BiQ: Outcome of the ODAC for UGN-102 (URGN)

To remind everyone about the question the ODAC was asked to consider, here it is as stated by the FDA:

Is the overall benefit-risk of the investigational therapy UGN-102 favorable in patients with recurrent LG-IR-NMIBC?

The result of the ODAC vote was:

Yes: 4
No: 5

Given the outcome of the vote, which came out against UGN-102, and in light of the FDA's own comments on the briefing documents, an unconditional approval of UGN-102 based on the existing data seems unlikely to me at this point. The FDA said at the end of the meeting that the Agency considered this a split vote and would work with the sponsor on next steps, so we'll have to wait to know the outcome of any discussions and the final PDUFA decision.

There are still several possible outcomes. For example, the FDA could grant a conditional approval with the requirement for a randomized confirmatory study, request a completely new pre-approval RCT to be conducted, or reject outright. It's too difficult to predict the outcome, so I will refrain from speculating.

In the case that the FDA rejects URGN's application and requires a new randomized trial, and assuming that a randomized trial could take up to 2 years, I expect that URGN may decide to abandon 102 due to its limited patent life, and focus its efforts instead on 103/104, their next-generation therapies meant to replace JELMYTO and UGN-102 by 2027.

Regarding the impact on the URGN share price, I fully expect the shares to take a significant hit once trading resumes. Looking ahead, URGN has approximately $250M in cash with a TTM average quarterly cash burn of approximately $30M; however, this could increase as the company expands clinical trials for 103/104.

On the revenue side, without any expected revenue from UGN-102, I would expect around $105M revenue for FY 2025, and $120M revenue for FY 2026. This translates to a forward BVR (my own customized metric, similar to EV/Revenue) of 2.9 for 2025 and 2.6 for 2026. While this isn't overly expensive, I expect the market may demand a larger discount given the added risk.

To be extra conservative, I would estimate the company to have 5-6 quarters of cash runway, which could necessitate raising additional cash by mid-2026. Another alternative would be to monetize royalty rights on JELMYTO to secure additional financing or take steps to conserve cash and extend the runway. Again, it's easy to speculate, but challenging to predict.

On a personal note, I think the outcome of the ODAC was unfortunate, and I don't feel it was in the best interest of patients. But of course, that's just my personal opinion. What matters from an investment perspective is what the next steps are for the FDA and Urogen.

Please refer to the BiQAP Live spreadsheet on the Active Portfolio page or the iQCS for additional information.

URGN share price at time of publication: $7.55.

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