What changed in this filing

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Item 9A. Controls and Procedures

2021-02-12 compared with 2020-02-14 · 418 added, 363 removed, 1027 unchanged (43% of the section changed)

15 unchanged sentences

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our fourth quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

Report of Independent Re gistered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

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

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

In our opinion, Ultragenyx Pharmaceutical Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, 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, 2019 and related notes and our report dated February 13, 2020 expressed an unqualified opinion thereon.

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

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

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

Basis for Opinion

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

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

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

over financial reporting based on our audit.

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

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

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

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

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

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

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

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Description of Common Stock

Warrant, dated as of June 30, 2010, issued to Emil D.

Kakkis, M.D., Ph.D.

Warrant, dated as of June 14, 2011, issued to Emil D.

Kakkis, M.D., Ph.D.

Warrant, dated as of June 14, 2011, issued to Emil D.

Kakkis, M.D., Ph.D.

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

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

and Kyowa Hakko Kirin Co., Ltd.

Amendment No.

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

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

and Kyowa Hakko Kirin Co., Ltd.

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and Kyowa Hakko Kirin Co., Ltd.

Exhibit Description

Incorporated by Reference

Amendment No.

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

Exhibit Description

Incorporated by Reference

Amendment No.

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and Kyowa Kirin Co., Ltd.

Amendment No.

10 to Collaboration and License Agreement, effective as of April 1, 2020, between Ultragenyx Pharmaceutical Inc.

and Kyowa Kirin Co., Ltd.

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

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and Saint Louis University

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

and CREMER OLEO GmbH & Co KG

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

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

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

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

and CREMER OLEO GmbH & Co KG

Exhibit Description

Incorporated by Reference

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

Sales Agreement, dated July 27, 2017, between Ultragenyx Pharmaceutical Inc.

and Cowen and Company, LLC

Amendment No.

1 to Sales Agreement, dated as of March 30, 2018, between Ultragenyx Pharmaceutical Inc.

and Cowen and Company, LLC

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

and Aenova Haupt Pharma Wolfratshausen GmbH

Royalty Purchase Agreement, dated as of December 17, 2019, between Ultragenyx Pharmaceutical Inc.

and RPI Finance Trust

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

and Arcturus Therapeutics Ltd.

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

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Form of Performance Stock Unit Agreement (2019)

Form of Performance Stock Unit Agreement (2020)

2014 Employee Stock Purchase Plan (as amended)

Corporate Bonus Plan

Employment Inducement Plan

Form of Non Statutory Stock Option Agreement (Inducement Plan)

Form of Non Statutory Stock Option Agreement (Inducement Plan) (ex-US)

Form of Restricted Stock Unit Agreement (Inducement Plan)

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

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

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Kakkis, M.D., Ph.D.

Exhibit Description

Incorporated by Reference

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

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and Thomas Kassberg

Exhibit Description

Incorporated by Reference

Offer Letter, dated as of March 12, 2012, between Ultragenyx Pharmaceutical Inc.

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

and Shalini Sharp

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

and Shalini Sharp dated as of March 5, 2020

Amendment No.

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

and Shalini Sharp

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

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

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

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

Dier dated August 28, 2020

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

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and Camille Bedrosian, M.D.

Separation Agreement and General Release, dated November 22, 2019, between Ultragenyx Pharmaceutical Inc.

and Wladimir Hogenhuis, M.D.

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

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and Condiotti Enterprises, Inc.

Exhibit Description

Incorporated by Reference

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

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and Condiotti Enterprises, Inc.

Exhibit Description

Incorporated by Reference

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

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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.

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.

and ARE-MA Region No., LLC.

Exhibit Description

Incorporated by Reference

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

and ARE-San Francisco No.

First Amendment, dated September 20, 2020, to the Lease Agreement dated December 15, 2019 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.

and ARE-San Francisco No.

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

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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

Exhibit Description

Incorporated by Reference

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.

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Inline XBRL Taxonomy Extension Presentation Linkbase Document

The cover page from the Company’s Annual Report on Form 10-k for the year ended December 31, 2019, formatted in Inline XBRL

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.

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Kakkis, M.D., Ph.D.

and Shalini Sharp, 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.

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.

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.

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February 11, 2021

/s/ Shalini Sharp

Shalini Sharp

Executive Vice President and Chief Financial Officer

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

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with US generally accepted accounting principles.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 11, 2021 expressed an unqualified opinion thereon.

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

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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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

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.

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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:

developed an independent expectation of the reserve and/or tested management’s estimation process to assess whether the recorded reserve balances are within a reasonable range of estimate, agreed relevant inputs to the terms of customer contracts, performed retrospective reviews, performed a sensitivity analysis on the inputs and assumptions used in the estimates and assessed subsequent events, and tested a sample of credits issued throughout the year.

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

Description of the Matter

At December 31, 2019, the Company had inventory of $11.5 million.

The Company values inventory at the lower of cost or net realizable value.

As discussed in Note 2 of the Company’s financial statements, the Company periodically reviews its inventories for excess amounts or obsolescence and writes down or reserves obsolete or otherwise unmarketable inventory to its estimated net realizable value.

Auditing the valuation of the Company’s inventories, particularly management’s assessment of required reserves for excess inventory, was complex and highly judgmental due to the Company’s limited history of product sales.

Management determines excess inventory based on expected future demand.

Estimates related to future demand are sensitive to significant inputs and assumptions such as acceptance by patients and physicians and the availability of formulary coverage and adequate reimbursement from private third-party payers for the product.

As discussed in Note 10, 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.

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 inventory reserve review process, including management's assessment of the assumptions and data underlying the excess and obsolete inventory valuation.

To test management’s estimates of future demand, we performed audit procedures that included, among others, comparing management’s projected sales to available historical sales and trend information, and other relevant factors.

We also compared on-hand inventories to management’s demand forecasts and assessed the projected utilization of the inventory lots including considering any applicable expiration dates.

We performed sensitivity analysis of projected sales volumes to evaluate the changes in the inventory reserve that would result from changes in the assumptions.

We also tested the clerical accuracy of the Company’s model.

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

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

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

/s/ Ernst & Young LLP

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Cash and cash equivalents

Short-term investments

Accounts receivable

Marketable debt securities

Accounts receivable, net

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Investment in Arcturus equity securities

Property, plant, and equipment, net

Equity investments

Marketable debt securities

Right-of-use assets

Intangible assets, net

Right-of-use lease assets

Long-term investments

LIABILITIES AND STOCKHOLDERS' EQUITY

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Accrued liabilities

Short-term lease liabilities

Contract liabilities

Lease liabilities

Total current liabilities

Contract liabilities

Lease liabilities

Deferred tax liabilities

Long-term lease liabilities

Liability related to the sale of future royalties

Other liabilities

Total liabilities

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Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

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Product sales

Non-cash collaboration royalty revenue

Total revenues

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Gain from sale of priority review vouchers

Change in fair value of investment in Arcturus equity securities

Change in fair value of equity investments

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

1 unchanged sentence

Loss before income taxes

Benefit from (provision for) income taxes

Provision for income taxes

Net loss per share, basic and diluted

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Year Ended December 31,

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustments

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Unrealized gain on available-for-sale securities

Other comprehensive income (loss):

Other comprehensive income:

Total comprehensive loss

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Balance as of December 31, 2017

Issuance of common stock in connection with underwritten

public offering, net of issuance costs

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

offering, net of issuance costs

Fair value of vested stock options assumed from acquisition

Employee stock-based compensation

Stock-based compensation expense

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

Other comprehensive loss

Other comprehensive income

Balance as of December 31, 2018

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offering, net of issuance costs

Employee stock-based compensation

Stock-based compensation expense

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

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public offering, net of issuance costs

Issuance of common stock in connection with license agreement,

net of issuance costs

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

offering, net of issuance costs

Employee stock-based compensation

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

Stock-based compensation expense

Issuance of common stock upon exercise of warrants and under

equity plan awards, net of tax

Other comprehensive income

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Stock-based compensation

Amortization of premium (discount) on investment securities, net

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

Depreciation and amortization

Foreign currency remeasurement (gain) loss

Change in fair value of investment in Arcturus equity securities

Change in fair value of equity investments

Non-cash collaboration royalty revenue

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

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Prepaid expenses and other assets

Right-of-use lease assets

Accounts payable, accrued, and other liabilities

Lease liabilities

Contract liabilities, net

Deferred tax liabilities

1 unchanged sentence

Investing activities:

Purchase of property and equipment

Purchase of investments

Purchase of investment in Arcturus equity securities

Proceeds from sale of investments

Proceeds from maturities of investments

Purchase of property, plant, and equipment

Purchase of marketable debt securities

Purchase of equity investments

Proceeds from sale of marketable debt securities

Proceeds from sale of equity investment

Proceeds from maturities of marketable debt securities

Proceeds from sale of priority review vouchers

Acquisition, net of cash acquired

Net cash provided by (used in) investing activities

Net cash used in investing activities

Financing activities:

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public offerings, net

Proceeds from the issuance of common stock in connection with the license

agreement, net

Proceeds from the issuance of common stock in connection with at-the-market

offering, net

Proceeds from the issuance of common stock under equity plan awards, net

Repayment of note payable

Proceeds from the issuance of common stock from exercise of warrants and equity

plan awards, net

Net cash provided by financing activities

Effect of exchange rate changes on cash

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

Net increase in cash, cash equivalents, and restricted cash

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

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

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

Supplemental disclosures of non-cash investing and financing information:

Acquired lease liabilities arising from obtaining right-of-use lease assets

Acquired lease liabilities arising from obtaining right-of-use assets

Stock-based compensation capitalized into ending inventory

Costs of property and equipment included in accounts payable and other liabilities

Fair value of vested stock options assumed in acquisition

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

See accompanying notes.

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

The Company has two approved therapies.

The Company has three commercially approved products.

Crysvita ® (burosumab) is approved in the United States 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 has received European conditional marketing authorization for the treatment of XLH with radiographic evidence of bone disease in children one year of age and older and adolescents with growing skeletons.

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

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

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

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

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

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

In addition to the approved treatments for XLH and MPS VII, the Company has four ongoing clinical development programs.

Crysvita is being studied for the treatment of tumor induced osteomalacia (TIO), a rare disease that impairs bone mineralization.

UX007 is being studied in patients severely affected by long-chain fatty acid oxidation disorders (LC-FAOD), a genetic disorder in which the body is unable to convert long chain fatty acids into energy.

The Company has two gene therapy pipeline candidates:

DTX301 is an adeno-associated virus 8 (AAV8) gene therapy product candidate in development for the treatment of patients with ornithine transcarbamylase (OTC) deficiency, the most common urea cycle disorder;

and DTX401 is an AAV8 gene therapy product candidate for the treatment of patients with glycogen storage disease type Ia (GSDIa).

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

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

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

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

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

GTX-102 is an antisense oligonucleotide, or ASO, which the Company is collaborating on the development with GeneTx Biotherapeutics LLC (GeneTx) for the treatment of Angelman syndrome, a debilitating and rare neurogenetic disorder caused by loss-of-function of the maternally inherited allele of the UBE3A gene.

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

The Company operates as one reportable segment.

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

Management recognizes the need to raise additional capital to fully implement its business plan.

Through December 31, 2019, the Company has relied primarily on the proceeds from equity offerings and its sale of future royalties to finance its operations.

The Company intends 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 will need to reevaluate its operating plans.

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

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

The Company will likely 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.

Summary of Significant Accounting Policies

1 unchanged sentence

The consolidated financial statements include the accounts of Ultragenyx Pharmaceutical Inc.

and our wholly-owned subsidiaries.

and its wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated.

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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, and stock-based compensation.

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.

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.

Actual results could differ from those estimates.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Cash, Cash Equivalents, and Restricted Cash

1 unchanged sentence

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

Restricted cash primarily consists of money market accounts used as collateral for the Company’s obligations under its facility leases.

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Cash and cash equivalents

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shown in the statements of cash flows

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

Marketable Debt Securities

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

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

Investments with a maturity of one year or less from the balance sheet date are reported as short-term investments and investments with a maturity of greater than one year from the balance sheet date are reported as long-term investments.

Investments with a maturity of one year or less from the balance sheet date are reported as current marketable debt securities and investments with a maturity of greater than one year from the balance sheet date are reported as non-current marketable debt securities.

Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive loss.

2 unchanged sentences

Interest on investments is included in interest income.

Investment in Equity Securities

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 common stock, or approximately 18.2 % of Arcturus’s outstanding shares of common stock as of the closing date of the transaction and received an option to purchase an additional 600,000 shares of common stock.

The investment is subject to the equity method of accounting as it was determined that the Company has significant influence over Arcturus, but does not control the significant activities of Arcturus.

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

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

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

The decision to elect the fair value option is irrevocable and is determined on an instrument by instrument basis.

The option to purchase additional stock is accounted for at fair value using the Black-Scholes option pricing method.

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

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

Concentration of Credit Risk and Other Risks and Uncertainties

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 and an option to purchase additional stock are included in the Consolidated Statements of Operations.

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

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

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

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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 balance sheets .

The Company has not experienced any credit losses to date from credit risk concentration.

Concentration of credit risk with respect to accounts receivable from customers is primarily limited to collaboration partners, drug wholesalers, and retail pharmacy distributors.

Credit is extended to our customers based on an evaluation of a customer’s financial condition, and collateral is not required.

Further, the Company maintains a policy to record allowances for potentially doubtful accounts for estimated losses resulting from the inability of customers to make required payments.

As of December 31, 2019, there were no allowances for doubtful accounts and the Company has not had any write-offs historically.

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

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

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

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

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

Balances are written off when determined to be uncollectible.

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

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

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

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

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Inventories consist of currently approved products.

The Company periodically reviews its inventories for excess amounts or

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

obsolescence and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value.

The Company periodically reviews its inventories for excess amounts or obsolescence and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value.

Management determines excess inventory based on expected future demand.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost, less accumulated depreciation and amortization.

Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets.

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Maintenance and repairs are charged to operations as incurred.

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

The useful lives of property and equipment are as follows:

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

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

Research and development equipment

1 unchanged sentence

Computer equipment

Not applicable

Leasehold improvements

1 unchanged sentence

Intangible Assets

The Company recognizes an acquired intangible apart from goodwill whenever the intangible arises from contractual or other legal rights, or whenever it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability.

The Company’s intangible assets consist of acquired in-process research and development (IPR&D) and an acquired contract asset.

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

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

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

The acquired contract asset was initially recorded at fair value and is amortized over its estimated useful life.

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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The Company has not recorded impairment of any long-lived assets.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Accruals of Research and Development Costs

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

The Company determines the actual costs through discussions with internal personnel and 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.

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.

Revenue Recognition

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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.

When the collaborative partner is the principal in the sale transaction with the customer, the Company records its share of collaboration profit as collaboration revenue.

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

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

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

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

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

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

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

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

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

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

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

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

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

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Notes to Consolidated Financial Statements (continued)

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

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

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The standalone selling price is generally determined based on the prices charged to customers or using expected cost-plus margin.

The Company estimates the efforts needed to complete the performance obligation and recognizes revenue by measuring the progress towards complete satisfaction of the performance obligation using an input measure.

The Company estimates the efforts needed to complete the performance obligations and recognizes revenue by measuring the progress towards complete satisfaction of the performance obligations using input measures.

Product sales

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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

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Notes to Consolidated Financial Statements (continued)

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 periodically and adjusted as necessary.

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

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

Non-cash collaboration royalty revenue

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

Liability Related to the Sale of Future Royalties”.

The Company 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 adopted Accounting Standards Update (ASU) No.

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

The results for year ended December 31, 2019 are presented under ASC 842.

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

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

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

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

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

As a result of the adoption of the new guidance, the Company recorded a right-of-use lease asset of $ 16.2 million, a short-term lease liability of $ 4.5 million, and a long-term lease liability of $ 17.0 million and no cumulative effect adjustment was made to the retained earnings as of the adoption date.

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

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

Leases” for further disclosure.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Comprehensive Loss

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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.

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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.

Business Combinations

The Company applies the provisions of ASC 805, “Business Combinations” , in the accounting for acquisitions.

The Company allocates the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date.

The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets which includes IPR&D.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments — Credit Losses, (Topic 326):

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

For trade receivables and other instruments, the Company will be required to use a new forward-looking expected loss model that generally will result in the earlier recognition of allowances for losses.

For available-for-sale debt securities with unrealized losses that are attributable to credit, the losses will be recognized in earnings as allowances.

This guidance is effective for the Company on January 1, 2020, and early adoption is permitted.

The Company does not expect that this guidance will have a material impact on its Consolidated Financial Statements and related disclosures.

Dimension Acquisition

On November 7 , 2017 , the Company acquired all of the issued and outstanding share capital of Dimension Therapeutics, Inc.

(Dimension), headquartered in Cambridge, Massachusetts for a purchase price of $ 6.00 per share or $ 152.3 million in cash.

In connection with the acquisition, the Company also paid a $ 2.9 million termination fee to REGENXBIO Inc.

(REGENX), as a result of a previously existing merger agreement between REGENX and Dimension and assumed all the outstanding equity awards of Dimension at the date of the acquisition.

The assumed equity awards were valued at $ 15.4 million using a Black-Scholes option pricing model on the acquisition date.

The equity awards assumed were allocated as follows:

$ 9.0 million to the purchase consideration relating to the vested portion of stock options assumed, $ 2.2 million for the acceleration of certain awards that were recognized immediately as expense in the post-combination financial statements, and $ 4.2 million is being recognized as expense after the acquisition date over the employee’s remaining service period.

The acquisition date fair value of the consideration transferred for Dimension was approximately $ 164.1 million, which consisted of the following (in thousands):

Cash payments

Fair value of vested stock options assumed

REGENX termination fee

Fair value of total consideration

The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Cash and cash equivalents

Short-term investments

Other current assets

Property and equipment

In-process research and development

Bayer collaboration agreement

Accounts payable and accrued liabilities

Notes payable

Deferred tax liabilities

Net identifiable net assets acquired

Net assets acquired

The transaction was accounted for as a business combination under the acquisition method of accounting as outlined in ASC 805, Business Combinations .

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.

The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions based on the information that was available as of the date of the acquisition.

See also “Note 6.

Intangible Assets, net” for a description of the intangible assets.

The Company recorded $ 47.4 million in non-current deferred tax liability resulting from the acquisition reflecting the tax impact of the difference between the book basis and tax basis of acquired IPR&D.

Subsequent to the acquisition date, the deferred tax liability was reduced to $ 31.2 million due to the reduction of U.S.

corporate tax rate from 34 % to 21 % in December 2017.

As of December 31, 2019, the deferred tax liability was increased to $ 33.3 million due to changes in the estimated state tax apportionment.

The goodwill balance is primarily attributed to the deferred tax liabilities arising from the temporary differences on IPR&D assets between book and tax basis as well as the relating to the assembled workforce and expanded market opportunities when integrating Dimension’s research with the Company.

The goodwill balance is not deductible for U.S.

income tax purposes.

The assumed notes payable of $ 4.9 million, along with the outstanding interest was repaid in December 2017.

In connection with the acquisition, the Company recognized transaction costs of $ 6.0 million as selling, general and administrative expense.

There were no purchase price adjustments subsequent to the acquisition.

Pro Forma Financial Information

The Company's consolidated statement of operations from November 7, 2017 through December 31, 2017 includes Dimension total revenue of $ 2.1 million and a net loss of $ 7.5 million.

If the acquisition had occurred on January 1, 2017, the supplemental unaudited pro forma financial results is $ 18.5 million in total revenues and $ 341.7 million in net loss for the year ended December 31, 2017.

The unaudited pro forma financial information include pro forma adjustments that assume the acquisition occurred on January 1, 2017.

These items include adjustments to remove the impact of transaction costs related to the acquisition of $ 9.6 million for the year ended December 31, 2017 and to record the amortization of definite-lived intangible assets of $ 1.8 million for the year ended December 31, 2017.

Other adjustments include reduction of interest income, amounts related to severance of certain employees, acceleration of certain equity awards, and adjustments to conform to the Company’s accounting policies on revenue.

These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

Fair Value Measurements

4 unchanged sentences

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

Money market funds are classified as Level 1.

Money market funds and U.S.

Government treasury bills are classified as Level 1.

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

1 unchanged sentence

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 the Arcturus common stock by using the quoted market price on December 31, 2019, which is a Level 1 fair value measurement.

The change in fair value of the Arcturus common stock for the year ended December 31, 2019 was $ 12.2 million, which was recognized in the Consolidated Statements of Operations.

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

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

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

The change in fair value of the option to purchase additional Arcturus common stock for the year ended December 31 , 2019 was $ 1.2 million, which was recognized in the Consolidated Statements of Operations.

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

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

2 unchanged sentences

Money market funds

Repurchase agreements

Time deposits

3 unchanged sentences

Government Treasury and agency securities

Investment in Arcturus equity securities

Investments in Arcturus and Solid common stock

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

December 31, 2019

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Government Treasury and agency securities

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Equity investment in Arcturus

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

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

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

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

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

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

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

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

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

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

Balance Sheet Components

Cash Equivalents and Investments

The fair values of cash equivalents and investments classified as available-for-sale securities consisted of the following (in thousands):

Cash Equivalents and Marketable Debt Securities

The fair values of cash equivalents and marketable debt securities classified as available-for-sale securities consisted of the following (in thousands):

December 31, 2020

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Money market funds

Repurchase agreements

Time deposits

3 unchanged sentences

Government Treasury and agency securities

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

December 31, 2019

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Finished goods

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

Property, Plant, and Equipment, net

Property, plant, and equipment, net consists of the following (in thousands):

Leasehold improvements

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Construction-in-progress

Property and equipment, gross

Property, plant, and equipment, gross

Less accumulated depreciation

Property and equipment, net

Property, plant, and equipment, net

Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $ 12.1 million, $ 8.3 million and $ 7.2 million respectively.

Amortization of leasehold improvements and software is included in depreciation expense.

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

In connection with the acquisition as described in Note 3 “Dimension Acquisition" the Company recognized IPR&D assets of $ 129.0 million and a contract asset of $ 13.5 million.

Subsequent to the acquisition of Dimension Therapeutics, Inc.

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

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

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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.

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

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

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

The Company recorded research and development expense of $ 0.2 million, $ 12.3 million, and $ 1.0 million for the years ended December 31, 2019, 2018, and 2017, respectively, related to the amortization of the asset.

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 $ 0.2 million, $ 0.2 million, and $ 12.3 million for the years ended December 31, 2020, 2019, and 2018, 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.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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Collaboration and license revenue:

KKC (Crysvita)

Crysvita collaboration revenue in profit-share territory

Crysvita royalty revenue in European territory

Daiichi Sankyo

Total collaboration and license revenue

1 unchanged sentence

Total product sales

Crysvita non-cash collaboration royalty revenue

Total revenues

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

Year Ended December 31,

United States

North America

Total revenues

1 unchanged sentence

Balance of product sales reserve at beginning of year

Payments and adjustments

Balance of product sales reserve at end of year

The following table presents changes in the contract assets (liabilities) for the years ended December 31, 2020 and 2019 (in thousands):

Balance of contract assets (liabilities) at beginning of year

Balance of contract assets at end of year

Balance of contract assets at beginning of period

Balance of contract liabilities at end of period, net

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

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Collaboration revenue related to sales in profit-share territory

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

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

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

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

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

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

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

Year Ended December 31,

Company's share of collaboration revenue

in profit-share territory

Company's share of revenue in profit-share territory

Royalty revenue in European territory

In December 2019, the Company entered into a Royalty Purchase Agreement with RPI Finance Trust (RPI), an affiliate of Royalty Pharma, and sold the future royalty payments related to Crysvita sales in the European territory to RPI.

Going forward, the Company will record the royalty revenue in European territory as non-cash royalties.

See “Note 11.

Liability Related to the Sale of Future Royalties”.

Non-cash royalty revenue in European territory

Product revenue related to sales in other territories

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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.

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

There were no product sales recorded for Crysvita for the year ended December 31, 2017.

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

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Cost sharing payments

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The Company had accounts receivable from KKC in the amount of $ 16.4 million and $ 28.5 million from profit-share revenue and royalties and other receivables recorded in prepaid and other current assets of $ 9.6 million and $ 17.8 million and accrued liabilities of $ 2.4 million and $ 0.9 million from commercial and development activity reimbursements, as of December 31, 2020 and 2019, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Saint Louis University License Agreement

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

Under the terms of this license agreement, BRI exclusively licensed to the Company its territories for certain intellectual property related to triheptanoin (UX007).

The Company may be obligated to make future payments of up to $ 5.3 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.

Additionally, the Company will pay to BRI a mid-single digit royalty on net sales of the licensed product in the licensed territories, if such product sales are ever achieved.

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

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

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.

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

REGENXBIO, Inc.

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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 with respect to three disease indications, subject to certain exclusions and has an option for another disease indication.

In October 2018, the Company exercised its remaining option with REGENX for the additional disease indication and paid a $ 1.0 million fee for the exercise of the option.

Each exercised option carries an annual maintenance fee of $ 0.1 million .

In addition, for each option exercised, the Company is obligated to pay 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.

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

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

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.

The Company will pay certain annual fees of $ 0.1 million, milestone payments of up to $ 14.0 million, and royalties on any net sales of products incorporating the licensed intellectual property that range from a high single-digit to low double-digit royalty .

Bayer HealthCare LLC

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

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.

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

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.

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

The Company recorded research and development expense of $ 0.2 million, $ 12.3 million, and $ 1.0 million for the years ended December 31, 2019, 2018, and 2017, respectively, for the amortization of the intangible asset.

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

The Company calculated the transaction price by including the unconstrained milestones along with the estimated payments for research and development services and recorded $ 0.5 million and $ 23.5 million, and $ 2.1 million as collaboration and license revenue for the years ended December 31, 2019, 2018, and 2017, respectively, by measuring the progress toward complete satisfaction of the performance obligation using an input measure.

The performance obligation under the contract was substantially completed by end of 2019.

As of December 31, 2019 and 2018, the Company had none and a $ 3.0 million contract asset associated with the performance obligation, respectively.

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

University of Pennsylvania

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Arcturus Research Collaboration and License Agreement

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

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

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

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

Arcturus has the primary responsibility for conducting certain research services, funded by the Company, and the Company will be responsible for development and commercialization costs.

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

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

As of December 31, 2019 and 2018, the Company has a balance of none and $ 0.5 million, respectively, in prepaid expenses and other current assets, and a balance of none and $ 0.4 million, respectively, in accrued liabilities related to Arcturus.

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

therapeutics for up to 12 rare diseases.

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

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the Arcturus common stock;

an option to purchase an additional 600,000 shares of Arcturus’ common stock at $ 16.00 per share, which may be exercised up to two years after the agreement effective date, with certain restrictions;

in addition to other changes as noted in the agreement.

The period for the Company to exercise its option to purchase the additional stock may also be extended under certain circumstances as specified in the Equity Purchase Agreement.

The Company is restricted from selling the 2,400,000 shares of common stock for a period of two years from the purchase date.

The additional stock, if purchased, are also restricted from sale for a period of time as specified in the agreement.

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

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

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

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

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

Immediately after the purchase, the Company held 18.2 % of Arcturus’ outstanding common stock, based on Arcturus’ outstanding common stock balance as of the transaction date.

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

As a result of the equity ownership and the right to nominate a board member, it was determined that the Company has significant influence over Arcturus.

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

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

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

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

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

Arcturus common stock

Fair value of option to purchase additional shares of Arcturus common stock

Option to purchase additional shares of Arcturus common stock

Acquisition of equity investment in

Arcturus in June 2019

Change in fair value

December 31, 2019

Acquisition of investment in Arcturus securities

Change in fair value

Transfer of value upon option exercise

Sale of shares

December 31, 2020

In August 2019, the Company entered into a Program Agreement and a Unitholder Option Agreement with GeneTx Biotherapeutics, LLC (GeneTx) to collaborate on the development of GeneTx’s GTX-102, an antisense oligonucleotide (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.

This option may be exercised any time prior to 30 days following notice of FDA acceptance of the IND for GTX-102 for an additional $ 50.0 million in payments.

Alternatively, the Company may extend the option period by paying an option extension payment of $ 25.0 million.

In the event the Company exercises the option extension, 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.

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 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 (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.

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

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

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.

2 unchanged sentences

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 year ended December 31, 2019, the Company recorded the $ 20.0 million payment as an in-process research and development expense.

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

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 HeLa producer cell line (PCL) and HEK293 transient transfection manufacturing technology platforms for AAV-based gene therapy products.

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

The Company will provide certain technical assistance and technology transfer services during the technology transfer period of three years to enable Daiichi Sankyo to use the technologies for its internal gene therapy programs.

Daiichi Sankyo has an option to extend the technology transfer period including know-how improvements by two additional one-year periods by paying a fixed amount for each additional year.

Daiichi Sankyo will be responsible for the manufacturing, development, and commercialization of products manufactured with the licensed technology;

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

In February 2020, the Company paid $ 25.0 million upon acceptance of the IND to maintain its option to acquire GeneTx until the earlier of 30 months from the first dosing of a patient in the Phase 1/2 study (subject to extensions) or 90 days after results are available from that study.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Solid Biosciences, Inc.

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

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

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

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

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

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

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

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

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

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

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

Solid common stock

Acquisition of investment in Solid

common stock in October 2020

Change in fair value

December 31, 2020

As described in “Note 2.

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

Prior to adoption of Topic 842 , under Topic 840 , rent expense was $ 6.4 million and $ 4.5 million during the years ended December 31, 2018 and 2017, respectively.

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

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

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Variable lease expense

Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2019 was $ 9.0 million and was included in net cash provided by operating activities in the Consolidated Statements of Cash Flows.

Interest expense

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows (in thousands):

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Present value of future lease payments

Short-term lease liabilities

Long-term lease liabilities

Lease liabilities, current

Lease liabilities, non-current

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

As of December 31, 2019, the weighted-average remaining lease term was 5.64 years and the weighted-average discount rate used to determine the lease liability was 7.5 %.

As of December 31, 2020, the weighted-average remaining operating and financing lease terms were 4.82 years and 4.51 years, respectively, and the weighted-average discount rates used to determine the lease liability for operating and financing leases were 6.70 % and 5.58 %, respectively.

Gain from Sale of Priority Review Vouchers

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Liability Related to the Sale of Future Royalties

In December 2019, the Company entered into a Royalty Purchase Agreement with RPI Finance Trust (RPI), an affiliate of Royalty Pharma.

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.

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

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.

As RPI’s rate of return is explicitly limited due to the cap on royalties they may receive, proceeds from the transaction was recorded as a liability (liability related to sale of future royalties on the Consolidated Balance Sheets).

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

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 aggregate future estimated royalty payments (subject to the capped amount), less the $ 314.2 million of net proceeds, will be recorded as non-cash interest expense 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 will continue to record the royalty revenue rising 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.

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.

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.

Through December 31, 2019, the Company’s effective annual interest rate was approximately 10.1 %.

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

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

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

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

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.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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 Company will record non-cash royalty revenues and non-cash interest expense within its Consolidated Statements of Operations over the term of the arrangement.

The following table shows the activity within the liability account during the year ended December 31, 2019 (in thousands):

Liability related to the sale of future royalties —

beginning balance

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

Liability related to the sale

of future royalties

Proceeds from sale of future royalties

in December 2019

Non-cash interest expense

Liability related to the sale of future royalties at

December 31, 2019

Non-cash collaboration royalty revenue

Non-cash interest expense

December 31, 2020

At-the-Market Offerings

In July 2016, the Company entered into an At-The-Market (ATM) sales agreement with Cowen and Company, LLC (Cowen), whereby the Company sold $ 150.0 million in aggregate proceeds of common stock, through Cowen as our sales agent.

During the year ended December 31, 2017, the Company sold 912,351 shares of common stock, resulting in net proceeds of approximately $ 67.6 million, after commissions and other offering costs.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

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

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

Underwritten Public Offering

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Stock-Based Awards

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

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

As part of the acquisition of Dimension (discussed in “Note 3.

Dimension Acquisition”), the Company assumed an equivalent 639,897 options to purchase shares of common stock of the Company from the equity plans of Dimension.

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

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

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

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Stock Option Activity

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Options granted

Options assumed

Options exercised

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Cash received from the exercise of options was $ 88.1 million, $ 7.7 million, and $ 25.8 million as of December 31, 2020, 2019, and 2018, respectively.

The weighted-average estimated fair value of stock options granted was $ 37.15 , $ 33.32 and $ 44.20 per share of the Company’s common stock during the years ended December 31, 2019, 2018, and 2017, respectively.

The total estimated grant date fair value of options vested during the years ended December 31, 2019, 2018, and 2017 was $ 45.3 million, $ 51.7 million, and $ 49.1 million, respectively.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

Restricted Stock Units

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

The total grant date fair value of the 313,682 shares vested during 2019 was approximately $ 20.8 million with an aggregate intrinsic value of the shares of $ 18.4 million.

The total grant date fair value of the RSUs vested during the years ended December 31, 2020, 2019, and 2018 was $ 27.2 million, $ 20.8 million, and $ 16.8 million, respectively.

The aggregate intrinsic value of the shares of the RSUs vested during the years ended December 31, 2020, 2019, and 2018 was $ 29.5 million, $ 18.4 million, and $ 14.9 million, respectively.

Performance Stock Units

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Unvested — December 31, 2017

PSUs cancelled

Unvested — December 31, 2018

3 unchanged sentences

Unvested — December 31, 2020

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

3 unchanged sentences

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

The total grant date fair value of the 65,643 shares vested during 2019 was approximately $ 3.2 million with an aggregate intrinsic value of the shares of $ 4.2 million.

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

Employee Stock Purchase Plan

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Total stock-based compensation expense

Stock-based compensation of $ 1.4 million and $ 1.1 million was capitalized into inventory for the years ended December 31, 2019 and 2018, respectively.

There was no stock-based compensation capitalized for the year ended December 31, 2017.

Stock-based compensation of $ 1.2 million, $ 1.4 million, and $ 1.1 million was capitalized into inventory for the years ended December 31, 2020, 2019, and 2018, respectively.

Capitalized stock-based compensation is recognized as cost of sales when the related product is sold.

14 unchanged sentences

Expected dividend rate

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Defined Contribution Plan

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31,

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Total current tax provision

Deferred tax provision (benefit):

Deferred tax provision:

International

Total deferred tax provision (benefit)

Total provision for (benefit from) income

Total deferred tax provision

Total provision for income taxes

The Company has incurred net operating losses since inception.

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Federal tax credits

Premium on equity issuance

Nondeductible permanent items

3 unchanged sentences

Foreign rate differential

Change in federal tax rate

Provision for income taxes

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In-process research and development

Basis difference in equity investments

Right-of-use lease assets

Gross deferred tax liabilities

Net deferred tax asset (liabilities)

As of December 31, 2019 and 2018, the Company had $ 549.9 million and $ 558.3 million of federal net operating loss carryforwards available to reduce future taxable income that will begin to expire in 2032 .

As of December 31, 2019 and 2018, the Company had $ 520.2 million and $ 476.8 million of state net operating loss carryforwards available to reduce future taxable income that will begin to expire in 2031 .

Net deferred tax liabilities

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

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

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

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

On November 7, 2017, the Company acquired Dimension (see “Note 3.

Dimension Acquisition”).

The Company recorded a net $ 47.4 million deferred tax liability relating to the tax impact of future GAAP amortization or potential impairments associated with the identified intangible assets acquired, which are indefinitely lived assets and are not currently deductible for tax purposes.

Due to the reduction of the US corporate tax rate to 21 % in the period subsequent to the acquisition, the Company recorded a net decrease to the deferred tax liability of $ 16.2 million with a corresponding benefit from income taxes of $ 16.2 million for the year ended December 31, 2017.

Due to a change in the state tax rates, the Company recorded a net increase to the deferred tax liability of $ 2.1 million with a corresponding deferred income tax expense of $ 2.1 million for the year ended December 31, 2019.

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, 2020.

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

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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Balance at end of year

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

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

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

It is our intention to reinvest the earnings of our non-U.S.

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

subsidiaries in their operations.

9 unchanged sentences

As of December 31, 2020, the aggregate payments under contractually binding manufacturing and service agreements are as follows (in thousands):

Year Ending December 31,

Manufacturing

Year Ended December 31,

Manufacturing and Services

Land and Building Construction

Leases” for lease commitments.

24 unchanged sentences

Common stock warrants

Accumulated Other Comprehensive Loss

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

Accumulated Other Comprehensive Income (Loss)

Total accumulated other comprehensive income (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 loss

Unrealized gain on securities available-for-sale

Total accumulated other comprehensive income

Quarterly Financial Data (unaudited)

3 unchanged sentences

Operating expenses

Net loss per share, basic and diluted

September 30,

Operating expenses

Change in fair value of equity investments

Net income (loss)

1 unchanged sentence

Net income (loss) per share, diluted

September 30,

Operating expenses

Change in fair value of equity investments

Net loss per share, basic and diluted

ULTRAGENYX PHARMACEUTICAL INC.

Notes to Consolidated Financial Statements (continued)

Subsequent Event

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

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

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

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

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

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