UroGen Pharma Ltd

Notes to the Unaudited Condensed Consolidated Financial Statements

Note1 – Business and Nature of Operations

Nature of Operations

UroGen Pharma Ltd. is an Israeli company incorporated in* April 2004 (*“UPL”).

UroGen Pharma, Inc., a wholly owned subsidiary of UPL, was incorporated in Delaware in* October 2015and began operating in February 2016 (*“UPI”).

UPL and UPI (together the “Company”) is a biotechnology company dedicated to developing and commercializing innovative solutions that treat urothelial and specialty cancers. Since commencing operations, the Company has devoted substantially all of its efforts to securing intellectual property rights, performing research and development activities, including conducting clinical trials and manufacturing activities, hiring personnel, launching the Company’sfirst commercial product,Jelmyto (mitomycin) for pyelocalyceal solution, formerly known as UGN-101, advancing UGN-102 through regulatory approval, and raising capital to support and expand these activities.

On* April 15, 2020,the U.S. Food and Drug Administration (“FDA”) granted expedited approval forJelmyto*, afirst-in-class treatment indicated for adults with low-grade upper tract urothelial cancer.Jelmyto consists of mitomycin, an established chemotherapy, and sterile hydrogel, using our proprietary sustained releaseRTGel technology. It has been designed to prolong exposure of urinary tract tissue to mitomycin, thereby enabling the treatment of tumors by non-surgical means.

In* August 2024,the Company completed the submission of the rolling NDA for UGN-102. In October 2024,the FDA accepted the Company's NDA for UGN-102 (mitomycin) for intravesical solution and assigned a Prescription Drug User Fee Act (PDUFA) goal date of June 13, 2025.*

Note2 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with instructions to Form10-Q and Article10 of Regulation S-X. Accordingly, they donot include all the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary for fair statement of its financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. Interim results arenot necessarily indicative of results for the full fiscal year. The year-end condensed consolidated balance sheet data was derived from audited financial statements but doesnot include all disclosures required by accounting principles generally accepted in the United States. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in the Company’s Annual Report on Form10-K for the year ended* December**31,* 2023, as filed with the U.S. Securities and Exchange Commission (“SEC”) on* March 14, 2024.*

The Company has experienced net losses since its inception and has an accumulated deficit of $768.7 million and $679.3 million as of* September 30, 2024* and* December**31,* 2023, respectively. The Company expects to incur losses and have negative net cash flows from operating activities as it executes on its strategy including engaging in further research and development activities, particularly conducting non-clinical studies and clinical trials. The success of the Company depends on the ability to successfully commercialize its technologies to support its operations and strategic plan.

In accordance with the accounting guidance related to the presentation of financial statements, management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for the next12 months from the date the financial statements are issued. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and donot include any adjustments relating to the carrying amounts and classification of assets and liabilities that* maybe necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is expected to be impacted by its ability to raise additional capital to fund its operations, produce cash inflows fromJelmyto* product sales and advance UGN-102 through regulatory approval.

Based on the Company's cash, cash equivalents and marketable securities as of* September 30, 2024*, together with management’s cash flow projections, the Company believes that it has sufficient cash and cash equivalents to fund its operations beyondone year from the issuance of these condensed consolidated financial statements. The Company* mayneed to raise additional capital in the future. There can beno* assurances that the Company will be able to secure such additional financing on terms that are satisfactory to the Company, in an amount sufficient to meet the Company's needs, or at all. In the event the Company isnot successful in obtaining sufficient funding, this could force the Company to delay, limit, or reduce the Company's product development, commercialization efforts or other operations.

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Note3 – Significant Accounting Policies

Principles of Consolidation

The Company's condensed consolidated financial statements include the accounts of UPL and its subsidiary, UPI. Intercompany balances and transactions have been eliminated during consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results* may*differ from those estimates. As applicable to the unaudited condensed consolidated financial statements, the critical accounting estimates relate to the fair value of share-based compensation, measurement of revenue, estimate of uncertain tax positions, and measurement of liabilities accounted for under the interest method.

Functional Currency

The U.S. dollar (“Dollar”) is the currency of the primary economic environment in which the operations of the Company are conducted. Therefore, the functional currency of the Company is the Dollar.

Accordingly, transactions in currencies other than the Dollar are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the Dollar are measured using the official exchange rate at the balance sheet date. The effects of foreign currency re-measurements are recorded in the condensed consolidated statements of operations as “Interest and other income, net.”

Cash and Cash Equivalents; Marketable Securities

The Company presents all highly liquid investments with an original maturity ofthree months or less when purchased as cash equivalents. Cash and cash equivalents generally consist of money market funds and bank money market accounts and are stated at cost, which approximates fair value.

Cash and cash equivalents and marketable securities totaled $254.2 million as of* September 30, 2024*. The Company accounts for its investments, which include cash equivalents and marketable securities, as available-for-sale in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic320, “Investments — Debt and Equity Securities”. Available-for-sale debt securities are carried at fair value with unrealized gains and losses reported in other comprehensive income/loss within shareholders’ equity. Realized gains and losses are recorded as a component of interest and other income, net. The cost of securities sold is based on the specific-identification method.

Certain short-term investments are valued using models or other valuation methodologies that use Level2 inputs. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, default rates, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. The majority of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

For individual debt securities classified as available-for-sale securities where there has been a decline in fair value below amortized cost, the Company determines whether the decline resulted from a credit loss or other factors. The Company records impairment relating to credit losses through an allowance for credit losses, limited by the amount that the fair value is less than the amortized cost basis. Impairment that hasnot been recorded through an allowance for credit losses is recorded through other comprehensive income, net of applicable taxes.

Restricted cash is related primarily to cash held to secure corporate credit cards; restricted deposits are related to cash held to secure leases.

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Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents and marketable securities. The primary objectives for the Company’s investment portfolio are the preservation of capital and the maintenance of liquidity. The Company doesnot enter into any investment transaction for trading or speculative purposes.

The Company’s investment policy limits investments to certain types of instruments such as certificates of deposit, money market instruments, obligations issued by the U.S. government and U.S. government agencies as well as corporate debt securities, and places restrictions on maturities and concentration by type and issuer. The Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation and concentrated within a limited number of financial institutions. The accounts are monitored by management to mitigate the risk.

The Company’s product sales are recognized through the Company's arrangements withthird-party national specialty distributors. The Company assesses the need for an allowance for doubtful accounts primarily based on creditworthiness, historical payment experience and general economic conditions. The Company hasnot experienced any credit losses related to arrangements with customers and hasnot currently recognized any allowance for doubtful accounts.

Income Taxes

The Company provides for income taxes based on pretax income, if any, and applicable tax rates available in the various jurisdictions in which it operates, including Israel and the United States. Deferred taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is recognized to the extent that it is more likely thannot that the deferred taxes willnot be realized in the foreseeable future.

The Company follows atwo-step approach in recognizing and measuring uncertain tax positions. After concluding that a particular filing position can be recognized (i.e., has a more-likely-than-not chance of being sustained), ASC740-10-30-7 requires that the amount of benefit recognized be measured using a methodology based on the concept of cumulative probability. Under this methodology, the amount of benefit recorded represents the largest amount of tax benefit that is greater than50% likely to be realized upon settlement with a taxing authority that has full knowledge of all relevant information. See Note16 for further discussion related to income taxes.

Inventory

The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. ForJelmyto, the Company commenced capitalization of inventory at the receipt of FDA approval.

The Company values its inventory at the lower of cost or net realizable value. The Company measures inventory approximating actual cost under afirst-in,first-out basis. The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories*.*

Property and Equipment

Property and equipment are recorded at historical cost, net of accumulated depreciation, amortization and, if applicable, impairment charges. The Company reviews its property and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable.

Property and equipment are depreciated over the following useful lives (in years):

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Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or lease terms. See Note8 for further discussion regarding property and equipment.

Prepaid Forward Obligation

The Company is party to a transaction (the “RTW Transaction”) with RTW Investments (“RTW”) in which the Company received funds to support the launch ofJelmyto and the development of UGN-102 in return for tiered, future cash payments based on net sales ofJelmyto and, subject to FDA approval, UGN-102, UGN-103 and UGN-104. The net proceeds received under the RTW Transaction were recognized as a long-term liability. The Company recognizes the current cash payable amounts under the arrangement within other current liabilities on the condensed consolidated balance sheets. The subsequent measurement for the liability follows the accounting principles defined in ASC Topic835-30, “Imputation of Interest”. See Note9 for further discussion related to the prepaid forward obligation.

Long-Term Debt

The Company is party to a loan agreement with funds managed by Pharmakon Advisors, L.P. (“Pharmakon”). The Company recognizes interest expense in current earnings, and accrued interest within other current liabilities on the condensed consolidated balance sheets. The Company recognizes capitalized financing expenses as a direct offset to the long-term debt on the Company's condensed consolidated balance sheets, and amortizes them over the term of the debt using the effective interest method. See Note10 for further discussion related to long-term debt.

Leases

The Company is a lessee in several noncancelable operating leases, primarily for office space, office equipment and vehicles. The Company currently hasno finance leases.

The Company accounts for leases in accordance with ASC Topic842, “Leases”. The Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Operating lease ROU assets are presented as operating lease right-of-use assets on the condensed consolidated balance sheets. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented separately as operating lease liabilities on the condensed consolidated balance sheets.

Lease expense is recognized on a straight-line basis for operating leases. Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expense on the condensed consolidated statements of operations in the same line item as expense arising from fixed lease payments.

The Company’s lease terms* may*include options to extend the lease. The lease extensions are included in the measurement of the right-of-use asset and lease liability when it is reasonably certain that it will exercise that option.

Because most of the Company’s leases donot provide an implicit rate of return, an incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

ROU assets for operating leases are periodically reviewed for impairment losses under ASC360-10, “Property, Plant, and Equipment”, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

Revenue

Product sales fromJelmyto are recognized as revenue under ASC606 at the point in time that control of the product has been transferred to the customer, generally at the point the product has been delivered to the treating physician. All product sales ofJelmyto are recognized through the Company's arrangements withthird-party national specialty distributors. Net revenue recognized includes gross revenue and management’s estimate of returns, consideration paid to the customer, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks relating to340b drug pricing programs and other government sponsored programs, Medicaid drug rebate programs, the Company’s copay assistance program, and Medicare refunds for discarded drug, which are estimated based on the Company’s historical experience.

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Research and Development Expenses

Research and development costs are expensed as incurred and consist primarily of the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, subcontractors and materials used for research and development activities, including nonclinical studies, clinical trials, manufacturing costs and professional services. The costs of services performed by others in connection with the research and development activities of the Company, including research and development conducted by others on behalf of the Company, shall be included in research and development costs and expensed as the contracted work is performed. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from its external service providers. The Company adjusts its accrual as actual costs become known. Where contingent milestone payments are due tothird parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when such development milestone results are achieved.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of personnel costs (including share-based compensation related to directors, employees and consultants). Other significant costs include commercial, medical affairs, external professional service costs, facility costs, accounting and audit services, legal services and other consulting fees. Selling, general and administrative costs are expensed as incurred, and the Company accrues for services provided bythird parties related to the above expenses by monitoring the status of services provided and receiving estimates from its service providers and adjusting its accruals as actual costs become known.

Share-Based Compensation

Share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the required service period, which is equal to the vesting period. For performance stock units (“PSUs”), cost is measured at the grant date based on the fair value of the award and is recognized over any relevant service period as expense when the achievement of the performance condition is probable. The fair value of options is determined using the Black-Scholes option-pricing model. The fair value of a restricted stock unit (“RSU”) or a PSU equals the closing price of the Company’s ordinary shares on the grant date. The Company accounts for forfeitures as they occur in accordance with ASC Topic718, “Compensation—Stock Compensation”.

The Company elected to recognize compensation costs for awards conditioned only on continued service that have a graded vesting schedule using the straight-line method and to value the awards based on the single-option award approach.

Pre-funded Warrants

The Company's outstanding pre-funded warrants are accounted for as a freestanding equity-linked financial instrument that meets the criteria for equity classification under ASC480, “Distinguishing Liabilities from Equity,” and ASC815, “Derivatives and Hedging.” Accordingly, the Company classifies the pre-funded warrants as a component of permanent shareholders’ equity within additional paid-in capital and records them at the applicable issuance date using a relative fair value allocation method. The Company valued the pre-funded warrants at the applicable issuance date, concluding that their sales price approximated their fair value, and allocated the net sales proceeds from the applicable equity transaction proportionately to the ordinary shares and pre-funded warrants.

Net Loss per Ordinary Share

Basic net loss per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional ordinary shares that would have been outstanding if the potential ordinary shares had been issued and if the additional ordinary shares were dilutive.

For all periods presented, potentially dilutive securities are excluded from the computation of fully diluted loss per share as their effect is anti-dilutive.

The Company’s pre-funded warrants require the holder to pay nominal consideration to receive the Company’s ordinary shares and are therefore considered outstanding shares in determining basic and diluted earnings per share in accordance with ASC Topic260, “Earnings per Share”.

Recently Adopted orIssuedAccounting Pronouncements

In* November 2023,the FASB issued Accounting Standards UpdateNo.* 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures ("ASU2023-07"), which provides guidance to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. Public entities must adopt the new guidance for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements and early adoption is permitted. The Company is currently assessing the disclosures which will be required under the new guidance and doesnot* believe the adoption of ASU2023-07 will have any material impact on its consolidated financial statements.

In* December 2023,the FASB issued Accounting Standards UpdateNo.* 2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures (“ASU2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt ASU2023-09 for the2025 year-end and is currently evaluating the potential impact of the adoption on the Company’s financial disclosures. ASU2023-09 allows for adoption using either a prospective or retrospective transition method.

The Company has reviewed other Accounting Standards Updates recently issued by the FASB, and determined thatnone of these pronouncements will have a significant impact on the Company's consolidated financial statements and related disclosures.

SEC Climate Disclosures

In* March 2024,the SEC issued its final climate disclosure rule, which requires certain disclosures relating to emissions and other climate-related topics. For smaller reporting companies, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2027.Subsequently, in April 2024,*the SEC issued an order staying implementation of the SEC Climate Disclosure Rules pending the resolution of certain challenges. The Company is currently evaluating the impact these rules will have on its consolidated financial statements and related disclosures.

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Note4 – Other Financial Information

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of* September 30, 2024* and* December 31, 2023* (in thousands):

Interest and Other Income, Net

Interest and other income, net consisted of the following for thethree andnine months ended* September 30, 2024and2023* (in thousands):

Note5 – Inventories

Inventories consisted of the following as of* September 30, 2024* and* December 31, 2023* (in thousands):

(1) $1.7 million of raw materials are included within other non-current assets on the condensed consolidated balance sheets at December 31, 2023. These raw materials are not expected to be manufactured and sold within the next 12 months. Changes in non-current assets are reflected on the condensed consolidated statements of cash flows within the caption of other non-current assets.

Note6 – Fair Value Measurements

The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

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As a basis for considering such assumptions, athree-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

The carrying amounts of the Company’s cash, restricted cash, other current assets, accounts payable and accrued liabilities are generally considered to be representative of their fair value because of the short-term nature of these assets and liabilities.

The carrying value of the prepaid forward obligation (See Note9 - Prepaid Forward Obligation) approximates its fair value. The Company estimated the fair value of the prepaid forward obligation using Level3 inputs, including internally developed financial forecasts and management's estimate of probability of success related to product candidates, and determined that the effective interest rate in the obligation approximates market rates for loans with similar terms and risk characteristics.

The Company estimated the fair value of long-term debt (see Note10 - Long-Term Debt) using the income approach with Level3 inputs. The Company estimated future floating rate interest payments using a forward curve of athree-month benchmark rate, and estimated fair value based on publicly available data reported in the financial statements of publicly traded venture lending companies. Based on a reasonable range of yields for debt instruments of similar tenor in a similar industry, the Company determined that the carrying value of the long-term debt on the Company's balance sheet approximates its fair value.

No transfers between levels have occurred during the periods presented.

Assets measured at fair value on a recurring basis based on Level1 and Level2 fair value measurement criteria as of* September 30, 2024* are as follows (in thousands):

Assets measured at fair value on a recurring basis based on Level1 and Level2 fair value measurement criteria as of* December 31, 2023* are as follows (in thousands):

The Company’s investments in U.S. government bonds and money market funds are measured based on publicly available quoted market prices for identical securities as of* September 30, 2024* and* December 31, 2023.*The Company's investments in corporate bonds, commercial paper and certificates of deposits are measured based on quotes from market makers for similar items in active markets.

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Note7 – Investments

The following table summarizes the Company’s investments as of* September 30, 2024* (in thousands):

The Company classifies its investments as available-for-sale, and they consist entirely of debt securities. As of* September 30, 2024*, the amortized cost of investments included an immaterial amount of accrued interest. As of* September 30, 2024*, marketable securities were in a net unrealized gain position. Unrealized gains and losses on available-for-sale debt securities are included as a component of comprehensive loss.

As of* September 30, 2024*, the aggregate fair value of investments held by the Company in an unrealized loss position was $4.6 million which consisted of 4 securities. The unrealized loss was primarily driven by minor fluctuations in the fair value of certain U.S. government and corporate bond positions. The Company doesnot expect to settle the debentures at a price less than the amortized cost basis of the investment; the Company expects to recover the entire amortized cost basis of the security. In accordance with the Company’s general investment strategy, the Company doesnot intend to sell the investments before maturity. As of* September 30, 2024*, the Company believes the cost basis for its marketable securities were recoverable in all material aspects andno allowance for credit losses were recognized in the period.

The Company’s investments as of* September 30, 2024* mature at various dates through* August**2026.* The fair values of investments by contractual maturity consist of the following (in thousands):

Note8 – Property and Equipment

Property and equipment, consists of the following as of* September 30, 2024* and* December 31, 2023* (in thousands):

Depreciation and amortization expense was $0.1 million and $0.3 million for thethree andnine months ended* September 30, 2024* and $0.2 million and $0.6 million for thethree andnine months ended* September 30, 2023*.

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Note9 – Prepaid Forward Obligation

In* March 2021,the Company entered into a prepaid forward agreement with RTW. Under the terms of the RTW Transaction, the Company received $75.0 million ($72.4 million net of transaction costs) to support the launch ofJelmyto* and the development of UGN-102. In return for the transferred funds, RTW is entitled to receive tiered, future cash payments based on aggregate worldwide annual net product sales ofJelmytoand, if approved, UGN-104, in an amount equal to: (i)9.5% of annual net sales up to*$200* million, (ii)3.0% of annual net sales for annual net sales between*$200* million and*$300* million, and (iii)1.0% of annual net sales for annual net sales above*$300* million. Pursuant to the agreement, the initial cash payment rate of9.5% onJelmyto aggregate worldwide annual net sales of up to $200 million was increased to 13.0% and remained at that rate during thenine months ended* September 30, 2024because certain revenue thresholds werenot* met. This rate* maydecrease in the future back to 9.5% if the Company subsequently meets certainJelmyto* aggregate worldwide annual net sales thresholds.

In addition, subject to FDA approval of UGN-102 and UGN-103, RTW is entitled to receive tiered, future cash payments based on aggregate worldwide annual net product sales of UGN-102 and UGN-103 in an amount equal to: (i)2.5% of annual net sales up to*$200* million, (ii)1.0% of annual net sales for annual net sales between*$200* million and*$300* million, and (iii)0.5% of annual net sales for annual net sales above*$300* million. If the Company doesnot receive FDA approval for UGN-102 by* June 30, 2025,the future cash payments to RTW with respect to aggregate worldwide annual net sales ofJelmyto* across allJelmyto annual net sales tiers will increase by 1.5%.

In accordance with the prepaid forward agreement, the Company will be required to make payments of amounts owed to RTW each calendar quarter, through and until the quarter in which the aggregate cash payments received by RTW are equal to or greater than*$300* million. As of* September 30, 2024,the cumulative amounts paid and payable by the Company were $31.6 million. As security for the payment and fulfilment of these amounts throughout the arrangement, the Company has granted RTW afirst* priority security interest in*Jelmyto,*UGN-102, UGN-103 and UGN-104, including the regulatory approvals, intellectual property, material agreements, proceeds and accounts receivable related to these products.

In* May 2021**,* following the receipt of necessary regulatory approvals, the Company received the $75.0 million prepaid forward payment ($72.4 million net of transaction costs) from RTW and recognized an associated prepaid forward obligation liability. Each period the Company makes a payment to RTW, an expense is recognized related to financing on the prepaid forward obligation based on an imputed rate derived from the expected future payments. Management reassesses the effective rate each period based on the current carrying value of the obligation and the revised estimated future payments. Changes in future payments from previous estimates are included in future financing expense. The Company doesnot expect to make any principal payments in the next12 months.

The following table shows the activity with respect to the carrying value of the prepaid forward liability for the year ended* December 31, 2023and for thenine* months ended* September**30,* 2024, in thousands:

(1) $3.3 million and $3.0 million of the Amounts paid and payable are included as current portion of the prepaid forward obligation within other current liabilities on the condensed consolidated balance sheets as of* September**30,* 2024 and* December 31, 2023,*respectively.

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Note10 – Long-Term Debt

On* March 7,2022, the Company entered into a loan agreement with Pharmakon for a senior secured term loan of up to $100 million intwo tranches. Thefirst tranche of $75 million was funded in March 2022.Thesecond* tranche of $25 million was funded in* December 2022.*

On* June 29, 2023,the loan agreement with Pharmakon was amended to replace the benchmark governing the interest rate with a rate based on the secured overnight financing rate ("SOFR") published by the Federal Reserve Bank of New York. Effective July 2023,the loan accrued interest using a benchmark rate of3*-month SOFR plus 8.25% plus an additional adjustment of 0.26161%.

On* March 13, 2024,the Company entered into an amended and restated loan agreement with Pharmakon for an additionalthird* andfourth tranche of senior secured loan. Thethird tranche of $25.0 million was funded in* September 2024.Thefourth* tranche of $75.0 million will become available at the Company's optionno later than* August 29, 2025,subject to (i) receiving FDA approval of a new drug application (“NDA”) for UGN-102 no later than June 30, 2025and (ii) the satisfaction of customary bring down conditions and deliverables. Under the amended and restated loan agreement, all outstanding loans with Pharmakon accrue interest using a benchmark rate of3*-month SOFR plus 7.25% plus an additional adjustment of 0.26161%. All outstanding principal will be required to be repaid infour equal quarterly installments commencing in thesecond quarter of2026, with aone-year extension possible upon FDA approval of an NDA for UGN-102 by* June 30, 2025.All outstanding loans with Pharmakon can be prepaid in whole at the Company's discretion, at any time, subject to prepayment premiums and make-whole amounts. The Company isnot* required to maintain any financial covenants.

The Company incurred financing expenses of $4.2 million related to thefirst andsecond tranches funded in2022, and $0.5 million related to thethird tranche funded in2024, which are recognized as a direct offset to the long-term debt on the Company's condensed consolidated balance sheets. These debt issuance costs are amortized over the term of the debt using the effective interest method, and are recorded in the condensed consolidated statements of operations as "Interest expense".

The following table shows the activity with respect to the carrying value of the long-term debt, in thousands:

Note11 – Leases

Operating Leases

The Company had the following office and laboratory facility leases during the period covered by this report:

In addition, the Company has other operating office equipment and vehicle leases. The Company’s operating leases* mayrequire minimum rent payments, contingent rent payments adjusted periodically for inflation, or rent payments equal to the greater of a minimum rent or contingent rent. The Company’s leases donot* contain any residual value guarantees or material restrictive covenants. The Company’s active leases expire at various dates from2025 through2026, with varying renewal and termination options.

The components of lease cost for thethree andnine months ended* September 30, 2024* and2023 were as follows (in thousands):

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The amounts recognized as of* September 30, 2024* and* December 31, 2023* were as follows (in thousands):

As of* September 30, 2024*, no impairment losses have been recognized.

Supplemental information related to leases for thenine months ended* September 30, 2024* and2023 is as follows (in thousands, except for lease terms and discount rate amounts):

As of* September 30, 2024*, maturities of lease liabilities were as follows (in thousands):

As of* September 30, 2023,*maturities of lease liabilities were as follows (in thousands):

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Note12 – Revenue From Product Sales

Net product sales consist of the following for thethree andnine months ended* September 30, 2024* and2023 (in thousands):

Net revenue recognized includes gross revenue and management’s estimate of returns, consideration paid to the customer, chargebacks relating to differences between the wholesale acquisition cost and the contracted price offered to the end consumer, chargebacks relating to340b drug pricing programs and other government sponsored programs, Medicaid drug rebate programs, the Company’s copay assistance program, and Medicare refunds for discarded drug, which are estimated based on the Company’s historical experience. Reserves related to items that are contractually able to be net settled are recognized as contra accounts receivable while other remaining reserves are recognized within other current liabilities on the condensed consolidated balance sheets. The following table shows the activity with respect to sales reserves for period ended of* September 30, 2024* (in thousands):

Note13 – License and Collaboration Agreements

Agenus Agreement

In* November 2019,the Company entered into a license agreement with Agenus Inc. ("Agenus"), pursuant to which Agenus granted to the Company an exclusive, worldwide (not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions), royalty-bearing, sublicensable license under Agenus’s intellectual property rights to develop, make, use, sell, import, and otherwise commercialize products incorporating a proprietary monoclonal antibody of Agenus known asAGEN1884* (zalifrelimab), an anti-CTLA-4 antagonist, for the treatment of cancers of the urinary tract via intravesical delivery. UGN-301 is a formulation of zalifrelimab administered usingRTGel technology that is in Phase1 clinical development for high-grade non-muscle invasive bladder cancer ("high-grade NMIBC").

Note14 – Shareholders’** Equity**

The Company had 100.0 million ordinary shares authorized for issuance as of* September 30, 2024* and* December 31, 2023*. The Company had42.2 million and32.5 million ordinary shares issued and outstanding as of* September 30, 2024* and* December 31, 2023*, respectively. Each ordinary share is entitled toone vote. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors (the “Board”). Since the Company's inception, the Board hasnot declared any dividends.

ATM Sales Agreement

In* December 2019,the Company entered into a sales agreement (the “ATM Sales Agreement”) with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) (“TD Cowen”) pursuant to which the Company may*from time to time offer and sell the Company's ordinary shares having an aggregate offering price of up to $100.0 million.

During thefirst quarter of2024, the Company sold 3,400,468 ordinary shares under the ATM Sales Agreement, for gross proceeds of approximately $56.1 million. The net proceeds to the Company after deducting sales commissions to TD Cowen were approximately $54.7 million. The remaining capacity under the ATM Sales Agreement was approximately $27.3 million as of* September**30,* 2024. The shares will be offered and sold pursuant to the Company's shelf registration statement on Form S-3 filed with the SEC on* November 15, 2022,which was declared effective on November 29, 2022.*

Securities Purchase Agreement

On* July26,* 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional and other accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue to the Purchasers 7,300,380 ordinary shares of the Company (“Shares”) and 5,278,776 of pre-funded warrants to purchase ordinary shares of the Company at a purchase price of $9.54 per Share or $9.539 for each ordinary share underlying a pre-funded warrant, in a private placement transaction that closed on* July 28, 2023and August 9, 2023 (the “Private Placement”) for aggregate gross proceeds of $120.0 million, before deducting fees to placement agents and financial advisors and before other expenses paid by the Company. Each pre-funded warrant has an exercise price of $0.001 per ordinary share, subject to customary adjustments, became exercisable upon original issuance and willnot* expire until exercised in full. The pre-funded warrants* maynot* be exercised if the aggregate number of ordinary shares beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation. The aggregate fee paid by the Company to placement agents and financial advisors was $3.6 million, plus the reimbursement of certain expenses.

Resales of the Shares and the ordinary shares issuable upon exercise of the pre-funded warrants were registered pursuant to the Company’s registration statement on Form S-3 (FileNo. 333-274423) filed with the SEC on* September 8, 2023,which was declared effective on September 15, 2023.On December 20, 2023,*the Company issued 1,599,733 ordinary shares through a cashless conversion of 1,599,840 pre-funded warrants for the purchase of ordinary shares of the Company.

Monograph Capital Partners I, L.P. (“Monograph”), a life sciences venture firm that is affiliated with Fred Cohen, M.D., a director of the Company at the time, purchased 1,572,327 of the Shares in the Private Placement, for an aggregate purchase price of $15.0 million. Dr. Cohen is the Chair and Chief Investment Officer of Monograph.

Underwritten Public Offering

On* June17,* 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with TD Securities (USA) LLC and Guggenheim Securities, LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale in a public offering of 5,000,000 ordinary shares of the Company for $17.50 per share and pre-funded warrants to purchase 1,142,857 ordinary shares of the Company for $17.499 per pre-funded warrant. The offering closed on* June 20, 2024.The gross proceeds to the Company from this closing of the offering were $107.5 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company of $7.3 million. Each pre-funded warrant has an exercise price of $0.001 per ordinary share, subject to customary adjustments, is exercisable at any time and willnot* expire until exercised in full. The pre-funded warrants* maynot* be exercised if the aggregate number of ordinary shares beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation. In addition, the Underwriters were granted an option exercisable for30 days, to purchase up to 921,428 additional shares at the public offering price, less the underwriting discounts and commissions. On* July 18, 2024,*the Company completed the closing of the sale of 921,428 additional shares in the offering following the exercise in full of the Underwriters’ option to purchase additional shares, which resulted in additional gross proceeds to the Company of $16.1 million before deducting underwriting discounts and commissions and offering expenses paid by the Company of $1.0 million.

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Note15 – Share-Based Compensation

In* October 2010,the Board approved a share option plan (the"2010* Plan") for grants to Company employees, consultants, directors, and other service providers. Subsequently, in* March 2017,the Board adopted the2017* Equity Incentive Plan (the*"2017* Plan" and, together with the2010 Plan, the "Plans"), which was approved by the shareholders in* April 2017.The2017* Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance share awards, performance cash awards, and other forms of share awards to the Company's employees, directors and consultants.

The grant of options to Israeli employees under the Plans is subject to the terms stipulated by Section102 of the Israeli Income Tax Ordinance (“Section102”). The option grants are subject to the track chosen by the Company, either the “regular income” track or the “capital gains” track, as set out in Section102. The Company registered the Plans under the capital gains track, which offers more favorable tax rates to the employees. As a result, and pursuant to the terms of Section102, the Company isnot allowed to claim as an expense for tax purposes the amounts credited to the employees in respect of options granted to them under the Plans, including amounts recorded as salary benefits in the Company’s accounts, with the exception of the work-income benefit component, if any, determined on grant date. For non-employees and for non-Israeli employees, the Plans is subject to Section3(i) of the Israeli Income Tax Ordinance.

Employees are typically granted stock options and/or RSUs, upon commencement of employment. Also, eligible employees* mayreceive an annual grant of options, RSUs and/or PSUs. Non-employee members of the Board typically receive a grant of stock options upon initial appointment to the Board, and/or stock options annually. The term of any option granted under the Plans cannot exceed 10 years. Options shallnot* have an exercise price less than 100% of the fair market value of the Company’s ordinary shares on the grant date, and generally vest over a period ofthree years. If the individual possesses more than 10% of the combined voting power of all classes of equity of the Company, the exercise price shallnot be less than 110% of the fair market value of an ordinary share on the date of grant.

The Company’s RSU and option grants provide for accelerated or continued vesting in certain circumstances as defined in the plans and related grant agreements, including a termination in connection with a change in control. RSUs generally vest in a 33% increment upon thefirst anniversary of grant, and in either equal quarterly or annual amounts for thetwo years following theone-year anniversary of the grant date. Options generally vest in a 33% increment upon thefirst anniversary of the grant date, and in either equal quarterly or annual amounts for thetwo years following theone-year anniversary of the grant date. The Company also grants PSUs to certain employees. The PSU’s currently outstanding vest based on either the earlier of obtaining regulatory approval for the Company’s lead product candidate UGN-102 or the occurrence of a change in control, or for certain other awards, the achievement of thefirst commercial sale of UGN-102 in the United States following UGN-102's receipt of regulatory approval. In* June 2024,the Company amended certain RSU and PSU awards granted to the chief executive officer to defer vesting until the end of2025.* The Company accounted for the modification as a Type I probable-to-probable modification under ASC718. As the modification didnot result in any incremental fair value at the modification date, the Company continues to recognize the original grant-date fair value ratably over the original service period or expected performance period.

The expected volatility is based on a mix of the Company’s historical volatility, and the historical volatility of comparable companies with similar attributes to the Company, including industry, stage of life cycle, size and financial leverage. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the options granted. The expected term is the length of time until the expected dates of exercising the options and is estimated for employees using the simplified method due to insufficient specific historical information of employees’ exercise behavior, and for non-employees, and directors using the contractual term.

The maximum number of ordinary shares that was initially authorized for issuance under the2017 Plan was 1,400,000. On* January 1, 2018,the share reserve increased by 250,167 shares to 1,650,167 shares. On October 12, 2018,the Company increased the number of ordinary shares authorized for issuance under the2017* Plan by 1,900,000 shares to 3,550,167 shares. On* June 8, 2020,the Company’s shareholders approved an increase to the number of ordinary shares authorized for issuance under the2017* Plan by 400,000 shares to a total share reserve of 3,950,167 shares. On* June 7, 2021,the Company’s shareholders approved an increase to the number of ordinary shares authorized for issuance under the2017* Plan by 400,000 shares to a total share reserve of 4,350,167 shares. On* June 8, 2022,the Company's shareholders approved an increase to the number of ordinary shares authorized for issuance under the2017* Plan by 400,000 shares to a total share reserve of 4,750,167 shares. On* September 7, 2023,the Company's shareholders approved an increase to the number of ordinary shares authorized for issuance under the2017* Plan by 450,000 shares to a total share reserve of 5,200,167 shares. On* August 6, 2024the Company's shareholders approved an increase to the number of ordinary shares authorized for issuance under the2017* Plan by 800,000 shares to a total of 6,000,167 shares.

In* May 2019,the Company adopted the UroGen Pharma Ltd.2019 Inducement Plan (the “Inducement Plan”). Under the Inducement Plan, the Company is authorized to issue up to 900,000 ordinary shares pursuant to inducement awards. The only persons eligible to receive grants under the Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq Marketplace Rule5635*(c)(4) and the related guidance under Nasdaq IM5635-1, including individuals who werenot previously an employee or director of the Company or are following a bona fide period of non-employment, in each case as an inducement material to such individual’s agreement to enter into employment with the Company. In* December 2021,the Board approved an increase to the number of shares authorized for issuance under the Inducement Plan of 300,000 shares. In June 2024,*the Board approved an increase to the number of shares authorized for issuance under the Inducement Plan of 600,000 shares to a total of 1,800,000 shares.

As of* September 30, 2024*,3,961,302 ordinary shares are subject to outstanding awards under the Company's share-based compensation plans and 1,853,992 ordinary shares remain available for future awards.

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The following table illustrates the effect of share-based compensation on the condensed consolidated statements of operations (in thousands):

The total unrecognized compensation cost of options and RSUs at* September 30, 2024* is $15.1 million with a weighted average recognition period of 1.82 years.

Note16 – Income Taxes

UroGen Pharma Ltd. is taxed under Israeli tax laws. As of* September 30, 2024*, the Company continues to maintain a full valuation allowance against deferred tax assets for all jurisdictions. In evaluating the need for a valuation allowance, the Company considers all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, forecasts of future taxable income, and tax planning strategies. The Company has cumulative global pretax losses for the years ended2023, 2022 and2021, and for thenine months ended* September 30, 2024*. The Company will continue to assess the extent to which its deferred tax assets* may*be realized in the future and will adjust the valuation allowance as needed.

The Company has a liability for uncertain tax positions of$3.2 million as of* September 30, 2024*, for tax positions relating to transfer pricing between affiliated entities. The Company recognizes interest accrued and penalties related to uncertain tax positions as a component of income tax expense. As of* September 30, 2024*, the Company’s liability for uncertain tax positions includes$1.2 million of accrued interest and penalties.

The Company operates on a global basis and is subject to tax laws and regulations in the United States and Israel. The estimate of the Company’s tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations, expectations regarding the outcome of tax authority examinations, as well as the ultimate measurement of potential liabilities.

The uncertain tax positions are reviewed quarterly and adjusted as events occur that could affect potential liabilities for additional taxes, including lapsing of applicable statutes of limitations, correspondence with tax authorities, proposed assessments by tax authorities, identification of new issues, and issuance of new legislation or regulations. The Company believes that adequate amounts of tax have been provided in income tax expense for any adjustments that* mayresult from its uncertain tax positions. Based upon the information currently available, the Company doesnot* reasonably expect changes in its existing uncertain tax positions in the next12 months and has recorded the gross uncertain tax positions as a long-term liability.

Note17 – Related Parties

There wereno related party transactions for thenine months ended* September 30, 2024.See Note14* for discussion regarding an affiliated investor in the private placement transaction for thenine months ended* September 30, 2023**.*

Note18 – Commitments and Contingencies

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of* September 30, 2024and December 31, 2023.The Company doesnot* anticipate recognizing any significant losses relating to these arrangements.

The Company received from Teva Pharmaceuticals, Inc. (“Teva”), a Paragraph IV Certification Notice Letter dated* February 20, 2024,providing notification that Teva submitted an abbreviated new drug application ("ANDA") to the FDA seeking approval to manufacture, use or sell a generic version ofJelmyto*. In the Notice Letter, Teva alleges thattwo of the patents listed in the FDA Orange Book forJelmyto, U.S. Patent Numbers9,040,074 and9,950,069, each of which expires in* January 2031,are invalid, unenforceable, or willnot* be infringed by Teva’s manufacture, use, or sale of the generic product described in its ANDA submission. On* April 2, 2024,the Company filed a lawsuit in the U.S. District Court for the District of Delaware against Teva Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries, Ltd., alleging infringement of U.S. Patent Numbers9,040,074* and9,950,069 and seeking a permanent injunction preventing U.S. market entry of Teva’s generic product prior to the expiry of such patents. The Company stipulated to the dismissal of Teva Pharmaceutical Industries, Ltd. without prejudice and the action continues against the othertwo Teva entities. If the Company is unsuccessful in securing the requested court relief,Jelmyto * maybe subject to immediate competition from an FDA approved generic product after regulatory exclusivity forJelmyto* expires in* April 2027.*

Separation Agreement

On* June 26, 2024,the Company entered into a separation agreement with Jeff Bova, the Company’s former Chief Commercial Officer, which sets forth the terms of Mr. Bova's termination of employment with the Company, effective as of September 30, 2024.The arrangement includes cash severance, a pro rata portion of the target annual bonus for calendar year2024,* and partial acceleration of share-based compensation. The Company recognized $1.1 million within selling, general and administrative expenses during thenine months ended* September 30,*2024 in relation to this arrangement.

Leases

See Note11 for further discussion regarding lease commitments.

Note19 – Subsequent Events

On* October 7, 2024,the Company entered into a separation and consulting agreement with Don Kim, pursuant to which Mr. Kim resigned from his positions as the Company’s Chief Financial Officer, principal financial officer and principal accounting officer, effective October 8, 2024.The arrangement includes cash severance and target annual bonus for calendar year2024* of approximately $0.5 million, which will be recognized in thefourth quarter of2024, as well as a post-separation consulting arrangement. Mr. Kim's outstanding share-based awards will remain eligible for continued vesting during the post-separation consulting period.

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