Good morning, ladies and gentlemen. Thank you for standing by, and welcome to UroGen Pharma's third quarter 2021 financial results and business update conference call. It is now my pleasure to turn the call over to Lee Roth, Senior Vice President of Investor Relations for Burns McClellan . Please go ahead.
Thank you, Jonathan. Good morning, everyone, and once again, welcome to the UroGen Pharma third quarter 2021 financial results and business update conference call. Earlier this morning, we issued a press release providing an overview of our recent corporate highlights and the financial results for the quarter ended September 30, 2021. A copy of this press release can be accessed on the investor section of our website at investors.urogen.com. Joining me on the call today are Liz Barrett, President and Chief Executive Officer, Dr. Mark Schoenberg, Chief Medical Officer, Jeff Bova, Chief Commercial Officer, and Molly Henderson, Chief Financial Officer. During today's call, we will be making certain forward-looking statements.
These may include statements regarding the success and timing of our ongoing commercialization of Jelmyto, planned clinical trials, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities, and 2021 financial guidance, 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 as well as our latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements, and UroGen disclaims any obligation to update such statements. With that, it's now my pleasure to turn the call over to UroGen's President and CEO, Liz Barrett. Liz?
Thank you, Lee, and thank you to everyone joining us today. Many of you joined us for our spotlight day last week, and we're pleased you're here with us today, where we'll discuss our third quarter earnings and highlight recent developments. During the third quarter, we made further progress in both the commercial and clinical development areas of our business. Our commercial team continued to execute on the rollout of Jelmyto in the face of ongoing impacts of the pandemic in the third quarter, especially in certain regions in the U.S. Our development and regulatory teams have made significant progress in our discussions with the FDA regarding UGN-102, as highlighted at last week's event.
Jeff will provide more detail on the Jelmyto commercialization, but at a high level, as the Delta variant increased new COVID cases, patient visits and access declined, causing Q3 patient starts to also decline, which is reflected in the revenue results. As previously reported, we had a strong Q2 that included a small bolus from delayed patients in Q1. Even given the revenue results, we saw a quarter-over-quarter increase in patient enrollment forms in Q3 versus Q2. Importantly, we have experienced accelerated momentum in September and October, marking our two highest ever months for both new patient starts and patient enrollment forms. Although the $11.4 million of revenue we achieved for the third quarter was shy of our initial expectations, we remain confident in our ability to finish the year strong.
In addition to making progress on driving awareness of Jelmyto in the U.S., we also made progress internationally. We recently launched a named patient program for Jelmyto in five European countries, France, Germany, Switzerland, Austria, and the U.K. This is a pilot program with the potential to be expanded into other European countries and will provide physicians access to and experience with Jelmyto as an initial step to determine commercial feasibility in Europe. The program will be managed by TannerGAP, Inc., a division of Tanner Pharma Group, which is a global provider of specialty access solutions. Turning to UGN-102, we were excited to announce last week that after several rounds of discussions with the FDA, we will be initiating a new phase III study of UGN-102 in low-grade intermediate risk non-muscle invasive bladder cancer.
This new trial will be a multinational single-arm study and replace the current phase III ATLAS trial. We believe the new study design is more appropriate for demonstrating safety and efficacy for UGN-102 in patients with low-grade non-muscle invasive bladder cancer who are at intermediate risk for recurrence. We also believe the new design increases the probability of success, and Mark will provide more details. In addition to these important updates, we and AbbVie recently made the decision to terminate our collaboration agreement. As we announced last year, our phase II trial of RTGel in combination with Botox for intravesical instillation for overactive bladder and urinary incontinence did not meet its primary endpoint, and we believe this was due to the inability of Botox to effectively permeate the urothelium.
As we evaluated the potential to leverage RTGel with the AbbVie portfolio, there was nothing compelling to continue our agreement, and therefore, we believed terminating this relationship was the most prudent path forward to allow for maximum flexibility for our RTGel intellectual property. Turning lastly to UGN-301, Mark will share our progress in advancing UGN-301 for high-grade non-muscle invasive bladder cancer into patients. We hope you were able to watch our spotlight event last week and hear from notable key opinion leaders on the opportunity for UroGen to provide patients with new treatments in this high unmet need disease. At UroGen, one of our primary goals is to transform the treatment paradigm in uro and specialty oncology away from repeated surgical procedures to non-invasive therapeutic ablation of tumors as well as locally administered immunotherapy approaches. I'm extremely proud of the progress we continue to make toward this goal.
With that, I'll turn the call over to Mark to discuss our recent clinical and development updates. Mark?
Thank you, Liz. The majority of my comments today will focus on the recent change to our clinical trial design for UGN-102, which we were excited to announce at last week's Spotlight event and our path ahead for UGN-301. As we mentioned at the event, after substantive conversations with the FDA, we have begun the process of initiating the new study of UGN-102, which has a more streamlined single-arm design similar to our phase IIb OPTIMA study and our pivotal trial for Jelmyto. The new phase III study will be a multinational, multicenter study enrolling approximately 220 patients. It will evaluate the safety and efficacy of UGN-102 as a primary chemoablative therapy in patients with low-grade intermediate-risk non-muscle invasive bladder cancer.
The design for this new trial will be similar to the OPTIMA trial in that the patient population will have the same clinical characteristics, receive the same treatment regimen, undergo the same efficacy and safety assessments, and qualitative follow-up. Patients will receive six once weekly intravesical installations of UGN-102 with a primary endpoint of complete response rate at three months after the first installation and the key secondary endpoint of durability of response in patients who achieve a CR at the three-month assessment. In addition to the design that we believe carries a high probability of success, one of the most significant benefits of this new study design is that we will no longer need to have a comparator arm to surgery. The new design is based on time to recurrence, and this should provide greater clarity regarding the duration of the study.
We expect to enroll the first patient in this new study in early 2022. As mentioned, we aim to enroll 220 patients across an estimated 90 sites and anticipate enrollment in less than a year and an FDA submission in 2024. In light of these developments, we have stopped enrollment in the phase III ATLAS study, but we'll continue to treat and follow patients currently enrolled. We believe the data generated from the ATLAS patients will be important as we continue to expand our knowledge around the role that UGN-102 can play in the treatment of low-grade intermediate risk disease. In addition to the new UGN-102 study, we have begun a small study that will evaluate the feasibility of at-home administration of UGN-102 by a qualified home health professional.
We believe offering an at-home solution for low-grade intermediate risk non-muscle invasive bladder cancer patients will be the first of its kind. In moving what is traditionally an in-office treatment into the home setting, we will address access to care issues that many elderly patients face. We are working with several U.S.-based centers and aim to enroll up to 10 patients and excuse me, plan to enroll the study over the next 6-9 months. In addition to the exciting developments around UGN-102, we continue to make progress with our earlier stage pipeline candidates, most notably UGN-301, our anti-CTLA-4 monoclonal antibody in RTGel. We believe that by delivering the anti-CTLA-4 intravesically, we will be able to achieve the necessary level of immune checkpoint inhibition without systemic toxicity commonly associated with IV administration of this antibody.
We currently have a non-human primate toxicity study underway and anticipate initiating a phase I clinical trial of UGN-301 in the first half of 2022. The goal of this planned phase I study is to establish the safety of and dose range for UGN-301 and to serve as a gateway for combining 301 with other agents in subsequent arms of the study. The first such arm will combine UGN-301 with UGN-201, our TLR7 agonist, which has demonstrated single agent activity in high-risk non-muscle invasive bladder cancer patients. We view UGN-301 as a fundamental checkpoint inhibitor and the cornerstone of a variety of potential combination therapy approaches, both in urologic oncology via intravesical administration and other specialty cancers. We are excited to evaluate its potential in the clinic next year and look forward to sharing details of our progress.
With that, I'd like to turn the call over to Jeff to provide a commercial update. Jeff?
Thank you, Mark. I'm pleased to provide you with an update on our ongoing commercial rollout of Jelmyto. Our revenue for the third quarter was $11.4 million. While our field force is now primarily engaging with physicians in person, as Liz mentioned, during the months of July and August, we experienced a tightening of restrictions in several parts of the country due to the Delta variant. Our third quarter softness was confined to these regions, corresponding with those hardest hit by the COVID surge. We have already seen a rebounding in these areas in September and October, and our sales reps are now mostly back to in-person meetings.
In order to get a sense of the continuing impact of COVID and the ultimate timing of the rebound, we recently conducted a survey of 56 urologists, with approximately 75% of our respondents indicating that they believe COVID was the basis for patients delaying treatment for low-grade UTUC, with such delays lasting an average of approximately 4 months. Overall, physicians remain enthusiastic on the use of Jelmyto, as evidenced by the increases in both the number of activated sites, 706 as of November 1st, up from 407 on August 1st, and the number of repeat accounts or sites treating more than one patient, which increased from 63 on August 1st to 86 on November 1st, an increase of 37%. Both of these numbers gives us confidence in continued adoption of Jelmyto and the physicians' positive experience in administering it to their patients.
Although we have had a quarter-over-quarter decline in revenues from Q2 to Q3. We believe we are largely past the latest COVID wave and are hopeful that much of the volatility we experienced this year will begin to subside, and we will experience a more normal launch trajectory for Jelmyto in 2022. Notwithstanding the final revenue number, we ended the quarter strong. As Liz mentioned, September and October were our highest months ever for both new patient start and patient enrollment forms. As a reminder, patient enrollment forms are the initial step to getting a patient treated and our best leading indicator of future patient starts. We closely track the challenges many companies are experiencing as it relates to supply chain, and we will work diligently with hospitals and sites of care to ensure product availability and delivery for all patients.
I remain excited by what we're seeing in adoption and physician engagement, and very optimistic that we've set a strong foundation for a solid 2022. Lastly, over the past few months, we have made progress on initiating our registry for Jelmyto. We are in the process of setting up the first 10 sites to enroll and collect important data on the long-term benefits of Jelmyto and evaluate real-world outcomes of UTUC patients treated with Jelmyto and to study its use in clinical practice in the United States. Patient data will be captured following Jelmyto treatment, with specific clinical questions being asked of participants. We expect to have initial information from this study in 2022. With that, I'd like to turn the call over to Molly for a review of the financials. Molly?
Thank you, Jeff, and thank you to everyone for joining today's call. UroGen recorded net product sales of Jelmyto for the third quarter ended September 30th, 2021 of approximately $11.4 million, aggregating to $31.9 million for the first nine months of 2021. This compares to $3.5 million and $3.8 million, respectively, in the same periods of 2020. The year-over-year increase was driven by the launch of Jelmyto in June of 2020. Cost of revenues for the third quarter of 2021 were approximately $1.2 million, resulting in a gross margin of 89% compared to gross margin of 91% in the third quarter of 2020.
Cost of revenues for the first 9 months of 2021 were $3.6 million, resulting in a gross margin of 89% compared to a gross margin of 91% for the comparable period in 2020. Research and development expenses for the third quarter ended September 30, 2021 were $11.9 million compared to $10.2 million for the same period in 2020. Research and development expense includes $1 million in non-cash share-based compensation expense for the third quarter ended September 30, 2021, as compared to $1.5 million for the same period in 2020. The overall increase in R&D expense in 2021 compared to 2020 relates to the initiation of a phase III ATLAS study at the end of 2020.
Selling, general, and administrative expenses for the third quarter ended September 30, 2021 were $21.6 million, as compared to $22.1 million for the same period in 2020. Selling general administrative expenses includes $4.5 million in non-cash share-based compensation expense for the third quarter ended September 30, 2021, as compared to $5.2 million for the same period in 2020. Total SG&A expenses are down slightly in 2021 due to the higher launch-related commercial spend in 2020. For the third quarter ended September 30, 2021, reported financing expense related to the prepaid forward obligation with RTW Investments was $6.8 million, and we reported a net loss of $30.2 million or $1.35 per share.
This compares to a net loss of approximately $29.1 million or $1.31 per share for the same period in 2020. The net loss for the third quarter ended September 30, 2021 and 2020 includes $5.5 million and $6.8 million, respectively, in non-cash share-based compensation expense. Turning to our financial guidance for 2021, we are currently reducing our operating expense guidance from the previous $155 million-$165 million to $137 million-$142 million. The reduction in our operating expense guidance is a result of lower anticipated costs in the fourth quarter associated with commercial and clinical activities. Note that this operating expense guidance includes estimated non-cash share-based compensation expense of $22 million-$25 million.
Additionally, as we near the end of 2021, we have visibility into our expected full year 2021 revenue. As a result, we are providing our estimate for full year 2021 revenue to be in the range of $47 million-$51 million. Lastly, we closed the third quarter with $110.3 million in cash equivalents, and marketable securities. We believe our current cash position will take us into 2023. We continue to explore opportunities to strengthen our balance sheet with non-dilutive capital in order to ensure we have sufficient resources to execute on our strategy. With that, operator, I'd like to turn the call over for questions.
Certainly. Ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from Chris Howerton from Jefferies. Your question please.
Great. Thank you so much for taking the questions. I think two for me. First, with respect to kind of the commercial activities and the progress there, I appreciate obviously, Jeff, that you were mentioning that some of the COVID-19 restrictions and the access to providers was one of the key headwinds. Curious if you could speculate on other factors that may or may not be going on to ensure that there will be continued growth once COVID-19 does hopefully clear. The second question I would have is with respect to kind of the R&D expenditures that we can expect for the phase III 102 programs.
Just curious, if you could give us some initial thoughts in terms of either the relative cost to ATLAS or some of the other trials out there that we can estimate, you know, the cost of capital or the cost for the new trial. Thank you.
Jeff, why don't you take the first question, and then Molly can answer the second question.
Sure. Thanks. Hi, Chris. Yeah, where I'm looking at September and October being record months just tells me, I mean, July and August were patients weren't coming in, as I mentioned, as much as they would be in without COVID. When you saw kind of the summer months go by, you saw the rebound, you know, like we're just seeing a similar rebound. Good, strong September, strong October things are continuing. Yeah, as I've always said to you, is that we hope that this is getting back to normal. Just got back from a recent conference, the first live larger group conference in Chicago.
They also, the urologist there told me their patients are coming back in greater amounts, and have a lot of positive things to say about Jelmyto. You're seeing accounts coming on board either for the first time or accounts that have been on board for a period of time, and they're finding additional patients that can benefit from Jelmyto.
Okay. Cool. Thanks, Jeff.
Yep.
Yeah, Chris, to answer your question on R&D expenses. At this point, we're still working with the CRO to determine what synergies exist between the two studies. At this point, we feel comfortable that the cash balance will get us into 2023, which is consistent with the guidance we provided before as it relates to our spend and cash balance. I will say, I think we feel pretty good, like I said, that there's a lot of synergies between the two studies, so we're really working hard to minimize any incremental costs associated with the switch.
Chris, I'll just make a couple more comments on the commercial and why we're bullish for the rest of the year and into 2022. There were a couple things at play. One, we talked about the fact that Q2 had some bolus from Q1 patients not coming in. The other thing we saw in the summer months as the Delta variant increases, as Jeff said, there was another lockdown as far as our access, but also fewer patients coming into the office. We've done an analysis that shows our patient enrollment forms and new patient starts are directly correlated to the increases and decreases in COVID cases.
You know, what we also saw was an increase of vacations happening in the summertime. I think a sort of pent-up demand, you know, where some people, you know, took time off that hadn't done so. I think when you put all of those things together and look at kind of what we've seen, you know, as Jeff mentioned, coming into September and October, gives us a lot of confidence that, you know, maybe we're getting over that hump, and hoping that it doesn't happen again. We definitely see the reduction in patients and then the increase in patients. It's really clear that patients aren't, you know, visiting the doctor's office, and then you see a kind of bolus, like I said.
As Jeff mentioned, the conference we were just at this past weekend, you know, that's what you're hearing back from physicians now is they are seeing a more normal, you know, what they kind of back to normal, patient, you know, patient flow. You know, we have patient enrollment forms that kind of give us an early indicator. We have seen actually every quarter, despite the fact that Q3 revenue was less than Q2 revenue, we actually had an increase in patient enrollment forms. It's the transition of those patient enrollment forms from, you know, identifying a patient to actually getting a patient started.
Those are a couple of things that we looked at that, you know, give us confidence as we see kind of the rebound of new patient starts, but then the continued quarter-over-quarter increase in our patient enrollment from. You know, Molly, for the first time, you know, we're providing guidance, which, you know, just shows you with a 47-51 range that, you know, we already know that this the Q4 is gonna be a significant, you know, increase over Q3. Hopefully that helps.
Yeah, it does. Thank you, Liz. I appreciate it. I'll hop back in the queue. Thanks, all.
Thank you. Our next question comes to the line of Paul Choi from Goldman Sachs. Your question, please.
Hi. Thank you. Good morning, and thanks for taking our questions. Maybe one for Jeff to continue on the commercial piece. Jeff, I was wondering if you could maybe just comment on, you know, whether you saw majority of the new patient enrollment forms tied to the activation of the additional centers. Is that where the primary growth is going? Or can you maybe, you know, qualitatively comment on, you know, is the majority of this new patient growth coming at existing centers? And then we should expect a delay, you know, sort of start for these newly activated sites.
Yeah, sure. Thanks for the question. It's a combination of both. What I hear from accounts is, you know, typically they obviously start out with one patient. They want to see how things go. Logistically, they want to make sure that they're getting reimbursed. The J-code, now I'm hearing 28 days they're getting accurately reimbursed. Then what they'll do is they actively, you know, start to look for patients. They talk to their colleagues. It is a combination of both. As you saw, we have a number of activated sites up significantly since the last time we reported. You know, that's a lot of things as well, you know, whether that was a formulary update, a new patient that came on, recently. You know, we'll continue to grow that number in accounts.
Again, if it, you know, the variant, the vaccine earlier in the year all sort of affected how quickly accounts get up and running. I'm not surprised to see the latest numbers that as accounts get up and running, you start to see the number of activated accounts go up. It's a combination of both. I'd say probably a little bit more accounts have treated a patient, and now they're looking for other patients to benefit from Jelmyto.
Okay, great. Thanks for that color, Jeff. Maybe two more for me. The first is for Molly. Molly, thanks for providing the fourth quarter guidance here for the remaining weeks here. I guess as you look to next year to 2022, could you maybe just sort of comment on, you know, how you think about the directional slope of the revenue growth for Jelmyto here as we get past the COVID-19 headwinds?
Just one for Mark as well, which is just in terms of the patients who are enrolled with regard to ATLAS. Can you maybe just comment on what the regulatory feedback has been with regard to follow-up requirements for that population and just, you know, what is required potentially from a filing perspective? Thank you very much for taking our questions.
Sure. Hi, Paul. To add some color on 2022, we are just, as we said, getting guidance on 2021. We're working hard to determine what the best range for 2022 is yet. At this point, we're not providing any additional color. As we look into the beginning of next year, we'll certainly look at the options for providing some guidance, not just on the revenue, but also on the OpEx number.
Paul, thanks. We are gonna continue to follow the ATLAS patients, because you can imagine, we're very interested in the safety information that we'll obtain by following these patients. Even though the study will be closed, the patients will continue to be followed, and we will incorporate those important pieces of information in a subsequent filing.
Thank you very much.
Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, please press star then one. Our next question comes from the line of Matt Kaplan from Ladenburg Thalmann. Your question please.
Hi. Thanks for taking the question. Just a follow-up on Paul's question in terms of maybe for Mark. The data that you hope to generate from ATLAS as the study winds down now that you have, you know, transitioned and pivoted to the new single arm study. Can you give us a sense in terms of kind of the even if you can get some efficacy data from that as well, given the status of the study, where you are in it and your expectation in terms of the number of patients that you'll be able to generate safety data from?
Matt, thank you. I don't think we've disclosed yet the number of patients. Liz may correct me on this. We think that the primary value of this population at this point is going to be to provide safety. We have been very fortunate in terms of the enrollment in the trial. As we had previously announced, we were even a little bit ahead of schedule in terms of enrollment. We think there'll be lots of important safety information. I think it's probably premature unless Liz wants to comment on this to talk at all about what kind of efficacy information could be gleaned from the experience in ATLAS.
Yeah, I mean, I think I will add that we absolutely will share the data, including efficacy data from the ATLAS study. So we'll have complete response rates. We haven't yet decided how long we will follow those patients, so obviously durability. You know, but absolutely we'll have complete response numbers. You know, we will be following both the treatment arm as well as the TURBT arm. So, you know, we hope to be able to gather some information, you know, from that arm as well, again, a lot around the safety. But, you know, we won't be able to do comparison because obviously we won't have the numbers that we've talked about. It won't, you know, be powered at that point.
Anything that we can get from there, we expect to one, include that in our filing, and two, we'll absolutely share it. Regardless of what it is, we just won't be doing comparisons. Our ability to share complete response rate, and we'll share the durability as it plays out, you know, because as these patients, and we'll share obviously more in 2022 around the number of patients as we actually still have some patients that are in screening. You know, once those patients are through, we'll, you know, make sure that it will be robust, right?
We'll have, you know, some patients, quite a few patients, and we'll be able to share even in 2022 data from the ATLAS study because obviously now it will no longer be a study where we have to keep it blinded. We'll be able to share that in 2022 as we enroll our new study. Hopefully that helps. We will share all of the information that we can, and we'll start to share that as quickly as we, you know, as we have robust data to share.
Okay, that sounds great. Just a question on UGN-301 and the planned phase I study that you're gonna start in the first half of the year. What's your sense in terms of how that study could progress and when you expect to see some initial safety and dose ranging data from that?
We expect to, as we talked about before, to go first in man with our CTLA-4 UGN-301. Then the idea is to shift to the combination with the TLR7 and then also to shift to a multi-arm study with other combinations. There's a lot that we've got planned, and using 301 as a backbone of a combination therapy for high-grade disease. I think that by the end of 2022 we'll at least be able to share the initial data that we have. You know, obviously, you know, you don't look at phase I, you know, for efficacy, but we'll, you know, there'll be some, potentially some efficacy to share.
You know, the purpose of the phase I is to ensure safety and then move to the appropriate optimal combination. We'll be able to share some of that, at least the initial data, on the CTLA-4 in 2022 as well.
Great. Thanks, Liz.
Thank you. Our next question comes from the line of Leland Gershell from Oppenheimer. Your question please.
Hey, good morning. Thanks for taking my question. Just wanted to clarify. The data from ATLAS that we eventually will see and will be included as part of the submission that will not have any role in terms of supporting the efficacy for registrational purposes. In other words, the FDA can rely entirely, presumably on the new phase III trial. Just wanted to clarify that, Mark. Thank you.
Yep. That's correct. Absolutely. That's correct.
Great. The same as that before, but is there any expectation on when we might see the initial cuts from ATLAS? Could that be sometime in 2022?
Yes. We'll absolutely be able to share CR rate because we'll have all of the patients, you know, through at least the three-month mark. We'll be able to share at least the complete response data in 2022.
All right. Terrific. Thanks for taking the questions.
Thank you.
Thank you. Ladies and gentlemen, this does conclude the question and answer session of today's program. I'd now like to hand the program back to Liz Barrett for any further remarks.
Thank you. Thanks, Lee, and thanks everybody for the questions. You know, I hope that you see that what we see and the potential of where we're headed with UroGen. We're excited about, you know, 2022, getting over the hump. You know, we're very bullish on the rest of the remainder of 2021 and having that great momentum going into 2022.
We continue to get very positive feedback, you know, working through the logistics and, you know, hopefully with the pandemic behind us, we can see, you know, the continued momentum and, you know, not only from a commercial standpoint, but, you know, as you've heard, the simplification of the one-arm study for UGN-102, you know, being able to, you know, talk to the FDA and work directly with the FDA, gain agreement on that, be able to share the data as we continue to generate data for ATLAS and then, you know, 102 and then launch our, you know, first, you know, in-man study with the combination in 2022 as well. So an exciting time for us as we continue to make progress, both from a commercial standpoint and also from a clinical development standpoint.
I appreciate all of your support and time, and we'll talk to you guys soon. Thanks. Take care. Bye.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.