UroGen Pharma – UGN-102 PDUFA June 13th
- rspace2
- Jun 6
- 4 min read
Executive Summary
UroGen has an upcoming PDUFA on June 13th for UGN-102. The ADCOM voted against approval by a 5-4 margin. The ADCOM case is compelling. This, combined with an adequate standard of care, makes an FDA rejection likely. If rejected, the share price of UroGen is likely to be between $ 1.50 and $ 2.50/share. The June 20th $4 puts appear most prudent for this FDA decision. They are currently trading at $ 1 per contract. We are long the $4 puts.
Background Information
Recurrent low-grade intermediate-risk non-muscle invasive bladder cancer (LG-IR-NMIBC)
There are three common types of bladder cancer: urothelial carcinoma, squamous cell carcinoma, and adenocarcinoma. Urothelial carcinoma and squamous cell carcinoma comprise about ~95% of bladder cancer cases. These cancers are further classified by stage, grade, and growth pattern. Non-muscle invasive bladder cancer (NMIBC) is confined to the inner lining of the bladder. Muscle-invasive bladder cancer invades the muscularis propria or higher. Locally advanced bladder cancer extends beyond the bladder wall into the surrounding tissues. Metastatic bladder cancer has spread to lymph nodes or other distant organs. Low-grade cancers grow more slowly and have more differentiated cells, whereas high-grade cancers are more aggressive and poorly differentiated. Papillary cancers appear as exophytic, frond-like growth and are the most common form of NMIBC. Non-papillary cancers are flat, high-grade, and aggressive.
LG-IR-NMIBC is a low-grade, intermediate-risk, non-muscle-invasive bladder cancer. The intermediate risk is most often due to recurrence. Classic symptoms include blood in the urine and abnormal urinary frequency or urgency. It has a high recurrence rate, as up to 70% recur within 5 years with improper post-op treatment. However, the progression to high-grade or invasive is rare, with less than 5% of cases progressing.
Treatments:
The standard of care for this type of cancer is a transurethral resection of bladder tumor (TURBT) followed by an initial dose of intravesical mitomycin C. Typically, adjuvant therapy follows, with 6 weeks of weekly dosing of intravesical mitomycin C. A cystoscopy is performed every 6 months, with repeat TURBTs for recurrence.
Higher-risk cancers are treated with a bacteria called BCG. However, this treatment is rare for less serious bladder cancers.
With the standard of care, recurrence rates are approximately 35-45% in this population over a 3.5-5 year period. It is challenging to make an apples-to-apples comparison with the ENVISION study patient population; however, the data from these studies provide some confidence in the numbers. The ENVISION study specifically enrolled patients who were intermediate-risk and had prior recurrence.
UGN-102 and UroGen Pharma
UGN-102
UGN-102 is a drug-delivery device for mitomycin C, eliminating the need for TURBT while offering a more sustained release of mitomycin C. The same drug-delivery platform, named RTGel, was approved for low-grade upper tract urothelial cancer, named Jelmyto. However, that indication has few treatment options, therefore making the risk-benefit case much more compelling.
The FDA ADCOM has released its report on UGN-102. They voted 5-4 against approving UGN-102. Their paper can be found at this link: https://www.fda.gov/media/186526/download.
There are two major issues with UroGen’s application. First, they did not conduct a proper double-blind, randomized clinical trial. Their one randomized trial, dubbed ATLAS, did not follow FDA guidelines and was terminated prematurely. The ADCOM paper explicitly states that it only considers data from the ENVISION trial for the application. Per the FDA guidance document on bladder cancer, “Choice of Comparator The appropriate choice of comparator should be discussed with the FDA before study initiation and should be consistent with standards of care and with practice patterns in the U.S,” implying that there should be a randomized clinical trial.
Second, the data from the single-arm Envision trial did not have a sufficiently long duration. The follow-up period was 18 months, whereas most data on recurrence span 3-5 years, making it difficult to extrapolate the effectiveness of the treatment compared to the standard of care. The standard of care is also reasonably effective for this indication, as patients rarely experience progression or mortality concerns related to the disease. Although inconvenient, TURBT + a few weeks of intravesical chemotherapy every few years as needed for recurrence does not threaten the life of the patient.
UroGen
UroGen has approximately $90 million in revenue from Jelmyto. However, growth has been minimal in the past few years. Gross margins are about 90%. However, the company has a negative book value. The current market capitalization is approximately $250 million, trading at a share price of nearly $ 5 per share. There is some incremental value in Jelymto. However, a CRL would be devastating for the company. There are no plans to run an RCT in the future. Additionally, such a trial would likely need to be conducted over approximately 3 years, deferring revenue for a significant amount of time. The company has approximately $190 million in cash but has burned about $125 million in 2024.
Analysis and Discussion
The FDA follows advisory committee decisions about 80% of the time. However, this number is typically lower for oncology indications. Additionally, when the ADCOM advises against approval, the FDA agrees roughly 67% of the time, compared to 97% of the time when the ADCOM advises in favor of approval. In this case, given the success of the standard of care, the odds are likely much higher than 67%.
Conclusion
The FDA will likely reject UroGen’s application for UGN-102 approval. The value of UroGen’s stock, if rejected, is likely to be somewhere between $1.50 and $ 2.50 per share. Therefore, the June 20th $4 puts, currently trading at $ 1 per share, are the best value. The odds of rejecting are likely higher than 67%. Additionally, the share price is likely to decline to around $ 2 per share or less, making this a positive EV bet.
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