UroGen Pharma Ltd. HEALTHCARE/BIOPHARMACEUTICALS … · base case assumes ~45% patient share and...

EQUITY RESEARCH

INITIATION OF COVERAGE

Derek [email protected]

Marcus [email protected]

Leah Rush [email protected]

Disseminated: May 30, 2017 06:29 EDT; Produced: May 30, 2017 06:29EDT

May 30, 2017

Stock Rating:

OUTPERFORM12-18 mo. Price Target $32.00URGN - NASDAQ $18.48

3-5 Yr. EPS Gr. Rate NA52-Wk Range $20.02-$13.01Shares Outstanding 11.0MFloat 5.9MMarket Capitalization $221.3MAvg. Daily Trading Volume NADividend/Div Yield NA/NMBook Value $1.49Fiscal Year Ends Dec2017E ROE NALT Debt NAPreferred NACommon Equity $16MConvertible Available NoNote: Trading range is as of 5/4/17 IPO.

EPSDiluted Q1 Q2 Q3 Q4 Year Mult.

2016A -- -- -- -- (1.91) NM2017E (3.00) (0.62) (0.60) (0.58) (3.01) NM2018E -- -- -- -- (4.10) NMRevenue($/mil) Q1 Q2 Q3 Q4 Year Mult.

2016A -- -- -- -- 0.0 NM2017E 0.0 0.0 0.0 0.0 0.0 NM2018E -- -- -- -- 0.0 NM

Oppenheimer & Co Inc. 85 Broad Street, New York, NY 10004 Tel: 800-221-5588 Fax: 212-667-8229

For analyst certification and important disclosures, see the Disclosure Appendix.

Stock Price Performance Company DescriptionUroGen Pharma Ltd. is a clinical-stagebiopharmaceutical company developingadvanced non-surgical treatments toaddress unmet needs in the field ofurology, with a focus on uro-oncology.

HEALTHCARE/BIOPHARMACEUTICALS

UroGen Pharma Ltd.Initiating Outperform: Gel With This DifferentiatedUro-oncology Platform PlaySUMMARYWe are initiating coverage on URGN with an Outperform rating and a $32 price target.We believe URGN’s proprietary reverse thermal gel (RTGel) platform could totallychange the way urothelial cancers are treated today by improving drug delivery (dwelltime) and efficacy in difficult to reach areas in the urinary tract while not interferingwith the natural flow of fluids. We think both of URGN's programs, MitoGel for low-grade upper tract urothelial carcinoma (UTUC)—an orphan indication—and VesiGel,for non-muscle invasive bladder cancer (NMIBC), could both replace surgery as thestandard of care for their respective indications. We are encouraged by the datagenerated thus far for MitoGel and VesiGel and believe there remains considerableupside to today's valuation.

KEY POINTS

■ MitoGel: We believe MitoGel's ability to increase dwell time in UTUC patientsshould translate to meaningful and durable complete response rates in MitoGel'sPhase 3, similar to data seen in its Compassionate Use study. Assuming positivedata, our physician checks indicate MitoGel could see meaningful uptake and ourbase case assumes ~45% patient share and peak sales of ~$525M.

■ VesiGel: We are encouraged by early data generated by VesiGel's open-labelPhase 2a in patients with NMIBC, which suggests improved efficacy and durabilityof response relative to generic Mitomycin C, a commonly used off-label chemoagent. We currently assign a POS of 30% and forecast un-risk adjusted peak salesof $570M as we await the full Phase 2a dataset expected in 2H17.

■ AGN deal: URGN granted AGN an exclusive license to develop a formulation ofBotox using its proprietary RTGel platform (BotuGel) for overactive bladder andinterstitial cystitis. While URGN is set to earn potential sales/regulatory milestonesand a low-single digit royalty on sales, more importantly, we believe the dealvalidates URGN's IP and to a degree the platform's safety profile.

■ RTGel platform: We believe URGN's RTGel could have wider applicabilitybeyond uro-oncoloy indications and could be developed for therapeutics targetingother hard to treat anatomies such as in gastroenterology and in women's health.We view URGN's ability to secure additional RTGel license agreements withother Pharma companies for potential life-cycle management strategies or noveltherapeutics as upside to our valuation.

■ Valuation: Our 12-18-month price target of $32 a share is based on probabilityweighted discounted cash flow analysis through 2036 using a 15% WACC andno terminal value. We assign ~$23, $7 and $2 of value per share to MitoGel,VesiGel and URGN's pipeline, respectively. Following URGN's May 2017 IPO, thecompany appears well capitalized to execute on its near-term catalysts.

Deirdre Abbotts

RI-Restricted

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5-YEAR PRICE PERFORMANCE

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URGN

Source: Bloomberg

INVESTMENT THESIS

We believe URGN’s proprietary RTGel platform may allow forimproved drug delivery and efficacy in various types of urothelialcancers given its ability to be delivered in hard to treat areaswithin the urinary tract without interfering with the natural flow offluids from the urinary tract and bladder. We view the platformas somewhat de-risked given encouraging data from URGN’searly studies for both MitoGel and VesiGel in their respectiveindications and believe they could represent a paradigm shift inthe treatment of uro-oncology indications if approved.

BASE CASE ASSUMPTION■ URGN reports positive results from MitoGel's pivotal study and is

approved for low-grade UTUC in 2019 (POS: 65%)■ MitoGel achieves un-risk adjusted peak sales of ~$525M before

patent expiry in 2031■ VesiGel receives approval for low-grade NMIBC in 2022 and

achieves un-risk adjusted peak sales of $570M before patent expiryin 2031

■ Modest risk-adjusted pipeline value (~$2/share) for Vesimune andBotuGel

CATALYSTS■ 2017: Potential updates from the open-label pivotal study for MitoGel

in low-grade UTUC■ 1H17: VesiGel Phase 2a study results in low-grade NMIBC■ 2H17: AGN expected to initiate Phase 2 study for BotuGel in

overactive bladder syndrome; URGN receives $7.5M milestonepayment for IND filing

■ 1H18: Full top-line results from MitoGel pivotal study in low-gradeUTUC

■ 2H18: Est. NDA filing for MitoGel for low-grade UTUC■ 2019: Est. approval for MitoGel for low-grade UTUC

UPSIDE SCENARIO■ MitoGel achieves un-risk adjusted peak sales of >$525M and/or its

patent runway is extended beyond 2031 for low-grade UTUC■ VesiGel achieves un-risk adjusted peak sales of >$570M and/or its

patent runway is extended beyond patent expiry in 2031■ Vesimune receives approval and is commercialized for high-grade

NMIBC■ AGN receives approval for BotuGel for overactive bladder syndrome

and interstitial cystitis

DOWNSIDE SCENARIO■ URGN's RTGel platform causes safety issues leading to failure of

both MitoGel and VesiGel programs■ MitoGel fails to demonstrate efficacy in its pivotal study■ MitoGel fails to achieve un-risk adjusted peak sales of $525M and/or

its patent expires before 2032 for low-grade UTUC■ URGN is not successful in the clinical development of VesiGel■ VesiGel fails to achieve un-risk adjusted peak sales of $570M and/

or its patent expires before 2031■ URGN's pipeline asset Vesimune and partnered asset BotuGel fail

in clinical development

PRICE TARGET CALCULATION

Our 12-18 month URGN price target of $32 a share is based on a discounted cash flow analysis through 2036 which incorporates the patentexpiry and genericization of both MitoGel and VesiGel. We assume approval of MitoGel and VesiGel in 2019 and 2022, and forecast un-risk adjusted peak sales of $525M and $570M, respectively. We use a WACC of 15% and assign no terminal value for MitoGel and VesiGelbeyond their patent expirations in 2031. We assign ~$1/share in NPV for potential milestones for URGN’s license agreement with AGNregarding BotuGel and ~$1/share in pipeline value for URGN’s early stage program, Vesimune, for the treatment of high-grade NMIBC.

KEY RISKS

Risks include: 1) clinical failure due to efficacy and/or safety of either MitoGel for low-grade UTUC and/or VesiGel for low-grade NMIBC; 2) ifMitoGel and/or VesiGel are approved, URGN’s inability to successfully commercialize either product; 3) if MitoGel’s or VesiGel’s intellectualproperty is invalidated and one or both products goes generic prior to 2031, it would adversely impact our price target; 4) even if MitoGeland/or VesiGel are approved, if commercial and/or public payers do not reimburse for these treatments, it will meaningfully impact oursales estimates.

Derek Archila: 617-428-5712

UroGen Pharma Ltd. URGN (OUTPERFORM) - $32.00

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Investment Thesis We are initiating coverage on UroGen Pharma Ltd. (URGN) with an Outperform rating and

a 12-18 month price target of $32 per share. We believe URGN’s proprietary RTGel

platform may allow for improved drug delivery and efficacy in various types of urothelial

cancers given its ability to be delivered in hard to treat areas within the urinary tract

without interfering with the natural flow of fluids from the urinary tract and bladder. We

view the platform as somewhat de-risked given encouraging data from URGN’s early

studies for both MitoGel and VesiGel in their respective indications along with URGN’s

license agreement with AGN for BotuGel, a proprietary formulation of Botox using URGN’s

RTGel technology being developed by AGN, for overactive bladder and interstitial cystitis.

We think the company’s lead program in development, MitoGel, a proprietary formulation

of Mitomycin C, could replace surgery as first-line treatment for patients with low-grade

upper tract urothelial carcinoma (UTUC), an orphan indication, since it addresses many

shortcomings of tumor resection procedures and off-label adjuvant chemotherapy usage.

We also believe MitoGel could warrant favorable pricing given low-grade UTUC’s orphan

status. We are encouraged by data from the company’s compassionate use study thus far

and expect the company to report top-line results from its pivotal study (OLYMPUS study)

in mid-2018. We believe MitoGel could be approved in 2019 assuming a 6-month review

and we forecast MitoGel achieving un-risk adjusted peak sales of ~$525M by 2030.

We believe VesiGel, URGN’s second product which is being developed as a first-line

treatment for low-grade non-muscle invasive bladder cancer (NMIBC), could lead to a

paradigm shift in how NMIBC patients are treated today. While the program is earlier in

development, early data looks promising, particularly the durability of complete response

rates seen in the Phase 2a study, and the overall market size is bigger than low-grade

UTUC, making it an attractive market opportunity. We expect URGN to move this program

into a Phase 2b in the US (OPTIMA II study) in early 2018. We assume approval in 2022

to be conservative and forecast un-risk adjusted peak sales of ~$570M in 2030.

We think URGN’s pipeline checks the boxes as far as being differentiated relative to

existing treatments, targeting hard to treat indications with no first-line medical therapy

and being positioned as an alternative to surgery, and we believe payers are likely to be

onboard given the potential to reduce costs associated with surgical treatment in these

indications and potential lifetime complications.

Post the company’s IPO in May 2017, we believe URGN is well financed (~$63M in cash)

to achieve significant value-creating milestones over the next 12-18 months, including: 1)

the full dataset for VesiGel’s Phase 2a (OPTIMA I) for low-grade NMIBC; and; 2) top-line

results from MitoGel’s pivotal study (OLYMPUS) in mid-2018.

Investment Positives

MitoGel Targets an Underserved Market with Significant Revenue Potential

We believe the UTUC market remains an attractive market with high unmet need where

MitoGel could become the first and only approved drug for this indication. Low-grade

UTUC is an orphan condition of about 14,500 patients in the US which typically affects

older patients in their early-to-mid-70s. As we noted, the unmet need is high as the current

treatment options consist of either nephroureterectomy (removal of the kidney and

ureters) while kidney-sparing techniques such as tumor resection combined with off-label

intravesical chemotherapy are generally reserved for patients with one kidney or patients

UroGen Pharma Ltd.URGN (OUTPERFORM) - $32.00

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who cannot tolerate surgery. Both procedures are costly and could require patients to end

up on lifetime dialysis if both kidneys are required to be removed. Even with treatment,

patients are plagued by high tumor recurrence rates in the range of 30-75%. The inability

of urologists to access specific areas in the urothelial tract in order to remove tumors and

spare a patient’s kidney remains a key challenge, and intravesical treatment with off-label

chemotherapy agents typically do not reside long enough in the upper tract to be

efficacious.

We believe URGN’s proprietary formulation of Mitomycin C (a generic cytotoxic antibiotic

that inhibits DNA thesis in bladder cells) using its RTGel technology has significant

advantages over the current standard of care and may allow physicians to treat patients

with low-grade UTUC without surgery due to MitoGel’s chemoablative properties, which

we believe physicians will prefer. MitoGel’s ability to convert from a liquid at cold

temperatures to a gel at warm temperatures should allow for increased dwell time and

drug exposure to tumors in the upper urothelial tract. We are encouraged by high

complete responder rates from MitoGel’s compassionate use study thus far and believe, if

approved, MitoGel could become a less invasive, first-line therapy chemoablative

treatment for patients with low-grade UTUC.

Our physician checks indicate a significant need for a product with MitoGel’s profile for

patients with UTUC, and given MitoGel’s orphan drug status, we believe the product could

gain favorable orphan pricing (we assume $70K annually, which may prove conservative)

for the UTUC indication. We estimate that, at branded pricing, market opportunity for

MitoGel will approach ~$1B by 2030. We assign a ~65% POS for both clinical and

commercial success for MitoGel program in low-grade UTUC and forecasts peak sales of

$525M in 2030 which assumes ~45% patient share, which may prove conservative. We

estimate MitoGel is worth $23 of our $32 a share price target.

VesiGel Addresses Similar Shortcomings as MitoGel But in a Larger Market

We believe VesiGel, which also utilizes URGN’s RTGel platform but with a higher dose of

Mitomycin C, could become a first-line chemoablative therapy for patients with low-grade

NMIBC. Bladder cancer accounts for ~5% of all new cancers in the US and is the fourth

most common cancer among men. We estimate there are approximately ~500K patients

with low-grade NMIBC which URGN is targeting with its VesiGel program. Similar to

UTUC, the standard of care treatment for NMIBC is surgery. The procedure, transurethral

resection of bladder tumor, or TURBT, is conducted either as an inpatient or outpatient

procedure under general or regional anesthesia. Patients may also receive intravesical

chemotherapy or adjuvant chemotherapy or immunotherapy treatment to reduce the rate

of tumor recurrence. Even with the current treatment options, recurrence rates are still

high, in the 15-61% range, with TURBT alone and somewhat lower with intravesical or

adjuvant chemotherapy/immunotherapy. In severe cases, patients may require a

cystectomy or removal of their bladder. While there are currently three approved

treatments for adjuvant therapy, there are still no non-surgical first-line treatments

available for patients with NMIBC.

We believe VesiGel’s profile, particularly its chemoablative properties, will resonate with

physicians. We are encouraged by VesiGel’s early data, especially the durability of the

complete responses seen in patients out to 12 months, which we think will be important in

driving physician uptake for VesiGel in low-grade NMIBC. At branded pricing, we think the

total market opportunity for VesiGel will approach ~$2B by 2030.

We assign a ~30% POS for both clinical and commercial success for VesiGel program in

low-grade NMIBC and forecast peak sales of ~$570M in 2030, which assumes ~30%

market share. We estimate VesiGel is worth $7 of our $32 a share price target.


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AGN Deal for BotuGel Validates URGN’s RTGel Platform and Potential for Upside

In October 2016, URGN entered into a worldwide agreement granting Allergan (AGN) an

exclusive worldwide license to develop, manufacture and commercialize a proprietary

formulation using URGN’s RTGel platform and clostridial toxins (Botox) for the treatment

of overactive bladder syndrome (OAB) and interstitial cystitis (bladder pain). We believe

the biggest positives from the AGN deal are: (1) we think it validates URGN’s RTGel

platform as a novel RTGel. According to URGN, AGN conducted significant due diligence

around the platform, technology and its intellectual property, which gets us more confident

in the durability of URGN’s lead products MitoGel and VesiGel which utilize the RTGel

platform technology; (2) we think AGN’s preference for de-risked assets with high

probabilities of success and the fact this program is for its largest product by sales, makes

it a relatively visible program within their urology franchise. We estimate AGN generated

$250M in Botox sales from urological indications, and we think BotuGel’s market could be

expanding as it would not require multiple injections into the bladder wall which can be

timely and challenging for physicians; and 3) we think AGN will dedicate the resources

required to get this program to goal line, and it already has the commercial infrastructure

in place to commercialize BotuGel if it is eventually approved. This gets us more confident

in URGN’s ability to recognize both regulatory and commercial milestones from the deal

and a decent revenue stream from a low single-digit royalty if approved.

We conservatively assign roughly a $1/share in pipeline value for the BotuGel agreement

based on our NPV analysis of future milestones (see Exhibit 22 for our assumptions).

RTGel Platform May Have Applicability for Other Tough to Treat Anatomies

We believe URGN's RTGel could have a wider applicability beyond uro-oncoloy

indications and could potentially be developed for new therapeutics targeting other hard to

treat anatomies such as gastroenterology and in women's health (reproductive system).

Since the RTGel is proprietary, we believe URGN may be able to secure additional

partnerships or license deals with other pharmaceutical companies looking to develop life-

cycle management strategies for existing drugs that may soon be coming off patent,

repurposing already approved drugs for delivery in tough to treat anatomies or for novel

drugs in development. We currently do not account for any deals beyond the AGN deal in

our valuation, leaving them for upside. Additionally, we view this as a potential source of

non-dilutive financing for the company.


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Risks to Our Price Target Risks include: 1) clinical failure due to efficacy and/or safety of either MitoGel for low-

grade UTUC and/or VesiGel for low-grade NMIBC; 2) if MitoGel and/or VesiGel are

approved, URGN’s inability to successfully commercialize either product; 3) if MitoGel’s or

VesiGel’s intellectual properties are invalidated and one or both products go generic prior

to 2031, it would adversely impact our price target; 4) even if MitoGel and/or VesiGel are

approved, if commercial and/or public payers do not reimburse for these treatments, it will

meaningfully impact our sales estimates; and 5) URGN may require additional cash to

fund its operations and clinical programs beyond our $150M estimate, which would be

dilutive to shareholders.

Catalyst Calendar URGN’s key value driver in the next 12-18 months will be top-line results from its pivotal

study (OLYMPUS study) for MitoGel in patients with low-grade UTUC expected by mid-

2018. Other catalysts during this timeframe include the full dataset for VesiGel’s Phase 2a

(OPTIMA I study) in low-grade NMIBC along with AGN’s initiation of its Phase 2 for

BotuGel (URGN will receive a $7.5M milestone when AGN files the IND). Not on the list of

potential catalysts or in our valuation would be upside from potential partnering or

licensing deal(s) URGN could seek to do within other areas where its RTGel platform

could be utilized such as in gastroenterology and/or female reproductive system.

Exhibit 1. UroGen Pharma Ltd. Catalyst Calendar (2017-19)

Date Event Comments

2H17 Full VesiGel Phase 2a (OPTIMA I study) results in NMIBC

2H'17 AGN to initiate Phase 2 for BotuGel in Overactive Bladder IND filing = $7.5M milestone to URGN

1H18 Initiate patient enrollment for VesiGel Phase 2b study in the US (OPTIMA II)

in patients with NMIBC

Mid-2018 Topline results from pivotal study for MitoGel in UTUC

2H18 Est. NDA filing for MitoGel in UTUC Orphan status - potential for 6-month expedited

review

2019 Est. approval of MitoGel for UTUC

Source: Company information, SEC filings and Oppenheimer Research


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Valuation Our 12-18 month URGN price target of $32 a share is based on a discounted cash flow

analysis through 2036 which incorporates the patent expiry and genericization of both

MitoGel and VesiGel in 2031. We assume approval of MitoGel and VesiGel in 2019 and

2022, and forecast un-risk adjusted peak sales of $525M and $570M, respectively. We

use a WACC of 15% and assign no terminal value for MitoGel and VesiGel beyond their

patent expirations in 2031. We assign ~$1/share in NPV for potential milestones and

royalties for URGN’s license agreement with AGN for BotuGel and ~$1/share in pipeline

value for URGN’s early stage program, Vesimune, for the treatment of high-grade NMIBC.

Post its IPO in May 2017, we estimate the company has ~$63M in cash. Our price target

assumes an additional $50M raise in 2018, and we believe URGN could reach breakeven

in 2020 assuming additional capital raises of $50M in 2019 and 2020.

Exhibit 2. UroGen Pharma Ltd. Discounted Cash Flow Analysis (2016-2036)

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E

EBIT 1 (28) (58) (38) 4 50 116 169 226 275 303 336 363 383 399 161 18 8 (4) 0 (6)

Add: Depreciation & Amortization 5 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Less: Taxes - - - - - - - - 52 64 70 78 84 89 93 39 6 5 2 3 2

Less: Capex 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Less: Net working capital 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Free cash flow (FCF) 3 (30) (60) (40) 2 48 114 167 172 209 231 256 276 292 304 120 9 2 (8) (5) (10)

NPV ('17-36E) $423

WACC 15.0%

Risk adj. BotuGel milestones $15

Risk adj. Pipeline (Vesimune) $18

Est. Market Cap $456

Shares outstanding 14

Price target $32

URGN Discounted Cash Flow ('16-'36E)


In our bull/bear scenario analysis, consistent with our DCF valuation, our base case (80%

probability of success) yields a PT of $32 a share. In our bull case, we forecast MitoGel

and VesiGel peak sales of $880M and $950M, respectively, which assumes each product

captures 75% and 50% share of its respective market. We estimate our bull case (POS:

10%) is worth an incremental $19 a share to our PT, or $55 a share. Conversely, our bear

case assumes (POS: 10%) MitoGel and VesiGel peak sales of $235M and $190M,

respectively, which assumes each product only captures 20% and 10% share of its

respective market. In this scenario we estimate there could be $15/share in downside to

our PT, or a bear case PT of $15 a share.

Exhibit 3. UroGen Pharma Ltd. Bull/Bear Scenario Analysis

Parameters: Bull Base Bear

MitoGel peak sales ($) $877 $526 $234

MitoGel market share (%) 75% 50% 20%

Probability of success (%) 65% 65% 65%

+/- $ per share vs. base case $16 $0 ($13)

VesiGel peak sales ($) $951 $570 $190

VesiGel market share (%) 50% 30% 10%

Probability of success (%) 35% 35% 35%

+/- $ per share vs. base case $7 $0 ($4)

Est. Scenario Price Target ($) $55 $32 $15

Probability of scenario (%) 10.0% 80.0% 10.0%

Scenario contribution $5 $26 $1

Probability-weighted Price Target $32

Source: Company information, SEC filings and Oppenheimer Research; may not add due to rounding


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Company Overview UroGen Pharma Ltd. (URGN) is a clinical-stage biopharmaceutical company focused on

the development of treatments for uro-oncology indications. The company’s lead program,

MitoGel, is a proprietary formulation of Mitomycin C (a generic chemotherapy agent), for

the treatment of low-grade upper tract urothelial carcinoma (UTUC). URGN is developing

MitoGel as a chemoablation agent for UTUC designed to remove tumors associated with

UTUC by non-surgical means. Using URGN’s proprietary RTGel platform, MitoGel is able

to address many of the shortcomings of tumor resection along with off-label use of

Mitomycin C and other chemotherapy agents for patients with UTUC. URGN is currently

evaluating MitoGel in a compassionate use program in the US, Europe and Israel, and

early data has demonstrated strong proof-of-concept for MitoGel in patients with UTUC.

The FDA has granted MitoGel orphan drug status and is allowing URGN to run a single

open-label pivotal Phase 3 study (OLYMPUS) for regulatory approval via the FDA’s

505(b)2 pathway. The company initiated its pivotal Phase 3 study in the 1Q17 and expects

top-line data by mid-2018.

URGN’s second program in development is VesiGel for low-grade non-muscle invasive

bladder cancer (NMIBC). VesiGel is a higher dose of Mitomycin C combined with URGN’s

RTGel platform. The higher dose is needed due to the increased surface area of the

bladder relative to upper tract. VesiGel is currently being evaluated in an open-label

Phase 2a program for patients with NMIBC which is set to complete in the 1H17. URGN

plans to move VesiGel into a Phase 2b program sometime in early 2018.

URGN has two additional pipeline programs of note. First, BotuGel (a proprietary RTGel

formulation of Botox), which URGN has licensed exclusive worldwide rights to AGN for

overactive bladder (OAB) and interstitial cystitis indications, and second, Vesimune, the

company’s proprietary immunotherapy product candidate for the treatment of high-grade

NMIBC, including carcinoma in situ (CIS). The company believes Vesimune, which is a

novel, liquid formulation of Imiquimod, a TLR7 agonist, in combination with additional

immunotherapy drugs such as checkpoint inhibitors or other chemotherapy agents, could

offer a valid alternative to surgery. Both programs are in early stages of development.

Exhibit 4. UroGen Pharma Ltd. Product Pipeline

Source: Company presentation and Oppenheimer Research


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URGN’s RTGel Platform Technology

URGN’s RTGel platform is a proprietary polymeric, biocompatible, reverse thermal gelatin

hydrogel which is a liquid at lower temperatures and converts to a gel at warmer

temperatures. URGN is not the first or only company to develop a reverse thermal

hydrogel, and these types of gels are used in several approved and development-stage

pharmaceutical products such as OTIC’s OTIPRIO, which is approved for the treatment of

pediatric patients with bilateral otitis media with effusion undergoing tympanostomy tube

placement. Additionally, some other of OTIC’s pipeline programs for hearing/inner ear

disorders also utilize reverse thermal gel technology. What makes URGN’s RTGel

platform unique is that it is designed specifically for delivery in the urinary tract and has

specialized properties for enhanced adhesion to the urothelial wall. According to URGN,

the company currently has ~16 issued patents and ~45 pending applications (worldwide)

on its RTGel platform related to the chemistry and construction, material science and

specific use of RTGel for the treatment of urinary tract indications. URGN’s four US

patents are expected to expire in the 2030-31 timeframe.

We think the RTGel platform when used with an active pharmaceutical agent could have

wide applicability across many different indications and may be able to increase drug

exposure in hard to treat areas such as the urothelial tract, female reproductive system

and the gastrointestinal tract. Since these areas can be challenging for surgeons to

address given visibility and access issues, we think the RTGel platform may be well suited

to deliver targeted therapies within these anatomies. We think RTGel’s formulation with

Mitomycin C and delivery into the urinary tract is well suited given the technology’s

potential to: (1) increase the exposure and dwell time of Mitomycin C allowing for more

tissue coverage; (2) ability to deliver higher doses of active drug than would otherwise be

possible with water-based formulations and; (3) its ability to maintain the active drug’s

chemical structure and mechanism of action.

One of the first things we thought could be an issue with this type of technology’s use in

the urinary tract is the potential for blockage. With that said, URGN has done extensive

pre-clinical and clinical testing with RTGel with it having been instilled ~600 times to date

in patients without a single blockage and allowing the urine to flow through without issues.

The FDA also reviewed URGN’s pre-clinical and clinical data ahead of granting orphan

drug status and feedback on URGN’s pivotal study design.

Exhibit 5. URGN’s Reverse Thermal Gelatin Hydrogel

Source: Company presentation and Oppenheimer Research


http://www.otiprio.com/about/technology/

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MitoGel

Background: Upper Tract Urothelial Carcinoma (UTUC)

According to the SEER, urothelial carcinoma is the eighth most cancer-related cause of

death in the US and is the most costly cancer on a per-patient basis in the US healthcare

system. Urothelial carcinomas can arise along any part of the urinary tract though they

mostly (~90-95%) occur in the lower tract (i.e., bladder, urethra) while the remaining ~5-

10% occur in the upper tract, or the kidneys and ureters. Primary urothelial carcinoma of

the upper tract is rare and has a propensity for multifocality, high local recurrence rates

and the development of metastases. According to company estimates, there are

approximately ~45,000 patients with UTUC, which is more common in elderly men with an

average age in the mid-70s. Of these ~45,000, approximately ~40% have non-muscle

invasive disease and ~80% of these patients, or about ~14,500, have low-grade UTUC.

Given the low incidence of UTUC, it is generally diagnosed during a symptomatic episode

or during surveillance (i.e., urinalysis, urine cytology or cystoscopy) of bladder cancers.

The most common symptoms found in UTUC patients are hematuria (blood in urine),

which occurs in 75-82% of cases, and flank and lumbar pain in ~20-30 of patients.

The type of UTUC is graded by severity:

Papilloma: This is also called benign papillary urothelial neoplasm of low malignant

potential (PUNLMP). This type of cancer may recur but has a low risk of progressing.

Low-grade: This type of cancer is more likely to recur and progress compared with

PUNLMP. URGN’s MitoGel is targeting low-grade UTUC.

High-grade: This type of cancer is the most likely to recur and progress.

Exhibit 6. Prevalence of Stage and Grade of Upper Tract Urothelial Carcinoma

Source: Company presentation and Oppenheimer research


http://emedicine.medscape.com/article/458825-overview

https://www.ncbi.nlm.nih.gov/pubmed/18221955

11

Current Treatment Options

Even with the complex anatomy of the urinary tract, the gold standard treatment for

patients with UTUC and one healthy kidney is a complete open nephroureterectomy with a

removal of the bladder cuff due to high rates of ureteral stump recurrence, which has been

reported to be between ~30-75%. While the open method continues to be used, more and

more, surgeons are using laparoscopic techniques in order to either perform a

nephrectomy or resect tumors in the upper urinary tract in order to spare the kidney,

known as parenchymal sparing. In one study, data showed laparoscopic

nephroureterectomy was associated with quicker ambulation, shorter hospital stays and

less analgesic use than patients undergoing open nephroureterectomy. Moreover, ~30%

of patients undergoing an open nephrectomy experienced surgically related complications

vs. only ~10% of patients in the laparoscopic group. In a randomized controlled trial, at 5-

years the metastases-free survival and cancer-specific survival rates were not statistically

different between open nephroureterectomy vs. laparoscopic nephroureterectomy, though

the study suggested, as we noted before, better postoperative outcomes relative to

complications related to surgery.

However, in one of the largest studies in UTUC, ~77% of patients underwent

nephroureterectomy with removal of the bladder cuff whereas ~17% were treated with a

parenchymal-sparing approach and ~6% with a nephrectomy alone. Overall, the study

found patients undergoing the parenchymal-sparing surgery had lower actuarial 5-year

disease-free survival rates than those with more aggressive surgical treatment options.

Additionally, in an article cited by the company in its F-1 filing from the Journal of

Endourology, investigators found 89.5% of patients undergoing tumor resections had a

mean of 5.5 recurrences per patient (n=57) over a four-year period. Moreover, 20% of the

patients in the study ultimately ended up receiving a nephroureterectomy. Urologists we

spoke with noted they continue to use both surgical options with the preference with the

open technique given the lower rates of survival and high recurrence rates associated with

patients undergoing parenchymal-sparing surgeries. According to the urologists we spoke

with, use of sparing procedures is for patients with a solidary kidney, patients with bilateral

disease and patients who may not be healthy enough to tolerate a major surgical

procedure and other medical comorbidities.

Additional challenges also arise in patients with only one functioning kidney who require a

nephroureterectomy to treat their UTUC. In these cases, patients will require chronic

dialysis therapy or a kidney transplant if the kidney is removed. Both of these options are

expensive with annual hemodialysis costs averaging ~$90K annually or ~$260K for kidney

transplant surgery which includes one-year annual post-surgery costs for

immunosuppressant therapy to ensure the organ is not rejected.





https://www.usrds.org/2014/view/

https://transplantliving.org/before-the-transplant/financing-a-transplant/the-costs/

12

Exhibit 7. Treatment Algorithm for Upper Tract Urothelial Carcinoma (UTUC)

Source: European Association of Urology, http://uroweb.org/wp-content/uploads/06-UTUC_druk_LR.pdf

In some patients, urologists will postoperatively treat patients with intravesical off-label

chemotherapy, though this has shown not to be very effective. Multiple agents including

bacille Calmette-Guerin (BCG), Mitomycin C, thiotepa and epirubicin have been used as

adjuvant therapies for patients with UTUC. According to our discussion with physicians,

generally the regimens consist of weekly dosing for six weeks either through an implanted

stent or catheter. Given the complex anatomy of the urinary tract, continued flow of urine

from the patient’s kidney to the bladder and the inability to achieve sufficient dwell time of

the chemotherapy agent, these treatments have limited effectiveness. Nonetheless, these

options are reserved for patients who are unable to have surgery either due to required

organ preservation or co-morbidities where a definitive surgery is contraindicated.

While urologists get paid to perform the procedures—be it the tumor resections with

adjuvant chemotherapy to spare the kidney, nephroureterectomy or a kidney transplant—

ultimately none are great options and are associated with either high recurrence rates

and/or high rates of co-morbidity and mortality. The physicians we spoke with indicated

the unmet need remains very high in patients with UTUC given the lack of good treatment

options and high reoccurrence rates. Additionally, we think payers would embrace a new

treatment option which reduces the need for invasive surgery and the potential

complications resulting from surgery, both of which are costly.

MitoGel Background

MitoGel is a sustained-release RTGel formulation of a low-dose of Mitomycin C (a

cytotoxic antibiotic that inhibits DNA thesis in bladder cells) being developed for the

treatment of low-grade UTUC. Given RTGel’s properties and ability to convert to a gel

form at warmer temperatures, we believe this will allow MitoGel to have increased dwell

time in the upper urinary tract and positions MitoGel as a potential first-line chemoablation

treatment for UTUC. MitoGel has shown in studies to remain in the upper urinary tract for

4-6 hours, and when it comes in contact with urine, MitoGel gradually dissolves, releasing

the active drug. Conversely, water-based Mitomycin C generics may only reside in the


http://uroweb.org/wp-content/uploads/06-UTUC_druk_LR.pdf

13

treatment area for a few minutes, preventing the dwell time needed to be efficacious.

MitoGel has been granted orphan drug designation by the FDA, entitling URGN to at least

seven years of exclusivity following approval as well as a priority review of their NDA.

MitoGel Clinical Development Program

MitoGel has generated very compelling proof-of-concept data through its ongoing

investigator-initiated Compassionate Use program. The program commenced in

September 2014 in the United States, Europe and Israel and is evaluating MitoGel in

patients with severe, non-resectable UTUC including patients diagnosed with unilateral

and bilateral UTUC, low-grade and high-grade disease as well as patients with a solitary

kidney. Without treatment, these patients would generally have very poor prognosis since

surgery is not an option. The program was allowed by the FDA in order to accumulate

safety and efficacy data only and is not part of URGN’s pivotal study.

As part of the ongoing program, patients receive six weekly instillations of MitoGel in the

upper urothelial tract for one week. One key component of MitoGel instillation is that

urologists are able to use existing catheters in these patients to instill MitoGel, and the

only additional step the urologist must perform is to chill MitoGel using an ice bucket

before instillation to ensure MitoGel is in its liquid form. At 4 weeks post dosing, patients

are evaluated endoscopically with additional confirmation through urine cytology. A patient

is deemed to have a complete response (CR) if no tumors initially diagnosed by the

physicians are detected and a partial response if the size or number of tumors

decreased, or if following an initial complete response, there is recurrence within

three months after the evaluation time.

Through the Compassionate Use program, 22 patients have been treated with MitoGel to

date with over ~130 instillations of MitoGel having been performed. Of the 22 patients, 13

who would be considered having low-grade UTUC (the indication URGN is seeking

approval for) completed the six weekly instillations of MitoGel and were evaluated

endoscopically 4 weeks post the last MitoGel instillation to determine if they were a

responder. Of the 9 patients not included in the analysis, 4 had a higher grade UTUC and

4 did not complete the full set of instillations over 4 weeks. The non-completers did not

complete MitoGel treatment due to factors unrelated to MitoGel treatment: 1 patient died

of an unrelated pulmonary embolism, 1 developed prostate cancer and chose not to

continue, 1 developed a catheter infection and chose not to continue and the last patient

was excluded as he developed bladder cancer and was treated with MitoGel for low

UTUC and with Mitomycin C for bladder cancer. Of the 13 evaluated, 8 achieved a

complete response at 4 weeks. We think the data is encouraging, and if replicated in

URGN’s pivotal study and if the complete response is durable out to 12 months (with or

without maintenance therapy), MitoGel could dramatically change the way low-grade

UTUC is treated today.

In Exhibit 8 (next page), we see a pre- and post-treatment example of a patient who

achieved a complete response in the MitoGel Compassionate Use program. We see the

tumor is no longer present in the endoscopic evaluation or on the X-ray of the patient’s

ureter. While this is only one example, we think MitoGel appears to have robust

chemoablative properties in patients who have no other option for treatment absent

nephroureterectomy. Additionally, thus far MitoGel has been generally well tolerated with

the most prominent adverse events being fatigue, allergic reaction, nausea, fever and

dysuria. All of the observed adverse events thus far are known side effects of Mitomycin

C, MitoGel’s underlying API.


https://clinicaltrials.gov/ct2/show/NCT02701023?term=urogen&rank=10

14

Exhibit 8. Compassionate Use Study – A Patient Case Study

Source: Company information and Oppenheimer Research

MitoGel OLYMPUS (Optimized DeLiverY of Mitomycin for Primary UTUC Study) Phase 3 Program

Based on data from MitoGel’s Compassionate Use program and the company’s

discussion with the FDA, in April 2017, URGN commenced its open-label, single-arm

Phase 3 clinical trial (OLYMPUS) for MitoGel for patients with low-grade UTUC. The

pivotal study, which is being run at centers in the United States and Europe, looks to

recruit 74 patients with low-grade UTUC.

Similar to the Compassionate Use study, patients will undergo six weekly MitoGel

instillations, and the primary endpoint of complete response will be measured at 4 weeks

post the patient’s last MitoGel instillation. One important difference in the OLYMPUS study

is patients who achieve a complete response at the primary evaluation time point will be

followed for an additional 12 months to better understand the durability of MitoGel

treatment and will receive one monthly maintenance instillation for up to 12 months.


http://investors.urogen.com/phoenix.zhtml?c=254372&p=irol-newsArticle&ID=2261681

https://clinicaltrials.gov/ct2/show/NCT02793128?term=urogen&rank=1

15

Exhibit 9. MitoGel Phase 3 Study Design (OLYMPUS Study)

Study Design: Single-Arm, Open-label, Multicenter, Safety/Efficacy Study

Target enrollment: n=74

Primary endpoint:Complete Response (CR) Rate defined as % of patients with CR at the Primary Disease

Evaluation (PDE) Visit [4 weeks after last instillation]

Secondary endpoints: - CR rate at 3 month after the PDE

- Pharmacokinetic (PK) parameter of Maximum plasma concentration [cmax]

- Pharmacokinetic (PK) parameter of Area under the Curve [AUC] Pharmacokinetic

parameter of cmax of MitoGel™ in the blood of a subset of patients

- Pharmacokinetic (PK) parameter of time to reach maximum concentration [tmax]

Pharmacokinetic parameter of cmax of MitoGel™ in the blood of a subset of patients

- Long-Term durable Complete Response (CR) Rate defined as % of patients who continue

to demonstrate CR at FU4 Visit occurring 12 months after PDE visit

OLYMPUS Study Design

Source: Clinicaltrials.gov

Since the OLYMPUS study is open-label, the company will have a good sense of how

the study is progressing. We expect the full top-line results from the OLYMPUS study

by mid-2018, and the company is targeting a 2018 NDA submission. Assuming a 6-month

review, we think MitoGel could be launched in 2019. Based on our discussions with

physicians regarding the study design, overall they believe it is well designed but also

believe 12-month data in patients who achieve a durable complete response on MitoGel

treatment and maintenance therapy and improvement on recurrence rates seem to be the

most important factors for them to determine their potential usage of MitoGel in low-grade

UTUC. Since the recurrence rate at 1 year for these patients is typically ~30% with

surgery with adjuvant BCG or Mitomycin C, physicians think the bar is low to show an

improvement in this hard-to-treat patient population.

One physician preferred to see an active comparator arm with either Mitomycin C and/or

BCG, but said he probably would still use MitoGel without comparative data. Both BCG

and Mitomycin C are used off-label in the treatment of low-grade UTUC and are likely the

reason the FDA did not require either to be used as an active comparator, in our view.

Overall, the feedback from urologists regarding MitoGel’s profile was generally positive,

and one physician said he would consider using MitoGel in ~100% of his patients if

MitoGel demonstrates a meaningful reduction in recurrence rates in patients with low-

grade UTUC at 12 months.

MitoGel Commercial Strategy

Given the small population of patients with low-grade UTUC, we believe URGN would be

able to commercialize MitoGel with a small specialty sales force of 30-40 sales

representatives. According to the company, there are only a few hundred centers with the

capability to treat UTUC right now, and we think MitoGel could expand the number of

physicians treating UTUC as it could be a good alternative to surgery if MitoGel’s pivotal

study is positive. Since low-grade UTUC is an orphan population, we think URGN will be

able to achieve significant patient share, which we outline below in our market model

assumptions (see Exhibit 10).


16

Exhibit 10. MitoGel Low-grade Upper Tract Urothelial Cancer Market Model

UTUC Market Model 2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E

US Urothelial cancer patients (LG UTUC) 45,000 45,360 45,723 46,089 46,457 46,829 47,204 47,581 47,962 48,346 48,732 49,122 49,515 49,911 50,311 50,713 51,119 51,528 51,940 52,356 52,774

% yoy growth 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

% US patients with non-muscle invasive UTUC 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40%

# US patients with non-muscle invasive UTUC 18,000 18,144 18,289 18,435 18,583 18,732 18,881 19,033 19,185 19,338 19,493 19,649 19,806 19,965 20,124 20,285 20,448 20,611 20,776 20,942 21,110

% with low grade non-muscle invasice UTUC 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%

# US patients with low-grade non-muscle invasive UTUC 14,400 14,515 14,631 14,748 14,866 14,985 15,105 15,226 15,348 15,471 15,594 15,719 15,845 15,972 16,099 16,228 16,358 16,489 16,621 16,754 16,888

% market share

% Resection/off-label chem/nephroureterectomy 100% 100% 100% 93% 84% 75% 66% 62% 57% 55% 55% 55% 55% 55% 55% 55% 55% 55% 55% 55% 55%

% MitoGel 0% 0% 0% 7% 16% 25% 34% 38% 43% 45% 45% 45% 45% 45% 45% 23% 7% 5% 2% 2% 2%

% Other/Generics 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 38% 41% 43% 43% 43%

% Total ` 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 78% 100% 100% 100% 100% 100%

# of MitoGel patients - - - 996 2,341 3,709 5,098 5,824 6,561 6,962 7,017 7,074 7,130 7,187 7,245 3,651 1,104 742 374 377 380

WAC Price (Cost of treatment) $0 $0 $0 $70,000 $72,100 $74,263 $76,491 $78,786 $81,149 $83,584 $86,091 $88,674 $91,334 $94,074 $96,896 $99,803 $102,797 $105,881 $109,058 $112,329 $115,699

% yoy growth 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%

Gross-to-net discount 0% 0% 0% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 35% 45% 50% 50% 50% 70%

Net price/TRx $0 $0 $0 $52,500 $54,075 $55,697 $57,368 $59,089 $60,862 $62,688 $64,568 $66,505 $68,501 $70,556 $72,672 $64,872 $56,539 $52,941 $54,529 $56,165 $34,710

Net sales - - - 52 127 207 292 344 399 436 453 470 488 507 526 237 62 39 20 21 13

% yoy growth 142% 63% 42% 18% 16% 9% 4% 4% 4% 4% 4% -55% -74% -37% -48% 4% -38%

POS % 0% 0% 0% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65%

Risk adj. Net sales - - - 34 82 134 190 224 260 284 295 306 317 330 342 154 41 26 13 14 9

% yoy growth 142% 63% 42% 18% 16% 9% 4% 4% 4% 4% 4% -55% -74% -37% -48% 4% -38%

Source: Company information and Oppenheimer Research estimates

Market Model & Assumptions

We assume there are 45,000 patients with upper tract urothelial carcinoma (UTUC) in the United States. We assume ~40% of patients have non-muscle invasive

UTUC and ~80% of these patients with non-muscle invasive disease, or ~14,500, would be considered low-grade and would be candidates for MitoGel treatment.

We believe MitoGel could capture significant patient share since there are no currently approved non-surgical treatment options available for UTUC. Based on our

discussions with physicians, if MitoGel is found to be effective in reducing recurrence of UTUC in patients at 1 year, they would use it in a majority of their patients (one

physician said as high as ~100% of his patients). In order to be conservative, we estimate ~45% patient share for MitoGel in UTUC at peak.

We assume the total treatment cost per year of $70,000-100,000 at gross pricing (includes maintenance therapy) before patent expiry. Assuming discounts of about

~25%, we forecast net pricing of $50,000-70,000 annually before patent expiration. Since there are no approved medical therapies for low-grade UTUC to serve as a

good analog, we assume a cost similar to that of care required for kidney-sparing surgery, which is around ~$80,000.

We assume MitoGel goes off patent in 2031 and the product achieves un-risk adjusted peak sales of ~$525M in 2030. We currently model a 65% probability of

success for MitoGel in low-grade UTUC, which we feel is appropriate and consistent with other late-stage pharmaceutical products.


17

VesiGel

Background: Non-muscle Invasive Bladder Cancer

The American Cancer Society estimates there were will be ~79,000 new cases of bladder

cancer (~60,500 men and ~18,500 women) in the US in 2017. Bladder cancer accounts

for ~5% of all new cancers in the US and is the fourth most common cancer in men.

According to the company, bladder cancer accounts for approximately ~90-95% of all new

cases of urothelial cancer in the United States, with a prevalence of approximately

580,000. Bladder cancer is nearly three to four times more common in men than women,

and generally affects older patients with an average age at diagnosis of 73. Most bladder

cancers start in the innermost lining of the bladder, which is called the urothelium or the

transitional epithelium. As the cancer grows into or through the other layers in the bladder

wall, it becomes more advanced, making it more difficult to treat. The most common

presenting symptom of bladder cancer is painless macroscopic hematuria which occurs in

about ~85% of patients with bladder cancer. Bladder irritability, urine frequency and

dysuria are also associated symptoms of bladder cancer. If bladder cancer is suspected,

generally a cystoscopy and a biopsy are performed in order to confirm diagnosis.

Bladder cancers are often described by their invasiveness into the wall of the bladder:

Non- invasive – the cancer is still in the inner layer of cells (the transitional

epithelium) but has not grown into the deeper layers.

Invasive – the cancer has grown into deeper layers of the bladder wall. These

cancers are more likely to spread and are harder to treat.

Approximately 75–85% of patients with bladder cancer present with a disease that is

confined to the mucosa [stage Ta, carcinoma in situ (CIS)] or submucosa (stage T1).

These categories are grouped as non-muscle invasive bladder cancer (NMIBC). Of these,

~70% present as stage Ta, ~20% as T1 and 10% as CIS. Assuming NMIBC is ~80% of all

new cases of bladder cancer diagnosed in the United States each year, this would

correspond to an estimated annual incidence and prevalence of ~60,000 and ~465,000

cases, respectively.

Exhibit 11. Bladder Cancer Staging

Source: Patient Resources LLC and Oppenheimer Research


https://www.cancer.org/

https://www.cancer.org/cancer/bladder-cancer/about/key-statistics.html


https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3263923/#bibr111-1756287211431976

18

Further, NMIBC is divided into two grades, low and high, with high-grade tumors more

likely to recur and progress into muscle-invasive tumors. Approximately 70% of patients

with NMIBC present with low-grade disease at diagnosis. URGN is currently developing

VesiGel for patients with low-grade NMIBC, which we view as an attractive market

opportunity.

Exhibit 12. Prevalence of Stage and Grade of Bladder Cancer


Current Treatment Options

The current standard of care for treating NMIBC is a surgical procedure known as a

transurethral resection of bladder tumor (TURBT) followed by adjuvant chemotherapy or

immunotherapy treatment. TURBT is conducted under either regional or general

anesthesia in order to remove visible tumors. TURBT is generally performed in a hospital

setting and often requires at least an overnight stay, though in some instances can be

done as an outpatient procedure. The procedure consists of the insertion of a rigid type of

cystoscope called a resectoscope that is placed into the bladder via the patient’s urethra.

The resectoscope has a wire loop at its end to remove any abnormal tissue or tumors.

Any remaining cancer may be treated by fulguration (burning the base of the tumor) or

through the use of a high-energy laser through a cystoscope. Side effects of TURBT can

range from less serious complications such as infection, bleeding, difficulty urinating, to

more serious complications including damage to a patient’s ureters, injury to the urethra,

and perforation of the bladder. In more invasive bladder cancers either a partial

cystectomy or radical cystectomy (partial or total removal of the bladder) may be required.


19

Exhibit 13. Transurethral Resection of Bladder Tumor (TURBT)

.

Source: Harvard Health Publications and Oppenheimer Research

Along with TURBT, perioperative treatments for NMIBC are also given to prevent the re-

seeding of cancer cells. These treatments consist primarily of chemotherapy in the case of

low-grade tumors and immunotherapy in the case of high-grade tumors and are

administered intravesically via catheter. Perioperative intravesical chemotherapy is used

primarily in low-grade tumors following TURBT in order to try to delay tumor recurrence,

but is not used as a chemoablation agent. The rationale is to expose tumors to high local

drug concentrations while minimizing systemic exposure, thereby enhancing the treatment

effect and reducing the drug toxicity.

There is a common belief that tumor cell implantation immediately after resection is

responsible for early recurrences of NMIBC (Heney et al. 1981). Reoccurrence rates of

NMIBC in patients after TURBT remain high. At 1- year and 5-years, rates of tumor

recurrence are 15-61% and 31-78%, respectively. The clinical prognostic factors to

whether tumors will recur have to do with the size, multiplicity, reaction to intravesical

therapy, grade, stage and presence of CIS. For low-grade tumors immediate, off-label

instillation is indicated with chemotherapy agents such as Mitomycin C, epirubicin or

doxorubicin which have demonstrated some benefit on tumor recurrence and progression

(Sylvester et al. 2004) vs. TURBT alone. In one study in which patients were infused with

epirubicin (a chemotherapy agent) immediately after the TURBT procedure, at 2 years

post the single instillation, the recurrence was decreased by nearly half.

Additionally, physicians may also treat patients with adjuvant intravesical chemotherapy

post TURBT. There are only three FDA-approved adjuvant treatments available: Thiotepa

(brand name Thioplex was approved in 1959), bacilli Calmette-Guerin (BCG) which was

approved in 1989, and Valstar (for BCG refractory patients only, sold by ENDP).

Mitomycin C along with other chemotherapy agents such as gemcitabine and docetaxel

are also used off-label for adjuvant therapy. BCG, an immunotherapy-based drug, is

generally used as an adjuvant treatment for patients with high-grade NMIBC; however, its

use is associated with severe side effects as noted by the black box warning on its label.

The black box is due to BCG containing live, attenuated mycobacteria and potential for

fatal infections. Radical cystectomy, or surgical removal of the bladder, is also a common

treatment option for patients who fail multiple TURBT procedures and intravesical BCG

therapies. Based on our review of the literature and discussions with physicians, typically

patients will undergo weekly instillations of adjuvant therapy for six weeks.


http://eu-acme.org/europeanurology/upload_articles/van%20der%20Heijden%20Sept%20Supp.pdf

http://eu-acme.org/europeanurology/upload_articles/van%20der%20Heijden%20Sept%20Supp.pdf


http://chemocare.com/chemotherapy/drug-info/Thiotepa.aspx

http://www.valstarsolution.com/patient/

http://reference.medscape.com/drug/theracys-tice-bcg-intravesical-live-342204#5

20

Exhibit 14. Treatment Algorithm for Non-Muscle Invasive Bladder Cancer (NMIBC)

Source: AUA, www.auanet.org/Documents/education/clinical-guidance/Non-Muscle-Invasive-Bladder-Cancer-Algorithm.pdf

VesiGel Background

VesiGel is a novel sustained-release high dose of Mitomycin C (40mg and 80mg) being

developed for the treatment of low-grade NMIBC and as a first-line non-surgical,

chemoablation alternative to TURBT. VesiGel is administered locally using standard

catheters and is designed to conform to the bladder’s anatomy and persist in the bladder

despite urine flow and bladder movement.

VesiGel Clinical Development Program

The company is currently conducting the OPTIMA study, which is a Phase 2a randomized,

open-label, single-arm active-controlled clinical trial in Europe and Israel to evaluate the

safety and efficacy of VesiGel (40mg, 80mg and 120mg MMC) in low-grade NMIBC. The

trial commenced in September 2013 and completed patient enrollment in March 2016.

VesiGel’s early proof-of-concept data looks promising thus far. In the ongoing open-label

Phase 2a, the primary endpoint of the trial used for observational purposes only was the

complete response rate at the primary disease endpoint, which was evaluated

approximately four weeks after the sixth weekly installation. Again, a complete

responder is defined as a patient whose initial diagnosis by a physician did not

detect tumors, and a partial response patient is defined as a patient whose tumor

size or number of tumors decreased, or if following an initial complete response,

there is recurrence within three months after the evaluation time. Of the 65 patients

evaluable to date, ~86% of patients (n=22) in the 80mg dose achieved a complete

response at the 4-week time point. While the company also looked at a higher 120mg

dose, they found that it did not necessarily increase efficacy and will likely plan to move

forward with the 80mg dose, which so far has shown to be efficacious, safe and tolerable.


21

Exhibit 15. VesiGel Phase 2a Results in Non-muscle Invasive Bladder Cancer


Exhibit 16. Cytoscopic Image of Patient with Complete Response from VesiGel Phase 2a Study

Source: Company SEC filings and Oppenheimer Research


22

Moreover, VesiGel’s chemoablation effect on the size and total number of tumors was

also of note. Relative to treatment with generic Mitomycin C in TURBT eligible patients,

meaning patients with tumor sizes of greater than 1 cm and multifocal disease (>3

tumors), more patients receiving VesiGel were complete responders. In patients with >3

tumors, 100% of patients (n=6) in the VesiGel 80mg arm achieved a complete response

vs. 50% for the Mitomycin C arm (n=8). Further, in patients with larger tumors (>1 cm),

83% of patients (n=6) in the VesiGel 80mg arm achieved a complete response vs. 40% for

the Mitomycin C arm (n=5). While we agree the data is early and studies are small, we

think data is very encouraging as it suggests VesiGel may allow for increased drug

exposure to the bladder tissue and we think could lead to VesiGel becoming a first-line

alternative to TURBT in NMIBC if this data can be replicated in later trials.

Exhibit 17. VesiGel Phase 2a Results in Non-muscle Invasive Bladder Cancer

(cont’d)


Thus far in the Phase 2a OPTIMA study, 41 patients have been treated with VesiGel (all

doses) and completed the 12-month follow-up period. Of these, 28 achieved a complete

response at the primary evaluation time point (4 weeks post last instillation) and did not

receive any additional treatments. Of these 28 patients, 22 (~80%) had a durable

complete response out to 12 months. Based on our discussion with urologists, we think

this data point will be very important in terms of adoption of VesiGel in NMIBC if approved.

We think this data further validates VesiGel’s ability to increase dwell time and drug

exposure within the bladder and its chemoablative properties. The company plans to

complete the current Phase 2a OPTIMA study in the first half of 2017, and we would

expect the full dataset sometime in the 2H17.


23

Exhibit 18. VesiGel Phase 2a Results in Non-muscle Invasive Bladder Cancer (cont’d)

Source: Company SEC filings and Oppenheimer Research

OPTIMA II Study

Based on the company’s discussion with the FDA in 2016, it plans to file an IND with the

agency in the 2H17 which should enable URGN to initiate a Phase 2b for VesiGel for the

treatment of NMIBC. The Phase 2b, which will be called the OPTIMA II study, will be a

prospective, open-label study evaluating the chemoablative effect of intravesical

instillation of VesiGel in patients with NMIBC. Assuming acceptance of the company’s IND

for VesiGel, the company plans to initiate recruitment for the OPTIMA II study beginning in

the 1H18.


24

Exhibit 19. VesiGel Low-grade Non-muscle Invasive Bladder Cancer (NMIBC) Market Model

NMIBC Market Model 2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E

US patients with Non-muscle invasive bladder cancer (NMIBC) in MM 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

% yoy growth 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

% US patients with low-grade NMIBC 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70%

# US patients with low-grade NMIBC 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4

% market share

% TURBT + Adjuvant chemotherapy 100% 100% 100% 100% 100% 100% 96% 90% 84% 78% 75% 72% 70% 70% 70% 70% 70% 70% 70% 70% 70%

% VesiGel 0% 0% 0% 0% 0% 0% 5% 11% 17% 23% 26% 29% 30% 30% 30% 15% 5% 3% 2% 2% 2%

% Other/Generics 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 26% 27% 29% 29% 29%

% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 85% 100% 100% 100% 100% 100%

# of VesiGel patients - - - - - - 0.02 0.04 0.06 0.08 0.09 0.10 0.11 0.11 0.11 0.06 0.02 0.01 0.01 0.01 0.01

WAC Price (Cost of treatment) $0 $0 $0 $0 $0 $0 $5,500 $5,665 $5,835 $6,010 $6,190 $6,376 $6,567 $6,764 $6,967 $7,176 $7,392 $7,613 $7,842 $8,077 $8,319

% yoy growth 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%

Gross-to-net discount 0% 0% 0% 0% 0% 0% 25% 25% 25% 25% 25% 25% 25% 25% 25% 35% 45% 50% 50% 50% 70%

Net price/TRx $0 $0 $0 $0 $0 $0 $4,125 $4,249 $4,376 $4,507 $4,643 $4,782 $4,925 $5,073 $5,225 $4,665 $4,065 $3,807 $3,921 $4,038 $2,496

Net sales - - - - - - 63 154 251 355 417 484 529 549 570 257 68 43 22 23 14

% yoy growth 142% 63% 42% 18% 16% 9% 4% 4% -55% -74% -37% -48% 4% -38%

POS % 0% 0% 0% 0% 0% 0% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30%

Risk adj. Net sales - - - - - - 19 46 75 106 125 145 159 165 171 77 20 13 7 7 4

% yoy growth 142% 63% 42% 18% 16% 9% 4% 4% -55% -74% -37% -48% 4% -38%

Source: Company information and Oppenheimer Research estimates

Market Model & Assumptions

We estimate there are 465,000 patients with non-muscle invasive bladder cancer (NMIBC) in the US. Based on the company’s estimates and our review of the literature,

approximately ~70% of these patients are considered to have low-grade NMIBC.

We assume VesiGel captures ~30% patient share of eligible candidates for VesiGel therapy, which may prove conservative depending on whether VesiGel will become first-line

therapy. Ultimately VesiGel’s use will depend on how compelling VesiGel’s efficacy data is.

We assume the total treatment costs per year of $5,000-7,000 at gross pricing. Assuming discounts of about ~25%, we forecast net pricing of $4,000-4,500 annually before

patent expiration. This is in line with the cost of the TUBRT procedure and could prove conservative.

We assume MitoGel goes off patent in 2031 and the product achieves un-risk adjusted peak sales of $570M in 2031. We currently model a 30% probability of success for

MitoGel in low-grade NMIBC which we feel is appropriate and consistent with other mid-stage pharmaceutical products.


25

Vesimune

URGN’s third product candidate is Vesimune, which is in early stage development for the

treatment of high-grade NMIBC, a highly aggressive form of bladder cancer. URGN

acquired Vesimune from Telormedix SA in late 2015 and currently has an active IND for

the product. We estimate there are approximately 150,000 patients with high-grade

NMIBC in the United States, making this another attractive market opportunity. As with

low-grade NMIBC, TURBT is generally the go-to treatment choice followed by a BCG

treatment regimen, though high rates of recurrence and risk of disease progression to

muscle-invasive tumors make TURBT a suboptimal treatment. The full removal of the

bladder may also be a good treatment option for some patients who are younger and may

not be able to tolerate BCG therapy.

We think Vesimune, the company’s immune-modulation product candidate, could

represent a more attractive alternative to the current standard of care, which is TURBT

followed by BCG treatment for high-grade NMIBC. Vesimune’s active ingredient is

Imiquimod, an imidazoquinoline, synthetic immune modulator, which specifically targets

Toll-lie receptor 7, which is expressed in bladder cancer cells. TLRs are pattern

recognition receptors which have shown an importance in stimulating innate and adaptive

immunity. This mechanism has been validated in more recent studies and approval by the

FDA of various cancer immunotherapies such as BCG and monophosphoryl lipid A. TLRs

are able to sense microbial components as well as host-derived endogenous molecules

released by injured tissues and play a critical role in defending against invading

pathogens.

The API on which Vesimune is based, Imiquimod in its topical formulation, is FDA

approved for several indications, including superficial basal cell carcinoma, genital warts

and actinic keratoses. Vesimune is a liquid formulation of Imiquimod for intravesical

administration that has been optimized for delivery in the urinary tract. Unlike URGN’s

other products in development, Vesimune does not use the company’s RTGel technology.

The company’s hypothesis is Vesimune may elicit an adaptive immune response in the

presence of released bladder cancer antigens, which may translate into a long-lasting

acquired immune response. Additionally, in combination with immune checkpoint

inhibitors, Vesimune could further increase the adaptive immune response and potentially

represent a viable alternative to BCG for the adjuvant treatment of high-grade NMIBC or

UTUC.

Prior to being acquired, Telormedix SA evaluated Vesimune in two early Phase 1 studies.

Overall, Vesimune was found to be well tolerated and some hints of efficacy were gleaned

from the small studies. In the Phase 1b study, 12 patients were enrolled and treated with

Vesimune 0.4% weekly for 6 weeks. The primary efficacy endpoint for observational

purposes only was the rate of complete response at 5 to 7 weeks after the sixth weekly

instillation. Of the 12 patients, 10 were evaluable for response, and 4 of the 10 achieved a

complete response. Patients were then followed for an additional 6-month period, and of

the 4 who had achieved a complete response, two patients remained disease-free at 6

months while not having received any additional therapy than Vesimune while the other 2

patients who also achieved complete response also remained disease-free though they

did receive BCG therapy post Vesimune treatment. While the data is early, we are

encouraged thus far and expect URGN to further explore Vesimune either as a single

agent or in combination with other agents for the treatment of high-grade NMIBC.

Currently we assign ~$1/share in pipeline value for the Vesimune programs which

assumes ~$300M in peak sales at a 5x multiple, a ~10% probability of success discounted

back 15 years at a ~15% discount rate.


https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3489745/

26

Exhibit 20. Vesimune Preliminary Proof-of-Concept Data (Phase 1b)

Source: Symphony Health and Oppenheimer Research

BotuGel

In October 2016, URGN entered into a worldwide agreement granting AGN an exclusive

worldwide license to develop, manufacture and commercialize a proprietary formulation

using URGN’s RTGel platform and clostridial toxins (Botox) for the treatment of overactive

bladder syndrome (OAB) and interstitial cystitis (bladder pain). OAB is a significant market

opportunity with over ~$4B in sales in 2016, according to Symphony Health data. While

the market is highly generic (~70% of 2016 scripts were generic), more invasive

treatments such as Botox injections into the bladder are used only in a subset of patients.

Botox is currently approved for OAB already; however, based on our physician checks,

treatment with Botox requires intravesical injections which in some cases patients are

reluctant to undergo. Physicians noted about ~30% of the total ~50M OAB patients in the

United States may not respond to oral therapy and could benefit from more aggressive

therapy such as Botox.

We estimate AGN derived ~$250M in sales from Botox in 2016 for urological indications,

and we believe improved delivery through the formulation with RTGel could allow

increased dwell time and prevent the need for injections. The physicians we spoke with

were intrigued by BotuGel’s potential profile and believe it could make it much easier and

faster to treat OAB using BotuGel vs. how they inject Botox into the bladder today. We

think BotuGel could prove to be market expanding if proven effective as procedures would

be faster and not require injections. While our physician checks were generally positive on

the idea, physicians will want to see if BotuGel’s efficacy and duration of benefit (Botox

lasts typically 6 months) are at the very least similar to the regular Botox injection for OAB.


http://investors.urogen.com/phoenix.zhtml?c=254372&p=irol-newsArticle&ID=2254529

https://www.botoxforoab.com/

https://www.botoxforoab.com/


27

Exhibit 21. Overactive Bladder Market Gross Sales (2012-16)

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

2012 2013 2014 2015 2016

OA

B M

arke

t b

y Sa

les

(in

Bill

ion

s $

) 4-Year CAGR: 10%

Source: Symphony Health and Oppenheimer Research

AGN is solely responsible for the development and commercialization of BotuGel and,

according to URGN, AGN plans to move this program into a Phase 2 study in the 2H17. At

the time of the deal, URGN received a $17.5M upfront fee, and they are eligible to receive

up to $207.5M in additional regulatory and sales milestones and a tiered low-single digit

royalty on worldwide sales. We think the biggest positive from the AGN deal is: (1) it

validates URGN’s RTGel platform as a novel RTGel. According to URGN, AGN conducted

significant diligence around the platform and its intellectual property which gets us more

confident in the durability of URGN’s lead products MitoGel and VesiGel; (2) AGN

generally prefers relatively de-risked assets with high probabilities of success, and the fact

this program is for its largest product by sales makes it a relatively visible program within

its urology franchise. We think AGN will dedicate the resources required to get this

program to goal line, and it already has the commercial infrastructure in place to

commercialize BotuGel if it is eventually approved.

We conservatively assign roughly a $1/share in pipeline value for the BotuGel agreement

based on our NPV analysis of future milestones (see Exhibit 22). Since the program is

early and there has been no data generated in humans to date, we assume a low

probability on future royalties from sales. We assume BotuGel could generate

approximately $500M in peak sales, which may prove to be conservative, as part of our

royalty NPV analysis below.

Exhibit 22. BotuGel Milestone NPV Analysis

BotuGel Milestone/Royalty Valuation Value Years NPV POS Risk Adj. NPV

Submission of IND $7.5 0.5 7.1 75.0% $5.3M

Init Phase 3 (US and EU) $20.0 5.0 11.1 35.0% $3.9M

Init phase 3 (second indication) $15.0 5.0 8.3 15.0% $1.2M

First sales $75.0 7.0 32.9 10.0% $3.3M

First sales (second indication) $40.0 10.0 12.3 5.0% $0.6M

Total sales >$500M $50.0 14.0 9.6 2.5% $0.2M

Low single digit royalty on WW sales 21.0 2.5% $0.0M

Risk adj. NPV $207.5 $14.6M



28

Management Rob Bentsur – Chief Executive Officer

Ron Bentsur has served as Chief Executive Officer since August 2015 and as a member

of the board of directors since October 2015. Mr. Bentsur has more than 15 years of

experience in the biotech industry. Until 2015, he served for more than five years as the

Chief Executive Officer of Keryx Biopharmaceuticals, Inc., and during his tenure, Keryx

received FDA approval pursuant to the FDA’s 505(b)(2) regulatory pathway for Auryxia

(ferric citrate) and launched it commercially in the United States. Prior to that Mr. Bentsur

served as Chief Executive Officer of XTL Biopharmaceuticals Ltd., a position he held from

January 2006 until April 2009. From October 2000 Mr. Bentsur was with Keryx and served

as its Chief Financial Officer from June 2003 until his departure in January 2006. From

July 1998 to October 2000, Mr. Bentsur served as Director of Technology Investment

Banking at Leumi Underwriters, where he was responsible for all technology/

biotechnology private placement and advisory transactions. From June 1994 to July 1998,

Mr. Bentsur worked as an investment banker in New York City, spending most of this

period at ING Barings Furman Selz. Mr. Bentsur holds a B.A. in economics and business

administration with distinction from the Hebrew University of Jerusalem, Israel, and an

M.B.A. (Magna Cum Laude), from New York University’s Stern School of Business.

Gil Hakim – President Israeli Operations

Gil Hakim has served as President of UroGen’s Israeli Operations since August 2015 and,

prior to that, served as UroGen’s CEO beginning in August 2010. Mr. Hakim has more

than 20 years of experience in the biotech industry. He served as Director of New Product

Development at Medispec Ltd. from 2004 to 2010, and was in charge of product

development in fields such as cardiology, urology and dermatology. Prior to Medispec,

from 2002 to 2004, Mr. Hakim was Director of Marketing and Clinical Research at MTRE

Advanced Technologies Ltd., a wholly owned subsidiary of Mennen Medical Ltd. that

develops thermoregulation devices. Prior to that, from 2000 to 2002, he was Business

Development Manager at Omrix Biopharmaceuticals, Inc. (acquired by Johnson &

Johnson in 2008), which develops biological glue and blood derivative products. Before

that, from 1998 to 2000, he served as European Product Manager at Biosense-Webster

(Johnson & Johnson) in Belgium, following Johnson & Johnson’s acquisition of Biosense

Israel, where he was also part of the Research and Development team. Mr. Hakim holds a

B.Sc. in life sciences from Ben-Gurion University, Israel.

Gary Titus – Chief Financial Officer

Gary Titus has served as Chief Financial Officer since July 2015. Mr. Titus has been a

member of the board of directors of ImmunoCellular Therapeutics, Ltd. since January

2013. He has more than 20 years of business experience in the healthcare and

biopharmaceutical industries, primarily in senior management roles. Prior to his

appointment as Chief Financial Officer at UroGen, from 2014 to 2015, Mr. Titus held the

position of Chief Financial Officer of BioCardia, Inc. Prior to that, from 2008 to 2013, Mr.

Titus was Senior Vice President and Chief Financial Officer at SciClone Pharmaceuticals,

Inc. From 2006 to 2008, Mr. Titus was Senior Vice President of Finance and Chief

Financial Officer at Kosan Biosciences, Inc. From 2003 to 2006, he was Chief Financial

Officer and Vice President at Nuvelo, Inc. Earlier in his career, Mr. Titus held a variety of

positions at other companies, including Metabolex, Inc., Intrabiotics Pharmaceuticals, Inc.

and Johnson & Johnson. Mr. Titus holds a B.Sc. in accounting from the University of

South Florida and a B.Sc. in finance from the University of Florida. Mr. Titus also

completed the Global BioExecutive Program at the University of California Berkeley’s

Haas School of Business.


29

Mark Schoenberg, MD – Medical Director

Mark Schoenberg, M.D., has served as UroGen’s Medical Director since February 2016.

Dr. Schoenberg has over 20 years of experience in clinical practice and research focused

on the care of patients with all forms of bladder cancer. Since April 2014, Dr. Schoenberg

has been University Professor and Chairman of the Urology Department at The

Montefiore Medical Center for The Albert Einstein College of Medicine of Yeshiva

University. Prior to joining Montefiore, from 2005 to 2014, Dr. Schoenberg served as

Director of Urologic Oncology and Bernard L. Schwartz Distinguished Professor of

Urology at Johns Hopkins Hospital. Dr. Schoenberg is also the past chair of the Medical

Advisory Board of the Bladder Cancer Advocacy Network, the author of The Guide to

Living with Bladder Cancer, co-editor of The Textbook of Bladder Cancer, a contributor to

Campbell’s Urology and a seminars editor of the journal Urologic Oncology. Dr.

Schoenberg received his M.D. from the University of Texas Health Sciences Center and

completed his residency in general surgery and urology at the Hospital of The University

of Pennsylvania, where he served as chief resident and urology instructor, before

completing basic research and clinical urologic oncology fellowships at Johns Hopkins

under the auspices of The American Cancer Society. Dr. Schoenberg is a fellow of the

American College of Surgeons, as well as a member of the American Association of

Cancer Research, the Society of Urologic Oncology and the American Urological

Association.

Arie Belldegrun, MD – Chairman

Arie Belldegrun, M.D., has served as UroGen’s Chairman since December 2012. Dr.

Belldegrun is Professor of Urology, holds the Roy and Carol Doumani Chair in Urologic

Oncology, and is Director of the UCLA Institute of Urologic Oncology at the David Geffen

School of Medicine at UCLA. Prior to joining UCLA, he was a research fellow at the

National Cancer Institute/National Institutes of Health in surgical oncology and

immunotherapy under Dr. Steven A. Rosenberg. Dr. Belldegrun has more than 20 years of

experience in the life science and biotech industry. In 1996 he founded Agensys, Inc., a

biotechnology company, and served as its founding chairman of the board of directors and

as a board member until 2007, when it was acquired by Astellas Pharma Inc. Dr.

Belldegrun was also a founder and the vice-chairman of the board of directors and

chairman of the scientific advisory board of Cougar Biotechnology, Inc., a biotechnology

company, from 2003 to 2009, when it was acquired by Johnson & Johnson. He currently

serves as Chairman and Chief Executive Officer of Kite Pharma, Inc., Chairman of Arno

Therapeutics, Inc., and Two River Group and as a board member of Teva Pharmaceutical

Industries Ltd. Dr. Belldegrun completed his M.D. at the Hebrew University Hadassah

Medical School in Jerusalem, Israel, his post-graduate studies in immunology at the

Weizmann Institute of Science, Israel, and his residency in urologic surgery at Harvard

Medical School. Dr. Belldegrun has authored several books in oncology and more than

500 scientific and medical papers related to urological cancers, immunotherapy, gene

therapy, and cancer vaccines. Dr. Belldegrun is certified by the American Board of

Urology and is a Fellow of the American College of Surgeons and the American

Association of Genitourinary Surgeons.


30

URGN Annual P&L Summary

(figures in $m, except per share data)

2015 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

MitoGel (Upper Tract Urothelial Carcinoma) - - - - - - - - 34 82 134 190 224 260 284

VesiGel (Low-Grade Non-Muscle-Invasive Bladder Cancer) - - - - - - - - - - - 19 46 75 106

Total product revenue - - - - - - - - 34 82 134 209 270 335 390

Other revenue (AGN milestones) - 18 - - - - - - - - - - - - -

Total Revenue - 18 - - - - - - 34 82 134 209 270 335 390

% y/y growth na na na na na na na na na na 63% 56% 29% 24% 17%

COGs - 0.0 - - - - - - 3 8 13 21 27 33 39

% of sales na 0% na na na na na na 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Gross Income - 17.5 - - - - - - 31 74 121 188 243 301 351

% gross margin na 100% na na na na na na 90% 90% 90% 90% 90% 90% 90%

R&D expense 11 10 5 5 5 5 20 25 25 26 26 27 27 27 28

% of sales na 59% na na na na na na 75% 31% 19% 13% 10% 8% 7%

G&A expense 2 6 2 2 2 2 8 8 8 9 9 9 10 10 10

% of sales na 37% na na na na na na 25% 11% 7% 4% 4% 3% 3%

S&M expense - - - - - - - 25 35 36 36 37 37 38 38

% of sales na na na na na na na na na 43% 27% 18% 14% 11% 10%

Operating Income (12) 1 (7) (7) (7) (7) (28) (58) (38) 4 50 116 169 226 275

% operating margin na na na na na na na na na 5% 37% 55% 63% 68% 70%

Net Financial Expense & Other (0.3) (2.7) 0.1 0.2 0.3 0.2 0.8 0.2 0.2 0.2 0.2 0.2 0.5 1.0 1.6

Pre-tax income (13) (2) (7) (7) (7) (7) (27) (58) (38) 4 50 116 170 227 277

% pre-tax income na na na na na na na na na 5% 37% 55% 63% 68% 71%

Tax expense (benefit) - - - - - - - - - - - - - 52 64

% tax rate 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 23% 23%

Net income (loss) before preferred dividends (13) (2) (7) (7) (7) (7) (27) (58) (38) 4 50 116 170 175 213

% sales na na na na na na na na na 5% 37% 55% 63% 52% 55%

Preferred Dividends 0.9 2.5 - - - - - - - - - - - - -

Net income (loss) (14) (4) (7) (7) (7) (7) (27) (58) (38) 4 50 116 170 175 213

Diluted EPS (5.88) (1.91) (3.00) (0.62) (0.60) (0.58) (3.01) (4.10) (2.41) 0.25 2.87 6.54 9.37 9.48 11.31

% y/y growth na na na na na na na na -110% 1043% 128% 43% 1% 19%

Weighted average shares 2.3 2.3 2.3 11.0 11.3 11.6 9.1 14.1 15.8 17.1 17.4 17.7 18.1 18.5 18.8

% y/y growth 0% na na na na 293% 56% 12% 8% 2% 2% 2% 2% 2%

Source: Company information and Oppenheimer & Co. Inc. estimates


31

URGN Abbreviated Balance Sheet & Cash Flow Statement

(figures in $m, except per share data)

2015 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Net income (13) (2) (7) (7) (7) (7) (27) (58) (38) 4 50 116 170 175 213

Stock-based compensation 0 2 1 1 1 1 4 4 5 5 6 6 7 8 9

Other adjustments to net income 5 4 - - - - - - - - - - - - -

Cash flow from operating activities (7) 4 (6) (6) (6) (6) (23) (54) (33) 10 56 122 177 183 222

Cash flow from investing activities (0) (1) (0.2) (0.2) (0.2) (0.2) (0.6) (2) (2) (2) (2) (2) (2) (2) (2)

Proceeds from common stock, net - - - 54 - - 54 50 50 50 - - - - -

Other financing (preferred stock) 22 (0) - - - - - - - - - - - - -

Cash flow from financing activities 22 (0) - 54 - - 54 50 50 50 - - - - -

Net change in cash 14 3 (6) 48 (6) (6) 30 (5) 15 58 54 120 175 181 220

Cash (beginning period) 4 18 21 15 63 58 21 52 47 61 119 173 293 468 649

Cash (end period) 18 21 15 63 58 52 52 47 61 119 173 293 468 649 868

Source: Company information and Oppenheimer & Co. Inc. estimates


32

Stock prices of other companies mentioned in this report (as of 5/29/2017):Allergan PLC (AGN-NYSE, $240.12, Not Covered)Otonomy (OTIC-NASDAQ, $13.40, Not Covered)

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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered byOppenheimer & Co. Inc:Stock Prices as of May 30, 2017Endo International PLC (ENDP - NASDAQ, $13.12, PERFORM)


33

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34

Distribution of Ratings/IB Services Firmwide

IB Serv/Past 12 Mos.

Rating Count Percent Count Percent

OUTPERFORM [O] 290 56.09 104 35.86

PERFORM [P] 223 43.13 69 30.94

UNDERPERFORM [U] 4 0.77 3 75.00

Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do notcorrelate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assignedbuy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.Note: Stocks trading under $5 can be considered speculative and appropriate for risk tolerant investors.

Company Specific DisclosuresIn the past 12 months Oppenheimer & Co. Inc. has provided investment banking services for URGN.

In the past 12 months Oppenheimer & Co. Inc. has managed or co-managed a public offering of securities for URGN.

In the past 12 months Oppenheimer & Co. Inc. has received compensation for investment banking services from URGN.

Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3months from URGN.

Oppenheimer & Co. Inc. makes a market in the securities of ENDP.

Additional Information Available

Please log on to http://www.opco.com or write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: EquityResearch Department, Business Manager.

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