UroGen Pharma Ltd. Q3 FY2022 Earnings Call

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to UroGen Pharma's Third Quarter 2022 Financial Results and Business Update Conference Call. It is now my pleasure to turn the call over to Vincent Perrone, Senior Director of Investor Relations for UroGen Pharma. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to UroGen Pharma's Third Quarter 2022 Financial Results and Business Update Conference Call. Earlier this morning, we issued a press release providing an overview of our recent corporate highlights and financial results for the quarter ended September 30, 2022. The press release can be accessed on the Investors portion of our website at investors.urogen.com. Joining me today are Liz Barrett, President and Chief Executive Officer; Dr. Mark Schoenberg, Chief Medical Officer; Jeff Bova, Chief Commercial Officer; and Don Kim, Chief Financial Officer. During today's call, we will be making certain forward-looking statements. These may include statements regarding our ongoing commercialization activities relating to Jelmyto, the expected benefits of the FDA's expansion of the end-use period for Jelmyto, our ongoing and planned clinical trials, commercial and clinical milestones in the year ahead, the growth potential for Jelmyto, the design potential benefits and commercial potential for UGN-102, if approved, the design, potential benefits and commercial potential of UGN-301, potential future commercialization activities for UGN-102 if approved, data presentations, expected regulatory filings and timing thereof, future research and development efforts and our financial and other corporate goals, among other things. These forward-looking statements are based on current information, assumptions and expectations that are subject to change. A description of potential risks can be found in our earnings press release and our SEC disclosure documents, including under the Risk Factors heading of our quarterly report on Form 10-Q for the quarter ended September 30, 2022, filed today. You are cautioned not to place undue reliance on these forward-looking statements, and UroGen disclaims any obligation to update these statements. I will now turn the call over to Liz.

Thank you, Vincent, and thank you, everyone, for joining us today. Looking back on this last quarter and just as importantly, looking at the quarters ahead, there is much to be encouraged and excited about. Although sales were slightly lower on a sequential quarter basis, year-over-year revenue grew 41% during the third quarter compared to the same period last year. We've come to believe this is reflective of a type of summer seasonality, which, in 2021, we associated with the rise of COVID-19 cases. Last year, test conversions were protracted in July before bouncing back in August. During the third quarter of 2022, timing of conversions from patient enrollment forms to new patient starts remained longer through August before returning to baseline after Labor Day. Importantly, the rate of decline in revenue was only 3% compared to a more significant decline in the same period in 2021, reflecting more consistent revenue versus the prior year. Jeff will provide more on this shortly, but we expect a return to growth in quarter 4. The introduction of Jelmyto requires a bold shift in the treatment paradigm, and rate of adoption varies from territory to territory. One of the most important proof points to the significant opportunity in low-grade UTUC is the breakout results in certain parts of the country, especially in the Northeast and Mid-Atlantic regions. These regions show what is possible when urologists have strong clinical conviction, and serve as a model for expansion in other parts of the country. Early adopters appear to be embracing Jelmyto and our RTGel technology. We believe that experience and familiarity is expected to spread, which would positively impact JELMYTO performance and, importantly, create a more receptive environment for the introduction of UGN-102. We've also learned that in the field, JELMYTO more closely resembles a medical device sale. Accordingly, we've made several strategic and purposeful changes to our commercial approach based on this and other key learnings, which Jeff will elaborate on shortly. Moving to UGN-102, it's been well established that both types of low-grade malignancies respond well to mitomycin delivery in a gel. I'm pleased to announce that we anticipate full enrollment of ENVISION, our pivotal Phase 3 trial with UGN-102 in patients with low-grade intermediate risk non-muscle invasive bladder cancer as early as the end of this month. We believe the success of this program to be partially derisked given the similarities of the diseases, a shared API in mitomycin, which has shown efficacy activity in both forms of low-grade malignancies, and the common RTGel technology. We, therefore, believe efficacy activity due to prolonged exposure to mitomycin with JELMYTO in the upper tract may translate to the bladder. Assuming positive results from ENVISION, we anticipate filing an NDA with the FDA in 2024, targeting priority review which, if granted, may potentially result in approval before the end of 2024. If approved, UGN-102 will be the first non-surgical primary therapeutic to treat low-grade intermediate risk non-muscle invasive bladder cancer patients, and this is where our experience and foundation with JELMYTO will prove invaluable. After establishing the use of mitomycin and RTGel with urologists, UGN-102 is expected to have a stronger starting point than JELMYTO. Delivery of UGN-102 is expected to be much easier for urologists, given it does not require the use of specialized equipment, scheduling of OR time and is designed to be administered by a doctor or support staff in clinic as an outpatient procedure. Installation of UGN-102 is perceived as a routine procedure in the urologist office, similar to other products administered on a regular basis. With the simplified administration and addressable patient population, roughly tenfold that of low-grade UTUC, we expect UGN-102 to have strong and rapid adoption and is positioned as the primary driver of value generation for UroGen's business over the long term. While geopolitical and macroeconomic forces continue to call for financial prudence, we remain confident in our ability to end the year with around $100 million in cash. We continue to focus on capital preservation and investment in our core assets, specifically JELMYTO sales growth and UGN-102 development, while carefully scrutinizing capital investments elsewhere. Finally, and before handing the call over to my colleagues, I'd like to welcome two prestigious individuals to our Board of Directors: Mr. Dan Wildman and Dr. Leana Wen. Leana is an emergency medicine physician and has served as a Professor of Health Policy and Management at the George Washington University School of Public Health since 2019. She also serves on the Boards of several other organizations, including Glaukos Corporation, the Bipartisan Policy Center, the Baltimore Community Foundation, and the National Committee on US-China Relations. Dan is a seasoned executive with more than 40 years in the medical device industry. He is currently Chairman of Progenerative Medical and he also serves as a strategic adviser for several medical device and pharmaceutical companies. With Johnson & Johnson, Dan led the digital surgery strategy initiative tasked with developing an integrated strategy for robotic surgery, leading to the 2019 acquisition of Auris Health. UroGen will benefit greatly from their insight and guidance. With that, I'll pass the call over to Mark to update you on our clinical development programs.

Thank you, Liz. Before I jump into our clinical update, I want to share our results from a recent retrospective analysis published in the British Journal of Urology International. The study was conducted by Dr. Kyle Rose and colleagues and evaluated 32 patients who received at least one dose of JELMYTO via the nephrostomy tube. The study found that 17 or 59% of patients had no evidence of disease at primary disease evaluation and did not recur at a median follow-up of 13 months post induction. Importantly, ureteral stenosis occurred in just 9% of the patient study. This multi-institutional retrospective analysis concluded that integrated administration of JELMYTO demonstrated a favorable safety profile, including a low rate of ureteral stenosis and can be administered without general anesthesia. Additional reports of real-world data are anticipated later this year and are expected to support the use of JELMYTO to treat low-grade UTUC. As Liz mentioned, both our Phase 3 ENVISION trial with UGN-102 and our Phase 1 trial, UGN-301, are ongoing. ENVISION is our single-arm international multi-center study evaluating the efficacy and safety of UGN-102 as primary chemoablative therapy in patients with recurrent low-grade intermediate-risk NMIBC. There are no approved primary non-surgical therapies for malignancy that affects approximately 80,000 new patients each year in the US alone. It is also worth restating that for these patients, the current standard of care remains transurethral resection of bladder tumors, or TURBT, a surgical procedure performed by resectoscope through the urethra that requires anesthesia, lifelong surveillance, and is associated with the risk of complications and frequent recurrent treatment. After 61% of TURBT patients typically experience recurrence after one year, and 78% experienced recurrence after five years. 34% to 76% of patients show evidence of tumor on repeat TURBT at two to six weeks. Given the high recurrence rate of low-grade intermediate-risk NMIBC, it remains a high unmet medical need for alternative therapies that decrease procedure-related risk and the need for repetitive intervention. We believe that UGN-102, if approved, has the potential to offer a convenient intravesical therapeutic option administered in an outpatient non-surgical setting. We expect the ENVISION trial to enroll approximately 220 patients across 90 clinical sites, who will receive six once-weekly intravesical installations of UGN-102. The primary endpoint will evaluate the complete response rate at three months after first installation, and the key secondary endpoint will evaluate durability over time in patients who achieve a complete response at the three-month assessment. We remain confident about the design of the ENVISION trial and the clinical potential of UGN-102 based on its similar design to our previously completed Phase 2b OPTIMA II study, which included new and recurrent low-grade intermediate-risk patients. I'm pleased to announce we anticipate the trial to be fully enrolled as soon as the end of this month with an NDA submission planned in 2024, assuming positive results. In parallel, we continue to advance a single-arm, at-home installation feasibility study for UGN-102. In 2023, we intend to share a data readout from the ATLAS trial, which will be included in our planned NDA submission, including complete response, duration of response and safety data of patients who completed treatment with UGN-102. To further build on what Liz commented about in her opening remarks, we are likewise optimistic about the clinical potential of UGN-102, because of its similarities to Jelmyto. Both products utilize mitomycin as their key pharmaceutical ingredient, albeit in a different ratio, and both allow for local delivery and sustained exposure to mitomycin for up to six hours. Importantly, both low-grade NMIBC and low-grade UTUC show many biological and clinical similarities. We are optimistic that the clinical results demonstrated by Jelmyto in the kidney could translate similarly to the bladder. For UGN-102, it sets itself apart from Jelmyto is that it is designed to be instilled into the bladder via urethral catheter in an outpatient setting. We believe that, if successful, it may offer a simpler, minimally invasive and non-surgical alternative to TURBT that can be administered in clinic by a urologist or a member of the support staff. Clinicians and KOLs we've engaged have already shown receptiveness to this potential new treatment option with 96% indicating, they are likely to use UGN-102 within two years of approval. Meanwhile, our Phase 1 trial with UGN-301, our in-licensed anti-CTLA-4 antibody for intravesical administration in RTGel, continues to enroll. UGN-301 is in development for use in combination with other immunomodulators, including UGN-201, our proprietary TLR7 agonist, and other potential chemotherapy and immunotherapies to treat high-grade NMIBC. This study is aimed at identifying the suitable dose for a subsequent Phase 2 trial. We viewed UGN-301 as a cornerstone checkpoint inhibitor for a variety of potential combination therapies targeting NMIBC, and continue to see broad applicability of intravesical administration of immunotherapies with RTGel, as a compelling opportunity to explore novel immunomodulatory drug combinations for advancing care in a broad range of clinical indications in urologic and specialty cancers. I'll now hand the call over to Jeff to provide a commercial update.

Thank you, Mark. As Liz noted, the third quarter saw a slight decline in Jelmyto sales compared to last quarter. However, on a year-to-date basis, Jelmyto sales have grown 45% compared to 2021. We remain confident in the long-term success of Jelmyto and its ability to address a significant unmet need in an underserved patient population. Last year, we attributed third quarter softness to what we believe corresponded to a rise in COVID-19 cases. We now believe that the slowdown is more likely a result of seasonality resulting from a wider conversion rate of patient enrollment forms to new patient starts. Specifically, in 2021, PEP conversions slowed down in July before returning to baseline in August. This year, however, the slowdown continued through August and snapped back in September right after the Labor Day holiday. While this pattern was not expected, we do feel better about the consistency we're beginning to see quarter-to-quarter and expect to return to growth in Q4 based on the number of PEPs converted in October. Key metrics, learnings from the field, and recent real-world outcomes data continue to give us confidence in the low-grade UTUC opportunity. Adoption metrics continue to support encouraging trends and a positive long-term thesis. Activated sites on November 1st were 930 compared to 893 on August 1st, and repeat accounts were 177 compared to 144 for the same period. Additional metrics demonstrate a steady addition of new prescribers each quarter and steady expansion of repeat users as well. Reimbursement remains at approximately 99% across all coverage types. Importantly, several larger academic and referral institutions are coming online, including NYU and LSU, which has taken longer than expected to onboard. From a field operations perspective, several territories and sales reps continue to outperform others. We dug deeper to better understand what's driving their success and came away with several important findings. First, we found that while patient identification remains a key driver, early adopters in these regions tend to be comfortable using Jelmyto for all appropriate patients. We also learned that in the field, Jelmyto closely resembles a medical device sale within a therapeutic. In response, we proactively made changes to several underperforming territories and regions to better align with this type of relevant experience. As Liz mentioned, Dan Wildman, who led J&J's med device business, is a recent addition to our Board of Directors, and we expect his extensive device experience to have a positive impact on our commercial organization. We also continue to look for opportunities to facilitate additional logistical efficiencies and minimize operational complexities for doctors and patients. During the third quarter, we announced the FDA authorization of an extension of the end-use period of Jelmyto admixture from eight to 96 hours. We believe this update simplifies treating Jelmyto and will positively impact adoption moving forward. We're already seeing a positive impact, helping to solve several logistical challenges, including allowing for delivery of the admixture the day before the installation and enabling early morning installations, which based on the feedback from the field, is preferred by nearly all of our HCPs. Feedback is overwhelmingly positive, and day-before delivery has provided confidence and on-time procedures for both patients and doctors. Looking ahead to next year, we anticipate all doses will be delivered at least one day before scheduled installation and for 90% of procedures to take place before 9:00 AM, allowing Jelmyto to fit in nicely with the HCP schedules. Not only does this benefit current adopters, but it also allows us to reengage with prospective customers who were reluctant or unable to adopt Jelmyto as the previous end-use period of eight hours was viewed as too restrictive. This reinforces our optimism for the future of Jelmyto to enhance treatment of low-grade UTUC and lay the foundation for the potentially much larger opportunity with UGN-102 and low-grade intermediate-risk non-muscle invasive bladder cancer. As Mark mentioned, the publication of outcomes from real-world data, most recently in the form of retrospective analysis, evaluating administration of Jelmyto via nephrostomy tube, continues to support the use of Jelmyto in low-grade UTUC. Growing adoption of administration via nephrostomy tube, which represents more than 50% of Jelmyto installations, continues to offer operational efficiencies and benefits to the patients as well. HCPs generally recognize the benefits of antegrade administration, which avoids the need for an OR and offers more flexibility with scheduling and installation since it can be performed by a trained nurse and does not require fluoroscopy after placement of the nephrostomy tube. During the third quarter, we continued implementing our phased launch of our uTRACT registry, which is expected to provide additional insights into the real-world outcomes of UTUC patients treated with Jelmyto, and evaluate its use in clinical practice in the US. With that, I'm happy to pass the call over to Don to discuss our financials.

Thank you, Jeff, and thank you, everyone, for joining today's call. I'm pleased to be with you today to review our financial results for the third quarter ended September 30, 2022. UroGen reported a net product revenue of Jelmyto for the third quarter of 2022 of $16.1 million, compared to $11.4 million in the third quarter of 2021, representing a 41% increase from the same period last year. Cost of revenue for the third quarter of 2022 was approximately $2 million, resulting in a gross margin of 87% compared to a gross margin of 89% in the third quarter of 2021. Research and development expenses for the third quarter of 2022 were $13.1 million, including non-cash share-based compensation expense of $600,000 as compared to $11.9 million, including non-cash share-based compensation expense of $1 million for the same period in 2021. The overall increase of $1.2 million is primarily attributed to the Phase 3 ENVISION study for UGN-102, research into ingredients scale-up and production efficiency for Jelmyto, partially offset by lower stock-based compensation expense to 2022. Selling, general and administrative expenses for the third quarter 2022 were $19.1 million, including non-cash share-based compensation expense of $1.8 million. This compares to $21.6 million, including non-cash share-based compensation expense of $4.5 million for the same period in 2021. The reduction in SG&A resulted primarily from lower stock-based compensation expenses in 2022. For the third quarter ended September 30, 2022, we reported financing expense related to the prepaid forward obligation to RTW Investment of $4.8 million, compared to $6.8 million for the same period in 2021. Interest expense related to the up to $100 million from loan facility with the funds managed by Pharmakon Advisors was $2.7 million for the third quarter of 2022. As the transaction closed in March of 2022, there was no such expense in the third quarter of 2021. For the third quarter ended September 30, 2022, we reported a net loss of $25.8 million or $1.13 per share. This compares to a net loss of $30.2 million or $1.35 per share in the third quarter of 2021. The net loss for the third quarter of 2022 includes $2.4 million in non-cash share-based compensation expense, compared to $5.5 million in non-cash share-based compensation expense in the third quarter of 2021. We closed the quarter with $95.9 million in cash, cash equivalents, and marketable securities. During the third quarter, we continued to prioritize our balance sheet in support of our commercial and clinical development activities. We remain cognizant of the challenging capital market environment and maintain a keen eye on capital preservation. Emphasis on prudent and responsible management of our operating capital continues to ensure investment in our core assets, specifically JELMYTO commercial sales growth and clinical development of UGN-102 as priorities. While we acknowledge the contraction in JELMYTO net sales, we were able to offset this shortfall by deferring or suspending non-core activities, ending the quarter with a solid $2.2 million in operating expenses, $4.7 million below consensus. Our efforts to manage our cash flow give us confidence in our ability to end the year with approximately $100 million in cash, which assumes the receipt of the $25 million second tranche under our $100 million common loan facility with the Pharmakon Advisors, which is expected to fund on December 16, 2022, subject to customary conditions and deliver growth. Looking ahead, we will watch revenue and expenses carefully while also managing the ample avenues of capital potentially available to us, should the need opportunistically strengthen our balance sheet arise.

Thank you, Don. As we look ahead, we are very enthusiastic about the learnings and coverage in several over-performing territories that will allow us to capitalize on a significant market opportunity to increase adoption for JELMYTO. We're even more bullish on the potential of low-grade intermediate risk on non-muscle invasive bladder cancer with UGN-102 and look forward to sharing data in 2023 and leveraging our experience to prepare for its potential approval and launch in the not-so-distant future. We thank you for your continued support as we advance both programs in parallel. I'll now turn the call over to the operator for a Q&A session.

Thank you. Our first question comes from Dipesh Patel with H.C. Wainwright. Your line is open.

Hi. Thank you for the updates. This is Dipesh Patel standing in for Ram Selvaraju. I have a few questions regarding JELMYTO and then a few others with regards to the other assets. So beginning with JELMYTO, what percentage of potential target physicians remains likely to switch to using JELMYTO with the new installation method?

Thanks, Dipesh. It's hard to measure. I can tell you that the new installation method has increased last week spoke from around 40% to 45% to now over 50%, and that was without the data from Dr. Rose. We had only nine patients, and now we're looking at 32 patients, which is obviously much more robust. So the expectation is certainly that it will help. It will make things more convenient for both the physician and the patient. But as far as an exact number, we do believe it's going to help grow JELMYTO sales overall. But it's a matter of obviously understanding the clinical benefits first, and this will certainly help from a convenience standpoint.

Great. Thanks. And how is the utilizing physician population remarked at all upon the enhanced ease of use with the end-use period extension for JELMYTO admixture and how impactful is this?

They definitely have reacted well. Again, this provides an opportunity for those physicians that are used to doing surgeries in the morning, because we may not have been able to get them a mixed dose until the afternoon. They've had to shift a lot of things around the business. Territory business managers have done a phenomenal job managing that. In some cases, multiple physicians would give a dose to the same patient just because of scheduling. This will allow flexibility, so to confirm that the dose is there the day before. It will allow the representative, if they're in there supporting to do that in the morning. And then once they support the installation in the morning, they're able to go out and sell and bring Jelmyto to more patients. And so the response has been immediate. We've already had, I think, the number is higher now, five accounts that have gotten the product the day before and administered in the morning when this wasn't possible just a month ago.

Great. That's helpful. And then, have there been any new developments with respect to optimizing the value of Jelmyto in ex-US territories?

No. What we've continued to do is the named patient program, but we have not done any work on ex-US, mainly as we've talked about before, because of reimbursement. So the idea is to sort of get an understanding and appreciation for the value of Jelmyto in ex-US territories and then at that point in time, be able to go to payers and work with them on being able to get a valuable and feasible price from bringing Jelmyto into the market. I can just tell you that yesterday, I received an article that was done in Australia that talked about a patient that got dosed through the named patient program and how compelling it was for her personally. And hopefully, those types of stories will start to get out and then the payers and the government will be more interested in working with us on being able to provide a price that's reasonable for us to be able to market the products outside the US.

Great. Thank you. And then just a couple of questions on some of the other assets. Since you now expect possible completion of enrollment in the UGN-102 Phase III ENVISION trial by the end of this month, when might we see top-line data? And how quickly after that might you be able to file for regulatory approval of the drug in the US?

Yes. As we have stated previously, the positive news is that we have successfully recruited the necessary number of patients to meet our enrollment target. It is now a matter of transitioning from recruitment to enrollment, which gives us confidence that this will happen soon. This is beneficial for us and the patients. It's important to remember that we need a minimum of 12 months of follow-up for all patients after their initial treatment before we can approach the FDA. Therefore, that will take place after the end of 2023. Following that, the next step will depend on the timing of closing our database. As mentioned before, our plan is to collaborate with the FDA and submit our application in 2024, with the hope of obtaining priority review and a six-month review period. This is our current objective. It is crucial that, when we submit to the FDA, we provide all the necessary data to facilitate a prompt review and approval rather than rushing the submission. To reiterate, we require all of 2023 to ensure we have the mandatory 12 months of follow-up for all patients, and many will have more than 12 months of follow-up by that time.

Great. I appreciate the added color on that. And then last question, what are the next steps likely to be in the development of UGN-301, assuming positive Phase 1 results?

Yes. So we will continue with the study of UGN-301, and I should really hand this over to Mark to address, but our goal is to combine it with various chemotherapies and other targeted agents. We will explore the combinations that we find most promising based on the data, and those are the ones we will pursue. We are also continuing our enrollment for the monotherapy, and we need to gather data on the monotherapy before we can proceed with the combinations, which is expected to take place in 2023.

Our next question comes from Boris Peaker with Cowen. Your line is open.

Great. Several questions as well. Maybe first, let's start on Jelmyto. How should we be thinking about the expectations for 4Q sales? And also, do you anticipate issuing annual guidance in early 2023?

I'm sorry, what was the last question?

Do you anticipate issuing annual sales guidance in the beginning of 2023, maybe JPMorgan or in your 4Q results call?

Yes. Given the Q3 results, we do expect Q4 to show growth. However, I can't confidently say that we will meet our guidance for this year. It's too early to speculate on our guidance for 2023. Q4 is crucial for us. The good news is we've seen a significant rebound in sales during September, October, and so far in November. Yet, it's still too early to make predictions, and due to the uncertainty, that's all we are prepared to discuss regarding guidance at this time.

Got it. And lastly, when it comes to Jelmyto administration with nephrostomy, you mentioned it's an increasing proportion of patients. Can you talk about the economics of the physician for traditional administration versus using a nephrostomy tube?

Sure. So in the nephrostomy tube, if they were to go to the surgery center to a hospital, the surgery center or hospital buy and bill for the drug. This gives the clinician the opportunity to go to administer it in their clinic, where they would buy and bill for the drug. So from a professional fee, they're probably similar. There's always a little bit more because they're encouraged to give it in the clinic. I don't know how meaningful that is. But it's really the buy-and-bill portion that allows physicians to buy the product in their clinic, administer it in their clinic versus retrograde. They often go to the ASC where the surgery center would buy the product or the hospital or the hospital would buy and bill for the product.

Got it. Thank you. Thanks for taking my questions.

Thanks, Boris.

Our next question comes from Matt Kaplan with Ladenburg. Your line is open.

Hi. Thanks for taking my question and good morning. Just can you talk a little bit about how you can translate your success regionally, I guess, in the Northeast to more broadly across the country and what your strategy is to do that now for Jelmyto?

Sure. The challenge with Jelmyto is that each region and territory has its own unique characteristics. The Northeast differs from the Midwest, for example; the Northeast might have more academic centers while the Midwest could have larger community accounts. Therefore, it’s crucial to examine each region and territory and understand the background of the business manager who is most likely to succeed. We share best practices daily, and many are applied to accounts that resemble those that have achieved success. However, business managers will tell you that each account is distinct and approaches things differently. It’s essential for them to solve problems, navigate operational logistics, and manage formulary issues. We are definitely sharing best practices, and where they can be applied nationally, we implement them. Nonetheless, it remains a challenge since not every territory is the same. We must ensure we have the right person in place and adapt as necessary.

Okay. And you mentioned something about thinking about Jelmyto in certain regions as a device-type sale or a drug-device combo sale. Have you implemented that aspect of it yet, or do you think that should have an impact going forward?

We have made progress, and I believe it will continue. Over the past year, we increased our hospital training efforts. We assess each territory to find the best fit. While it might resemble a device, it doesn't mean we have successful territories solely based on that. It’s a combination. What’s consistent is hiring individuals who can effectively navigate challenges and are driven by the obstacles they face. As we discuss with the business managers, this is demanding work. It takes a lot of effort, but it is very rewarding once they successfully onboard accounts and treat patients with Jelmyto. So yes, Matt, we acknowledge this and have made some changes to ensure we place the right person in each territory.

Okay, that's helpful, thank you. Following up on Boris' question, you previously provided guidance for revenues between $70 million and $80 million for this year. Now, with over $46 million in the first nine months, Liz, what is your perspective on the ability to meet that earlier guidance?

Yes, as I mentioned earlier in response to Boris, we do not believe we will meet our guidance for this year. However, we feel positive about our position in Q4 and our direction moving forward. To provide some context, if we compare the growth rate from last year’s second half to the first half, we would have met our guidance this year as well, especially considering our strong performance in Q4 compared to Q3 last year. The encouraging news is that we are seeing more consistency. Although there was a slight decline in Q3, it was not nearly as significant as what we experienced in 2021, which gives us confidence that we are achieving a more stable quarter-over-quarter performance. Additionally, as Jeff mentioned, we are excited about the success of some of our territories, indicating that the opportunity is indeed present. We have evidence that if our weaker territories performed similarly to the stronger ones, we would have a significant product, as we have frequently discussed. All these factors, combined with the changes Jeff talked about, bolster our confidence in the future. However, to be candid, the growth has been slower than we anticipated. We are in a better position post-COVID, as we continue to see growth, positive trends, new accounts, and new doctors prescribing our product. Importantly, we observe that the doctors who are using it are incorporating it into their standard care for most of their patients. Therefore, all these aspects give us strong confidence that while our peak expectations remain, the growth rate to reach that peak has shifted.

Okay. Okay. That's very helpful. Thank you. And then maybe a question for Mark. On the UGN-301 Phase 1 study, can you talk about a little bit about what you're looking for and what would designate a positive result in that Phase 1 study as a monotherapy before you go into the combination arms of that study?

Matt, thanks for the question. So remember, this study is designed in order to help us identify an appropriate dose for intravesical administration of this antibody, which, of course, is a very novel thing to be doing in this disease state. So what we're looking for is safety and tolerability and the identification of the dose. We would obviously be interested if we saw an efficacy signal. But that's really not the point of the study. Currently, it's to help us identify a dose, which we can then carry into the next phase of the development program, which would be a combination, as Liz mentioned earlier, with other agents such as our TLR7 agonist or other potential combinations with chemo or immunomodulators.

Okay. Okay. Thank you. Thanks. Thanks guys.

Thank you, Matt.

Our next question comes from Chris Howerton with Jefferies. Your line is open.

Great. Thank you so much. I think probably most of the questions at this point have been answered. I was curious what the status of 201 was. And Mark, I guess, I'm always kind of bugging you about this one, but what about doing a combination study with BCG in high grade? I can appreciate the fact that there are supply issues, but BCG is already approved and would have a similar mechanism to other TLR agonism. So, maybe I'll just end with a bit of a combative question to you, Mark.

Thank you very much, Chris. Liz may want to comment as well. I'll just give you my impression. One of the interesting things about BCG is that although, if read about it, there are a lot of hypotheses about how it works. It is still an area of active investigation, and it's a bit of a mystery how it does what it does. And as you also know, many people who received BCG ultimately relapse. So, between the issues related to supply, as you noted, because BCG is in short supply and manufacturing is challenged currently, having a real impact on clinical practice, I think personally, it would be great. And I'm glad that we're doing this to identify other novel immunomodulatory combinations, which would move us away from a BCG-dependent strategy for this particular population. So, while I can agree with you on a theoretical level that it would be interesting to do, I think practically and from a clinical perspective, it will be very important for us to pursue lines of investigation like we are doing in Neurogen, namely, to seek other important immunomodulatory and potentially other types of therapeutic combinations to address the unmet need in this patient population, which is acute. And as you know, these patients do face some difficult choices when BCG does not work.

Okay. That's fair. All right. That's fair. And so what about for 201 then?

As you know, and as we've previously discussed, we have very interesting non-clinical data suggesting that there is a sort of a synergistic interaction between 201 and 301, and that forms the basis for our current development program for the 301 molecule. So, one of the combinations we are contemplating and have sort of tentatively planned is the combination of 201 with 301 once the Phase 1 dose escalation study has provided us with safety and dose information about 301. So, we are still actively developing that as a combination that we'd like to carry forward once we have the Phase 1 data on the antibody.

Okay. Awesome. Thank you very, very much. I appreciate all the answers and look forward to the 102 data from ATLAS soon.

Thanks, Chris. Appreciate it.

Our next question comes from Paul Choi with Goldman Sachs. Your line is open.

Thank you and good morning. My first question is for Jeff. And Jeff, I was wondering if you can maybe just help us understand the market maybe segmenting a little more as to which proportion of potential prescribers are thinking about JELMYTO more as a device-based approach is maybe relative to medical oncologists who think about it more from a therapeutic treatment perspective and just help us understand which additional portion of the prescriber base you might be additionally able to target here?

I believe we've observed that when device representatives are integrated into the operating room team, they play a supportive role alongside the clinical and nursing staff or assist with installations. This reflects a company-wide mindset and is crucial for our business managers. Even if a manager has extensive experience with buy-and-bill processes, adapting to the specific institution—be it an academic facility or a large urology clinic—is essential. We certainly consider this during hiring, but it also informs the additional training we provide. Physicians who are considering Jelmyto for their patients really value our support; they appreciate the contributions of the business manager, the nursing staff, and the field reimbursement manager. This more device-oriented approach is critical, as it often leads to early and consistent success. We are continuously working to identify patients who could benefit from Jelmyto. As I’ve mentioned before, we need to deepen our engagement with existing accounts, and that remains true. We also need to continue onboarding new accounts—just like NYU and LSU have recently done. There are still many larger accounts that we need to welcome and adequately support, behaving in a way that emphasizes our device similarities since this is a procedural approach often used in the operating room. We are beginning to see a positive response and opportunities opening up, which represents a distinct sales strategy compared to simply prescribing a medication that is processed through specialty pharmacies. This shift in mentality is noticeable to both the physicians and us, leading to increased success on our part.

Yes. And just our commentary, Paul, to ask, medical oncologists don't treat these cancers. These are really treated by urologists. So, to Jeff's point, you have your large urology group practices, and then you have your institutions. And what we have found, to Jeff's point, is really when you go into the institutions where you can have some great success, and the large group practices tend to use more than nephrostomy tube administration. And so that's where we're seeing some delineation. But just to be clear to you and answer your question, it's not really with medical oncologists, it's really with urologists.

Great. Okay. Thanks for that. My second question for you, Liz or maybe Mark, is just your commentary on thinking about getting priority review for 102 next year. Obviously, you had success with your 101 filing. Can you maybe just comment on what feedback or commentary from the regulators you've received that underpin your view that you could possibly get priority review in next year when you do some of the filing?

Yes. It's really just based off of the fact that, to your point, we were able to get it for UGN-102. We do believe when the agency agreed with us on the high unmet need with this patient population, and we moved to a single-arm study. I think that shows that they recognize that there's a high unmet need. So when you take those things into consideration, I mean, I think that's why we feel like we have an opportunity to get priority review. Again, using a lot of the same data, when you think about it and approach as we give UGN-101, which is now Jelmyto as well.

Thanks for the clarification. My last question is for Don regarding the financials. I believe your cash assumptions for this year include access to the second tranche or term loan. Can you update us on what your expected cash runway looks like after that second tranche?

Yeah, sure. So we already give the notice to Pharmakon, which is accepted. So we are going to get funded on December 16 this year, before the year-end. And with that money, we are going to achieve approximately $100 million at the end of the year.

And how long is that $100 million assumed to last you through?

So the $100 million at least covers 2023, and it's all depending on our Jelmyto revenue and also how we invest and spend the money. So we can pretty much cut a lot of stuff except for our core business, depending on, again, Jelmyto sales and financial market condition. But we are not going to touch anything about the Jelmyto sales growth and usually one or two R&D investment.

Okay. Thank you very much. Thanks for taking my questions.

Sure.

Thanks Paul.

Our next question comes from Leland Gershell with Oppenheimer. Your line is open.

Yeah, thanks. My apologies, I joined a bit late, so I missed the prepared remarks. And I was wondering, did you touch on the use of the nephrostomy tube delivery method, how that's been trending? And I think on your last quarterly call, you mentioned that was a favorable aspect with respect to physician uptake and convenience and so forth. Has that been playing out? It seems like with the sales in Q3, maybe that has not been as supportive as you had expected. Could you provide some more color? Thank you.

Sure. Hi, Leland. Yes, we are now over 50%. The last time we reported, we were around 40% to 45%. That over 50% figure does not include the data that Mark mentioned from Dr. Rose regarding 32 additional patients, which we will be able to discuss with physicians. I think you will see that starting in Q4, and the effects will carry on from there. However, we managed to see slow growth even with the limited number of patients we had to reference from Dr. Murray. It's good that we'll have additional data to approach those physicians who were hesitant with just nine patients. We're likely still doing retrograde, but I believe that with this new data, you will notice a significant increase in nephrostomy tube administrations.

Okay. And just to drill a bit further, I mean it seems like there are other hurdles to growth and uptake of Jelmyto. Could you put into perspective the role that the nephrostomy tube, the move to the nephrostomy tube is offset by other hurdles that still exist, whether it's reimbursement, whether it's other logistical issues, as we think about how Jelmyto is doing here two-plus years into the launch? Thanks.

Certainly. The increase in stability from eight hours to 96 hours is eliminating a hurdle that existed a month ago. Nephrostomy tube administration offers convenience for both physicians and patients. For physicians, without the nephrostomy tube option, they would have to go to the operating room or surgery center, schedule time, and possibly train another physician to administer doses, which can complicate timing. Patients generally prefer clinic visits over surgery centers or hospitals. We now have more solid data to discuss with the doctors, which helps overcome initial challenges. They are quite enthusiastic about the increase in stability from eight to 96 hours. In fact, since my previous response, 15 accounts have received the product and administered it the next morning. By the end of this week or tomorrow, we expect to have even more accounts doing the same. This excitement stems not only from the increased stability but also from the newfound flexibility to administer in various settings according to their schedules. Therefore, the operational challenges that previously existed have largely been eliminated moving forward.

Okay. Thank you.

Thank you.

That concludes our question-and-answer session. I'd like to turn the call over to Liz Barrett for any closing remarks.

Thank you. As always, we appreciate your support and interest in UroGen. We continue to forge new ground in the treatment of urothelial cancers as we change some very long-embedded standards. So we have much to look forward to over the next 24 months. We'll keep our open dialogue as key initiatives play out. So I hope you guys all have a nice day. And operator, you can now disconnect. Thank you.

This concludes the program. You may now disconnect. Goodbye.