2024, subject to the limitations and conditions set forth in the amendment.

As a result, KKC will continue to support the Company’s commercial field and marketing efforts through a cost share arrangement through April 2024, subject to the limits and conditions set forth in the amendment.

After April 2024, the Company’s rights to promote Crysvita in the U.S.

will be limited to medical geneticists and the Company will solely bear its expenses related to the promotion of Crysvita in the profit-share territory.

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

In July 2022, the Company sold to OMERS its right to receive 30 % of the future royalty payments due to the Company based on net sales of Crysvita in the U.S.

and Canada, subject to a cap, beginning in April 2023, as further described in Note 10.

Royalty Revenue Related to Sales in the 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.”

Liabilities for Sales 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.

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Non-cash royalty revenue in European territory

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Notes to Consolidated Financial Statements (continued)

Product Revenue Related to Sales in Other Territories

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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.

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

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Notes to Consolidated Financial Statements (continued)

2021, 2020, and 2019, 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 to the distributor.

The Company recorded product sales of $ 42.7 million, $ 21.4 million, and $ 10.4 million for the years ended December 31, 2022, 2021, and 2020, 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 Latin America 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 its territories and is 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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Collaboration Receivable and Payable

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.

Saint Louis University License Agreement

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

The Company had accounts receivable from KKC in the amount of $ 27.5 million and $ 20.2 million from profit-share revenue and royalties and other receivables recorded in prepaid expenses and other current assets of $ 6.4 million and $ 16.0 million and accrued liabilities of $ 3.1 million and $ 2.3 million from commercial and development activity reimbursements, as of December 31, 2022 and 2021, respectively.

Saint Louis University

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

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The Company is required to pay to SLU a low single-digit royalty on net sales of the licensed products in any country or region, upon reaching a certain level of cumulative worldwide sales of the product.

Baylor Research Institute License Agreement

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

Baylor Research Institute

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

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.

For the years ended December 31, 2022, 2021, and 2020 , the Company recorded $ 2.5 million, nil and $ 2.0 million, respectively, for the attainment of various development and commercial milestones as finite-lived intangible assets.

The Company is obligated to make additional future payments of up to $ 7.5 million contingent upon attainment of various development and commercial milestones.

Additionally, the Company is paying BRI a mid- single-digit royalty on net sales of the licensed product in the licensed territories.

REGENXBIO, Inc.

The Company has a license agreement with REGENX, for an exclusive, sublicensable, worldwide commercial license under certain intellectual property for preclinical and clinical research and development, and commercialization of drug therapies using REGENX 's licensed patents for the treatment of hemophilia A, OTC deficiency, and GSD1a.

The Company has a license agreement with REGENXBIO, Inc., or REGENX, for an exclusive, sublicensable, worldwide commercial license under certain intellectual property for preclinical and clinical research and development, and commercialization of drug therapies using REGENX's licensed patents for the treatment of hemophilia A, OTC deficiency, and GSD1a.

The Company will pay an annual fee and certain milestone fees per disease indication, low to mid- single-digit royalty percentages on net sales of licensed products, and milestone and sublicense fees owed by REGENX to its licensors, contingent upon the attainment of certain development activities as outlined in the agreement.

The Company also has an option and license agreement with REGENX under which the Company has an exclusive, sublicensable, worldwide license to make, have made, use, import, sell, and offer for sale licensed products to treat Wilson disease and CDKL5 deficiency.

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

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Notes to Consolidated Financial Statements (continued)

rare metabolic disorder.

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 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 HealthCare LLC

The Company has an agreement with Bayer Healthcare LLC (Bayer) to research, develop and commercialize AAV gene therapy products for the treatment of hemophilia A (DTX 201).

Under this agreement, Bayer has been granted an exclusive license to develop and commercialize one or more novel gene therapies for hemophilia A.

The agreement requires that Bayer use commercially reasonable efforts to conduct and fund a proof-of-concept (POC) clinical trial and any subsequent clinical trials and commercialization of gene therapy products for treatment of hemophilia A.

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

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.

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.

The Company previously had a collaboration and license agreement with Bayer Healthcare LLC, or Bayer, to research, develop and commercialize AAV gene therapy products for the treatment of hemophilia A, or DTX 201.

Under this agreement, Bayer had been granted an exclusive license to develop and commercialize one or more novel gene therapies for hemophilia A.

In October 2022, the Collaboration and License Agreement for DTX201 with Bayer was terminated and all licensed rights to DTX201 have reverted back to the Company.

The Company also obtained rights to all necessary data and information to further develop DTX201 or another hemophilia A program through a royalty-free, worldwide, sublicensable, perpetual license.

University of Pennsylvania

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.

The Company has a research, collaboration, and license agreement with University of Pennsylvania School of Medicine, or 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.

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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 Therapeutics Holdings Inc.

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

The Company is also 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 Therapeutics Holdings Inc.

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

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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 agreement, the Company incurred nil , nil , and $ 0.4 million for the years ended December 31, 2022, 2021, and 2020, 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, or 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’

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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.

common stock at

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Notes to Consolidated Financial Statements (continued)

$ 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.

During the years ended December 31, 2022 and 2021 , the Company sold 500,000 shares and 1,700,000 shares of Arcturus common stock, at a weighted-average price of $ 20.39 and $ 47.44 , 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.

As of December 31, 2022 and 2021 , the Company held nil and 500,000 shares, respectively, of Arcturus common stock.

The Company’s investment in Arcturus was accounted at fair value, as the fair value was readily determinable.

All remaining shares of Arcturus held by the Company were sold during the year ended December 31, 2022.

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 Arcturus common stock

December 31, 2020

Change in fair value

Transfer of value upon option exercise

Sale of shares

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December 31, 2022

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.

Pursuant to the agreement, upon acceptance of the IND, which occurred in January 2020, the Company elected to extend the option period by paying an option extension payment of $ 25.0 million (option extension premium) during the year ended December 31, 2020.

The Company has a right to acquire GeneTx for a payment of $ 125.0 million, at any time, until the earlier of 30 months from the first dosing of a patient in a planned Phase 1/2 study (subject to extensions) or 90 days after results are available from that study.

This exclusive option to acquire GeneTx can be extended under certain circumstances, by up to four additional three-month periods, by paying an additional extension fee for each three-month period.

During the exclusive option period, GeneTx is responsible for conducting the program based on the development plan agreed between the parties and, subject to the terms in the Program Agreement, has the decision-making authority on all matters in connection with the research, development, manufacturing and regulatory activities with respect to the Program.

The Company will provide support, at its discretion, including strategic guidance and clinical expertise.

The Company and GeneTx will collaborate on the management of the Phase 1/2 study in patients with Angelman syndrome.

If the Company acquires GeneTx, the Company will then be responsible for all development and commercialization activities from the date of acquisition.

The Company would also be required to make payments upon achievement of certain development and commercial milestones, as well as royalties, depending upon the success of the program.

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 a $ 20.0 million upfront payment as an in-process research and development expense, respectively.

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Notes to Consolidated Financial Statements (continued)

Daiichi Sankyo

In March 2020, the Company entered into a License and Technology Access Agreement (the License Agreement) with Daiichi Sankyo Co., Ltd.

(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 P roducer Cell Line (PCL) and HEK293 transient transfection manufacturing technology platforms for AAV-based gene therapy products.

In March 2020, the Company executed a License and Technology Access Agreement, or the License Agreement, with Daiichi Sankyo Co., Ltd., or 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 Pinnacle PCL TM producer cell line platform, or Pinnacle PCL Platform, 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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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.

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.

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 completion of the technology transfer of the Pinnacle PCL Platform and HEK293 platform.

Daiichi Sankyo reimbursed the Company for all costs associated with the transfer of the manufacturing technology and will pay single-digit royalties on net sales of products manufactured in either system.

The Company also entered into a Stock Purchase Agreement, or 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 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 SPA.

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 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.

In June 2020, the Company executed a subsequent license agreement, or 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 SPA 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 Pinnacle PCL Platform and HEK293 transient transfection manufacturing technology platform together with the initial technical assistance and technology transfer services, which was completed in the first quarter of 2022, 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.

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Notes to Consolidated Financial Statements (continued)

As of December 31, 2022, 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 SPA, 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, 2022 was $ 181.9 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 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.

Revenue allocated to the intellectual property and the technology transfer services was recognized over an initial period which was completed during the first quarter of 2022.Progress toward complete satisfaction of the individual performance obligation used an input measure.

Revenue for know-how and improvements after the completion of technology transfer is 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.

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 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.

The Company recognized $ 7.7 million, $ 85.0 million, and $ 89.2 million respectively, for the years ended December 31, 2022, 2021, and 2020 in revenue related to this arrangement.

As of December 31, 2022 and 2021 , the Company had recorded contract liabilities of $ 1.5 million and $ 9.1 million and an accounts receivable related to the above agreements of nil and $ 0.1 million, respectively.

In December 2020, the Company entered into a License and Collaboration Agreement with Mereo BioPharma 3, or 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 OI.

The Company was granted an exclusive license to develop and commercialize setrusumab in the U.S., Turkey, and the rest of the world, excluding the EEA, U.K., and Switzerland, or 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 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 (excluding the Mereo Territory), and Mereo will pay the Company a fixed double-digit percentage royalty on net sales in the Mereo Territory.

Although Mereo 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 Mereo.

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

Accordingly, for the three months ended March 31, 2021, the Company recorded the upfront payment of $ 50.0 million as in-process research and development expense.

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

Evkeeza is approved in the U.S., where it is marketed by Regeneron, and in the EU and U.K.

as a first-in-class therapy for use together with diet and other low-density lipoprotein-cholesterol-lowering therapies to treat adults and adolescents aged 12 years and older with HoFH.

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

The Company is obligated to pay up to $ 63.0 million in future milestone payments, contingent upon the achievement of certain regulatory and sales milestones.

The Company may share in certain costs for global trials led by Regeneron and also received the right to opt into other potential indications, including a right to negotiate a separate agreement with Regeneron to collaborate on the Regeneron’s investigational antibody for the treatment of fibrodysplasia ossificans progressiva, or FOP, which expired in July 2022.

The collaboration agreement is within the scope of ASC 808 which provides guidance on the presentation and disclosure of collaborative arrangements.

As the Company would be the principal in future sale transactions with the customer, the Company will recognize product sales and cost of sales in the period the related sales occur and the related revenue recognition criteria are met.

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Notes to Consolidated Financial Statements (continued)

Under the collaboration agreement, Regeneron will supply the product and will charge the Company a transfer price from the low 20 % range up to 40 % on net sales, which will be recognized as cost of sales in the Company’s Statement of Operations.

Upon the closing of the transaction in January 2022, the Company paid Regeneron a $ 30.0 million upfront payment.

The Company recorded costs of sales of $ 2.9 million, for the year ended December 31, 2022 , related to the amortization of the intangible asset.

Further, the Company reimbursed Regeneron for certain costs of $ 7.3 million that was recorded as research and development expense for the year ended December 31, 2022 .

No sales of Evkeeza were recorded for the year ended December 31, 2022.

In May 2022, the Company announced an exclusive License Agreement for the AAV gene therapy for UX111 with Abeona for the treatment of MPS IIIA.

Under the terms of the agreement, the Company assumed responsibility for the UX111 program and in return, Abeona is eligible to receive tiered royalties of up to 10 % on net sales and commercial milestone payments of up to $ 30.0 million following regulatory approval of the product.

Additionally, the Company entered into an Assignment and Assumption Agreement with Abeona to transfer and assign to the Company the exclusive license agreement between Nationwide Children’s Hospital, or NCH, and Abeona for certain rights related to UX111.

Under this agreement, NCH is eligible to receive from the Company up to $ 1.0 million in development and regulatory milestones as well as royalties in the low single-digits of net sales.

The Company is obligated to pay Abeona certain prior development costs and other transition costs related to UX111.

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

Accordingly, the value of the acquired intellectual property rights and clinical inventory as well as prior development costs and transition costs of $ 3.1 million were recorded as research and development expense for the year ended December 31, 2022.

Solid Biosciences, Inc.

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.

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 is collaborating to develop products that combine Solid’s differentiated microdystrophin construct, the Company’s Pinnacle PCL 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.

On a product-by-product basis, the Company is 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.

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.

In October 2022, Solid announced a 1 for 15 reverse stock split.

After the split, the Company holds 521,719 shares in Solid.

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

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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.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

Solid Common Stock

Acquisition of investment in Solid

common stock in October 2020

December 31, 2020

Change in fair value

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31,

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Interest expense

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.

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

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2022, 2021, and 2020 was $ 13.1 million, $ 11.8 million, and $ 10.3 million, respectively, and was included in net cash used in operating activities in the Consolidated Statements of Cash Flows.

The following table summarizes maturities of lease liabilities and the reconciliation of lease liabilities as of December 31, 2022:

Year Ending December 31,

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Lease liabilities , non-curre nt

The table above excludes $ 23.4 million of legally binding minimum lease payments for a lease that was executed during the year ended December 31, 2022, but whose term had not commenced.

The Company is also obligated to pay $ 9.9 million of fit-out costs related to this lease.

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.

Liability Related to the Sale of Future Royalties

For the years ended December 31, 2022 and 2021 , the weighted-average remaining operating lease terms were 3.01 years and 3.84 years, respectively, the weighted-average remaining financing lease terms were 2.81 years and 3.88 years, respectively, the weighted-average discount rates used to determine the lease liability for operating leases were 6.72 % and 6.64 %, respectively, and the weighted-average discount rates used to determine the lease liability for finance leases were 5.13 % and 5.44 % respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Liabilities for Sales of Future Royalties

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.

Proceeds from the transaction were recorded as a liability (liability related to sale of future royalties on the Consolidated Balance Sheets).

The Company amortizes $ 320.0 million, net of transaction cost of $ 5.8 million, using the effective interest method over the estimated life of the arrangement.

In order to determine the amortization of the liability, the Company is required to estimate the total amount of future royalty payments to be received by the Company and paid to RPI, subject to the capped amount, over the life of the arrangement.

The excess of future estimated royalty payments (subject to the capped amount), over the $ 314.2 million of net proceeds, is recorded as non-cash interest expense over the life of the arrangement.

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

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

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 EU, the U.K., and Switzerland under the terms of the Company’s Collaboration and License Agreement with KKC dated August 29, 2013, as amended, or the KKC Collaboration Agreement.

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, or when aggregate royalty payments received by RPI are equal to $ 800.0 million.

In July 2022, the Company entered into a Royalty Purchase Agreement with OMERS.

Pursuant to the agreement, OMERS paid $ 500.0 million to the Company in consideration for the right to receive 30 % of the future royalty payments due to the Company from KKC based on net sales of Crysvita in the U.S.

and Canada under the terms of the KKC Collaboration Agreement.

The calculation of royalty payments to OMERS will be based on net sales of Crysvita beginning in April 2023 and will expire upon the earlier of the date on which aggregate payments received by OMERS equals $ 725.0 million or the date the final royalty payment is made to the Company under the KKC Collaboration Agreement.

Proceeds from these transactions were recorded as liabilities for sales of future royalties on the Consolidated Balance Sheets.

Upon inception of the respective arrangements, the Company recorded $ 320.0 million and $ 500.0 million, net of transaction costs of $ 5.8 million and $ 9.1 million for RPI and OMERS, respectively, using the effective interest method over the estimated life of the applicable arrangement.

In order to determine the amortization of the liabilities, the Company is required to estimate the total amount of future royalty payments to be received by the Company and paid to RPI and OMERS, subject to the capped amount, over the life of the arrangements.

The excess of future estimated royalty payments (subject to the capped amount), over the $ 314.2 million and $ 491.0 million, respectively, of net proceeds, is recorded as non-cash interest expense over the life of the arrangements.

Consequently, the Company estimates an imputed interest on the unamortized portion of the liabilities and records interest expense relating to the transactions.

The Company records the royalty revenue arising from the net sales of Crysvita in the applicable territories as non-cash royalty revenue in the Consolidated Statements of Operations over the term of the arrangements.

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.

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

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

The Company’s effective annual interest rate was approximately 9.3 % and 8.4 %, for RPI and OMERS, respectively, as of December 31, 2022.

There are a number of factors that could materially affect the amount and timing of royalty payments from KKC in the applicable 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, macroeconomic and inflationary pressures, the introduction of competing products, pricing for reimbursement in various 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, or USD, while significant portions of the underlying sales of Crysvita are made in currencies other than USD, and other events or circumstances that could result in reduced royalty payments from 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 the relevant territories 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 arrangements.

The following table shows the activity within the liability account (in thousands):

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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.

The following table shows the activity within the liability account (in thousands):

Liability related to the sale

of future royalties

Liabilities for Sales of Future Royalties

December 31, 2020

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December 31, 2021

Net proceeds from sale of future

Non-cash collaboration royalty revenue

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At-the-Market Offerings

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.

In May 2021, the Company entered into an Open Market Sale Agreement with Jefferies LLC, or 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.

As of December 31, 2022 , the Company has sold 1,050,372 shares under the arrangement resulting in net proceeds of approximately $ 78.9 million.

No shares were sold under the arrangement for the year ended December 31, 2022.

Underwritten Public Offering

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.

The total proceeds that the Company received from the offering were approximately $ 330.4 million, net of underwriting discounts and commissions.

In October 2020, the Company completed an underwritten public offering in which 5,111,110 shares of common stock were sold, which included 666,666 shares purchased by the underwriters pursuant to an option granted to them in connection with the offering, at a public offering price of $ 90.00 per share.

The total proceeds that the Company received from the offering were approximately $ 435.6 million, net of underwriting discounts and commissions.

Common Stock Warrants

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.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Stock-Based Awards

Equity Plan Awards

In 2011, the Company adopted the 2011 Equity Incentive Plan (the 2011 Plan).

In 2011, the Company adopted the 2011 Equity Incentive Plan, or the 2011 Plan.

The 2011 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the board of directors.

In 2014, the Company adopted the 2014 Incentive Plan (the 2014 Plan).

In 2014, the Company adopted the 2014 Incentive Plan, or the 2014 Plan.

The 2014 Plan had 2,250,000 shares of common stock available for future issuance at the time of its inception, which included 655,038 shares available under the 2011 Plan, which were transferred to the 2014 Plan upon adoption.

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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 .

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.

In February 2021, the Company adopted the Employment Inducement Plan, or 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.

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As of December 31, 2022 , an aggregate of 14,211,103 shares of common stock have been authorized for issuance under the 2011 Plan, the 2014 Plan, and the Inducement Plan.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Stock Option Activity

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December 31, 2022

Options granted

Options exercised

Options cancelled

Outstanding —

December 31, 2020

Options granted

Options exercised

Options cancelled

Outstanding —

December 31, 2021

Vested and exercisable —

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The total intrinsic value of options exercised during the years ended December 31, 2022, 2021, and 2020 was $ 2.6 million, $ 38.3 million, and $ 56.9 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.

Cash received from the exercise of options was $ 6.2 million, $ 36.6 million, and $ 88.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The weighted-average estimated fair value of stock options granted was $ 34.77 , $ 70.84 , and $ 35.22 per share of the Company’s common stock during the years ended December 31, 2022, 2021, and 2020, respectively.

The total estimated grant date fair value of options vested during the years ended December 31, 2022, 2021, and 2020 was $ 58.7 million, $ 48.1 million, and $ 45.4 million, respectively.

Performance Stock Options

The following table summarizes activity under the Company’s Performance Stock Option, or PSO, plans and related information:

PSOs Outstanding

Number of Options

Weighted- Average Exercise Price

Weighted-Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value

Outstanding —

December 31, 2021

PSOs cancelled

Outstanding —

December 31, 2022

Vested and exercisable —

December 31, 2022

Vested and expected to vest —

December 31, 2022

During the year ended December 31, 2022, PSOs were granted to certain nonexecutive employees.

PSOs are subject to vest only if specified operational milestones are achieved and the employees’

continued service with the Company.

The Company uses the Black-Scholes method to calculate the fair value at the grant date and is recognizing stock-based compensation expense for the PSOs that are expected to vest.

Stock-based compensation for PSOs is recognized over the service period, beginning in the period the Company determines it is probable that a milestone will be achieved.

Forfeitures of PSOs are recognized as they occur.

The Company reassesses the probability of the performance condition at each reporting period and adjusts the compensation cost based on the probability assessment.

As of December 31, 2022 , certain operational milestones were deemed probable of achievement.

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

No PSOs vested or were exercised during the year ended December 31, 2022.

The weighted-average estimated fair value of PSOs granted was $ 28.76 during the year ended December 31, 2022.

ULTRAGENYX PHARMACEUTICAL INC.

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Restricted Stock Units

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

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

RSUs Outstanding

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December 31, 2022

RSUs cancelled

Unvested —

December 31, 2020

RSUs cancelled

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.

3 unchanged sentences

Performance Stock Units

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

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

PSUs Outstanding

5 unchanged sentences

December 31, 2022

PSUs cancelled

Unvested —

December 31, 2020

PSUs cancelled

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.

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The total grant date fair value of the PSUs vested during the years ended December 31, 2022, 2021, and 2020 was $ 1.6 million, $ 9.2 million, and $ 10.3 million, respectively, with an aggregate intrinsic value of the shares of $ 2.0 million, $ 18.9 million and $ 14.4 million, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Employee Stock Purchase Plan

In January 2014, the Company adopted the 2014 Employee Stock Purchase Plan (ESPP) and reserved a total of 600,000 shares of common stock for issuance under the ESPP.

In January 2014, the Company adopted the 2014 Employee Stock Purchase Plan, or ESPP, and reserved a total of 600,000 shares of common stock for issuance under the ESPP.

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

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As of December 31, 2022 , an aggregate of 4,585,921 shares of common stock have been authorized for future issuance on the ESPP.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Stock-Based Compensation Expense

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As of December 31, 2022 , the total unrecognized compensation expense related to unvested equity awards, net of estimated forfeitures, was $ 229.4 million, which the Company expects to recognize over an estimated weighted-average period of 2.28 years.

In determining the estimated fair value of the stock options and ESPP, the Company uses the Black-Scholes option-pricing model and assumptions discussed below.

In determining the estimated fair value of the stock options, PSOs and ESPP, the Company uses the Black-Scholes option-pricing model and assumptions discussed below.

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

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

Strike price for options awards and PSOs is equal to the closing market value of our common stock on the date of grant.

The fair value of stock option awards granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

4 unchanged sentences

Expected dividend rate

The fair value of PSOs granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

Year Ended December 31,

Expected term (years)

Expected volatility

Risk-free interest rate

Expected dividend rate

Defined Contribution Plan

2 unchanged sentences

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):

The Company recorded $ 9.0 million, $ 5.5 million, and $ 4.3 million as expense related to the plan for the years ended December 31, 2022, 2021, and 2020 , respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

Year Ended December 31,

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The Company has established a full valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the right to deduct research and development expenditures for tax purposes in the period the expenses were incurred and instead requires all U.S.

and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively.

Due to this required capitalization of research and development expenditures and the significant taxable income generated as a result of our sale of royalties in July 2022, the Company has recorded current state income tax expense of $ 6.1 million for the year ended December 31, 2022.

The current income tax provision is primarily for state taxes the Company anticipates paying as a result of statutory limitations on the Company's ability to offset expected taxable income with net operating loss carry forwards in certain states.

The effective tax rate of our provision for income taxes differs from the federal statutory rate as follows:

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Fixed assets and intangibles

Liability related to sale of future royalties

Liabilities for sales of future royalties

Basis difference in equity investments

Capitalized research and development costs

Gross deferred tax assets

3 unchanged sentences

In-process research and development

Basis difference in equity investments

Right-of-use lease assets

3 unchanged sentences

As of December 31, 2022 and 2021 , the Company had approximately $ 710.0 million and $ 777.0 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, 2022 and 2021 , the Company had federal research tax credit carryforwards of approximately $ 32.6 million and $ 22.9 million, respectively, available to reduce future tax liabilities that will begin to expire in 2030 .

As of December 31, 2022 and 2021 , the Company had state research credit carryforwards of $ 59.9 million and $ 44.6 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 .

As of December 31, 2022 and 2021 , the Company had federal Orphan Drug Credits of $ 239.3 million and $ 208.1 million, respectively, 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.

1 unchanged sentence

Deferred tax assets for net operating losses and tax credits have been reduced and a corresponding adjustment to the valuation allowance has been recorded.

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 $ 193.8 million and $ 139.5 million during the years ended December 31, 2022 and 2021, respectively.

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Commitments and Contingencies

The Company has various manufacturing, clinical, research, and other contracts with vendors in the conduct of the normal course of its business.

The Company has various manufacturing, construction, clinical, research, and other contracts with vendors in the conduct of the normal course of its business.

Other than as noted below, contracts are terminable, with varying provisions regarding termination.

If a contract with a specific vendor were to be terminated, the Company would only be obligated for the products or services that the Company had received at the time the termination became effective.

Manufacturing and service contract obligations primarily relate to the manufacture of inventory for our approved products, the majority of which are due in the next 12 months .

As of December 31, 2022, the aggregate payments under contractually-binding manufacturing and service agreements are as follows (in thousands):

22 unchanged sentences

Notes to Consolidated Financial Statements (continued)

Related Party Transaction

In July 2022, the Company entered into an agreement with a non-profit foundation in which two of the Company’s board members, including the Company’s Chief Executive Officer, are also board members of the foundation, whereby a $ 1.0 million contribution will be paid out to the foundation over a four-year period, beginning in the third quarter of 2022, to support rare disease education and awareness.

As a result, the Company recorded $ 0.3 million as research and development expense for this agreement for the year ended December 31, 2022 .

Net Loss per Share

9 unchanged sentences

Common stock warrants

Accumulated Other Comprehensive Income (Loss)

Total accumulated other comprehensive income (loss) consisted of the following (in thousands):

Accumulated Other Comprehensive Loss

Total accumulated other comprehensive loss consisted of the following (in thousands):

Year Ended December 31,

Cumulative foreign currency translation adjustment

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.

Unrealized loss on securities available-for-sale

Total accumulated other comprehensive loss

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