Urogen Pharma Ltd

NASDAQ:URGN

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good day, and thank you for standing by. Welcome to the 2024 Second Quarter UroGen Pharma Earnings Call. [Operator Instructions]

Please advise that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Vincent Perrone, Head of Investor Relations. Please go ahead.

[Vincent Perrone, executive]

Thank you, operator. Good morning, everyone, and welcome to UroGen Pharma's Second Quarter 2024 Financial Results and Business Update Conference Call.

Earlier this morning, we issued a press release providing an overview of our recent corporate highlights and financial results for the quarter ended June 30, 2024. The press release can be accessed on the Investors portion of our website at investors.urogen.com.

Joining me today are Liz Barrett, President and Chief Executive Officer; Dr. Mark Schoenberg, Chief Medical Officer; David Lin, Chief Commercial Officer; and Don Kim, Chief Financial Officer.

During today's call, we will be making certain forward-looking statements. These may include statements regarding our ongoing commercialization activities related to JELMYTO; our ongoing and planned clinical trials, commercial and clinical milestones, market and revenue opportunities; our commercialization strategy and expectation as well as potential future commercialization activities for UGN-102, if approved; anticipated data; regulatory filings and decisions, including UGN-102 potentially receiving priority review, UGN-102 being a primary growth driver for UroGen, if approved; future research and development efforts; our corporate goals and 2024 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. 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 Barrett, President and CEO. Liz?

[Elizabeth Barrett, executive]

Thank you, Vincent, and thank you for everyone joining this morning. The clear highlight of the second quarter was from our lead product candidate, our announcement of positive 12-month duration of response data from the ENVISION study evaluating UGN-102 in patients with low-grade intermediate risk, non-muscle invasive bladder cancer. We previously announced a compelling complete response rate of 79.6% at 3 months.

The durability data showed that for those patients who had achieved a CR at 3 months, the duration of response was an unprecedented 82.3% at 12 months by Kaplan-Meier analysis. This is the highest duration of response ever reported in this patient population. We presented these data during a virtual event on June 13. The event included presentations by several key opinion leaders with expertise in urology. We also interviewed a patient who spoke about his experience in the ENVISION trial and the challenges that come with the surgical standard of care.

This was an excellent opportunity to hear the perspectives of both physicians and patients in the urology community. The replay is available on our website, and I would encourage those unable to join to listen to the replay. The body of clinical data that supports UGN-102 is very compelling, with consistent 3-month complete response rates across ENVISION, ATLAS in the prior Phase II OPTIMA II study. Duration of response across all trials was also impressive giving us confidence in the ability of UGN-102 to improve patient outcomes and quality of life.

Our immediate priority is to complete our NDA submission for UGN-102 and low-grade intermediate risk non-muscle invasive bladder cancer, which we expect in the very near term. The NDA is a rolling submission that was initiated earlier this year. Assuming priority review, we expect an approval decision as early as the first quarter of 2025.

The estimated market opportunity for UGN-102 is over $5 billion, and if approved, it would be the first FDA-approved medicine for this patient population. We expect UGN-102 will transform the treatment paradigm for this patient population as well as our company. There are an estimated 82,000 patients treated with low-grade intermediate risk non-muscle invasive bladder cancer in the U.S. each year. This is over 10x the size of the JELMYTO market in upper tract urothelial carcinoma or UTUC.

Unlike most rare diseases, which are constant and concentrated, UTUC is episodic, dispersed and treated by a wide range of physicians making patient distribution more challenging. In contrast, bladder cancer is prevalent and is regularly treated by nearly all urologists.

UGN-102 is relatively easy for physicians and their staff to administer. Perhaps most importantly, we believe it can fit seamlessly into current practice based on physician feedback. This is critical as we expect it would not disrupt the physician's practice. Instead, it could expand their practice by better utilizing staff as they can easily be administered by a nurse or physician extender with minimal training and does not require special equipment. We have learned from our experience over the past few years and are prepared to aggressively drive market penetration for UGN-102, if approved.

David Lin, our recently appointed Chief Commercial Officer, will provide more details on our plans in a few minutes.

In April, we announced the FDA acceptance of the IND for UGN-103 and marking a significant step in our life cycle management strategy. Developed with technology licensed from medac, UGN-103 expected to offer manufacturing efficiencies and additional IP protection through June 2035, utilizing current medac issued patents and potentially until December 2041 with our pending U.S. patents. We have activated our first sites and expect to have our first patient dose in the very near future. As previously disclosed, assuming positive data and approval, we plan to launch the next-generation product of UGN-102 in the first half of 2027.

JELMYTO generated net product revenue of $21.8 million in the second quarter. This represented approximately 16% growth sequentially versus the first quarter and 3% growth over the same period in 2023. This is due in part to growing 340b and wastage provision headwinds as well as a contraction in path conversions from the prior year.

While the revenue results were below expectations, we remain optimistic on the continued growth of JELMYTO for patients with low-grade UTUC. Notwithstanding the single-digit year-over-year growth in net revenue, we saw a 14% growth in patient enrollment forms in the first half of the year as compared to the same period in 2023. The lower conversion rate and higher discounts muted the actual patient demand.

Our capital resources continue to be a priority. In June, we took the opportunity to strengthen our balance sheet through a successful public offering. This raised net proceeds of approximately $116.2 million, which will support our launch of UGN-102. It also gives us the flexibility to evaluate business development opportunities to advance our leadership in urologic and specialty cancers. We expect to end the year with approximately $220 million on the balance sheet, which will support a strong launch of UGN-102.

Assuming approval in the first quarter of 2025 and based on our latest projections and financial models, we estimate that we now have sufficient cash to support our business to and through profitability.

I will now turn the call over to Dr. Mark Schoenberg, our Chief Medical Officer, for a clinical update. Mark?

[Mark Schoenberg, executive]

Thank you, Liz. We discussed the latest ENVISION clinical results in detail during our virtual event in June, but let me spend a few minutes on the highlights.

ENVISION was a Phase III multinational single-arm pivotal study in patients with low-grade intermediate risk non-muscle invasive bladder cancer. A total of 240 patients were enrolled. The median age was 70, and 2/3 of patients were male. All patients enrolled had at least 1 TURBT and experienced a recurrence of bladder cancer within the past year. Therefore, this patient population represents approximately 75% of the estimated annual cases in the U.S. of low-grade intermediate risk non-muscle invasive bladder cancer, equating to around 60,000 estimated cases annually.

UGN-102 was administered once weekly via intravesical installation for 6 consecutive weeks. Participants then returned approximately 3 months after the first installation for determination of response. Assessing of response was based on visual observation during cystoscopy, [indiscernible] biopsy and urine cytology. The 3-month complete response rate was 79.6%. Of those patients that were not complete responders, less than 3% progressed to high-grade disease, which is lower than the published range for disease progression in patients with this disease treated by TURBT.

In June, we announced results from the key secondary endpoint of duration of response. Among patients who achieved a complete response at 3 months, the estimated duration of response at 12 months was an unprecedented 82.3%. It's too early to estimate median duration of response given that so few patients who achieved a complete response subsequently went on to have disease recurrence. However, we can use secondary predictive models such as a [indiscernible] model, which estimates a median duration of response of 40 months for complete responders based on the data thus far.

The side effect profile was consistent with previous clinical trials in UGN-102. Adverse events were, in general, mild and moderate in severity. The vast majority were lower urinary tract symptoms, and these are symptoms that urologists see commonly and typically can manage. These latest results demonstrate a strong duration of response for UGN-102 across 3 clinical trials. In the Phase IIb OPTIMA II study, the estimated 9-month duration of response was 69.9%. And in ATLAS, for those patients that receive UGN-102 alone and demonstrated a complete response rate, the estimated 12-month duration of response in the CR population was 79.6%.

The consistency of these data is obviously very encouraging. We believe the overall body of evidence for UGN-102 will help us make a compelling case for FDA approval and support widespread use by urologists, if approved.

Low-grade IR NMIBC is characterized by a high recurrence rate, but a low risk of progression. This condition is essentially chronic, necessitating long-term monitoring and management. The current standard of care for these patients is transurethral resection. TURBT will typically require 7 to 10 days for initial recovery. Approximately 1/3 of patients who undergo this procedure will experience some form of postoperative complication, typically within 3 months of surgery. The average age for diagnosis of bladder cancer is in the mid-70s.

So many of these patients are not great candidates for surgery. Repeated rounds of anesthesia pose a risk of cognitive decline in the elderly population with the literature also indicating a potential mortality risk. Additionally, for younger patients, repeated TURBT can cause cumulative bladder damage and negatively impact quality of life.

We believe that the ability of UGN-102 to achieve durable complete responses nonsurgically and to potentially reduce recurrence rates while extending disease-free intervals will provide an advance in the care of this patient population. As Liz mentioned, the execution of the single-arm Phase III clinical trial for UGN-103, the next-generation successor to UGN-102, are progressing well. We have onboarded 3 clinical sites in the U.S. and plan to enroll approximately 87 patients. We expect to dose the first patients in the next few weeks, and the full enrollment is anticipated in the first half of 2025 with an NDA filing in the first half of 2026 and a potential approval in the first half of 2027.

We foresee a similar development plan for UGN-104, our next-generation formulation of JELMYTO, and expect to commence a single-arm Phase III study early next year.

Turning to our pipeline. We continue to develop our immuno-oncology candidate, UGN-301. UGN-301 is an anti-CTLA-4 antibody delivered using our proprietary RTGel technology. We are conducting a Phase I clinical study to evaluate the safety, tolerability and to establish a recommended Phase II dose with UGN-301 as a monotherapy as well as combination therapy. We plan to report safety and tolerability data for the monotherapy arm in late 2024.

We've also initiated combination therapy arms evaluating UGN-301 plus gemcitabine and UGN-301 plus UGN-201, our proprietary formulation of imiquimod, a TLR7 agonist, in high-grade NMIBC patients. We look forward to providing updates as the program moves forward.

Now over to David Lin for a commercial update.

[David Lin, executive]

Thank you, Mark, and good morning, everyone. I'm incredibly excited to take on the role of Chief Commercial Officer at UroGen. The team has done a fantastic job revolutionizing patient care. With the potential commercialization of UGN-102, there is incredible opportunity for significant value creation. While we will continue to support adoption of JELMYTO to maximize the value of that product, my #1 priority this year is to prepare for the commercial launch of UGN-102. We will apply all that we have learned with JELMYTO with the launch of UGN-102, if approved.

UGN-102 commercialization planning is well underway, targeting an early 2025 launch, assuming priority review. I would like to highlight 5 key components of our commercialization plan with further details on our plans as the year progresses. Liz and Mark have already discussed the remarkable body of clinical evidence supporting UGN-102. We are already engaging with the medical community through various educational initiatives to broaden awareness of the needs in low-grade intermediate risk, non-muscle invasive bladder cancer as well as our clinical data, so the value proposition of the product is well understood upon approval.

Second, we want to make it easy for accounts to integrate UGN-102 into their treatment protocols upon approval. We can streamline this process by offering comprehensive support, including training for health care professionals and their office staff.

Third, we will focus on informing and supporting confidence in access and reimbursement. We are currently planning engagement initiatives that will inform stakeholders about UGN-102's coverage options and reimbursement processes.

Fourth, we believe that 102 will ultimately offer a better experience for patients with the potential for both improved clinical outcomes as well as a reduced burden from surgery. We want to drive a productive patient-physician dialogue with the goal of fostering a collaborative decision-making process.

Finally, the planned launch of UGN-102 means that UroGen will transition from a diffuse rare disease focus to selling a specialty product that has much broader potential. We will scale our commercial capabilities, notably patient support and distribution infrastructure as well as an incremental increase in our sales force, noting that there is already significant prescriber overlap with JELMYTO.

As we think about leveraging our experience with JELMYTO, we have learned that there are certain clinical practices that tend to respond better to increase contact with our sales and support personnel. Based on these findings, we are increasing the frequency of interaction with these accounts now with JELMYTO.

Lastly, I'll note that together with our collaborators and academia, we continue to generate new real-world data for JELMYTO. This is a great opportunity to reinforce its value proposition with the urology community. JELMYTO was recently featured in 3 presentations at AUA. The data included independent, long-term real-world analysis that demonstrated a very high recurrence free survival of 86% at 24 months for patients who had responded to initial induction.

There were also new data supporting the value of maintenance use of JELMYTO and how maintenance appears to be associated with significantly better recurrence-free survival. These studies generated a lot of interest at AUA, and our commercial and medical affairs teams are now incorporating them into their communications with clinicians.

I will now turn the call over to Don Kim to discuss our financials.

[Dong Kim, executive]

Thank you, David. For the second quarter of 2024, we reported JELMYTO net product revenues of $21.8 million. Cost of revenue for the second quarter ended June 30, 2024, was $2.2 million compared with $2.4 million for the second quarter of 2023. The overall decrease year-over-year was primarily attributable to certain nonrecurring payments made in connection with our supply arrangement in the prior year.

Research and development expenses in the second quarter were $15.4 million, as compared to $11.6 million for the same period in 2023. The overall increase year-over-year was primarily due to higher costs related to manufacturing of UGN-102 as well as R&D expenses in connection with our initiation of a Phase III study for UGN-103, partially offset by lower UGN-102 clinical trial costs.

Selling and marketing expenses in the second quarter were $18.9 million compared with $13.9 million for the same period in 2023. The increase year-over-year was primarily attributable to UGN-102 brand marketing costs as well as an increase in overall commercial operation costs.

General and administrative expenses were $11.2 million in the second quarter compared with $8.6 million for the second quarter ended 2023. The increase was primarily attributable to legal and compliance activities, precommercial marketing communication expenses related to UGN-102, third-party advisory services and ongoing managed services.

Noncash financing expense related to the prepaid forward obligation to RTW investments was $5.8 million for the second quarter of 2024 compared with $5.3 million in the same period in 2023.

Interest expense in the second quarter was $3.5 million compared with $3.8 million for the same period in 2023. The decrease was primarily attributed to the decrease in the margin interest rate and related impact to amortization of the discount on the Pharmakon loan as a result of the amended and restated loan agreement in March 2024.

Net loss for the second quarter was $33.4 million or $0.91 net loss per basic and diluted ordinary share as compared to $24.1 million or basic and diluted net loss per ordinary share of $1.03 for the same period in 2023. Cash, cash equivalents and marketable securities on June 30 were approximately $241.3 million.

In June 2024, we completed an underwritten public offering of 5 million ordinary shares at a price of $17.50 per share and to certain investors in lieu of issuing ordinary shares, we sold prefunded warrants to purchase approximately 1.1 million ordinary shares at a purchase price of $17.499 per prefunded warrants. Growth proceeds from the offering before deducting underwriting discounts and commissions and estimated offering expenses were approximately $107.5 million.

In July 2024, the underwriters exercised their option to purchase the full overallotment of approximately 921,000 additional shares. This added further growth proceeds to the company of $16.1 million before deducting underwriting discounts and commissions and estimated offering expenses.

With respect to our previously provided JELMYTO 2024 full year revenue guidance, we see a path towards the lower end of that range. With respect to our previously provided full year 2024 OpEx guidance, we expect to be towards the higher end of this range with revised noncash share-based compensation expense of $9 million to $30 million, subject to market conditions.

Our anticipated full year 2024 noncash financing expense related to the prepaid obligation to RTW Investments is unchanged and expected to be in the range of $21 million to $26 million. The rate for the cash component of RTW obligation will be 13% of global net product sales of JELMYTO in 2024.

For further details on our financials, including results for the 6 months ended June 30, 2024, please refer to our quarterly report on Form 10-Q, which has been filed with the SEC.

We are now ready to open the call for questions. Operator?

[Operator]

[Operator Instructions]

Our first question comes from the line of Tara Bancroft of TD Cowen.

[Tara Bancroft, analyst]

So I was wondering if you could give us some more detailed expectations for what JELMYTO revenue can look like by quarter for the rest of the year to result in your guidance such as whether it will be mostly back-end weighted or anything else?

[Elizabeth Barrett, executive]

Yes. Tara, it's Liz. I appreciate the question, but we're not going to provide -- we've never provided quarterly guidance and we won't do so. I think the important thing of what we said is that we're not going to give additional guidance for the year given the variability that we've seen so far to date. Again, this is the first time we've seen the conversion rate decline. We've seen increases in gross to net. And so because of that, we feel like it's probably more prudent just to kind of leave things where they are. And what we've said is that we do see a path to the low end of the guidance if things go well for the next few months.

Interestingly, what we continue to learn is this being a very rare disease; if you look at the top 20 accounts from last year, they're not the top 20 accounts from this year. So I really do also want to just comment, I'm going to turn it over to David now. I really love what David's doing, digging into what we need to do to ensure the high touch support that we need to provide because these patients, you don't know where they are, right?

Again, 1 month, they're in one place or in a different place. So our ability to increase our reach and frequency and the high-touch nature of it. So David, can you just sort of give some additional color on some of the things that you're doing and working on to ensure that the rest of the year, we actually see that conversion go back up to our normal rate?

[David Lin, executive]

Yes. Thanks for the questions. I'm really enthusiastic about what we're seeing with JELMYTO, particularly because the significant unmet need is significant. And one of the things that the organization has learned over time is that the support that UroGen provides to the physicians and their practices is really an important component to seeing that conversion through from the time of patient enrollment all the way through receiving the 6 doses of treatment.

So we are doubling down in terms of higher touch with many of the accounts that are seeing more patient volume to make sure that we are supporting them appropriately, not only in the logistical components of administering JELMYTO, but also making sure that their confidence around access and reimbursement is at a very high level.

So the continued unmet need is there, and we are very much looking forward to supporting our customer base in getting their patients to treatment.

[Operator]

Our next question comes from the line of Raghuram Selvaraju of H.C. Wainwright & Co.

[Raghuram Selvaraju, analyst]

So I just wanted to see if you could perhaps give us some more granularity as you look towards the potential commercial introduction of UGN-102? And again, speaking to what you were just saying before, Liz, about the high-touch approach that you want to take to continued commercialization of JELMYTO. Maybe give us some both qualitative and quantitative metrics regarding how you intend to implement the sales and marketing infrastructure to support UGN-102.

Ultimately, what you think the field sales force is going to look like, both in terms of size as well as account targeting as and when UGN-102 gets to the market. And how much of the existing infrastructure you expect to be able to place in the service of support of UGN-102 once that new product comes online?

[Elizabeth Barrett, executive]

Sure. So David, why don't you start, and I'll add in any additional commentary?

[David Lin, executive]

Yes. Thanks very much for the question. As we've talked about, we think UGN-102 is really transformative opportunity for patient care and low-grade intermediate risk non-muscle invasive bladder cancer.

So the things we'll take into account at this point in terms of commercialization, we know we've got to educate the physician base around the unmet need and also make sure that the remarkable data around UGN-102 is well understood.

The second thing we'll do is ensure that we have comprehensive support around integrating UGN-102 into their workflows. And then importantly, we will also focus on driving confidence in access and reimbursement. How that translates into scaling up our organization? I think as we've previously stated, we anticipate a modest increase in our sales force. We are contemplating somewhere between 10 and 15 sales reps or we call them territory business managers.

And then the important thing is the Matrix team that surrounds that group, which handles nursing support as well as field reimbursement, will also be looking at how to scale that capability up to provide the appropriate level of support for a new medicine such as UGN-102. Most of the -- actually all of the JELMYTO learnings have taught us that we can leverage pretty much everything that we're doing for JELMYTO and then supplementing it in specific instances. Because as we've said, the patient population is slightly larger or considerably larger, and we will scale appropriately. So those final tweaks are being planned right now.

[Elizabeth Barrett, executive]

Yes. And so I think the thing that David talked about here and what we -- the difference, and we've talked about this a lot, there's a significant difference, right, when you think about the integration into the physician practice. So the most important thing for physicians and look, this is experience with oncologists as well, you have to make it seamless for their practice or they will not adopt the product regardless of how great the data is.

And so that's been the #1 thing that David has been focused on is how do we ensure the seamless integration. And the difference, as we've talked about many times between UGN-102 and JELMYTO is JELMYTO's hard. It's hard because you've got to have a fluoroscopy. So you have -- it has to be done by a physician. So you, most of the time, have to go to a surgery center or to the hospital. Very different. UGN-102 can be done by an extender, fits very nicely. They already have these "IVT days" in their practice.

So it fits very nicely into that, but we will not sort of assume that to be the case, and to David's point, make sure that we do have the types of roles that we need to support that. And David has already brought up things that in the current plan where he feels like we need to augment and we're going to do that. We will ensure that the increased acceleration of adoption for UGN-102. And then we don't just do a plug and play with JELMYTO, but we're really looking at it as a fresh new launch, although we are fortunate enough to have a nice overlap.

So you -- from the physician standpoint, so relationships that we built and those physicians are excited about -- that have used JELMYTO are excited about UGN-102. Physicians that have not used JELMYTO are excited about UGN-102. And so again, all of that is in the works as we're working on right now and, Ram, we'll continue to provide additional color around that as we work it out in the next few months.

[Raghuram Selvaraju, analyst]

And do you think that the presence of UGN-102, just in and of itself, might actually provide a tailwind to JELMYTO sales as well?

[Elizabeth Barrett, executive]

Yes. That's been -- and I've said that before. I actually do think it's what I call a reverse halo because after physicians see their experience with UGN-102, they may be more willing to work a little bit harder for JELMYTO. I also believe that patients will become more engaged as well. It's very difficult to engage, do anything dramatic with patients when there's only 6,000 of them annually, very different when there's 80,000 of them, and we can do more around educating and engaging the patients and ensuring that sort of patient-physician dialogue is productive and that there is shared sort of decision-making between the 2 of them. But absolutely agree, Ram, that there's an opportunity for a reverse halo there.

[Raghuram Selvaraju, analyst]

And very quickly on the pipeline, can you comment on any specific efforts you expect to be making to further accelerate the development of 103 and 104 which are central to your life cycle management strategy as well as clarify that when you said earlier that you think the company may, at this point, be sustainably financed through to achievement of profitability. But this also includes the expected investments you plan to make not just in 103 and 104, but in potentially 301 as well?

[Elizabeth Barrett, executive]

Yes, absolutely. Great question. We do believe that we are financed through profitability and beyond, given including what you just talked about, including the where we need to be with 103 and 104. One of the reasons that we took our expenses -- well, we didn't take them up, obviously. They're still within range, but we guided to the higher end is because we've accelerated both 103 and 104, and so we want to make sure that we get those done as quickly as possible, and so we are financed that way.

And so to your point, life cycle management, we're excited about that. We already started. We've already have sites that have started with 103. We anticipate first patient dosed very shortly. And we'll obviously announce that as that comes out. And then again, as quickly as we can behind that start with UGN-104. The nice thing about those life cycle management clinical studies is they don't have to be as big, right? So they're smaller.

Now that there is experience in this patient population with our own medicines with JELMYTO and UGN-102, we're able to discuss with the FDA what we typically -- what they would expect to see. So as long as those -- they deliver in that range, we should be able to go to them with a fewer patients. So those should be accelerated. And that allows us to still have money to -- for their other areas. We've talked to other companies that are interested and putting their medicines in our gel, and we're going to be talking about a few of those over the next few months, and we'll be announcing those. And we -- this, our current financing allows us to continue to do some of those as well, collaborations.

Now we can't go out and do a massive acquisition, but we will be able to fund and finance collaborations as we go forward, taking our technology and adding potentially to our technology as well as going into using new medicines in this space.

So I hope that helps. If there's something I missed, please let me know.

[Operator]

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

[Leland Gershell, analyst]

Wanted to ask with respect to -- it could be a larger potential for the gel technology in perhaps more advanced disease. Wondering if you guys have contemplated to look at UGN-102 in high-grade NMIBC, either on its own or perhaps paired with another agent, given that there has been data showing that there could be a role for mitomycin in high-grade NMIBC, and perhaps [indiscernible] gel and higher dwell time that could sort of turbocharge that potential benefit?

[Elizabeth Barrett, executive]

Absolutely. We definitely are -- that's part of our life cycle planning. We do believe, as you know, that combination therapies, as we get into high-grade disease, will probably be more relevant. And so we will do it, and Mark and his team are doing that work as we speak to come up with where will we go next, right? We have a list of potential opportunities, but definitely be looking at UGN-102 in high-grade disease.

[Operator]

Our next question comes from the line of Kelsey Goodwin of Guggenheim Securities.

[Kelsey Goodwin, analyst]

Congrats on the progress this quarter. Two from us. First, when we think about the JELMYTO headwinds that you face. Maybe, could you just remind us to what extent they're relevant or have read through to UGN-102? And then separately, now that you have ENVISION durability data in hand, can you provide more color on what you've been hearing in recent weeks from KOLs in the intermediate risk space?

[Elizabeth Barrett, executive]

Sure, Kelsey. I'll turn the first question over to David and also ask for Mark to comment. So David, on both of those, and then Mark, please add any color as well.

[David Lin, executive]

Yes. Thanks for the question. So with regard to the question on JELMYTO, as we discussed, a lot of the headwinds from a gross to net perspective were on 340b chargebacks and also Medicare refunds for discarded drug. We expect those to be significantly less exposure when it comes to UGN-102 because UGN-102, when you think about where it would be administered, it will be more heavily focused in community practices. And then with regard to discarded drug provisions, we anticipate that to be considerably less and under the threshold. So as we look forward, I think many of those headwinds will be less of an issue.

[Operator]

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

[Matthew Kaplan, analyst]

Just first question, how should we think about the potential for a priority review being granted for UGN-102 as you near the submission here?

[Elizabeth Barrett, executive]

Yes. Look, it's a great question, Matt. My regulatory guy has very, very high confidence. I'm just laughing because I achieve them all the time. Because he thinks -- I probably don't wish better than I give a percentage, but it's very, very likely.

The reason is because of the things we've been talking about, right? The data is very compelling. There are no other drugs approved. Of course, there is a surgical, but there's -- if you look at what the FDA publishes around priority review, we fit into their guidelines. And so we believe that we should get priority review.

Having to said that, we all know that there's no guarantees. And so we will be sharing, obviously, as soon as we file and then we get our acceptance. And when we get the acceptance, which is 60 days later, that's when they'll tell us whether we have priority review. But we feel very confident that we'll get priority review, but obviously can't guarantee that to be the case. But we feel like we definitely fit nicely into that.

[Matthew Kaplan, analyst]

Great. Great. That's helpful. And then just shifting to your commercial products, JELMYTO. Talk a little bit about the performance during the second quarter and how -- and the potential for improved growth going forward. Specifically, can you address some of the headwinds that you're running into, the chargebacks, the unused drug and just in terms of the transition of patients that are in the queue there and to treated patients as well going forward?

[Elizabeth Barrett, executive]

Yes. Matt, look, it's a great question. I'll make a few comments and then turn it over to David to add anything.

Yes, I absolutely believe it. I've been out myself, obviously, talking to physicians who use JELMYTO. Those that are clinically convicted are clinically convicted. And what I mean by that is there are major institutions around the country, our top KOLs in this space who use JELMYTO in every single one of their patients. And I'd say every single one. Yes, maybe there's a couple that they don't. But for the most part, they treat all of their patients.

That tells me that there is clinical conviction and that they believe in JELMYTO. So a lot of it is around what David talked about earlier. And just what we really hear is the -- and even Dr. Linehan, when we had the event for 102, she talked about the logistics around JELMYTO, and that being the single largest barrier to adoption. And I believe the real -- the biggest largest barrier is actually around patient identification.

You've got 6,000 patients, you've got 10,000 urologists. And so as I mentioned earlier, when we take a look at our top 20 accounts from '24, they're different than our top 20. There's obviously some overlap, but more than half of the top 20 accounts in '24 are not the ones in '23. And it's not a matter of that there is a negative experience, and therefore, they're not using. It's just when the patient is there.

And so I think that is one of the things that we're really focused on. And one of the things that David has implemented just over the last few weeks is ensuring that we are increasing and improving our reach and frequency so that we are there to help identify those patients.

To your point, the gross to net and the wastage, they are going to be what they are. Those are, in summary, a lot of respects, uncontrollables for us. So what we have to do is we have to double down on patient identification and adoption, and that's what we're focused on and the conversion. There are a myriad of different reasons. Nothing -- no one thing, but you have to be there from the beginning of when that patient was identified.

If we had just translated the patient enrollment form growth in the first half, we would be well within -- we would have not had a miss this quarter or last quarter. So that also tells me that the demand is there and it's something else that's holding it up and those are the things that we're working on.

I don't know, David, if you want to add any additional color to that.

[David Lin, executive]

Thanks, Liz. No, the only thing I would add is, as we've talked about, the clinical conviction of the customers that we speak to is very high, and those particularly with experience administering JELMYTO as well as what their patients have told them is that it's a positive experience. Our biggest challenge is being at the right place, at the right time, as it is a very diffused patient population.

So when we are with a customer that has identified a patient, it is incumbent upon us to deliver the most seamless process we can in supporting them with training and scheduling. So I think our fundamentals are very strong, and we are doubling down to make sure that we execute flawlessly when offices find or identify patients.

[Elizabeth Barrett, executive]

Thanks, Matt. And I do want to go back to Kelsey. I'm sorry, we didn't answer your second question. I'm just going to ask Mark to comment. He recently got back from a BEACON event. And obviously, we've all had a lot of interaction with KOLs. So Mark, maybe you can give some color on the recent event and your recent conversations with KOLs, to answer Kelsey's second question.

[Mark Schoenberg, executive]

Kelsey, thanks for the question, and it's an exciting time in the community as represented by the bladder cancer advocacy network, as this audience may know, is already very aware of the ENVISION data as well as the predicate data for ATLAS and OPTIMA, the Phase II trial. And there is growing excitement about the potential availability of this drug, if approved.

And I think people are really beginning to understand, and I heard this from KOLs just this past week in San Diego at the meeting. A lot of excitement about the possibility that this is going to be available for patients, that it will make it possible in-an-office setting in a manner that is much less technically complex than the delivery of JELMYTO to provide chemoablation for patients who heretofore have really only had TURBT available as the option for treating this disease.

So I would say in aggregate, both -- and this is a mixed audience. This is both patients and docs and people from industry. Patients and doctors are excited about the potential for the approval of UGN-102 as are we. So exciting times, I think, as reflected by that conversation.

[Elizabeth Barrett, executive]

Operator, any additional questions?

[Operator]

Yes. Our next question is from Paul Choi of Goldman Sachs.

[Kyuwon Choi, analyst]

My first question is just a follow-up on 340b commentary. Can you elaborate on this and whether you think this is just more a seasonal onetimer impact in the quarter? Or do you sort of anticipate this to be more the ongoing mix for JELMYTO? And then for 102, is part of the offset here with regard to drug waste and so forth, having a prefilled device, and do you expect that to mitigated by that?

And then my second question for Mark is with regards to 103 and 104. I appreciate the detailed timelines that you've laid out, Mark. Can you maybe elaborate whether you would potentially have any interim data updates for those programs in '25 or '26? Or are you just planning to present top line results and proceed with the filing?

[Elizabeth Barrett, executive]

Yes, Paul. I'll just comment on the gross to net. And I wish I had a crystal ball where that's concerned. We see quite a bit of variability quarter-to-quarter. So I do think -- I think we have hit a place where we're not going to go back to the higher -- to the lower discounts. We'll continue to see that. So I think in aggregate over the year, so I think there continue to be variability quarter-to-quarter, so that's making it very difficult. But I do -- but I think that we're going to continue to see that as a headwind.

I don't think it will increase much more than we've already seen the variability now. Like I said, it's at a new low only because we don't see that obviously as much with nephrostomy tube administration as you do with other. Although I do think this is the single biggest issue facing our industry today. You hear it from a lot of people around 340b. I think we need to figure out a way to have that addressed because what you're seeing is institutions, they buy practices and they get the 340b discount, even though it's delivered into an account.

So I don't think that we'll see further erosion, but I think that what is here is going to be here to stay from a gross to net perspective. So again, as I mentioned before, even with the headwinds of gross to net and the wastage provision, I think we've learned now, pretty good at what we can anticipate. I think it's incumbent upon us to drive adoption and drive the demand and ensure that, that demand translates to an actual patient being treated.

And that's something that, again, David, is really, really focused on. So I think that, that's going to be the key, identifying the patients and translating every patient to a dose. And again, we're seeing that a little bit better in the third quarter so far, but I don't want to get ahead of ourselves. And that's what we saw in the first 6 months, which we had not seen before. And if we had simply done that, even with the headwinds, we would be where we needed to be.

So feel good about our ability. Like I said, we believe there's a path to the lower end of the guidance. I feel really good about the stuff that David is implementing. And so we'll continue to drive that. But be assured, it's going to continue to be a slog, right, with JELMYTO. Very, very different than UGN-102, which we know will be -- not only the practice economics, but the ease of use, and the learning and ensuring that we have all the things that we underestimated with JELMYTO, that we don't do that, and we will not make that -- we won't do that again where we underestimate the logistics. And so that's one of the things that David's really, really focused on.

So with that, Mark, why don't you answer the question around UGN-103 and 104?

[Mark Schoenberg, executive]

Yes. Paul. So as Liz said in her remarks, 103 is already rolling, and because it is a smaller trial, we anticipate rapid accrual completing in sort of early to mid '25.

Candidly, it's premature to talk about the timeline on 104. But with respect to releasing interim data on either program, I'd have to defer to Liz, because they are going to be fast accruing trials with an approach to disease with which we are already familiar. I'm not certain that we would want to do that. But again, I have to defer to Liz as to how she's going to approach the availability and release of interim data from those trials.

[Elizabeth Barrett, executive]

Yes. I think the one thing that we would consider is the CR data, right, being able to -- given that, that is in and of itself, we may be able to disclose and share that. The most important thing for us is we have been very conservative in the sense that we don't want to jeopardize anything with the FDA. In example, some of the other companies out there have been giving, updating on all of their durability data on an ongoing basis. We chose not to do that because we did not want the FDA to have any reason to question our data and so the integrity of our data.

So we would not share ongoing durability data, but I think what we would be able to share is sort of the initial CR. And I think that, that's something that we'll look at doing. But other than that, we would not share on the durability. I just don't think it's a good practice. And like I said, we don't want to do anything that could jeopardize our filings. So we will continue to be very conservative from that perspective.

[Operator]

I'm showing no further questions at this time. I would now like to turn it back to Liz Barrett, CEO, for closing remarks.

[Elizabeth Barrett, executive]

Yes. Thank you, and thanks, everybody, for joining us today. I think you heard from us today, our real shift in focus is toward UGN-102. We will be finishing our filing as we've talked about very shortly, and we'll share that with you. We'll anticipate the feedback from the FDA and in short order after that, and we'll keep you posted on things.

I think the compelling nature of the data, the durability, the recurrence-free survival, both frankly, for UGN-102 and JELMYTO, show that we have the ability and potential to transform the way that these patients are treated. That's always been our mission and our vision for our company. So we said, not only will they transform that for patients, but also for our company. So we'll keep you posted.

Thanks for your questions and participation today, and we look forward to the ongoing dialogue. Operator, you can disconnect now.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.