Ladies and gentlemen, thank you for standing by, and welcome to the UroGen Pharma second quarter 2022 update conference call. It's my pleasure to hand the call over to Vincent Perrone, Senior Director of Investor Relations for your [Technical Difficulty]. Please go ahead.

Thank you, operator. Good morning, everyone. And welcome to UroGen Pharma Second Quarter 2022 Financial Results and Business Update Conference Call. Earlier today we issued a press release providing an overview of our recent corporate highlights and financial results for the quarter ended June 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 CEO; Dr. Mark Schoenberg, Chief Medical Officer; Jeff Bova, Chief Commercial Officer; and Dong 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, our ongoing and planned research efforts and clinical trials, the potential benefits of Jelmyto and our product candidates, data presentations, regulatory filings, future revenue opportunities, potentially reaching cash flow breakeven by 2025, the availability of the second tranche of our term loan facility, and 2022 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 and latest SEC disclosure documents, including under the risk factors heading up our quarterly report on Form 10-Q for the quarter ended June 30, 2020 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'll now turn the call over to Liz. Liz?

Thank you, Vincent, and thank you to everyone joining us today. As summarized in this morning's press release, our progress during the second quarter of 2022 can primarily be viewed along three lines. First is the continued growth of our Jelmyto revenue. Second is the on pace enrollment of our clinical programs, and the third is further strengthening of the body of evidence underscoring the benefit of Jelmyto in a real world setting. The common thread between each of these areas is disciplined execution and determined commitment from our entire team to deliver benefit to patients and value to shareholders, which I am pleased to discuss in more detail with you today. Our overarching goal remains to fundamentally transform the treatment paradigm for patients suffering from urothelial and specialty cancers, reflecting a largely underserved patient population with a crucial need for novel therapies. Our currently approved medicine Jelmyto is a prime example of filling a need with a option for patients suffering from low-grade Upper Tract Urothelial Carcinoma. And I'm pleased to report that we continue to see increased adoption with net revenue of $16.6 million, a year-over-year growth of 28% and 22% growth over Q1. Jeff will describe our commercial results in more detail, including a review of overall Jelmyto outcome data recently presented at AUA. But we remain confident in our original guidance and expect growth and acceleration of Jelmyto adoption throughout the remainder of 2022. Beyond Jelmyto, our two ongoing clinical trials are actively underway in enrolling at expected rates. Most importantly, our ENVISION Phase III pivotal study of UGN-102, a novel medicine and development to treat patients with low-grade intermediate-risk non-muscle invasive bladder cancer, remains on track for full enrollment by year end. Assuming positive data, we anticipate filing an NDA with the FDA in 2024…

Thank you, Liz. As Liz described, both our Phase III ENVISION trial with UGN-102 and our Phase I trial with UGN-301 are pressing forward full steam, on time, and on budget. ENVISION is a single-arm international multicenter study, evaluating the efficacy and safety of UGN-102 as primary chemoablative therapy in patients with recurrent low-grade intermediate-risk non-muscle invasive bladder cancer. There are no approved primary non-surgical therapies for the approximately 80,000 patients suffering from this disease each year in the U.S. alone, and it's worth restating that the current standard of care for low-grade disease is endoscopic surgical resection, which is performed repeatedly in the majority of patients due to tumor recurrence. We expect to enroll approximately 220 patients across the 90 clinical sites who will receive 6 once-a-week intravascular installations UGN-102. The primary endpoint will evaluate the complete response rate at 3 months after first installation, and the key secondary endpoint will evaluate durability over time in patients who achieve a complete response at the 3 month assessment. As previously stated, we remain confident in the design of the ENVISION trial and the clinical potential of UGN-102 for several reasons. First, ENVISION shares a similar design to our previously completed Phase IIb OPTIMA II study which enrolled patients with new and recurrent low-grade intermediate-risk non-muscle invasive bladder cancer, and where we observed a complete response rate of 65%. And in this subset of patients, duration of response at 12 months from the start of therapy estimated by Kaplan Meier analysis to be 72.5%. I'd like to take a moment to draw everyone's attention to an additional piece of information that has recently come to light in the wake of our Phase IIb OPTIMA II trial. Investigators at the University of North Carolina recently published an article in the Journal of…

Thank you, Mark. As Liz noted, Jelmyto sales continue to grow at $16.6 million in Q2, representing a 22% increase from Q1 and a 28% increase from the same period last year. Our previous net product revenue guidance for Jelmyto of $70 million to $80 million for the fiscal year remains unchanged. Our launch ramp strengthened as the environment continues to normalize. Activated sites on August 1 were 893 compared to 857 on May 1, 2022, while repeat accounts on August 1 were 144 compared to 114 on May 1, 2022. Another important metric we track for Jelmyto adoption is the Nephrostomy tube administration. Based on the feedback from our field force of regional business directors, our nurses, and our territory business managers, we believe in Nephrostomy administration has increased from approximately 20% to approximately 40% of installations over the past 3 months. This positive encouraging trend confers multiple potential benefits, including offering physicians and patients multiple modes of administration, more flexibility in scheduling, and minimizing manipulation of the ureter during installation. In addition, Nephrostomy installation may be performed by trained nursing professionals under clean rather than sterile conditions and does not want require fluoroscopy after Nephrostogram to confirm placement at the first installation. Additionally, a retrospective pooled analysis by four premier academic institutions of real world data of 26 patients who received Jelmyto via Nephrostomy was presented at the recent American Urological Association meeting by Dr. Kyle Rose. This analysis described how 13 of 26 patients examined exhibited a complete response, while another 12 patients had a partial response. 9 patients went on to receive at least one dose of maintenance therapy. Importantly, ureteral stenosis occurred in 4 or 15% of patients. There were no severe adverse events reported and no patients had impaired renal function. While our existing and prospective business with Jelmyto continues to strengthen, we also cannot ignore the opportunity in hand with UGN-102. The U.S. market opportunity and low-grade intermediate-risk non-muscle invasive bladder cancer is estimated at $3 billion, and this considers the after mentioned 75% or 60,000 patients that encounter recurrence. 68% of those encounter more than two recurrences, and 23% have more than 5. In addition, repeat TURBT procedures have been found to be associated with increased mortality of 14%, independent of surgical risk. And preliminary market research shows that physicians identify 25% of these patients as ineligible or averse to surgery anyhow. With the relevant ease of administration of UGN-102 and the potential to limit or avoid TURBT, it should come as no surprise that 96% of urologists surveyed indicated they would adopt UGN-102 into their treatment protocol within 2 years of approval. With that, I'm happy to pass the call over to Dong to discuss our financials done.

Thank you, Jeff, and thank you to everyone for joining today's call. I'm pleased to be with you today to review our financial results for the second quarter ended June 30, 2022. UroGen reported net product sales of Jelmyto for the second quarter of 2022 of approximately $16.6 million. It compares to $30 million in the second quarter of 2021. We continue to anticipate the full year 2022 net product revenue from Jelmyto between $70 million and $80 million. Cost of revenues for the second quarter of 2022 was approximately $1.8 million, resulting in a gross margin of 89% compared to a gross margin of 89% in the second quarter of 2021. Research and Development expenses for the second quarter ended June 30, 2022 were $12.6 million compared to $30.1 million for the same period in 2021. R&D expenses including $0.7 million and $1.0 million in non-cash share-based compensation expense for the second quarter of 2022 and 2021 respectively. The increase in R&D expense is related to the ongoing Phase III ENVISION study of UGN-102 offset by [indiscernible] expenses for the Phase I study of UGN-301 as compared to pre-clinical work in the prior year. Selling General and Administrative expenses for the second quarter ended June 30, 2022 were $20.8. million compared to $22.3 million for the second quarter of 2021. SG&A expense includes $2.2 million and $5.0 million of non-cash share-based compensation expense for the second quarter of 2022 and 2021, respectively. The reduction in SG&A expense resulted primarily from a decrease in compensation expense, offset by expenses related to participation in the 2022 American Urological Association annual meeting. For the second quarter ended June 30, 2022, we reported financing expense related to prepaid forward obligations to RTW investment of $5.8 million compared to $3.1 million for the same…

Thank you, Dong. I simply like to close by expressing my pride in all that we have accomplished and continue to execute on from the entire UroGen team. We are in close contact with stakeholders that utilize and receive Jelmyto, as well as those participating in our clinical trials. And are thrilled with the feedback we continuously receive for advancing these innovative and novel treatments. Our progress would not be possible without them and want to extend our sincere thanks for their participation. We recognize a challenging environment and want to thank and reiterate our commitment to our shareholders who recognize the long term vision and strategy and remain bullish on our ability to build a meaningful long term sustainable growth business. I'll now turn the call over to the operator for Q&A session. Operator?

[Operator Instructions]. Our first question comes from line of Chris Howerton from Jeffries.

So I guess two questions for me. One is kind of a guess more of a complex question. I hosted a call with a physician recently from Boston at a larger institution, and I would like you to be able to comment on two potential drivers of growth for Jelmyto that came out of that call. One was the the time it took larger institutions to really onboard the process efficiently. From my conversation, it seemed like it took their institution at least 12 months to kind of get fully on board. So how might we expect the impact of those larger institutions with potentially multiple patients available for Jelmyto in the coming quarters? And then the second one, which you've already addressed on the call, which was awesome, which was the Nephrostomy administration. I think, on one hand, you can see the ease of administration, but in his hands, it was not the preferred methodology. So I guess, how are you kind of seeing the the receptivity to that route of administration moving forward? Is it going to be spotty like that? Is it education that it's going to take to continue that adoption? The second question that I have would be just clarification in terms of the expected timelines for the data readout for one or two. Should that be -- I think it's just a one-year endpoint. So is that kind of the timeline we should be thinking about?

Hi, there, Chris. It's Liz. First of all, I actually want to thank you for hosting that call. That was very informative for us. And if anyone on the line didn't get to hear it, I would recommend -- I'm not sure if you have a playback of it, but I definitely recommend listening to it. It was great. I'll just turn it over to Jeff to answer the first two questions on the time and Nephrostomy tube, and then Mark can answer the timing question.

Hey, Chris. Appreciate the interview as well. I thought he actually did it in less than 12 months. They were one of the ones that were able to do it in 6 months. It's a range, it depends on the account, it depends on the speed at which the champion can get it on formulary, get it through pharmacy as well, because it does have to be mixed at these accounts. So it's probably those are probably two good numbers in your hospital accounts where there is more bureaucracy and there's more of a formal process. It can take anywhere from 4 to 12 months. And as we saw with the number of accounts activated, we've still got accounts to activate as we get closer to peak and -- we're going to continue to grow that. But I think I'm comfortable saying the faster ones can move 4 to 12 months -- or 4 months, and usually, sometimes it can take longer than that. And Nephrostomy, I think it's going to continue to grow as we generate more data. I really -- I was pleasantly surprised with the data that we have out there, which is good, but it's not a significant number of patients. I think it's going to continue to go up as we get a greater number of patients and we're able to go out there with more data. Having said that, to answer your question, I do think it's going to ultimately be physician preference. We you know -- you have physicians that would prefer to deliver it Retrograde and they still may, but we've also heard from a lot of physicians they prefer to deliver it Retrograde a year and a half ago, and they're delivering it now through Nephrostomy tube.

Can I maybe ask -- So sorry, Mark, just wanted to ask maybe just a very quick clarification to Jeff, it's, could you estimate the kind of number of physicians that have tried to use the Nephrostomy tube late at this point?

I think the range would be too great. I can certainly look into that. But now I can't even estimate because it really has just been this last quarter. So I don't have that level.

I think just to sort of comment on that. As Jeff said, not everyone will move to Nephrostomy tube. You have those physicians who are very comfortable with the current approach and and they'll continue to do that. But you know, those that well -- and actually we have some patients, frankly, because we've talked to patients as well, who also don't want to use an Nephrostomy tube. So having is definitely -- I think having both available in the utilization of Nephrostomy tube and getting more data on that, it's been very helpful. And I think that will continue to be, but I don't think that you will ever be in a situation where all of them will move. Mark, I don't know if you quite feel differently, but you can comment on that before you move to the question on the clinical timing.

I think that's exactly correct. And the great thing here is there are two modes of administration and physicians will and patients will avail themselves of whatever they're most comfortable with. So it provides a lot of meaningful flexibility in the real world, which is terrific. And it's exactly how we take care of patients. So it makes a lot of sense. And as we've said, patients and physicians will make their own decisions. but it does provide a nice option if Nephrostomy tube is available. With respect to timing on ENVISION, let me just remind you, we're going to enroll that this year. Everybody needs 12 month follow up. That's what we'll spend '23 doing. It's getting all that 12 month follow up. So the data will be in and '24 for our submission to the FDA. However, as you all recall, we also are accumulating data from the Atlas trial, and those data will be available in '23. And we expect to share some of those data then.

Our next question comes from Raghuram Selvaraju from H.C. Wainwright. Your line is open.

Just a couple. I was wondering whether you have real degree of visibility at this point regarding where steady state sort of utilization rate penetration would be for the Nephrostomy tube base delivery of Jelmyto. My understanding is right now it's running at around 40%. But do you think ultimately it's going to wind up being the vast majority of the situations in which Jelmyto is administered? And then secondly, I was wondering if you could comment on in the context of your full year revenue guidance, what you expect to be the principal accelerators of revenue growth in the second half of this year.

I think it depends on the larger retrospective data that will come hopefully soon. And it depends on what that reads out. To answer your question, I'll give you a big range. I think it's going to be the majority, but it's probably going to be between 50% and 70%, I believe will be nephrostomy tube, depending a lot around that data. And I would have never expected it to be this high this early with really very little data. And the fact that it's been going up every quarter, it doubled from Q1 to Q2, I could see this being as high as 70% to 75% of the installation.

And as far as far as guidance, I do think it's going to be the retrospective data. The timing of that, that can help excel our end of year Q3, Q4 growth. We continue to implement more and more patient marketing, so patient awareness. We believe this is a big driver that can help us towards the end of this year and into next year. So patients are aware. They're asking, they're discussing with their physicians. This can help as well. So those would be the two things in mind.

The only thing I'll add to that is we continue to see an increase in our patient enrollment forms and patient demand. I think when you when you look at that and project it out -- of course, you know, as we've talked about before, weeks are volatile, so you can't look just at patient enrollment forms, because we also are starting to see more stocking and more purchases, more bulk purchases, particularly by the institutions. And as was mentioned in the first question that Chris said, we also are seeing some new institutions come on board, and have just actually gotten approval for some some some of the larger institutions around the around the country. So I think as you continue to see that, you continue to see the new institutions coming on board, you continue to see nephrostomy tube usage particularly in the community practices so they don't have to worry about fluoroscopy or anything else, I think those are the things that will help us to see an inflection point as we get into the rest of Q3 and Q4.

Our next question comes from the line of Boris Peaker from Cowen, your line is open.

My first question is if we look a little further on Jelmyto projections, just based on your internal market estimates, what percentage of the target market has Jelmyto already penetrated?

We haven't provided that particularly, but it's between 10% and 20%, and we still have obviously a long way to go there. So it really depends. I think one of the biggest things that we continue to face is finding the patients, right? Because they're not linear. So you don't get -- every month, you know, there's different patients that get identified and different levels of patients. So it's hard to sort of say what your exact penetration is at any point in time. You have to look at it over time. But if you think about what we've talked about before, which is, the entire market is $700 million. If you think about the $70 million this year, what penetration would be? Obviously would be -- it's bigger than 10% because 10% would be for the full year. So as you start to get into the second half of the year, you're getting closer to that sort of 15% to 20%.

Of these patients that are available in general, do you have a sense of the breakdown between large medical facilities which may take a long time to on board versus the more community settings?

Jeff, do you want to talk about that?

It's still continues to be about 50-50. We've got for physician -- for community doctors who don't want to do this, [indiscernible] in the last 6 months a robust referral program to get those patients to folks that do. And there are, there are some smaller groups that don't want to -- they either don't treat UTUC or they don't want to be part of the buy-and-bill financial burden. And so we connect them with physicians colleagues in their area that are administering. And we will continue to do that. That will be a critical success factor because there are a lot of urologists that may not just want to treat these patients, and we need to get those to urologists that will provide Jelmyto as an option. So 50-50, to answer your question.

Our next question comes from the line of Matt Kaplan from Ladenburg.

Just wanted to dig in just a little bit more nephrostomy tube application. I guess maybe a question for Mark. If the future data looks comparable to Retrograde perfusion, what would be the reason why doctors or patients would prefer the Retrograde perfusion? Is there some economic advantage or incentive to doctors to use the Retrograde versus the nephrostomy tube?

From a medical perspective, it looks like the argument -- and this is again based on very preliminary data -- the argument that people are going to be able to make is that there may be less ureteral manipulation with nephrostomy. And as everybody recalls, at least in the OLYMPUS trial, narrowing of the ureteral, albeit transient in those patients, was a concern. That seems to be less of an issue with nephrostomy administration. However, from a medical perspective, how you get this gel into the renal pelvis of the ureter is really more a matter of physician preference and comfort. And from a patient perspective, the one thing that argues actually in favor of nephrostomy administration is it can be done very rapidly in the office. And the retrograde administration is a little bit more cumbersome, and it requires a little more instrumentation. But let me defer to Jeff on the economics.

So the community doctor, when they have to go -- as you know Matt, when it's a Part B drug, it's whatever institution or doctor buys the drug that then gets reimbursed. So if the community doctor goes to their surgery center, it's the actual surgery center that purchases the drug and the surgery center is reimbursed. If they go to the hospital, it's the same. The hospital purchases, the hospital is reimbursed. The advantage here is they can deliver this in the clinic. So it's the actual office that will buy the drug similar to other drugs like Provenge and Xofigo that are given in the clinic. This has now sort of changed in economics from a doctor who's been going to the surgery center or been going to the hospital, they now have the ability to buy the product, and then they get reimbursed, their group of 3 or 4 or their clinic.

And then a question on 102 in the ENVISION study. What's the rate-limiting step to the filing of the NDA at this point? And I guess what I'm getting at is where are you on manufacturing and where is that process?

I mean we're on schedule -- that's not the rate-limiting factor. Everything is great from manufacturing, our CMC, all of that. What's really the rate-limiting factor is 12 months of follow-up. You need 12 months of follow-up, a minimum 12 months of follow-up, and then we will continue to follow the patients even beyond that. So really, as I've said before, unfortunately, I can't make 12 months go faster than 12 months is. And so assuming we're on track right now for our enrollment. Happy to say through July, and it looks like that'll be that way through August. So we're happy with where we are with enrollment. So we expect -- as we said, that will be done by the end of the year, and then you have to take those patients to 12 months. So we're saying it would be the end of '23. So then it becomes database locking, cleaning, which obviously, as you know takes time. We have to make sure we don't want to do anything that would jeopardize the quality of the data. So it's all about the data and the timing on the follow-up. But we will continuously be talking to the FDA as we get a little bit closer to that and see what our possibilities are for different types of submission. So as soon as we have that, obviously, we'll share it. But that is the only rate-limiting factor for us.

Our next question come from the line of Leland Gershell from Oppenheimer.

Just a couple for me also on the nephrostomy tube anterograde installation. Clearly, it seems to be catalyzing interest amongst physicians despite the limited data. In our discussion with urologists, it seems like they're finding the time saving of patients coming in for their repeat weekly installations with the tube to be simply much better than the much longer time involved in terms of having to prep patients and other aspects related to the retrograde which may potentially make up for or outweigh any economic financial benefits to those same physicians. I'm wondering if Jeff can kind of comment around that dynamic? And also with the doubling of the installation rate on the anterograde I just want to drill into that a bit more. Is this coming from docs who are becoming more comfortable and therefore, treating more of their own patients? Is it driving an expansion and broadening of urologists perhaps to those in groups who may have been either slower or more reluctant to adopt Jelmyto? How should we think about kind of the landscape of urologist adoption across the different types of urologists out there, community versus referral center and so forth with anterograde becoming a viable option?

So the first question, the one -- the biggest piece of feedback I get is they don't have to schedule all their time. They don't have to schedule surgery center time. It just allows them a lot more freedom from a treatment standpoint. It allows the patient to go to a comfortable environment. And so there's a convenience on both ends. But I think the biggest -- the one that I've heard the most is just the scheduling, which can be challenging given the staffing issues that we're seeing in hospitals and surgery centers. So that's probably the biggest driver what I've heard.

As far as the doubling, I think it's probably a combination of a lot of things. I think now you see physicians that enjoyed the ease of this in their clinic and start to see and start to realize that this is an option they may expand to greater parts of our indication. Perhaps they were using it in some areas, and now they're using it in the full indication because they're able to do this in a more convenient manner. I would say that's probably more of the dominant than versus like new physicians that weren't as interested in Jelmyto. And now they're very interested in nephrostomy tube. But I think there are some that have shown interest now that we have shown data from this level of administration. But it's really primarily around the ease of convenience. Even though we did overcome all the challenges around the training, the mixing, the setting things up, sometimes it's not really what we can do. It's the institution, it's the scheduling, it's when can I get into ORs, they days I'm in OR. This provides a much greater convenience for everyone.

Our next question come from line Paul Choi from Goldman Sachs.

This is Charlie on for Paul. Just a quick one from us. I was curious about the operation expense guidance reduction for the year at this point. I'm just wondering, is there any particular business strategy or philosophy behind where those cost cuts were made? And just anything that you're looking to prioritize or anything? Any color there would be great.

Really, what it came down to just some of our expenses just came in lower than we expected. So some of the -- particularly around the clinical studies and some of the work. And I'll ask Dong to comment further. I think that some of the other stuff was like we'd like to do a study in the unwilling and unable, right? It's something that the FDA has not agreed that they would give us an approval on, but it's something that we believe if we had a study that showed those patients unwilling or unable to go through surgery that, that could broaden the patient population. So we decided as a company to delay that, started that study into next year. One, we don't want to do anything with -- this is for UGN-102 until we have finished our current ENVISION study. So we decided to postpone that. And I think the other stuff is really just really around the margin. But Dong, do you want to comment about that?

I mean we mentioned everything in the cover. So yes, so that's it. And we don't really want -- we want to keep our Jelmyto and wanted to focus on 301 as well. But anything good to have, we're trying to reconsider, but basically, we covered everything.

Let me just make one other comment. I just want to say we haven't cut anything that would help with the adoption of Jelmyto. That is one area that we absolutely are making sure that anything, any areas, particularly Jeff mentioned earlier, around patient activation, we really believe that to get a sense of urgency from physicians that patient activation is a key strategy for us going forward. So we're not doing -- we're not cutting back on any of our commercial spending, but we're just being very diligent on everything that we're doing.

And I'm not showing any further questions in the queue at this moment.

Okay. Great. Well, as I mentioned before, we're very proud of the progress that we continue to make toward realizing our vision for those patients suffering from urothelial cancers. We appreciate your on continued [Technical Difficulty] look forward to keeping you all informed as key events come to fruition. So thanks, everyone. Operator, you may now disconnect.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.