Ultragenyx Pharmaceutical Inc. (RARE) FY 2025 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our Consolidated Financial Statements and related notes included elsewhere in this Annual Report.

This discussion and analysis generally covers our financial condition and results of operations for the year ended December 31, 2025, including year-over-year comparisons versus the year ended December 31, 2024. Our Annual Report on Form 10-K for the year ended December 31, 2024 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2023 in "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

Ultragenyx Pharmaceutical Inc., we or the Company, is a biopharmaceutical company committed to bringing novel products to patients for the treatment of serious rare and ultra-rare genetic diseases. We have built a diverse portfolio of approved therapies and product candidates aimed at addressing diseases with high unmet medical need and clear biology for treatment, for which there are typically no approved therapies treating the underlying disease. Our strategy is predicated upon time- and cost-efficient drug development, with the goal of delivering safe and effective therapies to patients with the utmost urgency.

Approved Therapies and Clinical Product Candidates

Our current approved therapies and clinical-stage pipeline consist of four product categories: biologics, small molecules, AAV gene therapy, and nucleic acid product candidates. We have four commercially approved products, consisting of Crysvita® (burosumab) for the treatment of X-linked hypophosphatemia, or XLH, and tumor-induced osteomalacia, or TIO, Mepsevii® (vestronidase alfa) for the treatment of mucopolysaccharidosis VII, or MPSVII or Sly Syndrome, Dojolvi® (triheptanoin) for the treatment of long-chain fatty acid oxidation disorders, or LC-FAOD, and Evkeeza® (evinacumab) for the treatment of homozygous familial hypercholesterolemia, or HoFH. Please see “Item 1. Business” above for a description of our approved products and our clinical stage pipeline products.

Financial Operations Overview

We are a biopharmaceutical company with a limited operating history. To date, we have invested substantially all of our efforts and financial resources in identifying, acquiring, and developing our products and product candidates, including conducting clinical studies and providing selling, general and administrative support for these operations. To date, we have funded our operations primarily from the sale of our equity securities, revenues from our commercial products, the sale of certain future royalties, and strategic collaboration arrangements.

We have incurred net losses in each year since inception. Our net losses were $575 million and $569 million for the years ended December 31, 2025 and 2024, respectively. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations.

For the year ended December 31, 2025, our total revenues increased to $673 million, compared to $560 million for the same period in 2024. The increase in revenue was driven by higher demand for our approved products.

As of December 31, 2025, we had $737 million in available cash, cash equivalents and marketable securities.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We periodically review our estimates as a result of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the financial statements prospectively from the date of the change in estimate. Our significant accounting policies are more fully described in “Note 2. Summary of Significant Accounting Policies” to our financial statements included elsewhere in this Annual Report.

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We define our critical accounting policies as those GAAP accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments are as follows:

Revenue Reserves

Provisions for returns and other adjustments are provided for in the period the related revenue is recorded, as estimated by management. These reserves are based on estimates of the amounts earned or claimed on the related sales and are reviewed periodically and adjusted as necessary. Our estimates of government mandated rebates, chargebacks, estimated product returns, and other deductions depend on the identification of key customer contract terms and conditions, negotiated pricing, as well as estimates of sales volumes to different classes of payors. If actual results vary, we may need to adjust these estimates, which could have a material effect on earnings in the period of adjustment.

Liabilities for Sales of Future Royalties

We sold our right to receive certain royalty payments from net sales of Crysvita in certain territories to RPI Finance Trust (an affiliate of Royalty Pharma) and OCM LS23 Holdings LP (an investment vehicle for Ontario Municipal Employees Retirement System, or OMERS. At inception, we recorded a liability based upon estimated future cash flows discounted at a market rate. We amortize this liability using the effective interest method over the estimated life of the applicable arrangement. To determine the amortization of the liability, we estimate the total amount of future royalty payments to be received by us and paid to RPI and OMERS. Any estimated royalty payments in excess of the initial liability are recorded as non-cash interest expense. Consequently, we estimate imputed interest on the unamortized portion of the liabilities and record as interest expense based on the estimated term of the arrangements.

We periodically assesses the expected royalty payments using a combination of historical results, internal projections and forecasts from external sources. To the extent such payments are greater or less than our initial estimates or the timing of such payments is materially different than our original estimates, we employ the prospective method to adjust the amortization of the liabilities and the effective interest rate.

There are a number of factors that could materially affect the amount and timing of royalty payments from KKC in the applicable territories, most of which are not within our control. Such factors include, but are not limited to, the success of KKC’s sales and promotion of Crysvita, changing standards of care, macroeconomic and inflationary pressures, the introduction of competing products, pricing for reimbursement in various territories, manufacturing or other delays, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of Crysvita, significant changes in foreign exchange rates as the royalty payments are made in U.S. dollars, or USD, while significant portions of the underlying sales of Crysvita are made in currencies other than USD, and other events or circumstances that could result in reduced royalty payments from sales of Crysvita, all of which would result in a reduction of non-cash royalty revenue and the non-cash interest expense over the life of the arrangement. Conversely, if sales of Crysvita in the relevant territories are higher than expected, the non-cash royalty revenue and the non-cash interest expense recorded by us would be greater over the term of the arrangements.

Income Taxes

We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We assess the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

We recognize benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. Our policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

As of December 31, 2025, our total gross deferred tax assets were $1,361 million. Due to our lack of earnings history and uncertainties surrounding our ability to generate future taxable income, the net deferred tax assets have been fully offset by a valuation allowance. The deferred tax assets were primarily comprised of federal and state tax net operating losses and tax credit carryforwards. Utilization of the net operating loss and tax credit carryforwards may be subject to an annual limitation due to

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historical or future ownership percentage change rules provided by the Internal Revenue Code of 1986, and similar state provisions. The annual limitation may result in the expiration of certain net operating loss and tax credit carryforwards before their utilization.

Results of Operations

Comparison of Years Ended December 31, 2025 and 2024

Revenues (dollars in millions)

Our product sales increased for the year ended December 31, 2025, compared to the same period in 2024. The increase was primarily due to increased demand for Crysvita in Latin America resulting from an increase in the number of patients on therapy, continued progress of the launch of Evkeeza in several markets in EMEA and in Japan, and the continued increase in demand for our other approved products.

Our Crysvita royalty revenue increased for the year ended December 31, 2025, compared to the same period in 2024. This increase in Crysvita revenue was primarily due to an increase in the number of patients on therapy.

Cost of Sales (dollars in millions)

Cost of sales increased for the year ended December 31, 2025, compared to the same period in 2024. The increase in cost of sales was primarily due to an increase in demand for Crysvita in Latin America, Evkeeza in EMEA and Japan, and the continued increase in demand for our other approved products.

Research and Development Expenses (dollars in millions)

Research and development expenses include internal and external costs incurred for research and development of our programs and program candidates and expenses related to certain technology that we acquire or license through business development transactions. These expenses consist primarily of clinical studies performed by contract research organizations, manufacturing of drug substance and drug product performed by contract manufacturing organizations and at our gene therapy manufacturing facility, materials and supplies, fees from collaborative and other arrangements including milestones, licenses and other fees, personnel costs including salaries, benefits and stock-based compensation, and overhead allocations consisting of various support and infrastructure costs.

Clinical programs include study conduct and manufacturing costs related to clinical program candidates. Translational research includes costs for preclinical study work and costs related to preclinical programs prior to IND filing. Upfront license, acquisition, and milestone fees include any significant expenses related to strategic licensing agreements. Approved products include costs for disease monitoring programs for post-marketing clinical studies, medical affairs activities to support scientific discovery efforts on existing programs, and regulatory costs for unapproved regions. Infrastructure costs include direct costs related to laboratory, IT, and equipment depreciation costs, and overhead allocations for human resources, IT, and other allocable costs.

We manage our research and development expenses by identifying the research and development activities we expect to be performed during a given period and then prioritizing efforts based on anticipated probability of successful technical development and regulatory approval, market potential, available human and capital resources, scientific data and other considerations. We regularly review our research and development activities based on unmet medical need and, as necessary, reallocate resources among our research and development portfolio that we believe will best support the long-term growth of our business. We allocate and analyze certain operational expenses by individual product candidates, specifically costs to conduct clinical studies, including

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expenses incurred with clinical research organizations, direct manufacturing costs, and salaries and benefits. Other operational expenses are not allocated and analyzed by individual product candidates. For instance, costs associated with Chemistry, Manufacturing and Controls, or CMC costs, are primarily purchases of materials for our internal gene therapy manufacturing activities that qualify as research and development expenses at the time of purchase but for which the allocation and consumption of such costs by a specific product candidate is not determined; accordingly, CMC costs for gene therapy programs are generally spread across multiple product candidates. Although we do track and allocate certain operational R&D costs at the individual product candidate level, as described above and as reflected in the table below, we do not fully track and allocate research and development expenses at the individual product candidate level.

The following table provides a breakout of our research and development expenses by individual product candidate under each major clinical program type and other research and development categories:

Total research and development expenses increased for the year ended December 31, 2025 compared to the same period in 2024. The change in research and development expenses was primarily due to:

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for gene therapy programs, an increase primarily due to an increase in UX111 manufacturing costs in preparation for commercial launch, partially offset by the timing of the DTX401 and DTX301 manufacturing runs for which costs were incurred during the year ended December 31, 2024, which did not recur for the year ended December 31, 2025;

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for biologic and nucleic acid programs, an increase primarily due to manufacturing costs for UX143 combined with the continued clinical conduct of the UX143 and GTX102 programs and associated clinical development and manufacturing expenses;

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for translational research, a decrease primarily due to decreases in manufacturing expense for IND-stage projects;

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for upfront license, acquisition, and milestone fees, costs for achievement of a clinical enrollment milestone on the GTX-102 program during the year ended December 31, 2024 that did not recur during the year ended December 31, 2025;

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for other research and development expenses, a decrease primarily due to decreased staffing and cost efficiencies to support internal manufacturing, and administrative and general support.

We expect a decrease in research and development expenses in the near term. This expected decline is primarily driven by the expected completion of several Phase 3 clinical programs and a strategic restructuring of our workforce and expenditures to better match our current pipeline requirements.

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Selling, General and Administrative Expenses (dollars in millions)

Selling, general and administrative expenses increased for the year ended December 31, 2025, compared to the same period in 2024. The increase was primarily due to higher employee compensation costs and increased marketing expenses as we continue to plan for our future product launches.

We expect annual selling, general and administrative expenses to increase in the future as we plan to increase our selling expenses in preparation for launches of additional products, while continuing to support our existing approved products and multiple clinical-stage product candidates.

Interest Income (dollars in millions)

Interest income decreased for the year ended December 31, 2025 compared to the same period in 2024, primarily due to lower marketable securities balances.

Non-cash Interest Expense on Liabilities for Sales of Future Royalties (dollars in millions)

The non-cash interest expense on liabilities for sales of future royalties decreased for the year ended December 31, 2025, compared to the same period in 2024, primarily due to a change in estimate related to the timing of future royalty payments from our collaboration partner, KKC. The decrease was partially offset by interest expense from the sale of future royalties to OMERS in November 2025. To the extent the royalty payments are greater or less than our initial estimates or the timing of such payments is materially different than our original estimates, we prospectively adjust the effective interest rate.

Liquidity and Capital Resources

To date, we have funded our operations primarily from the sale of our equity securities, revenue from our commercial products, the sale of certain future royalties, and strategic collaboration arrangements.

As of December 31, 2025, we had $737 million in available cash, cash equivalents, and marketable securities. We believe that our existing capital resources will be sufficient to fund our projected operating requirements for at least the next 12 months. Our cash, cash equivalents, and marketable securities are held in a variety of deposit accounts, interest-bearing accounts, corporate bond securities, commercial paper, U.S. government securities, asset-backed securities, and money market funds. Cash in excess of immediate requirements is invested with a view toward liquidity and capital preservation, and we seek to minimize the potential effects of concentration and credit risk.

In November 2025, we received net proceeds of $392 million from OMERS for the sale of a percentage of our future royalties on Crysvita in the U.S. and Canada.

In June 2024, we completed an underwritten public offering for the sale of shares of common stock and pre-funded warrants. The total proceeds received from the offering were $381 million, net of underwriting discounts and commissions. As of December 31, 2025, no pre-funded warrants had been exercised.

In February 2024, we entered into a Sales Agreement with Cowen and Company, LLC, or Cowen, pursuant to which the Company may offer and sell shares of the Company’s common stock having an aggregate offering proceeds up to $350 million, from time to time, in ATM offerings through Cowen. The Company sold 2.2 million shares under the ATM for net proceeds of $80 million during the year ended December 31, 2025. No shares were sold under the ATM during the year ended December 31, 2024.

The following table summarizes our cash flows for the periods indicated (in millions):

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Cash Used in Operating Activities

Our primary use of cash is to fund operating expenses, which consist primarily of research and development and commercial expenditures. Due to our significant research and development expenditures, we have generated significant operating losses since our inception. Cash used to fund operating expenses is affected by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

Cash used in operating activities for the year ended December 31, 2025 was $466 million and primarily reflected a net loss of $575 million, partially offset by non-cash items of $132 million, net, which consisted primarily of non-cash royalty revenues, non-cash interest expense related to the sale of future royalties to RPI and OMERS, stock-based compensation, amortization of discounts on marketable securities, and depreciation and amortization. The change in operating assets and liabilities also reflected a net use of cash of $23 million, primarily due to an increase in accounts receivable due to timing of sales and collections, combined with an increase in prepaid expense and other assets, primarily prepaid manufacturing, partially offset by an increase in accounts payable, accrued, and other liabilities, primarily related to an increase in accrued manufacturing in preparation for development and commercial launches.

Cash used in operating activities for the year ended December 31, 2024 was $414 million and primarily reflected a net loss of $569 million, partially offset by non-cash items of $141 million, net, which consisted primarily of non-cash royalty revenues, non-cash interest expense related to the sale of future royalties to RPI and OMERS, stock-based compensation, amortization of discounts on marketable securities, and depreciation and amortization. The change in operating assets and liabilities also reflected a net increase of cash of $14 million, primarily due to an increase in accounts payable, accrued, and other liabilities, related to an increase in accrued collaboration and higher revenue reserves from increased sales of our approved products, combined with an increase in inventory, partially offset by a decrease in prepaid expenses and other assets.

Cash Provided by (Used in) Investing Activities

Cash provided by investing activities for the year ended December 31, 2025 was $236 million and was primarily related to proceeds of $258 million from net activities in marketable securities, partially offset by $15 million in payments for intangible assets related to milestones on our commercial products.

Cash used in investing activities for the year ended December 31, 2024 was $18 million and was primarily related to $13 million in payments for intangible assets related to milestones on our commercial products, partially offset by $4 million from net activities in marketable securities.

Cash Provided by Financing Activities

Cash provided by financing activities for the year ended December 31, 2025 was $478 million and was primarily comprised of $392 million in net proceeds from the additional sale of future royalties to OMERS in November 2025, combined with $80 million in net proceeds from our ATM offering.

Cash provided by financing activities for the year ended December 31, 2024 was $399 million and was primarily comprised of $381 million in net proceeds from the sale of common stock in our June 2024 underwritten public offering and $11 million in proceeds from the issuance of common stock from exercise of equity plan awards, net.

Funding Requirements

We anticipate that, excluding non-recurring items, we will continue to generate annual losses in the near term as we continue the development of, and seek regulatory approvals for, our product candidates, and continue with commercialization of approved products. We may require additional capital to fund our operations, to complete our ongoing and planned clinical studies, to commercialize our products, to continue investing in early-stage research capabilities to promote our pipeline growth, to continue to acquire or invest in businesses or products that complement or expand our business, including future milestone payments

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thereunder, and to further develop our general infrastructure and such funding may not be available to us on acceptable terms or at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce the scope of, or terminate one or more of our clinical studies, research and development programs, future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Our future funding requirements will depend on many factors, including the following:

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the scope, rate of progress, results and cost of our clinical studies, nonclinical testing, and other related activities;

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the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates, products that we have begun to commercialize, and any products that we may develop in the future;

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the cost of operating our GMP gene therapy manufacturing facility;

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the number and characteristics of product candidates that we pursue;

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the cost, timing, and outcomes of regulatory interactions and approvals;

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the cost and timing of establishing our commercial infrastructure, and distribution capabilities;

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the impact of macroeconomic conditions, including general economic slowdowns, changing interest rates and inflation on our business operations and operating results; and

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the terms and timing of any collaborative, licensing, marketing, distribution, acquisition and other arrangements that we may establish, including any required upfront milestone, royalty, reimbursements or other payments thereunder.

We expect to satisfy future cash needs through existing capital balances, revenue from our commercial products, and a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, sales of future royalties and other marketing and distribution arrangements. Please see “Risk Factors—Risks Related to Our Financial Condition and Capital Requirements.”

Contractual Obligations and Commitments

Material contractual obligations arising in the normal course of business primarily consist of operating leases and manufacturing and service contract obligations. See "Note 9. Leases" to the Consolidated Financial Statements for amounts outstanding for operating leases as of December 31, 2025.

Manufacturing and service contract obligations primarily relate to manufacturing of product for our clinical stage pipeline, the majority of which are due in the next 12 months.

Subsequent to December 31, 2025, we initiated a process to cancel certain arrangements with CMO’s related to the manufacturing of UX143. As a result, we expect that certain contract commitments will be cancelled and that the terminations will accelerate the net payments of approximately $40 million in accordance with the agreements. Our estimates are based on information available as of the approval date of the restructuring plan and are subject to change as the plan is implemented.

We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities. The terms of certain of our licenses, royalties, development and collaboration agreements, as well as other research and development activities, require us to pay potential future milestone payments based on product development success. The amount and timing of such obligations are unknown or uncertain. These potential obligations are further described in "Note 8. License and Research Agreements" to the Consolidated Financial Statements.

Recent Accounting Pronouncements

See "Note 2. Summary of Significant Accounting Policies" to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Recently Enacted Tax Legislation

The One Big Beautiful Bill Act, or OBBBA, was enacted in the U.S. in July 2025. The OBBBA legislation provides for the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, revisions to the international tax framework and the reinstatement of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented in future periods. We maintain a full valuation allowance against our U.S. federal and state deferred tax assets and does not anticipate achieving profitability to the extent needed to release the

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valuation allowance in the near term. As such, we have determined that the OBBBA will not have a material impact on our income tax provision in the near term.