What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 352 added, 422 removed, 780 unchanged (50% of the section changed)

3 unchanged sentences

in thousands, except share amounts and par value)

September 30,

Current assets:

8 unchanged sentences

12,493  

12,704  

Prepaid expenses and other current assets

12,146  

11,101  

Total current assets

6 unchanged sentences

Marketable securities

10,165  

Other non-current assets

1 unchanged sentence

$ 135,619  

Liabilities and Shareholders' Equity (Deficit)

Liabilities and Shareholders' Deficit

Current liabilities:

13 unchanged sentences

97,941  

97,537  

Long-term lease liabilities

4 unchanged sentences

Commitments and Contingencies (Note 18)

Shareholders' Equity (Deficit):

Ordinary shares, NIS 0.01 par value, 100,000,000 shares authorized at September 30, 2022 and December 31, 2021;

23,011,324 and 22,462,995 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Shareholders' Deficit:

Ordinary shares, NIS 0.01 par value, 100,000,000 shares authorized at March 31, 2023 and December 31, 2022;

23,440,521 and 23,129,953 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

5 unchanged sentences

( 45 )  

Total Shareholders' Equity (Deficit)

Total Shareholders' Deficit

( 116,554 )  

Total Liabilities and Shareholders' Equity (Deficit)

Total Liabilities and Shareholders' Deficit

$ 112,954  

4 unchanged sentences

in thousands, except share and per share amounts)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

$ 16,097  

$ 11,351  

For the Three Months Ended March 31,

$ 17,192  

3 unchanged sentences

12,039  

40,874  

28,300  

Operating expenses:

2 unchanged sentences

12,696  

38,429  

34,560  

Selling, general and administrative expenses

1 unchanged sentence

21,300  

61,204  

66,117  

Operating loss

( 22,045 )  

( 23,440 )  

( 58,759 )  

Financing on prepaid forward obligation

( 5,224 )  

( 6,828 )  

( 16,478 )  

Interest expense on long-term debt

( 3,553 )  

( 5,215 )  

Interest and other income, net

Interest and other income (expense), net

Loss before income taxes

( 30,192 )  

( 30,211 )  

( 79,848 )  

Income tax expense

1 unchanged sentence

$ ( 30,213 )  

$ ( 25,831 )  

$ ( 30,211 )  

$ ( 80,914 )  

Statements of Comprehensive Loss

$ ( 30,213 )  

$ ( 30,211 )  

$ ( 80,914 )  

Other comprehensive loss

Unrealized (loss) on investments

( 99 )  

( 41 )  

( 130 )  

Unrealized gain (loss) on investments

Comprehensive Loss

$ ( 30,151 )  

$ ( 30,252 )  

$ ( 81,044 )  

Net loss per ordinary share - basic and diluted

$ ( 1.30 )  

( 1.35 )  

$ ( 3.56 )  

Weighted average number of shares outstanding used in computation of basic and diluted loss per ordinary share

1 unchanged sentence

22,631,509  

22,711,686  

22,318,589  

The accompanying notes are an integral part of these condensed consolidated financial statements.

7 unchanged sentences

income (loss)

Balance as of July 1, 2022

Balance as of January 1, 2023

23,129,953  

2 unchanged sentences

$ (107 )  

Changes During the Three Months Ended September 30, 2022

Changes During the Three Months Ended March 31, 2023

Exercise of options into ordinary shares

3 unchanged sentences

(30,213 )  

Balance as of September 30, 2022

23,011,324  

$ 485,041  

$ ( 548,235 )  

$ ( 155 )  

Balance as of July 1, 2021

22,354,533  

$ 464,823  

$ (408,658 )  

$ 56,271  

Changes During the Three Months Ended September 30, 2021

Exercise of options into ordinary shares

50,312  

Share-based compensation

Other comprehensive loss

( 41 )  

( 30,211 )  

Balance as of September 30, 2021

Balance as of March 31, 2023

23,440,521  

2 unchanged sentences

$ ( 45 )  

The accompanying notes are an integral part of these condensed consolidated financial statements.

UroGen Pharma Ltd.

Condensed Consolidated Statements of Shareholders ’

Equity (Deficit)

in thousands, except share amounts)

Ordinary Shares

Additional paid-in

Other comprehensive

income (loss)

$ ( 116,554 )

Balance as of January 1, 2022

4 unchanged sentences

$ 8,413  

Changes During the Nine Months Ended September 30, 2022

Exercise of options into ordinary shares

548,329  

Share-based compensation

Other comprehensive loss

( 130 )  

(80,914 )  

Balance as of September 30, 2022

23,011,324  

$ 485,041  

( 548,235 )  

$ ( 155 )  

Balance as of January 1, 2021

22,167,791  

$ 452,525  

$ (356,501 )  

$ 96,355  

Changes During the Nine Months Ended September 30, 2021

Changes During the Three Months Ended March 31, 2022

Exercise of options into ordinary shares

1 unchanged sentence

Share-based compensation

17,756  

Other comprehensive loss

1 unchanged sentence

( 28,392 )  

Balance as of September 30, 2021

Balance as of March 31, 2022

22,682,221  

6 unchanged sentences

in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows From Operating Activities

$ ( 30,213 )  

Adjustment to reconcile net loss to net cash from operating activities:

Depreciation and amortization

Inventory Obsolescence

Accrued financing on prepaid forward obligation

Amortization (accretion) on marketable securities

( 354 )  

Share-based compensation

2 unchanged sentences

Changes in operating assets and liabilities:

( 1,140 )  

Accounts receivable

Prepaid expenses and other current assets

( 1,045 )  

Other non-current assets

( 421 )  

Accounts payable and accrued expenses

Employee related accrued expenses

( 3,338 )  

Other current liabilities

Lease liabilities

( 252 )  

Net cash used in operating activities

( 25,807 )  

Cash Flows From Investing Activities

Purchases of marketable securities

Sales of marketable securities

( 24,176 )  

Maturities of marketable securities

30,469  

13,621  

Purchases of property and equipment

Net cash (used in) provided by investing activities

( 23 )  

Net cash provided by investing activities

13,596  

Cash Flows From Financing Activities

Proceeds from prepaid forward arrangement

Proceeds from exercise of options into ordinary shares

Proceeds from issuance of long-term debt

70,831  

Issuance cost related to at-the-market issuances

Net cash provided by financing activities

70,742  

Increase (Decrease) in Cash and Cash Equivalents

( 18,866 )  

60,342  

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

56,220  

45,587  

Cash, Cash Equivalents and Restricted Cash at End of Period

$ 37,354  

$ 105,929  

Supplemental Disclosures of Non-Cash Activities

10 unchanged sentences

April 2004 ( “UPL”).

UroGen Pharma Inc., a wholly owned subsidiary of UPL, was incorporated in Delaware in 

UroGen Pharma, Inc., a wholly owned subsidiary of UPL, was incorporated in Delaware in 

October 2015 

9 unchanged sentences

first -in-class treatment indicated for adults with low-grade upper tract urothelial cancer (“low-grade UTUC”). 

Jelmyto  consists of mitomycin, an established chemotherapy, and sterile hydrogel, using our proprietary sustained release RTGel technology.

Jelmyto  consists of mitomycin, an established chemotherapy, and sterile hydrogel, using our proprietary sustained release 

RTGel  technology.

It has been designed to enable longer exposure of urinary tract tissue to mitomycin, thereby enabling the treatment of tumors by non-surgical means.

8 unchanged sentences

The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in the Company’s Annual Report on Form 10 -K for the year ended December 

31, 2021, as filed with the Securities and Exchange Commission (“SEC”) on March 21, 2022.

31, 2022, as filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 24, 2023.

The Company has experienced net losses since its inception and has an accumulated deficit o f $ 607.3  

million and $ 467.3  million as of September 30, 2022 and December 

million and $ 577.1  million as of March 31, 2023 and December 

31, 2022, respectively.

The Company expects to incur losses and have negative net cash flows from operating activities as it executes on its strategy including engaging in further research and development activities, particularly conducting non-clinical studies and clinical trials.

The success of the Company depends on the ability to successfully commercialize its technologies to support its operations and strategic plan.

Based on management’s cash flow projections the Company believes that its cash and cash equivalents and marketable securities are sufficient to fund the Company’s planned operations for at least the next 12 months.

The Company anticipates that it will need to raise additional capital in the future.

There can be no assurances that the Company will be able to secure such additional financing if at all, or on terms that are satisfactory to the Company, and that it will be sufficient to meet its needs.

In the event the Company is not successful in obtaining sufficient funding, this could force us to delay, limit, or reduce our product development, commercialization efforts or other operations.

The success of the Company depends on the ability to successfully commercialize its technologies to support its operations and strategic plan. 

In accordance with the accounting guidance related to the presentation of financial statements, management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the date the financial statements are issued.

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and do not include any adjustments relating to the carrying amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

The Company’s ability to continue as a going concern is expected to be impacted by its ability to raise additional capital to fund its operations, produce cash inflows from Jelmyto product sales and develop UGN- 102.

The Company believes that absent sufficient proceeds received from equity, financing, or business development transactions, the Company will not have sufficient cash and cash equivalents to fund its operations beyond one year from the issuance of these financial statements.

Accordingly, the Company will, over the next 12  months, require significant additional financing to continue its operations.

In addition, there can be no assurances that the Company will be able to secure such additional financing if at all, on terms that are satisfactory to the Company, and in amounts sufficient to meet its needs.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. Failure to successfully receive additional financing will require the Company to delay, limit or reduce product development and commercialization efforts.

Note 3 –

1 unchanged sentence

Principles of Consolidation

The condensed consolidated financial statements include the accounts of UPL and its subsidiary, UPI.

The Company's condensed consolidated financial statements include the accounts of UPL and its subsidiary, UPI.

Intercompany balances and transactions have been eliminated during consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.

Actual results may differ from those estimates.

5 unchanged sentences

At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the Dollar are measured using the official exchange rate at the balance sheet date.

The effects of foreign currency re-measurements are recorded in the condensed consolidated statements of operations as “Interest and other income, net.”

The effects of foreign currency re-measurements are recorded in the condensed consolidated statements of operations as “Interest and other income (expense), net.”

Cash and Cash Equivalents;

2 unchanged sentences

Cash and cash equivalents generally consist of money market funds and bank money market accounts and are stated at cost, which approximates fair value.

Cash and cash equivalents and marketable securities totaled $ 95.9  million as of September 30, 2022 .

Cash and cash equivalents and marketable securities totaled $ 75.2  million as of March 31, 2023 .

The Company accounts for its investments, which include cash equivalents and marketable securities, as available-for-sale in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments —

1 unchanged sentence

Available-for-sale debt securities are carried at fair value with unrealized gains and losses reported in other comprehensive income/loss within shareholders’

Realized gains and losses are recorded as a component of interest and other income, net.

Realized gains and losses are recorded as a component of interest and other income (expense), net.

The cost of securities sold is based on the specific-identification method.

71 unchanged sentences

All product sales of Jelmyto are recognized through the Company's arrangement with a single customer, a third -party national specialty distributor.

Net revenue recognized include management’s estimate of returns, consideration paid to the customer, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks relating to 340b drug pricing programs, Medicaid drug rebate programs, and the Company’s copay assistance program, which are estimated based on industry benchmarking studies as well as the Company’s historical experience.

Net revenue recognized includes gross revenue and management’s estimate of returns, consideration paid to the customer, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks relating to 340b drug pricing programs, Medicaid drug rebate programs, the Company’s copay assistance program, and Medicare refund for discarded drug, which are estimated based on the Company’s historical experience.

Research and Development Expenses

Research and development costs are expensed as incurred and consist primarily of the cost of salaries, share-based compensation expense, payroll taxes and other employee benefits, subcontractors and materials used for research and development activities, including nonclinical studies, clinical trials, manufacturing costs and professional services.

Research and development costs are expensed as incurred and consist primarily of the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, subcontractors and materials used for research and development activities, including nonclinical studies, clinical trials, manufacturing costs and professional services.

The costs of services performed by others in connection with the research and development activities of the Company, including research and development conducted by others on behalf of the Company, shall be included in research and development costs and expensed as the contracted work is performed.

4 unchanged sentences

Selling, general and administrative expenses consist primarily of personnel costs (including share-based compensation related to directors, employees and consultants).

Other significant costs include commercial, medical affairs, external professional service costs, facility costs, accounting and audit services, legal services, and other consulting fees.

Other significant costs include commercial, medical affairs, external professional service costs, facility costs, accounting and audit services, legal services and other consulting fees.

Selling, general and administrative costs are expensed as incurred, and the Company accrues for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from its service providers and adjusting its accruals as actual costs become known.

9 unchanged sentences

For all periods presented, potentially dilutive securities are excluded from the computation of fully diluted loss per share as their effect is anti-dilutive.

Recently Issued Accounting Pronouncements

Recently Adopted Issued Pronouncements

The Company has reviewed the Accounting Standards Updates recently issued by the Financial Accounting Standards Board, and determined that they are not applicable to the Company.

2 unchanged sentences

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of September 30, 2022 and December 

31, 2021  (in thousands):

September 30,

Accounts payable and accrued expenses consisted of the following as of March 31, 2023 and December 31, 2022  (in thousands):

Accounts payable

$ 6,968  

$ 5,527  

Accrued sales reserves

4 unchanged sentences

Total accounts payable and accrued expenses

Interest and Other Income, Net

Interest and other income, net consisted of the following as of September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30,

$ 17,130  

$ 12,383  

Interest and Other Income (Expense), Net

Interest and other income (expense), net consisted of the following as of March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Interest income

Other income (expense), net

Interest and other income, net

Other expense, net

( 15 )  

Total interest and other income (expense), net

Note 5 –

Inventories consisted of the following as of 

September 30, 2022 and December 31, 2021 (in thousands):

September 30,

March 31, 2023 and December 31, 2022 (in thousands):

Raw materials (1)

$ 5,297  

$ 4,676  

Finished goods

Total inventories

( 1 )  $ 2.1  million and $ 1.0  million of raw materials are included within other non-current assets on the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021, respectively.

$ 8,257  

$ 6,695  

( 1 )  $ 2.8  million and $ 2.4  million of raw materials are included within other non-current assets on the condensed consolidated balance sheets at March 

31, 2023  and December 31, 2022, respectively.

Changes in non-current assets are reflected on the condensed consolidated statements of cash flows within the caption of other non-current assets. 

Note 6 –

9 unchanged sentences

The carrying amounts of the Company’s cash, restricted cash, other current assets, accounts payable and accrued liabilities are generally considered to be representative of their fair value because of the short-term nature of these assets and liabilities.

The carrying value of the prepaid forward obligation (See Note 9 - Prepaid Forward Obligation) approximates its fair value. 

The Company estimated the fair value of the prepaid forward obligation using Level 3 inputs, including internally developed financial forecasts and management's estimate of probability of success related to product candidates, and determined that the effective interest rate in the obligation approximates market rates for loans with similar terms and risk characteristics. 

The carrying value of the prepaid forward obligation (See Note 9 - Prepaid Forward Obligation) approximates its fair value. The Company estimated the fair value of the prepaid forward obligation using Level 3 inputs, including internally developed financial forecasts and management's estimate of probability of success related to product candidates, and determined that the effective interest rate in the obligation approximates market rates for loans with similar terms and risk characteristics. 

The Company estimated the fair value of long-term debt (see Note 10 - Long-Term Debt) using the income approach with Level 3 inputs.

2 unchanged sentences

No transfers between levels have occurred during the periods presented.

Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of September 30, 2022 are as follows (in thousands):

Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of March 31, 2023 are as follows (in thousands):

Fair Value Measurements Using

1 unchanged sentence

Balance as of

September 30,

Identical Assets

Cash equivalents

Money market funds

Marketable securities

US government

18,842  

Corporate bonds

2 unchanged sentences

Total marketable securities

38,679  

18,842  

19,837  

Total assets at fair value

$ 39,337  

$ 19,500  

$ 19,837  

Assets measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of December 31, 2022 are as follows (in thousands):

3 unchanged sentences

Identical Assets

Cash equivalents

Money market funds

Marketable securities

US government

$ 28,693  

Corporate bonds

2 unchanged sentences

Total marketable securities

Total assets at fair value

$ 44,556  

$ 28,693  

$ 15,863  

The Company’s investments in U.S.

government bonds and money market funds are measured based on publicly available quoted market prices for identical securities as of March 31, 2023 and December 31, 2022.

The Company's investments in corporate bonds, commercial paper and certificates of deposits are measured based on quotes from market makers for similar items in active markets.

Note 7 –

 Investments

The following table summarizes the Company’s investments as of September 30, 2022 (in thousands):

The following table summarizes the Company’s investments as of March 31, 2023 (in thousands):

Cash equivalents

Money market funds

Marketable securities:

US government

$ 18,829  

$ ( 21 )  

$ 18,842  

Corporate bonds

( 27 )  

Commercial paper

( 11 )  

Certificates of deposit

( 22 )  

Total marketable securities

$ 38,724  

$ ( 81 )  

$ 38,679  

Total assets at fair value

$ 39,382  

$ ( 81 )  

$ 39,337  

The Company classifies its investments as available-for-sale, and they consist entirely of debt securities.

As of September 30, 2022 , the amortized cost of investments included an immaterial amount of accrued interest.

As of September 30, 2022 , marketable securities were in a net unrealized loss position. Unrealized gains and losses on available-for-sale debt securities are included as a component of comprehensive loss. 

September 30, 2022 , the aggregate fair value of investments held by the Company in an unrealized loss position was $ 64.9 million which consisted of 

As of March 31, 2023 , the amortized cost of investments included an immaterial amount of accrued interest.

As of March 31, 2023 , marketable securities were in a net unrealized loss position. Unrealized gains and losses on available-for-sale debt securities are included as a component of comprehensive loss. 

March 31, 2023 , the aggregate fair value of investments held by the Company in an unrealized loss position was $ 22.2 million which consisted of 

22 securities. The unrealized loss was primarily driven by rising interest rates.

2 unchanged sentences

In accordance with the Company’s general investment strategy, the Company does not intend to sell the investments before maturity.

September 30, 2022 , the Company believes the cost basis for its marketable securities were recoverable in all material aspects and no credit losses were recognized in the period.

The Company’s investments as of September 30, 2022 mature at various dates through August 2023.

March 31, 2023 , the Company believes the cost basis for its marketable securities were recoverable in all material aspects and no allowance for credit losses were recognized in the period.

The Company’s investments as of March 31, 2023 mature at various dates through January 2026.

The fair values of investments by contractual maturity consist of the following (in thousands):

September 30,

Maturities within one year

$ 29,172  

$ 44,556  

Maturities after one year through three years

10,165  

Total investments

$ 39,337  

$ 44,556  

Note 8 –

Property and Equipment

Property and equipment, consists of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30,

Property and equipment, consists of the following as of March 31, 2023 and December 31, 2022 (in thousands):

Laboratory equipment

3 unchanged sentences

accumulated depreciation and amortization

( 3,367 )  

Property and equipment, net

Depreciation and amortization expense was $ 0.2  million and $ 0.7  million for the 

three and nine months ended September 30, 2022 and $ 0.2  million and $ 0.6  million for the three and nine months ended September 30, 2021 .

$ 1,103  

$ 1,297  

Depreciation and amortization expense was $ 0.2  million for the 

three months ended March 31, 2023 and $ 0.2  million for the three months ended March 31, 2022 .

Note 9 –

5 unchanged sentences

If certain revenue thresholds for Jelmyto aggregate worldwide annual net sales are not met, the future cash payments to RTW with respect to Jelmyto annual net sales up to $200 million will increase by 3.5 %, and may decrease back to 9.5% dependent on the Company meeting certain subsequent Jelmyto aggregate worldwide annual net sales thresholds.

The rate in effect for the nine  months ended September 

30, 2022 for annual sales up to $ 200 million was 13.0 %.

The rate in effect for the three months ended March 31, 2023 

for annual net sales up to $ 200 million was 13.0 %.

In addition, subject to FDA approval of UGN- 102, RTW is entitled to receive tiered, future cash payments based on aggregate worldwide annual net product sales of UGN- 102 in an amount equal to:

7 unchanged sentences

Changes in future payments from previous estimates are included in future financing expense. The Company does not expect to make any principal payments in the next 12 months.

The following table shows the activity with respect to the carrying value of the prepaid forward liability, in thousands:

Prepaid forward obligation at closing of RTW Transaction

Capitalized closing costs

The following table shows the activity with respect to the carrying value of the prepaid forward liability for the year ended December 31, 2022 and for the three  months ended March 31, 2023, in thousands:

Carrying value of prepaid forward obligation as of December 31, 2021

$ 85,713  

Financing on prepaid forward obligation

21,559  

Amounts paid and payable (1)

Carrying value of prepaid forward obligation as of December 31, 2022

98,923  

Financing on prepaid forward obligation

Amounts paid and payable (1)

Carrying value of prepaid forward obligation as of September 30, 2022

Carrying value of prepaid forward obligation as of March 31, 2023

$ 101,912  

( 1 ) $ 2.2  million and $ 2.3  million of the Amounts paid and payable are included as current portion of the prepaid forward obligation within other current liabilities on the condensed consolidated balance sheets as of March 

31, 2023  and December 31, 2022, respectively.

Note 10 –

4 unchanged sentences

first  tranche of $ 75  million was funded in 

March 2022. 

At its option, the Company 

draw up to an additional $ 25  million before 

December 31, 2022, 

subject to customary bring down conditions and deliverables.

The second tranche of $ 25  million was funded in 

December 2022.

The facility will mature 

3 unchanged sentences

1.25 % floor) plus 

8.25 %. In the event of the cessation of LIBOR, the benchmark governing the interest rate will be replaced with a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York.

Upon the cessation of LIBOR, the benchmark governing the interest rate will be replaced with a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York.

The Company is not required to maintain any financial covenants.

The Company incurred financing expenses of $ 4.2 million which are recognized as a direct offset to the long-term debt on the Company's condensed consolidated balance sheet.

These debt issuance costs are amortized over the term of the debt using the effective interest method, and are recorded in the condensed consolidated statements of operations as “Interest expense".

The Company incurred financing expenses of $ 4.2 million which are recognized as a direct offset to the long-term debt on the Company's condensed consolidated balance sheets.

The following table shows the activity with respect to the carrying value of the long-term debt, in thousands:

Long-term debt at closing of Pharmakon loan

$ 100,000  

Capitalized costs and discounts

Interest expense

Amounts paid and payable

Carrying value of Pharmakon loan as of September 30, 2022

Carrying value of Pharmakon loan as of December 31, 2022

97,537  

Interest expense

Carrying value of Pharmakon loan as of March 31, 2023

$ 97,941  

Note 11  

Operating Leases

The Company had the following office and laboratory facility leases as of September 30, 2022 :

In April 2016, UPL signed an addendum to its November 2014 lease agreement for the Company’s offices located in Israel, in order to increase the office space rented and to extend the rent period until 2019.

In March 2019, UPL utilized the agreement extension option and extended the rent period for an additional three years until August 2022.

The Company had the following office and laboratory facility leases as of March 31, 2023 :

July 2022, 

1 unchanged sentence

September 2025.  

The Company's remaining contractual obligation under this lease is approximately $ 0.9  million as of September 30, 2022. 

In September 2017, UPI entered into a new lease agreement for its office space in New York, which the Company previously used as its headquarters.

The lease agreement commenced in October 2017 and terminated in February 2021. 

The Company's remaining contractual obligation under this lease is approximately $ 0.7  million as of March 31, 2023. 

In April 2018, UPI entered into a new lease agreement for an office in Los Angeles, California.

1 unchanged sentence

The landlord provided a tenant allowance for leasehold improvements of $ 0.2 million that was accounted for as a lease incentive.

The Company’s remaining contractual obligation under this lease is approximately $ 0.4  million as of September 30, 2022 .

The Company’s remaining contractual obligation under this lease is approximately $ 0.3  million as of March 31, 2023 .

In November 2019, UPI entered into a sublease for this office space, with a lease commencement date of 

1 unchanged sentence

The subtenants exercised their early access clause and moved into the premises at the end of November 2019. 

The remaining rental payments to be received over the lease term is approximately $ 0.4  million as of September 30, 2022 .

The Company accounts for the sublease as an operating lease in accordance with ASC 842 - 10 - 25 - 2 and ASC 842 - 10 - 25 - 3.

The main lease was considered for impairment and the amount was determined to be immaterial.

The remaining rental payments to be received over the lease term is approximately $ 0.2  million as of March 31, 2023 .

The Company accounts for the sublease as an operating lease in accordance with ASC 842.

In November 2019, UPI entered into a new lease agreement for an office in Princeton, New Jersey, which the Company now uses as its headquarters.

The lease commencement date was November 29, 2019, with an original lease term of 38 months, expiring January 31, 2023.

The lease commencement date was November 29, 2019 

with an original lease term of 38 months, expiring January 31, 2023.

In June 

2022, the Company signed a lease extension for the Princeton office, extending the term of the lease through January 31, 2026. 

The Company’s remaining contractual obligation under this lease is approximately $ 1.9  million as of September 30, 2022 .

The Company’s remaining contractual obligation under this lease is approximately $ 1.6  million as of March 31, 2023 .

In addition, the Company has other operating office equipment and vehicle leases.

2 unchanged sentences

The Company’s leases expire at various dates from 2023  through 2026, with varying renewal and termination options.

The components of lease cost for the three and nine months ended September 30, 2022  and 2021 were as follows (in thousands):

The components of lease cost for the three months ended March 31, 2023  and 2022  were as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Operating lease cost

Sublease income

( 56 )  

Variable lease cost

The amounts recognized as of September 30, 2022 and 

The amounts recognized as of March 31, 2023 and 

December 31, 2022 were as follows (in thousands):

September 30,

Right-of-use assets

$ 2,329  

$ 2,452  

Long-term lease liabilities

Other current liabilities

As of September 30, 2022 , no impairment losses have been recognized to date.

Supplemental information related to leases for the nine months ended 

September 30, 2022 and 2021 is as follows (in thousands):

Nine Months Ended

September 30,

As of March 31, 2023 , no impairment losses have been recognized.

Supplemental information related to leases for the three months ended 

March 31, 2023 and 2022 is as follows (in thousands, except for lease terms and discount rate amounts):

Three Months Ended  

Cash paid for amounts included in the measurement of lease liabilities:

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Weighted-average discount rate of operating leases

As of September 30, 2022 , maturities of lease liabilities were as follows (in thousands):

10.12 %  

As of March 31, 2023 , maturities of lease liabilities were as follows (in thousands):

Years ending December 31,

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Total future minimum lease payments

$ 2,676  

Present value of lease liabilities

As of September 30, 2022 , undiscounted cash flows to be received under the Company’s operating sublease on an annual basis were as follows (in thousands):

$ 2,371  

As of March 31, 2023 , undiscounted cash flows to be received under the Company’s operating sublease on an annual basis were as follows (in thousands):

Operating Leases

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2025 and thereafter

Sublease income is recognized net within operating expenses.

Sublease income for the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Sublease income from fixed lease payments

Note 12  

Revenue From Product Sales

Net product sales consist of the following for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Net product sales consist of the following for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Net revenue recognized includes management’s estimate of returns, consideration paid to the customer, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks relating to 

340b  drug pricing programs, Medicaid drug rebate programs, and the Company’s copay assistance program, which are estimated based on industry benchmarking studies as well as the Company’s historical experience.

Reserves related to items that are contractually able to be net settled are recognized as contra accounts receivables. The following table shows the activity with respect to sales reserves for period ended of September 30, 2022  (in thousands):

$ 17,192  

$ 13,564  

340b  drug pricing programs, Medicaid drug rebate programs, the Company’s copay assistance program, and Medicare refund for discarded drug, which are estimated based on the Company’s historical experience.

Reserves related to items that are contractually able to be net settled are recognized as contra accounts receivable while other remaining reserves are recognized within other current liabilities on the condensed consolidated balance sheets. The following table shows the activity with respect to sales reserves for period ended of March 31, 2023  (in thousands):

Reserves related to government sponsored programs

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Balance as of December 31, 2022

Balance as of September 30, 2022

$ 1,437  

( 2,470 )  

( 2,060 )  

Balance as of March 31, 2023

$ 1,797  

$ 2,143  

Note 13  

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In November 2019, the Company entered into a license agreement with Agenus Inc., pursuant to which Agenus granted to the Company an exclusive, worldwide ( not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license under Agenus’s intellectual property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody of Agenus known as AGEN1884 (zalifrelimab), an anti-CTLA- 4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery.

Initially, the Company plans to develop AGEN1884 in combination with UGN- 201 for the treatment of high-grade NMIBC.

Pursuant to the license agreement, the Company paid Agenus an upfront fee of $ 10.0 million and has agreed to pay Agenus up to $ 115.0 million upon achieving certain clinical development and regulatory milestones, up to $ 85.0 million upon achieving certain commercial milestones, and royalties on net sales of licensed products in the 14 %- 20 % range.

The Company will be responsible for all development and commercialization activities.

Under the terms of the license agreement, Agenus has agreed to use commercially reasonable efforts to supply AGEN1884 to the Company for use in preclinical studies or clinical trials.

Unless earlier terminated in accordance with the terms of the license agreement, the license agreement will expire on a product-by-product and country-by-country basis at the later of (a) the expiration of the last to expire valid claim of a licensed patent right that covers the licensed product in such country or (b) 15 years after the first commercial sale of the licensed product in such country.

The Company may terminate the license agreement for convenience upon 180 days’

written notice to Agenus.

Either party may terminate the license agreement upon 60 days’

notice to the other party if, prior to the first commercial sale of a licensed product, the Company substantially ceases to conduct development activities of the licensed products for nine consecutive months (and during such period, Agenus has complied with its obligations under the license agreement) other than in response to a requirement of an applicable regulatory authority or an event outside of the Company’s control.

In addition, either party may terminate the license agreement in the event of an uncured material breach of the other party.

UGN- 301 is a formulation of zalifrelimab administered using RTGel  technology that is in Phase 1 clinical development for high-grade non-muscle invasive bladder cancer ("high-grade NMIBC"). 

MD Anderson Agreement

In January 2021, the Company announced that it entered into a three -year strategic research collaboration agreement with MD Anderson focusing on the sequential use of UGN- 201 and UGN- 301  as an investigational treatment for high-grade NMIBC.

Under the terms of the agreement, MD Anderson and the Company will collaborate on the design and conduct of non-clinical and clinical studies with oversight from a joint steering committee.

The Company will provide funding, developmental candidates, and other support.

Pursuant to the agreement, the Company makes bi-annual payments to MD Anderson to fund the collaboration.

As of September 30, 2022 , the Company has made payments to MD Anderson totaling $ 2.0 million recognized evenly over the associated period through research and development expenses.

Pursuant to the agreement, the Company has made bi-annual payments totaling $ 2.0 million to MD Anderson to fund the collaboration, recognized evenly over the associated period through research and development expenses.

In July 2022, the Company determined that it had achieved the objectives that it established when the agreement was initiated, and notified MD Anderson that it was exercising its right to conclude the collaboration in 2022 as the Company did not foresee initiating further development activities as part of the collaboration, although the Company will continue to collaborate on existing joint projects.

As a result of this notification, the Company is not responsible for any further fixed bi-annual funding payments, although the Company will be responsible for costs related to existing joint projects that exceed the payments already made to MD Anderson.  

As a result of this notification, the Company is not responsible for any further fixed bi-annual funding payments in 2023, although the Company will be responsible for costs related to existing joint projects that exceed the payments already made to MD Anderson.  

Note 14  

Shareholders ’

The Company had 100.0 million ordinary shares authorized for issuance as of September 30, 2022 and December 31, 2021 .

The Company had 23.0 million and 22.5  million ordinary shares issued and outstanding as of September 30, 2022 and December 

31, 2021, respectively.

The Company had 100.0 million ordinary shares authorized for issuance as of March 31, 2023 and December 31, 2022 .

The Company had 23.4  million and 23.1  million ordinary shares issued and outstanding as of March 31, 2023 and December 31, 2022 , respectively.

Each ordinary share is entitled to one vote.

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As a result, and pursuant to the terms of Section 102, the Company is not allowed to claim as an expense for tax purposes the amounts credited to the employees in respect of options granted to them under the Plans, including amounts recorded as salary benefits in the Company’s accounts, with the exception of the work-income benefit component, if any, determined on grant date.

For non-employees and for non-Israeli employees, the Plans are subject to Section 3 (i) of the Israeli Income Tax Ordinance.

For non-employees and for non-Israeli employees, the Plans is subject to Section 3 (i) of the Israeli Income Tax Ordinance.

Employees are typically granted stock options and/or restricted stock units ("RSUs"), upon commencement of employment.

Also, eligible employees may receive an annual grant of options or RSUs.

Non-employee members of the Board typically receive a grant of stock options upon initial appointment to the Board, and stock options annually.

Non-employee members of the Board typically receive a grant of stock options upon initial appointment to the Board, and/or stock options annually.

The term of any option granted under the Plans cannot exceed 10 years.

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1,400,000 . On January 1, 2018, the share reserve increased by 250,167 to 1,650,167 shares.

On October 12, 2018, the Company increased the amount of ordinary shares authorized for issuance under the 2017 Plan by 1,900,000 to 3,550,167 shares.

On June 8, 2020 the Company’s shareholders approved an increase to the amount of ordinary shares authorized for issuance under the 2017 Plan by 400,000 to 3,950,167 shares.

On June 7, 2021, the Company’s shareholders approved an increase to the amount of ordinary shares authorized for issuance under the 2017 Plan by 400,000 to 4,350,167 shares.

On June 8, 2022, the Company's shareholders approved an increase to the amount of ordinary shares authorized for issuance under the 2017  Plan by 400,000 to 4,750,167 shares. 

On October 12, 2018, the Company increased the number of ordinary shares authorized for issuance under the 2017 Plan by 1,900,000 to 3,550,167 shares.

On June 8, 2020, the Company’s shareholders approved an increase to the number of ordinary shares authorized for issuance under the 2017 Plan by 400,000 to 3,950,167 shares.

On June 7, 2021, the Company’s shareholders approved an increase to the number of ordinary shares authorized for issuance under the 2017 Plan by 400,000 to 4,350,167 shares.

On June 8, 2022, the Company's shareholders approved an increase to the number of ordinary shares authorized for issuance under the 2017  Plan by 400,000 to 4,750,167 shares. 

In May 2019, the Company adopted the UroGen Pharma Ltd.

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In December 2021, the Board approved a 300,000 increase in the share reserve of the Inducement Plan. 

As of September 30, 2022 , 3,442,209  

As of March 31, 2023 , 3,545,519  

ordinary shares are subject to outstanding awards under the Company's share-based compensation plans and 1,020,735  ordinary shares remain available for future awards.

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Three Months Ended

Nine Months Ended

September 30,

Research and development expenses

Selling, general and administrative expenses

The total unrecognized compensation cost of options and RSUs at September 30, 2022 is $ 12.2  million with a weighted average recognition period of 1.67  years.

Total share-based compensation expense

$ 2,286  

$ 2,949  

The total unrecognized compensation cost of options and RSUs at March 31, 2023 is $ 14.2  million with a weighted average recognition period of 2.1  years.

Note 16  

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is taxed under Israeli tax laws.

As of September 30, 2022 , the Company continues to maintain a full valuation allowance against deferred tax assets for all jurisdictions.

As of March 31, 2023 , the Company continues to maintain a full valuation allowance against deferred tax assets for all jurisdictions.

In evaluating the need for a valuation allowance, the Company considers all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, forecasts of future taxable income, and tax planning strategies.

The Company has cumulative global pretax losses for the years ended 2021, 2020 and 

2019, and for the nine months ended September 30, 2022 .

The Company has cumulative global pretax losses for the years ended 2022, 2021  and 

2020, and for the three months ended March 31, 2023 .

The Company will continue to assess the extent to which its deferred tax assets may be realized in the future and will adjust the valuation allowance as needed.

The Company has a liability for uncertain tax positions of $ 2.8  million as of September 30, 2022 , for tax positions relating to transfer pricing between affiliated entities.

The Company has a liability for uncertain tax positions of $ 3.0  million as of March 31, 2023 , for tax positions relating to transfer pricing between affiliated entities.

The Company recognizes interest accrued and penalties related to uncertain tax positions as a component of income tax expense.

As of September 30, 2022 , the Company’s liability for uncertain tax positions includes $ 0.9  million of accrued interest and penalties.

As of March 31, 2023 , the Company’s liability for uncertain tax positions includes $ 1.1  million of accrued interest and penalties.

The Company operates on a global basis and is subject to tax laws and regulations in the United States and Israel.

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There were no related party transactions for the 

nine months ended September 30, 2022 or 2021 .

three months ended March 31, 2023 or 2022 .

Note 18  

2 unchanged sentences

Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities.

The Company’s maximum exposure under these arrangements is unknown as of September 30, 2022 and December 31, 2021 .

The Company’s maximum exposure under these arrangements is unknown as of March 31, 2023 and December 31, 2022 .

The Company does not anticipate recognizing any significant losses relating to these arrangements.

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Subsequent Events

On October 21, 2022, the Company requested the advance of the second tranche (the "Tranche B Loan") under the Pharmakon loan agreement in the amount of $ 25.0 million. The funding of the Tranche B Loan is expected to occur on December 16, 2022, subject to customary bring down conditions and deliverables. The proceeds of the Tranche B Loan will be used to fund the Company's general corporate and working capital requirements.

The Company has evaluated and determined there were no further subsequent events.

The Company has evaluated and determined there were no subsequent events.

Management ’

2 unchanged sentences

the audited financial statements and notes thereto as of and for the year ended December  

31, 2021 and the related Management ’

s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2021 ( “

31, 2022 and the related Management ’

s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2022 ( “

Annual Report ”

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We have developed 

 reverse-thermal hydrogel, a proprietary sustained release, hydrogel-based technology that has the potential to improve therapeutic profiles of existing drugs.

RTGel  reverse-thermal hydrogel, a proprietary sustained release, hydrogel-based technology that has the potential to improve therapeutic profiles of existing drugs.

Our technology is designed to enable longer exposure of the urinary tract tissue to medications, making local therapy a potentially more effective treatment option.

Our approved product 

Jelmyto ®

(mitomycin) for pyelocalyceal solution, and our investigational candidate, UGN-102 (mitomycin) for intravesical solution, are designed to ablate tumors by non-surgical means and to treat several forms of non-muscle invasive urothelial cancer, including low-grade upper tract urothelial cancer (“low-grade UTUC”) and low-grade intermediate risk non-muscle invasive bladder cancer (“low-grade intermediate risk NMIBC”), respectively.

In addition, our immuno-uro-oncology pipeline includes UGN-301 (zalifrelimab), an anti-CTLA-4 antibody, which we intend to study as a combination therapy with multiple potential agents.

We estimate that the annual treatable patient population of low-grade UTUC in the United States is approximately 6,000 to 7,000;

the estimated annual treatable population of low-grade intermediate risk NMIBC is approximately 80,000.

RTGel is a novel proprietary polymeric biocompatible, reverse thermal gelation hydrogel, which, unlike the general characteristics of most forms of matter, is liquid at lower temperatures and converts into gel form when warmed to body temperature.

We believe that these characteristics promote ease of delivery into and retention of drugs in body cavities, including the bladder and the upper urinary tract, forming a transient reservoir of drug that disintegrates over time while preventing rapid excretion, providing for increased dwell time.

RTGel leverages the physiologic flow of urine to provide a natural exit from the body.

Jelmyto  (mitomycin) for pyelocalyceal solution, and our investigational candidate, UGN-102 (mitomycin) for intravesical solution, are designed to ablate tumors by non-surgical means and to treat several forms of non-muscle invasive urothelial cancer, including low-grade upper tract urothelial cancer (“low-grade UTUC”) and low-grade intermediate risk non-muscle invasive bladder cancer (“low-grade intermediate risk NMIBC”), respectively.

In addition, our immuno-uro-oncology pipeline includes UGN-301 (zalifrelimab), an anti-CTLA-4 antibody, which we intend to study as both monotherapy and in combination therapy.

We estimate that the annual treatable patient population of low-grade UTUC in the United States is approximately 6,000 to 7,000 and the annual treatable population of low-grade intermediate risk NMIBC is approximately 80,000.

RTGel  is a novel proprietary polymeric biocompatible, reverse thermal gelation hydrogel technology, which, unlike the general characteristics of most forms of matter, is liquid at lower temperatures and converts into gel form when warmed to body temperature.

We believe that these characteristics promote ease of delivery into and retention of drugs in body cavities, including the bladder and the upper urinary tract, forming a transient reservoir of drug that dissolves over time while preventing rapid excretion, providing for increased dwell time.

RTGel  leverages the physiologic flow of urine to provide a natural exit from the body.

We believe that RTGel , when formulated with an active drug, may allow for the improved efficacy of treatment of various types of urothelial and specialty cancers and urologic diseases without compromising the safety of the patient or interfering with the natural flow of fluids in the urinary tract.

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increasing the exposure of active drugs in the bladder and upper urinary tract by significantly extending the dwell time of the active drug while conforming to the anatomy of the bladder and the upper urinary tract, which allows for enhanced drug tissue coverage.

For example, the average dwell time of the standard mitomycin water formulation, currently used as adjuvant treatment, in the upper urinary tract is approximately five minutes, compared to up to six hours when mitomycin is formulated with RTGel ;

For example, the average dwell time of the standard aqueous mitomycin formulation, currently used as adjuvant treatment, in the upper urinary tract is approximately five minutes, compared to up to six hours when mitomycin is formulated with RTGel ;

administering higher doses of an active drug than would otherwise be possible using standard water-based formulations.

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maintaining the active drug’s molecular structure and mode of action.

These characteristics of RTGel enable sustained release of mitomycin in the urinary tract for both Jelmyto and UGN-102.

These characteristics of RTGel  enable sustained release of mitomycin in the urinary tract for both Jelmyto and UGN-102.

Further, RTGel may be particularly effective in the bladder and upper urinary tract where tumor visibility and access are challenging, and where there exists a significant amount of urine flow and voiding.

We believe that these characteristics of RTGel may prove useful for the local delivery of active drugs to other bodily cavities in addition to the bladder and upper urinary tract.

On April 15, 2020, the FDA approved our new drug application (“NDA”) for Jelmyto (mitomycin) for pyelocalyceal solution, formerly known as UGN-101, for the treatment of adult patients with low-grade UTUC.

On April 15, 2020, the U.S.

F ood and Drug Administration ("FDA") appro ved our new drug application (“NDA”) for Jelmyto (mitomycin) for pyelocalyceal solution, formerly known as UGN-101, for the treatment of adult patients with low-grade UTUC.

Jelmyto consists of mitomycin, an established chemotherapy, and sterile hydrogel, using our proprietary sustained release RTGel technology.

It has been designed to prolong exposure of urinary tract tissue to mitomycin, thereby enabling the treatment of tumors by non-surgical means.

New product exclusivity for Jelmyto exists through April 15, 2023, Orphan Drug exclusivity through April 15, 2027, as well as a composition of matter patent set to expire in early 2031. The main patents that protect Jelmyto in the United States are set to expire on January 20, 2031.

New product exclusivity for Jelmyto exists through April 15, 2023, and Orphan Drug exclusivity applies through April 15, 2027, as well as a composition of matter patents set to expire in early 2031. The main patents that protect Jelmyto  in the United States are set to expire in January 2031.

These patents were listed in the FDA's Orange Book (Approved Drug Products with Therapeutic Equivalence Evaluations).

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It is a challenging condition to treat due to the complex anatomy of the urinary tract system.

Prior to Jelmyto , the current standard of care included endoscopic resection(s) and radical nephroureterectomy, which involves the removal of the renal pelvis, kidney, ureter and bladder cuff.

Prior to Jelmyto , the current standard of care included endoscopic resection(s) and radical nephroureterectomy, the latter which involves the removal of the renal pelvis, kidney, ureter and bladder cuff.

Treatment is further complicated by the fact that low-grade UTUC is most commonly diagnosed in patients over 70 years of age, who may already have compromised kidney function and may suffer further complications as a result of a major surgery.

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The most commonly reported adverse events (≥ 20%) were ureteric obstruction, flank pain, urinary tract infection, hematuria, abdominal pain, fatigue, renal dysfunction, nausea, dysuria and vomiting.

Most adverse events were mild to moderate and manageable using well established treatments.

Most adverse events were mild to moderate and manageable.

No treatment-related deaths occurred.

In December 2022, we presented new data from a follow up study to the OLYMPUS trial designed to obtain long‐term data on Jelmyto .

Based on data available for 16 of the 23 patients who had remained in CR at the end of the OLYMPUS study, the median duration of response in that subset of patients was 28.9 months.

Thirteen patients remained in CR, two patients had recurrence of low grade‐UTUC on the same side as treated in OLYMPUS, and one patient underwent RNU due to ureteral stricture without evidence of UTUC at the time of surgery.

No patient had progressed to high‐grade disease.

In June 2020, we initiated our commercial launch of Jelmyto in the United States.

We have staffed, trained and prepared a customer-facing team that includes territory business managers with deep experience in both urology and oncology.

These territory business managers are led by seven regional business directors.

Each region is additionally supported by one to two clinical nurse educators to provide education and training around instillation, as well as a field reimbursement manager to help ensure access and reimbursement for appropriate patients.

These territory business managers are led by seven regional business directors, who are in turn supported by three regional operations managers. Each region is additionally supported by one to two clinical nurse educators to provide education and training around instillation, as well as a field reimbursement manager to help ensure access and reimbursement for appropriate patients.

In addition, our organization currently includes several medical science liaisons who appropriately engage with physicians interested in learning more about UroGen, 

Jelmyto  and our technology, both in person and virtually.

In total, our customer-facing team comprises approximately 80 colleagues. 

In total, our customer-facing team comprises approximately 80 representatives. 

We are committed to helping patients access Jelmyto .

Our market access teams have laid the foundation for coverage and reimbursement, meeting multiple times with payors.

All Medicare patients are covered and the vast majority of commercial plans have policies in place, in whole covering over 150 million lives.

Medicare patients are covered and the vast majority of commercial plans have policies in place, in whole covering over 150 million lives.

In addition to reimbursement and access, we have also been focused on ensuring seamless integration into physician practices.

We have implemented processes to help make Jelmyto preparation and administration safe and seamless for practitioners and patients, including entering into an agreement with a major national specialty pharmacy under which the pharmacy, following receipt of a patient prescription, prepares the Jelmyto admixture on our behalf.

We have implemented processes to help make Jelmyto preparation and administration seamless for practitioners and patients, including entering into an agreement with a major national specialty pharmacy under which the pharmacy, following receipt of a patient prescription, prepares and dispenses the Jelmyto admixture on our behalf.

In September 2022, the FDA authorized an extension of the in-use period for Jelmyto admixture from eight hours to 96 hours (four days) following reconstitution of the product, adding convenience and flexibility in managing patient care.

In October 2020, a Medicare C-Code was issued for Jelmyto .

The Centers for Medicare & Medicaid Services established a permanent and product-specific J-code for Jelmyto that took effect on January 1, 2021, and replaced the C-Code. We have also launched a registry to capture data and evaluate real world outcomes in patients with low-grade UTUC that have been or will be treated with Jelmyto .

The Centers for Medicare & Medicaid Services established a permanent and product-specific J-code for Jelmyto that took effect on January 1, 2021 and replaced the C-Code. We have also launched a registry to capture data and evaluate real world outcomes in patients with low-grade UTUC that have been or will be treated with Jelmyto .

The purpose of the registry is to study the use of Jelmyto in clinical practice in the United States and address specific clinical questions.

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Patients were treated with six weekly instillations of UGN-102 and underwent assessment of CR (the primary endpoint) four to six weeks following the last instillation;

Consistent with our previous reports showing that 65%, or 41 out of 63 patients, treated with UGN-102 achieved a complete response three months after the start of therapy.

65%, or 41 out of 63 patients, treated with UGN-102 achieved a complete response three months after the start of therapy.

In this subset of patients, 39 (95%), 30 (73%), and 25 (61%) remained disease-free at six, nine, and 12 months after treatment initiation, respectively.

The probability of durable response nine months after CR (12 months after treatment initiation) was estimated to be 72.5% by Kaplan-Meier analysis. T hirteen patients had documented recurrences.

Fifty-seven of 63 (90%) patients completed all six instillations of UGN-102 according to study protocol.

Fifty-seven of 63 (90%) patients completed all six instillations of UGN-102 according to the study protocol.

Median duration of response was not reached.

The most common adverse events, greater than 10%, were most often reported as mild to moderate in severity and include dysuria, hematuria, urinary frequency, fatigue, urgency and urinary tract infection. The final data was published online in The Journal of Urology in October 2021 and was included in the January 2022 print edition.

Urothelial cancer, which is comprised of bladder cancer and UTUC, affects a large, and what we believe to be, an underserved patient population.

Annual expenditures for Medicare alone in the United States for the treatment of urothelial cancer were estimated to be at least $5.0 billion in 2020.

The majority of the expenditures are spent on tumor resection surgeries such as transurethral resection of bladder tumor ("TURBT").

The prevalence of bladder cancer in the United States based on most recently published data was approximately 724,000 and estimated 2021 annual incidence of bladder cancer was approximately 85,000.

We estimate based upon a review of peer-reviewed literature and publicly available data that there are approximately 80,000 low-grade intermediate risk NMIBC patients in the United States annually.

We believe that UGN-102 has the potential to be a new therapeutic option for the treatment of low-grade intermediate risk NMIBC patients.

In December 2022 we presented new data from a follow up study to the OPTIMA II study designed to obtain long-term data on UGN-102 that shows median duration of response of 24.4 months based on available data for 15 out of 25 patients who achieved a complete response in OPTIMA II. Seven patients remained in CR, six patients had recurrence of low-grade disease, one patient had progression to high-grade disease and one patient withdrew consent but remained in CR at the last evaluation prior to discontinuation.

All patients were alive at the last contact, and five patients were known to have had post-study treatment with transurethral resection of the bladder tumors or fulguration.

UGN-102 is administered locally using the standard practice of intravesical instillation directly into the bladder via a catheter.

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We initiated the Phase 3 ATLAS trial in December 2020 and until November 2021, were enrolling patients in this trial comparing UGN-102 with or without TURBT to standard of care, TURBT.

In parallel, we continued to engage in discussions with the FDA and, based on this dialogue, we designed a trial in order to demonstrate the efficacy and safety of UGN-102.

This new Phase 3 ENVISION trial is a single-arm, multinational, multicenter study evaluating the efficacy and safety of UGN-102 as primary chemoablative therapy in patients with low-grade intermediate risk NMIBC.

The design for the Phase 3 ENVISION trial is similar to our Phase 2 OPTIMA II trial in that the patient population will have similar clinical characteristics, receive the same treatment regimen and undergo the same efficacy and safety assessments and qualitative follow-up.

Study participants will receive six once-weekly intravesical instillations of UGN-102.

The planned primary endpoint will evaluate the complete response rate at three months after the first instillation, and the key secondary endpoint will evaluate durability over time in patients who achieve complete response at the three-month assessment.

In February 2022, we announced the initiation of the Phase 3 ENVISION trial, which is expected to enroll approximately 220 patients across 90 sites, with completion of enrollment expected by the end of 2022. Assuming positive findings, we anticipate submitting an NDA for UGN-102 in 2024.

In November 2021, as a result of the FDA's acceptance of a single arm approach (the ENVISION Trial), we stopped enrollment of the Phase 3 ATLAS study. However, at the time enrollment was stopped, any patients who had signed an informed consent were able to complete screening, and if eligible were randomized into the trial.

Patients continue to be followed in the Phase 3 ATLAS study, and clinical results from these patients are expected to generate additional safety data and other insights in our evaluation of UGN-102 as a primary therapy in the treatment of low-grade intermediate risk NMIBC.

We have also initiated a Phase 3b study with the objective of demonstrating whether UGN-102 can be administered at home by a qualified home health professional, avoiding the need for repeated visits to a healthcare setting for instillation. Patients in the ongoing Phase 3b study will receive six once-weekly intravesical instillations of UGN-102.

The Phase 3b study aims to enroll up to 10 patients across four centers, with completion of enrollment anticipated by the end of 2022. The initial treatment visit will occur at the investigative site and instillation will be performed by a qualified physician.

Treatment visits two to six will take place at the patient's home and instillation will be performed by a properly trained and qualified home health professional.

The primary endpoint of the study is the incidence of treatment-emergent adverse events ("TEAEs"), serious TEAEs, TEAEs of special interest, discontinuations from at home study treatment, and clinically significant abnormalities in laboratory tests (hematology, serum chemistry, and urinalysis).

We believe establishing a precedent for a convenient at home solution may facilitate access-to-care and address quality of life issues that certain patients may face with the current standard of care .

In parallel, we continued to engage in discussions with the FDA and based on this dialogue, we designed a trial in order to demonstrate the efficacy and safety of UGN-102.

This Phase 3 ENVISION trial is a single-arm, multinational, multicenter study evaluating the efficacy and safety of UGN-102 as primary chemoablative therapy in patients with low-grade intermediate risk NMIBC.

The design of the Phase 3 ENVISION trial is similar to our Phase 2 OPTIMA II trial in that the patient population has similar clinical characteristics, receives the same investigational treatment regimen and undergoes similar efficacy and safety assessments and qualitative follow-up.

Study participants receive six once-weekly intravesical instillations of UGN-102.

The primary endpoint will evaluate the complete response rate at three months after the first instillation, and the key secondary endpoint will evaluate durability of response in patients who achieve complete response at the three-month assessment.

In February 2022, we announced the initiation of the Phase 3 ENVISION trial, targeting enrollment of 220 patients across 90 sites.

In December 2022, we completed our target enrollment of the Phase 3 ENVISION trial. Assuming positive findings, we anticipate submitting an NDA for UGN-102 in 2024, subject to FDA agreement on the proposed submission.

As a result of the FDA's acceptance of a single arm approach, we stopped enrollment of the Phase 3 ATLAS study. However, at the time enrollment was stopped, any patients who had signed an informed consent were able to complete screening, and if eligible were randomized into the trial.

Clinical results from these patients are expected to generate additional safety and efficacy data and other insights in our evaluation of UGN-102 as a primary therapy in the treatment of low-grade intermediate risk NMIBC.

We also initiated a Phase 3b study with the objective of demonstrating whether UGN-102 can be administered at home by a qualified home health professional, avoiding the need for repeated visits to a healthcare setting for instillation.

As per the study design, patients in this study received six once-weekly intravesical instillations of UGN-102 with the initial treatment visit occurring at the investigative site and instillation performed by a qualified physician.

Treatment visits two to six took place at the patient's home and instillation was performed by a properly trained and qualified home health professional.

The primary endpoints of the study include safety and tolerability, discontinuations from at home study treatment and feedback from patients, home health professionals and investigators via standardized questionnaires.

The study completed enrollment with a total of eight patients across four centers and all study visits for these enrolled patients have been completed.

Preliminary results were reported through a press release in February 2023, finding that UGN-102 was suitable to administer at home by a visiting nurse under the supervision of a treating physician and resulted in 75% of patients achieving a complete response, defined as no detectable disease three months after starting treatment.

Patients, nurses and investigators also completed home instillation feasibility questionnaires.

These standardized feasibility questionnaires highlighted that all eight patients preferred at-home to in-office treatment, and five of six patients recommended UGN-102 home instillation instead of TURBT.

Home instillation was reported as feasible for visiting nurses, and three of four investigators considered at-home treatment “not different”

than in-office treatment.

We believe establishing the precedent for a convenient at home solution may facilitate access to care and address quality of life issues that certain patients may face with the current standard of care.

UGN-301 (zalifrelimab) intravesical solution

Our immuno-uro-oncology pipeline includes UGN-301, an anti-CTLA-4 monoclonal antibody, which we intend to study as a combination therapy with multiple potential agents.

Our immuno-uro-oncology pipeline includes UGN-301, an anti-CTLA-4 monoclonal antibody, which we intend to study as a standalone agent and as a combination therapy.

Non-human primate toxicity studies supported the initiation of a multi-arm Phase 1 study of UGN-301 in combination with other agents.

We believe that this approach leverages our unique drug delivery technology and provides an opportunity to evaluate intravesical delivery of UGN-301 in combination with other immuno-modulators, chemotherapies, gene therapy and innate immune stimulators.

High-grade NMIBC is a highly aggressive form of bladder cancer.

High-grade non-muscle invasive bladder cancer ("high-grade NMIBC") is a highly aggressive form of bladder cancer.

TURBT followed by adjuvant intravesical immunotherapy with Bacillus of Calmette and Guerin ("BCG") is the current standard of care therapy for high-grade NMIBC. However, the high rates of recurrence and significant risk of progression to muscle-invasive tumors are particularly dangerous.

Radical cystectomy, or bladder removal is strongly advocated in patients with BCG-unresponsive NMIBC (i.e., patients with BCG-refractory and BCG-relapsing tumors in whom further BCG therapy is not recommended) or for patients who cannot tolerate BCG.

The first combination we are seeking to investigate clinically involves the sequential use of UGN-201 (imiquimod), a toll-like receptor-7 ("TLR 7") agonist, and UGN-301 in high-grade NMIBC ("high-grade NMIBC").

The first combination we are seeking to investigate clinically involves the sequential use of UGN-201 (imiquimod), a toll-like receptor-7 ("TLR 7") agonist, and UGN-301 in high-grade NMIBC.

UGN-201 is a liquid formulation of imiquimod for intravesical administration that has been optimized for delivery in the urinary tract.

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We believe that the combination of UGN-301 and UGN-201 makes local therapy a potentially more effective treatment option while minimizing systemic exposure and potential side effects.

In March 2022, we announced FDA clearance of our Investigational New Drug application ("IND") to begin a novel Phase 1 clinical study of UGN-301 in patients with recurrent NMIBC. The novel study design will utilize a Master Protocol that we believe is a more efficient and streamlined approach to development.

In March 2022, we announced FDA clearance of our Investigational New Drug application ("IND") to begin a novel Phase 1 clinical study of UGN-301 in patients with recurrent NMIBC. The novel study design utilizes a Master Protocol that we believe is a more efficient and streamlined approach to development.

It will provide more flexibility to add study arms as the trial progresses and is expected to increase efficiency and potentially reduce costs.

We expect the Master Protocol will allow the Company to more quickly evaluate safety, tolerability and dosing of UGN-301 in combination with additional immunomodulators and chemotherapies, with the goal of developing optimized treatment regimens for patients. The multi-arm Phase 1 study, which is expected to support the development of UGN-301 in high-grade NMIBC, was initiated in April 2022 and is actively enrolling.

We expect the Master Protocol will allow us to more quickly evaluate safety, tolerability and dosing of UGN-301 in combination with additional immunomodulators and chemotherapies, with the goal of developing optimized treatment regimens for patients. The multi-arm Phase 1 study, which is expected to support the development of UGN-301 in high-grade NMIBC, was initiated in April 2022 and is actively enrolling. 

Our Research and Development and License Agreements

Agenus Agreement

In November 2019, we entered into a license agreement with Agenus Inc., pursuant to which Agenus granted us an exclusive, worldwide (not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license under Agenus’s intellectual property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody of Agenus known as AGEN1884 (zalifrelimab), an anti-CTLA-4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery.

In November 2019, we entered into a license agreement with Agenus Inc.

("Agenus"), pursuant to which Agenus granted us an exclusive, worldwide (not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license under Agenus’s intellectual property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody of Agenus known as AGEN1884 (zalifrelimab), an anti-CTLA-4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery.

UGN-301 is a formulation of zalifrelimab administered using RTGel technology that is in Phase 1 clinical development for high-grade NMIBC.

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In January 2021, we announced that we had entered into a three-year strategic research collaboration agreement with MD Anderson focusing on the sequential use of UGN-201 and UGN-301 as an investigational treatment for high-grade NMIBC.

Under the terms of the agreement, we and MD Anderson agreed to collaborate on the design and conduct of non-clinical and clinical studies with oversight from a joint steering committee.

We agreed to provide funding, developmental candidates, and other support.

Pursuant to the agreement, we have made bi-annual payments to MD Anderson to fund the collaboration, totaling $2.0 million and recognized evenly over the associated period through research and development expenses.

Pursuant to the agreement, we have made bi-annual payments totaling $2.0 million to MD Anderson to fund the collaboration, recognized evenly over the associated period through research and development expenses.

In July 2022, we determined that we had achieved the objectives that we established when the agreement was initiated, and notified MD Anderson that we were exercising our right to conclude the collaboration in 2022 as we did not foresee initiating further development activities as part of the collaboration, although we will continue to collaborate on existing joint projects.

As a result of this notification, we are not responsible for any further fixed bi-annual funding payments, although we will be responsible for costs related to existing join projects that exceed the payments already made to MD Anderson.  

As a result of this notification, we are not responsible for any further fixed bi-annual funding payments in 2023, although we will be responsible for costs related to existing joint projects that exceed the payments already made to MD Anderson.  

For additional information regarding our research and development and license agreements, see Note 13 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

Impact of COVID-19 Pandemic

COVID-19 could have a detrimental impact on our ongoing and future clinical trials, our ongoing commercial launch and future commercialization activities for Jelmyto , and our ability to access capital markets.

According to the Centers for Disease Control and Prevention, as of October 2022, over 68% of the U.S.

population has completed their primary series of vaccination. However, as circumstances evolve, in particular related to the emergence of variants and subvariants, it will be important to understand potential impacts to patients and the hospital system, and the ability for patients to access 

Jelmyto. 

While it is difficult to predict the ultimate impact of the ongoing COVID-19 pandemic on our business and the healthcare industry, we continue to monitor the evolving COVID-19 situation, and the potential further impacts that the pandemic and the related government response may have on our business.

Components of Operating Results

During the three and nine months ended September 30, 2022 we recognized $16.1 million and $46.3 million of revenue, respectively from sales of our product, Jelmyto .

During the three months ended March 31, 2023 and March 31, 2022, we recognized $17.2 million and $13.6 million of revenue, respectively from sales of our product, Jelmyto .

Cost of Revenue

Cost of revenue consists primarily of inventory and related costs associated with the manufacturing, distribution, warehousing and preparation of Jelmyto, 

including inventory impairment.

In periods prior to receiving FDA approval for Jelmyto , we recognized inventory and related costs associated with the manufacture of Jelmyto as research and development expenses.

including inventory write-downs.

In periods prior to receiving FDA approval for Jelmyto , we recognized inventory and related costs associated with the manufacture of Jelmyto as research and development expense.

Research and Development Expenses

Research and development expenses, net consist primarily of:

Research and development expenses, net consists primarily of:

salaries and related costs, including share-based compensation expense, for our personnel in research and development functions;

expense incurred under agreements with third parties, including clinical research organizations (“CROs”), subcontractors, suppliers and consultants, nonclinical studies and clinical trials;

expense incurred to acquire, develop and manufacture nonclinical study and clinical trial materials;

expense incurred to purchase active pharmaceutical ingredient (“API”) in support of R&D activities and other related manufacturing costs;

expense incurred to acquire, develop and manufacture nonclinical study and clinical trial materials;

expense incurred to purchase active pharmaceutical ingredient (“API”) in support of R&D activities and other related manufacturing costs;

facility and equipment costs, including depreciation expense, maintenance and allocated direct and indirect overhead costs.

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We estimate nonclinical study and clinical trial expense based on the services performed pursuant to contracts with research institutions and contract research organizations that conduct and manage nonclinical studies and clinical trials on our behalf based on actual time and expense incurred by them.

We accrue for costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from our external service providers.

We recognize costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from our external service providers.

We adjust our accrual as actual costs become known.

Where at risk contingent milestone payments are due to third parties under research and development and collaboration agreements, the milestone payment obligations are expensed when such development milestone results are achieved.

We are currently focused on advancing our product candidates, and our future research and development expenses will depend on their clinical success.

Research and development expenses will continue to be significant and will increase over at least the next several years as we continue to develop our product candidates and conduct nonclinical studies and clinical trials of our product candidates.

We are currently focused on advancing our product candidates, and our future research and development expense will depend on their clinical success.

Research and development expense will continue to be significant.

Research and development activities are central to our business model.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We do not believe that it is possible at this time to accurately project total expense required for us to reach commercialization of our product candidates.

We do not believe that it is possible at this time to accurately project total expenses required for us to reach commercialization of our product candidates.

Due to the inherently unpredictable nature of nonclinical and clinical development, we are unable to estimate with certainty the costs we will incur and the timelines that will be required in the continued development and approval of our product candidates.

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In addition, we cannot forecast which product candidates may be subject to future collaborations, if and when such arrangements will be entered into, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

We expect our research and development expenses to increase over the next several years as our clinical programs progress and as we seek to initiate clinical trials of additional product candidates.

We also expect to incur increased research and development expenses as we selectively identify and develop additional product candidates.

We expect our research and development expense to increase over the next several years as our clinical programs progress and as we seek to initiate clinical trials of additional product candidates.

We also expect to incur increased research and development expense as we selectively identify and develop additional product candidates.

The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include, but are not limited to, the following:

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the length of time required to enroll eligible patients;

delays or operational challenges resulting from the ongoing COVID-19 pandemic;

the number of doses that patients receive;

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Other than Jelmyto , which was approved by the FDA in April 2020, we have not received approval of any of our product candidates.

UGN-102 and UGN-301 are still in clinical development, and the outcome of these efforts is uncertain.

UGN-102 and UGN-301 are still in clinical development.

As such, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements.

License fees and development milestone payments related to in-licensed products and technology are expensed as incurred or when achieved, in the case of milestones, if it is determined at that point that they have no established alternative future use.

License fees and development milestone payments related to in-licensed products and technology are expensed as incurred, or achieved in the case of milestones, if it is determined at that point that they have no established alternative future use.

Selling and Marketing Expenses

To date, selling and marketing expenses consist primarily of commercial personnel costs (including share-based compensation) along with pre-commercialization and commercialization activities related to Jelmyto .

We anticipate that our selling and marketing expenses  will remain relatively consistent for the remainder of 2022.

formerly known as UGN-101. 

General and Administrative Expenses

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Other significant costs include medical affairs services, external professional service costs, facility costs, accounting and audit services, legal services, and other consulting fees.

We anticipate that our general and administrative expenses 

will remain relatively consistent for the remainder of 2022 , and may increase in the future to support the potential approval and commercialization of our product candidates and our continued research and development programs. 

Financing on Prepaid Forward Obligation

Financing on prepaid forward obligation is comprised of financing expense related to the RTW Transaction (see Note 9 to our condensed consolidated financial statements included in this Quarterly Report).

Financing on prepaid forward obligation is comprised of financing expense related to the RTW Transaction (see Note 9 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report).

Interest Expense

Interest expense is comprised of interest related to our long-term debt with Pharmakon (see Note 10 to our condensed consolidated financial statements included in this Quarterly Report).

Interest and Other Income, Net

Interest and other income, net, consisted primarily of interest income.

We have yet to generate net taxable income in Israel.

We have historically incurred operating losses resulting in carry forward tax losses totaling approximately $335.8 million as of December 31, 2021.

Interest expense is comprised of interest related to our long-term debt with Pharmakon (see Note 10 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report).

Interest and Other Income (Expense), Net

Interest and other income (expense), net, consisted primarily of interest income, net losses on foreign exchange and bank commissions.

We have yet to generate taxable income in Israel.

We have historically incurred operating losses resulting in carry forward tax losses totaling approximately $419.1 million as of December 31, 2022.

We anticipate that we will continue to generate tax losses for the foreseeable future and that we will be able to carry forward these tax losses indefinitely to future taxable years.

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Income tax expense also consists of our estimate of uncertain tax positions, and related interest and penalties.

See Note 16 to the condensed consolidated financial statements for further information.

See Note 16 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report for further information.

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenue and expense incurred during the reported periods.

In accordance with GAAP, we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances at the time such estimates are made.

In accordance with U.S.

generally accepted accounting principles ("GAAP"), we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances at the time such estimates are made.

Actual results may differ from these estimates under different assumptions or conditions.

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Results of Operations

Comparison of the three months ended September 30, 2022 and 2021

The following table sets forth our results of operations for the three months ended September 30, 2022 and 2021.

Three Months Ended September 30,

Comparison of the three months ended March 31, 2023 and 2022

The following table sets forth our results of operations for the three months ended March 31, 2023 and 2022.

Three Months Ended March 31,

(in thousands)

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Interest expense on long-term debt

Interest and other income, net

Interest and other income (expense), net

Loss before income taxes

Income tax expense

Revenue was $16.1 million and $11.4 million for the three months ended September 30, 2022 and 2021, respectively.

Revenue was $17.2 million and $13.6 million for the three months ended March 31, 2023 and 2022, respectively.

The increase in revenue of $3.6 million reflects the increased volume of sales of our product Jelmyto .

Cost of Revenue

Cost of revenue was $2.0 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively.

In periods prior to receiving FDA approval for Jelmyto , we recognized inventory and related costs associated with the manufacture of Jelmyto as research and development expenses.

We expect this to continue to impact cost of revenue through approximately the second quarter of 2023 as we produce Jelmyto at costs reflecting the full cost of manufacturing and as we deplete inventories that we had expensed prior to receiving FDA approval.

Gross margin would have been approximately 86.9% versus 87.5% for the three months ended September 30, 2022, if we had not sold Jelmyto units that were expensed prior to regulatory approval.

Cost of revenue was $2.3 million and $1.5 million for the three months ended March 31, 2023 and 2022, respectively.

In periods prior to receiving FDA approval for Jelmyto , we recognized inventory and related costs associated with the manufacture of Jelmyto as research and development expenses. The overall increase of $0.8 million is primarily attributable to the full depletion of inventories that we had expensed prior to receiving FDA approval and increased volume of sales of our product Jelmyto . 

Research and Development Expenses

Research and development expenses were $13.1 million and $11.9 million for the three months ended September 30, 2022 and 2021, respectively.

The overall increase of $1.2 million is primarily attributable to the Phase 3 ENVISION study for UGN-102, research into ingredient scale-up and production efficiency for Jelmyto , partially offset by lower stock-based 

compensation expenses in 2022.

Research and development expenses were $12.5 million and $12.7 million for the three months ended March 31, 2023 and 2022, respectively.

The overall decrease of $0.2 million is primarily attributable to lower research and development expenses related to the Phase 3 ENVISION study for UGN-102, research into ingredient scale-up and production efficiency for Jelmyto , reduced clinical compensation expenses and the ending of our collaboration with MD Anderson, partially offset by higher research and development expenses related to our Phase 1 study for UGN-301.

Selling and Marketing Expenses

Selling and marketing expenses were $11.9 milli on and $12.5 million for the three months ended September 30, 2022 and 2021 , respectively.

The decrease in selling and marketing expenses of $0.6 million is primarily attributable to lower stock-based compensation expenses in 2022 .

Selling and marketing expenses were $14.1 milli on and $13.4 million for the three months ended March 31, 2023 and 2022 , respectively.

The increase in selling and marketing expenses of $0.7 million is primarily attributable to 

brand marketing related expenses and commercial operation trainings, partially offset by lower market access related expenses and stock-based compensation expenses.

General and Administrative Expenses

General and administrative expenses were $7.2 million and $9.2 million for the three months ended September 30, 2022 and 2021 , respectively.

The decrease in general and administrative expenses of $2.0 million resulted primarily from a decrease in stock-based compensation expenses in 2022.

General and administrative expenses were $10.3 million and $7.9 million for the three months ended March 31, 2023 and 2022 , respectively.

The increase in general and administrative expenses of $2.4 million resulted primarily from third-party advisory providers, compensation expenses, and ongoing managed services for information technology, partially offset by lower medical affair advisory services and recruiting fees.

Financing on Prepaid Forward Obligation

Financing on prepaid forward obligation was $4.8 million and $6.8 million for the three months ended September 30, 2022 and 2021, respectively.

Financing on prepaid forward obligation was $5.2 million and $5.8 million for the three months ended March 31, 2023 and 2022, respectively.

The measurement of financing on prepaid forward obligation is an accounting estimate under the "imputed interest method" of accounting (see Note 3 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report) which is affected by estimated future payments to RTW, which are based on a percentage of revenues.

The decrease in financing on prepaid forward obligation of $2.0 million was driven primarily by changes in underlying assumptions for remeasuring the effective rate.

Interest Expense on Long-term Debt

Interest expense was $2.7 million and zero for the three months ended September 30, 2022 and 2021, respectively.

The cost in 2022 relates to the Pharmakon loan which closed in March 2022.

Interest and Other Income, Net

Interest and other income, net was $0.5 million and $0.1 million for the three months ended September 30, 2022 and 2021, respectively.

The increase in interest and other income, net was primarily due to minor fluctuations in interest earned on investments and foreign exchange.

Comparison of the nine months ended September 30, 2022 and 2021

The following table sets forth our results of operations for the nine months ended September 30, 2022 and 2021.

Nine Months Ended September 30,

(in thousands)

Cost of revenue

Operating expenses:

Research and development

Selling and marketing

General and administrative

Total operating expenses

Operating loss

Financing on prepaid forward obligation

The decrease in financing on prepaid forward obligation of $0.6 million was driven primarily by changes in underlying assumptions for remeasuring the effective rate.

Interest Expense on Long-term Debt

Interest and other income, net

Loss before income taxes

Income tax expense

Revenue was $46.3 million and $31.9 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in revenue of $14.4 million reflects the increased volume of sales of our product Jelmyto .

Cost of Revenue

Cost of revenue was $5.4 million and $3.6 million for the nine months ended September 30, 2022 and 2021, respectively.

In periods prior to receiving FDA approval for Jelmyto , we recognized inventory and related costs associated with the manufacture of Jelmyto as research and development expenses.

Gross margin would have been approximately 87.8% versus 88.3 % for the nine months ended September 30, 2022, if we had not sold Jelmyto units that were expensed prior to regulatory approval.

Research and Development Expenses

Research and development expenses were $38.4 million and $34.6 million for the nine months ended September 30, 2022 and 2021, respectively.

The overall increase of $3.8 million is primarily attributable to the Phase 3 ENVISION study for UGN-102, research into ingredient scale-up and production efficiency for Jelmyto , partially offset by lower stock-based 

compensation expenses in 2022.

Selling and Marketing Expenses

Selling and marketing expenses were $38.1 milli on and $35.4 million for the nine months ended September 30, 2022 and 2021 , respectively.

The increase in selling and marketing expenses of $2.7 million is primarily attributable to increased market access and brand marketing expenditures, and other expenses related to our participation in the American Urological Association's annual meeting, as well as our annual sales meeting, which did not occur in 2021, partially offset by lower stock-based compensation expenses in 2022.

General and Administrative Expense

General and administrative expense was $23.1 million and $30.7 million for the nine months ended September 30, 2022 and 2021 , respectively.

The decrease in general and administrative expense of $7.6 million resulted primarily from a decrease in stock-based compensation expenses in 2022.

Financing on Prepaid Forward Obligation

Financing on prepaid forward obligation was $16.5 million and $9.9 million for the nine months ended September 30, 2022 and 2021, respectively. 

The measurement of financing on prepaid forward obligation is an accounting estimate under the "imputed interest method" of accounting (see Note 3 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report) which is affected by estimated future payments to RTW, which are based on a percentage of revenues.

The increase in financing on prepaid forward obligation of $6.6 million was driven primarily from a full nine months of financing cost in 2022 for the RTW Transaction, which closed in May 2021, partially offset by changes in underlying assumptions for remeasuring the effective rate.

Interest Expense

Interest expense was $5.2 million and zero for the nine months ended September 30, 2022 and 2021, respectively.

The cost in 2022 relates to the Pharmakon loan which closed in March 2022.

Interest and Other Income, Net

Interest and other income, net was $0.6 million and $0.3 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in interest and other income, net of $0.3 million was primarily due to higher interest earned on cash, cash equivalents and marketable securities.

Interest expense was $3.6 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively.

The cost in 2023 relates to interest expense on the Pharmakon loan for the full quarter versus the prior year given the loan closed in March 2022.

Interest and Other Income (Expense), Net

Interest and other income (expense), net was $0.6 million and $0.0 million for the three months ended March 31, 2023 and 2022, respectively.

The increase in interest and other income (expense), net was primarily due to interest earned on investments due to changes in the overall interest rate environment.

Liquidity and Capital Resources

As of September 30, 2022, we had $95.9 million in cash and cash equivalents and marketable securities.

As of March 31, 2023, we had $75.2 million in cash and cash equivalents and marketable securities.

Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation, and is held primarily in U.S.

Based on our cash flow projections, we believe that our current cash and cash equivalents and marketable securities are sufficient to fund our planned operations beyond the next 12 months.

Through September 30, 2022, we funded our operations primarily through public equity offerings, private placements of equity securities and our funding arrangements with RTW and Pharmakon.

dollars. 

Through March 31, 2023, we funded our operations primarily through public equity offerings, private placements of equity securities and our funding arrangements with RTW and Pharmakon.

In December 2019, we entered into a sales agreement (the “ATM Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which we may from time to time offer and sell our ordinary shares having an aggregate offering price of up to $100.0 million.

The shares are offered and will be sold pursuant to a shelf registration statement on Form S-3 which was declared effective by the SEC on January 2, 2020.

During the second quarter of 2020, we sold 700,000 ordinary shares under the ATM Sales Agreement, for gross proceeds of approximately $16.6 million.

The net proceeds to us after deducting sales commissions to Cowen and other issuance expenses were approximately $15.8 million.

The remaining capacity under the ATM Sales Agreement is approximately $83.4 million.

The remaining capacity under the ATM Sales Agreement is approximately $83.4 million as of March 31, 2023.

The shares will be offered and sold pursuant to our shelf registration statement on Form S-3 filed with the SEC on November 15, 2022, which was declared effective on November 29, 2022.

In March 2021, we entered into a prepaid forward agreement with RTW, pursuant to which RTW agreed to provide us with an upfront cash payment of $75.0 million to support the launch of Jelmyto and the development of UGN-102, and we agreed to provide RTW with tiered future payments based on global annual net product sales of Jelmyto and UGN-102, if approved.

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On March 7, 2022, we entered into a loan agreement ("Loan Agreement") with Pharmakon for a senior secured term loan of up to $100.0 million in two tranches.

The first tranche of $75.0 million ($72.6 million of proceeds were received, $70.8 million net of additional transaction costs) was funded in March 2022. At our option, we may draw up to an additional $25.0 million before December 31, 2022, subject to customary bring down conditions and deliverables.

The Pharmakon loan will mature five years from initial funding and can be prepaid in whole at our discretion, at any time, subject to prepayment premiums and make-whole amounts. The Pharmakon loan will require interest-only payments for the first 48 months followed by principal and interest payments with interest accruing using 3-month LIBOR (with a 1.25% floor) plus 8.25%. In the event of the cessation of LIBOR, the benchmark governing the interest rate will be replaced with a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York. On October 21, 2022, we requested the advance of the second tranche (the "Tranche B Loan") under the Loan Agreement in the amount of $25.0 million. The funding of the Tranche B Loan is expected to occur on December 16, 2022, subject to customary bring down conditions and deliverables.

We have incurred losses since our inception and negative cash flows from our operations, and as of September 30, 2022 we had an accumulated deficit of $548.2 million.

The first tranche of $75.0 million ($72.6 million of proceeds were received, $70.8 million net of additional transaction costs) was funded in March 2022, and the second tranche of $25.0 million was funded in December 2022. The Pharmakon loan will mature five years from initial funding and can be prepaid in whole at our discretion, at any time, subject to prepayment premiums and make-whole amounts. The Pharmakon loan will require interest-only payments for the first 48 months followed by principal and interest payments with interest accruing using 3-month LIBOR (with a 1.25% floor) plus 8.25%.

Upon the cessation of LIBOR, the benchmark governing the interest rate will be replaced with a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York. 

We have incurred losses since our inception and negative cash flows from our operations, and as of March 31, 2023 we had an accumulated deficit of $607.3 million.

We anticipate that we will continue to incur losses for the reasonably foreseeable future.

Our primary uses of capital are, and we expect will continue to be, commercialization activities, research and development expenses, including third-party clinical research and development services, laboratory and related supplies, clinical costs, including manufacturing costs, legal and other regulatory expense and general and administrative costs, partially offset by proceeds from sales of Jelmyto .

We cannot estimate the actual amounts necessary to successfully commercialize any approved products, including Jelmyto , or whether, or when, we may achieve profitability.

Our primary uses of capital are, and we expect will continue to be, commercialization activities, research and development expense, including third-party clinical research and development services, laboratory and related supplies, clinical costs, including manufacturing costs, legal and other regulatory expense and general and administrative costs, partially offset by proceeds from sales of Jelmyto .

We routinely evaluate our liquidity needs, including assessment of our current financial condition, sources of liquidity including current cash and cash equivalents and marketable securities and management’s cash flow projections.

Our ability to continue as a going concern is expected to be impacted by our ability to raise additional capital to fund our operations, produce cash inflows from Jelmyto product sales and develop UGN-102. 

We believe that absent sufficient proceeds received from equity, financing, or business development transactions, we will not have sufficient cash and cash equivalents to fund our operations beyond one year from the issuance of our condensed consolidated financial statements included elsewhere in this Quarterly Report.

We estimate that our existing resources and projected revenues will only be sufficient to fund our planned operations until mid-way through the first quarter of 2024. 

Accordingly, we will, within the next 12 months, require significant additional financing to continue our operations. In addition, there can be no assurances that we will be able to secure such additional financing if at all, on terms that are satisfactory to us, and in amounts sufficient to meet our needs.

These factors raise substantial doubt about our ability to continue as a going concern. Failure to successfully receive additional financing will require us to delay, limit or reduce product development and commercialization efforts.

We cannot estimate the actual amounts necessary to successfully commercialize any approved products, or whether, or when, we may achieve profitability.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements.

There can be no assurances that we will be able to secure such additional financing if at all, or on terms that are satisfactory to us, and that it will be sufficient to meet its needs.

In the event we are not successful in obtaining sufficient funding, this could force us to delay, limit, or reduce our product development, commercialization efforts or other operations.

Funding and Material Cash Requirements

Our present and future funding and cash requirements will depend on many factors, including, among other things:

Our present and future funding and material cash requirements will depend on many factors, including, among other things:

the progress, timing and completion of clinical trials for UGN-102 and UGN-301;

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potential new product candidates we identify and attempt to develop;

revenues we may derive either directly or in the form of royalty payments from future sales of Jelmyto , UGN-102, UGN-301, RTGel reverse thermal hydrogel and any other product candidates;

revenues we may derive either directly or in the form of royalty payments from future sales of Jelmyto , UGN-102, UGN-301, RTGel reverse thermal hydrogel technology and any other product candidates;

the repayment of outstanding debt.

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Debt financing, if available, may involve agreements that include covenants that further limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

In addition, the terms of the Pre-Paid Forward Contract with RTW and the Loan Agreement limit our ability to take certain actions, including incurring additional indebtedness.

In addition, the terms of the Forward Contract with RTW and the Loan Agreement limit our ability to take certain actions, including incurring additional indebtedness.

If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

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Also, in November 2019, we entered into a new lease agreement, dated effective October 31, 2019, for an office in Princeton, NJ.

The lease commencement date was November 29, 2019 and the lease term is 38 months. In June 2022, the Company signed an amendment to its November 2019 lease agreement to extend the term for an additional three years through January 31, 2026. 

The total obligation for future minimum lease payments under our operating leases is $2.8 million as of September 30, 2022. See Note 11 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report for further information.

The lease commencement date was November 29, 2019 and the lease term is 38 months. In June 2022, we signed an amendment to our November 2019 lease agreement to extend the term for an additional three years through January 31, 2026. 

The total obligation for future minimum lease payments under our operating leases is $2.7 million as of March 31, 2023. See Note 11 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report for further information.

In March 2022, UroGen Pharma Ltd., UroGen Pharma, Inc., as the borrower ("Borrower"), and certain direct and indirect subsidiaries of the Company party thereto from time to time, as guarantors ("Guarantors" and, collectively with UroGen Pharma Ltd.

and Borrower, "Credit Parties"), entered into the Loan Agreement with funds managed by Pharmakon Advisors, L.P., including BPCR Limited Partnership (as a "Lender"), BioPharma Credit Investments V (Master) LP (as a "Lender"), and BioPharma Credit PLC, as collateral agent for the Lenders (in such capacity, "Collateral Agent"), pursuant to which the Lenders agreed to make the Term Loans to the Borrower in an aggregate principal amount of up to $100.0 million to be funded in two tranches:

(i) the Tranche A Loan of $75.0 million was advanced in March, 2022 and (ii) the Tranche B Loan of $25.0 million will be advanced at Borrowers election, subject to certain conditions, subject to the customary bring down conditions and deliverables, and in no event later than December 31, 2022.

On October 21, 2022, we requested the advance of the Tranche B Loan under the Loan Agreement in the amount of $25.0 million. The funding of the Tranche B Loan is expected to occur on December 16, 2022, subject to customary bring down conditions and deliverables.

(i) the Tranche A Loan of $75.0 million was advanced in March 2022 and (ii) the Tranche B Loan of $25.0 million was advanced in December 2022.

The Term Loans will mature on the fifth-year anniversary of the Tranche A Closing Date (the “Maturity Date”).

The Term Loans bear interest at 8.25% plus three-month LIBOR per annum with a LIBOR floor of 1.25%.

In the event of the cessation of LIBOR, the benchmark governing the interest rate will be replaced with a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York as described in the Loan Agreement.

Upon the cessation of LIBOR, the benchmark governing the interest rate will be replaced with a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York as described in the Loan Agreement.

Interest is payable quarterly in arrears.

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The following table sets forth the significant sources and uses of cash for the periods set forth below: 

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Operating Activities

Net cash used in operating activities was $65.8 million during the nine months ended September 30, 2022, compared to $64.8 million during the nine months ended September 30, 2021.

The $1.0 million increase was attributable primarily to financing costs related to the prepaid forward obligation and Pharmakon loan, as well as timing of certain accruals.

Net cash used in operating activities was $25.8 million during the three months ended March 31, 2023, compared to $24.0 million during the three months ended March 31, 2022.

The $1.8 million increase was attributable primarily to financing costs related to the prepaid forward obligation and Pharmakon loan, as well as timing of certain accruals, partially offset by the increase in net sales of our product Jelmyto during 2023.

Investing Activities

Net cash used in investing activities was $22.0 million during the nine months ended September 30, 2022, compared to $5.0 million during the nine months ended September 30, 2021.

The net change of $17.0 million is primarily related to reinvestment in securities.

Net cash provided by investing activities was $6.3 million during the three months ended March 31, 2023, compared to $13.6 million during the three months ended March 31, 2022.

The net change of $ 7.3 million is attributable primarily to proportionately less maturities to purchase marketable securities in 2023 as compared to 2022.

Financing Activities

Net cash provided by financing activities was $71.8 million during the nine months ended September 30, 2022, compared to $72.4 million during the nine months ended September 30, 2021.

The decrease of $0.6 million is related to proceeds from the Pharmakon loan in the current year as compared to proceeds from the prepaid forward arrangement with RTW in the prior year.

Net cash provided by financing activities was $0.7 million during the three months ended March 31, 2023, compared to $70.7 million during the three months ended March 31, 2022.

The decrease of $70.0 million is attributable primarily to proceeds from the Pharmakon loan in the prior year.

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-Q

Item 1. Financial Statements