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)
Year Ended December 31, Dollar Percent
Product sales:
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)
Year Ended December 31, Dollar Percent
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:
Year Ended December 31, Dollar Percent
Clinical programs:
Gene therapy programs
Biologic and nucleic acid programs
Total biologic and nucleic acid programs 219 140 79 56%
Translational research 39 46 (7 ) -15%
Upfront license, acquisition, and milestone fees — 30 (30 ) -100%
Stock-based compensation 84 87 (3 ) -3%
Other research and development 72 85 (13 ) -15%
Total research and development expenses $ 750 $ 698 $ 52 7%
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)
Year Ended December 31, Dollar Percent
Selling, general and administrative $ 349 $ 321 $ 28 9%
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)
Year Ended December 31, Dollar Percent
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)
Year Ended December 31, Dollar Percent
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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Year Ended December 31,
Cash used in operating activities $ (466 ) $ (414 )
Cash provided by (used in) investing activities 236 (18 )
Cash provided by financing activities 478 399
Effect of exchange rate changes on cash 4 (2 )
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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to interest earned on our cash equivalents and marketable securities. The primary objective of our investment activities is to preserve our capital to fund operations. A secondary objective is to maximize income from our investments without assuming significant risk. Our investment policy provides for investments in low-risk, investment-grade debt instruments. As of December 31, 2025, we had cash, cash equivalents, and marketable securities totaling $737 million, which included bank deposits, money market funds, U.S. government treasury and agency securities, and investment-grade corporate bond securities which are subject to default, changes in credit rating, and changes in market value. The securities in our investment portfolio are classified as available for sale and are subject to interest rate risk and will decrease in value if market interest rates increase. A hypothetical 100 basis point change in interest rates during any of the periods presented would not have had a material impact on the fair market value of our cash equivalents and marketable securities as of December 31, 2025. To date, we have not experienced a loss of principal on any of our investments and as of December 31, 2025, we did not record any allowance for credit loss from our investments.
Foreign Currency Risk
We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. dollars. Due to the uncertain timing of expected payments in foreign currencies, we do not utilize any forward exchange contracts. All foreign transactions settle on the applicable spot exchange basis at the time such payments are made. Volatile market conditions arising from the macroeconomic environment (including financial conditions affecting the banking system and financial institutions), inflation, or global political instability may result in significant changes in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our revenue and operating income as expressed in U.S. dollars. An adverse movement in foreign exchange rates could have a material effect on payments made to foreign suppliers and payments related to license agreements. For the year ended December 31, 2025, a majority of our revenue, expenses, and capital expenditures were denominated in U.S. dollars. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our Consolidated Financial Statements.
Item 8. Financial Statements and Supplementary Data
Our financial statements are annexed to this Annual Report beginning on page F-1 and are incorporated by reference into this Item 8.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of our “disclosure controls and procedures” as of the end of the period covered by this Annual Report, pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act. In connection with that evaluation, our Principal Executive Officer and our Principal Financial Officer concluded that our disclosure controls and procedures were effective and designed to provide reasonable assurance that the information required to be disclosed is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms as of December 31, 2025. For the purpose of this review, disclosure controls and procedures means controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit is accumulated and communicated to management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our management used the Committee of Sponsoring Organizations of the Treadway Commission Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), or the COSO framework, to evaluate the effectiveness of internal control over financial reporting. Management believes that the COSO framework is a suitable framework for its evaluation of financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of our internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting.
Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, and has concluded that as of such date, our internal control over financial reporting was effective.
Our independent registered public accounting firm, Ernst & Young LLP, has audited the financial statements included in this Annual Report and has issued a report on the effectiveness of our internal control over financial reporting. The report of Ernst & Young LLP is included below.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our fourth quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
To the Stockholders' and the Board of Directors of Ultragenyx Pharmaceutical Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Ultragenyx Pharmaceutical Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Ultragenyx Pharmaceutical Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 18, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Mateo, California
February 18, 2026
Item 9B. Other Information
During the three months ended December 31, 2025, none of our directors and officers adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
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Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Except as set forth below, the information required by this Item is incorporated herein by reference to information in the proxy statement for our 2026 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates, or the “2026 Proxy Statement”, including under the headings “Nominees and Incumbent Directors,” “Executive Officers,” ““Board of Directors and Committees,” “Corporate Governance” and, as applicable, “Delinquent Section 16(a) Beneficial Ownership Reports.”
We have adopted a Global Code of Conduct that applies to all of our directors, officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions. Our Global Code of Conduct is posted on our website located at https://ir.ultragenyx.com/ under “Corporate Governance”. We intend to disclose future amendments to certain provisions of the Global Code of Conduct, and waivers of the Global Code of Conduct granted to executive officers and directors, on the website within four business days following the date of the amendment or waiver.
Item 11. Executive Compensation
The information required by this Item is incorporated herein by reference to information in the 2026 Proxy Statement, including under the headings “Executive Compensation,” “Director Compensation,” and “Board of Directors and Committees.”
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated herein by reference to information in the 2026 Proxy Statement, including under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated herein by reference to information in the 2026 Proxy Statement, including under the headings “Certain Relationships and Related-Person Transactions,” “Corporate Governance,” and “Board of Directors and Committees.”
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated herein by reference to information in the 2026 Proxy Statement, including under the heading “Ratification of the Selection of Independent Registered Public Accounting Firm.”
79
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report.
(1) Consolidated Financial Statements
Consolidated Financial Statements—See Index to Consolidated Financial Statements at page F-1 of this Annual Report.
(2) Consolidated Financial Statement Schedules
Consolidated Financial Statement schedules have been omitted in this Annual Report because they are not applicable, not required under the instructions, or the information requested is set forth in the Consolidated Financial Statements or related notes thereto.
(b) Exhibits
Exhibit Incorporated by Reference Filed
Number Exhibit Description Form Date Number Herewith
3.1 Amended and Restated Certificate of Incorporation 8-K 2/5/2014 3.1
80
81
10.43# First Amendment to Employment Inducement Plan S-8 6/8/2023 4.7
10.44# Second Amendment to Employment Inducement Plan S-8 7/12/2024 4.7
82
83
84
19.1 Ultragenyx Insider Trading Policy X
21.1 Subsidiaries of Ultragenyx Pharmaceutical Inc. X
23.1 Consent of Independent Registered Public Accounting Firm X
24.1 Power of Attorney (included on the signature page of this report)
97.1 Ultragenyx Pharmaceutical Inc. Clawback Policy 2/21/2024 97.1
101.INS XBRL Instance Document, formatted in Inline XBRL X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
* Certain identified information has been omitted by means of marking such information with asterisks in reliance on Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.
# Indicates management contract or compensatory plan.
85
§ The certification attached as Exhibit 32.1 that accompanies this Annual Report is not deemed filed with the SEC and is not to be incorporated by reference into any filing of Ultragenyx Pharmaceutical Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report, irrespective of any general incorporation language contained in such filing.
Item 16. Form 10-K Summary
None.
86
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ULTRAGENYX PHARMACEUTICAL Inc.
By: /s/ Emil D. Kakkis
Emil D. Kakkis, M.D., Ph.D.
President and Chief Executive Officer(Principal Executive Officer)
Date: February 18, 2026
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Emil D. Kakkis, M.D., Ph.D. and Howard Horn, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and any of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Daniel G. Welch Daniel G. Welch Chairman of the Board February 18, 2026
/s/ Deborah DunsireDeborah Dunsire, M.D. Director February 18, 2026
/s/ Matthew K. Fust Matthew K. Fust Director February 18, 2026
/s/ Michael Narachi Michael Narachi Director February 18, 2026
/s/ Amrit Ray Director February 18, 2026
Amrit Ray, M.D.
/s/ Corsee D. Sanders Director February 18, 2026
Corsee D. Sanders, Ph.D.
/s/ Shehnaaz Suliman Director February 18, 2026
Shehnaaz Suliman, M.D.
87
Ultragenyx Pharmaceutical Inc.
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) F-2
Consolidated Financial Statements:
Consolidated Balance Sheets F-4
Consolidated Statements of Operations F-5
Consolidated Statements of Comprehensive Loss F-5
Consolidated Statements of Stockholders’ Equity (Deficit) F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-9
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Ultragenyx Pharmaceutical Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Ultragenyx Pharmaceutical Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
Liabilities for sales of future royalties
F-2
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2012.
San Mateo, California
February 18, 2026
F-3
ULTRAGENYX PHARMACEUTICAL INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
December 31,
ASSETS
Current assets:
Cash and cash equivalents $ 421 $ 174
Accounts receivable, net 158 122
Prepaid expenses and other assets 61 40
Property, plant, and equipment, net 244 266
Marketable securities 57 135
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 31 $ 39
Lease liabilities 12 10
Liabilities for sales of future royalties 69 50
Other liabilities 7 4
Total current liabilities 384 344
Lease liabilities 24 30
Deferred tax liabilities 30 30
Liabilities for sales of future royalties 1,147 820
Other liabilities 20 17
Commitments and contingencies (Note 15)
Noncontrolling interest 7 7
Stockholders’ equity (deficit):
Treasury stock, at cost, 0.2 shares in 2025 and 0.1 shares in 2024 (8 ) (4 )
Deferred compensation obligation 8 4
Accumulated other comprehensive income (loss) 1 (1 )
Total stockholders’ equity (deficit) (80 ) 255
See accompanying notes.
F-4
ULTRAGENYX PHARMACEUTICAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Year Ended December 31,
Revenues:
Collaboration and license — — 71
Operating expenses:
Selling, general and administrative 349 321 310
Other income (expense) 1 (5 ) (1 )
(Provision for) benefit from income taxes (4 ) (2 ) 2
Net loss per share, basic and diluted $ (5.83 ) $ (6.29 ) $ (8.25 )
Shares used in computing net loss per share, basic and diluted 98.6 90.5 73.5
See accompanying notes.
ULTRAGENYX PHARMACEUTICAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
Year Ended December 31,
Other comprehensive income (loss):
Foreign currency translation adjustments 3 (2 ) —
Change in unrealized gain (loss) on available-for-sale securities (1 ) — 8
Other comprehensive income (loss): 2 (2 ) 8
Total comprehensive loss $ (573 ) $ (571 ) $ (599 )
See accompanying notes.
F-5
ULTRAGENYX PHARMACEUTICAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
Shares Capital Income (Loss) Deficit Stock Obligation Equity (Deficit)
Stock-based compensation — 135 — — — — 135
Issuance of common stock under equity plan awards, net of tax 1.1 8 — — — — 8
Other comprehensive income — — 8 — — — 8
Net loss — — — (607 ) — — (607 )
Stock-based compensation — 159 — — — — 159
Issuance of common stock under equity plan awards, net of tax 1.4 11 — — — — 11
Deferred compensation — — — — (4 ) 4 —
Other comprehensive loss — — (2 ) — — — (2 )
Net loss — — — (569 ) — — (569 )
Stock-based compensation — 152 — — — — 152
Issuance of common stock under equity plan awards, net of tax 1.9 6 — — — — 6
Deferred compensation — — — — (4 ) 4 —
Other comprehensive income — — 2 — — 2
Net loss — — — (575 ) — — (575 )
See accompanying notes.
F-6
ULTRAGENYX PHARMACEUTICAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
Operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on marketable securities, net (4 ) (13 ) (13 )
Depreciation and amortization 35 36 26
Non-cash royalty revenue (112 ) (101 ) (69 )
Non-cash interest expense on liabilities for sales of future royalties 62 63 66
Other (2 ) (2 ) 3
Changes in operating assets and liabilities:
Accounts receivable (31 ) (34 ) (23 )
Inventory (6 ) (11 ) (7 )
Prepaid expenses and other assets (10 ) 12 15
Accounts payable, accrued, and other liabilities 24 47 (1 )
Net cash used in operating activities (466 ) (414 ) (475 )
Investing activities:
Purchase of property, plant, and equipment (6 ) (7 ) (44 )
Purchase of marketable securities (186 ) (409 ) (526 )
Proceeds from sale of marketable securities — 3 51
Proceeds from maturities of marketable securities 444 410 696
Payments for intangible asset (15 ) (13 ) (3 )
Other (1 ) (2 ) (6 )
Net cash provided by (used in) investing activities 236 (18 ) 168
Financing activities:
Proceeds from the sale of future royalties, net 392 — —
Proceeds from the issuance of common stock under equity plans, net 6 11 8
Proceeds from issuance of equity from noncontrolling interest — 7 —
Other — — 1
Net cash provided by financing activities 478 399 388
Effect of exchange rate changes on cash 4 (2 ) —
Cash, cash equivalents, and restricted cash at beginning of year 184 219 138
Cash, cash equivalents, and restricted cash at end of year $ 436 $ 184 $ 219
See accompanying notes.
F-7
ULTRAGENYX PHARMACEUTICAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
Supplemental disclosures of non-cash information:
See accompanying notes.
F-8
ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements
1.
Organization and Basis of Presentation
Ultragenyx Pharmaceutical Inc., or the Company, is a biopharmaceutical company incorporated in Delaware.
The Company is focused on the identification, acquisition, development, and commercialization of novel products for the treatment of serious rare and ultra-rare genetic diseases. The Company operates as one reportable segment and has four commercially approved products.
Crysvita® (burosumab) is approved in the United States, or U.S., the European Union, or EU, and certain other regions for the treatment of X-linked hypophosphatemia, or XLH, in adult and pediatric patients one year of age and older. Crysvita is also approved in the U.S. and certain other regions for the treatment of fibroblast growth factor 23, or FGF23-related hypophosphatemia in tumor-induced osteomalacia, or TIO, associated with phosphaturic mesenchymal tumors that cannot be curatively resected or localized in adults and pediatric patients 2 years of age and older.
Mepsevii® (vestronidase alfa) is approved in the U.S., the EU and certain other regions, as the first medicine for the treatment of children and adults with mucopolysaccharidosis VII, or MPS VII, also known as Sly syndrome.
Dojolvi® (triheptanoin) is approved in the U.S. and certain other regions for the treatment of pediatric and adult patients severely affected by long-chain fatty acid oxidation disorders, or LC-FAOD.
Evkeeza® (evinacumab) is approved in the U.S. and the European Economic Area, or EEA, and Japan for the treatment of homozygous familial hypercholesterolemia, or HoFH. The Company has exclusive rights to commercialize Evkeeza® (evinacumab) outside of the U.S.
In addition to the approved products, the Company has the following ongoing clinical development programs:
•
UX111 (formerly ABO-102) is an AAV9 gene therapy product candidate for the treatment of patients with Sanfilippo syndrome type A, or MPS IIIA, a rare lysosomal storage disease;
•
DTX401 is an adeno-associated virus 8, or AAV8, gene therapy product candidate for the treatment of patients with glycogen storage disease type Ia, or GSDIa;
•
GTX-102 is an antisense oligonucleotide, or ASO for the treatment of Angelman syndrome, a debilitating and rare neurogenetic disorder caused by loss-of-function of the maternally inherited allele of the UBE3A gene;
•
DTX301 is an AAV8 gene therapy product candidate in development for the treatment of patients with ornithine transcarbamylase, or OTC deficiency, the most common urea cycle disorder;
•
UX701 is an adeno-associated virus 9, or AAV9, gene therapy designed to deliver stable expression of a truncated version of the ATP7B copper transporter following a single intravenous infusion to improve copper distribution and excretion from the body and reverse pathological findings of Wilson liver disease; and
•
UX143 which is subject to the Company’s collaboration agreement with Mereo BioPharma 3, or Mereo, is a fully human monoclonal antibody that inhibits sclerostin, a protein that acts on a key bone-signaling pathway and inhibits the activity of bone-forming cells for the treatment of patients with Osteogenesis Imperfecta, or OI.
The Company has sustained operating losses and expects such annual losses to continue in the near term. The Company’s ultimate success depends on the outcome of its research and development and commercialization activities. Through December 31, 2025, the Company has relied primarily on the sale of equity securities, revenues from commercial products, the sale of certain future royalties, and strategic collaboration arrangements to finance its operations. The Company may need to raise additional capital to fully implement its business plans through the issuance of equity, borrowings, or strategic alliances with partner companies. However, if such financing is not available at adequate levels, the Company would need to reevaluate its operating plans.
2.
Summary of Significant Accounting Policies
Basis of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. The Company consolidates any variable interest entity, or VIE, for which it is the primary beneficiary. Certain reclassifications have been made to prior periods in the consolidated financial statements and accompanying notes to conform with the current presentation.
F-9
ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Segment Reporting
The Company operates as one reportable segment relating to the research, development and commercialization of its products. The segment derives its current revenues from its four commercially approved products.
The Company’s Chief Operating Decision Maker, or CODM, is the Company's Chief Executive Officer. The CODM manages the Company’s operations on an integrated basis for the purpose of allocating resources. When evaluating the Company’s financial performance, the CODM regularly reviews total revenues and total expenses and makes decisions using this information on a consolidated basis.
Use of Estimates
The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities and the reported amounts of expenses in the Consolidated Financial Statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to clinical trial accruals, fair value of assets and liabilities, income taxes, stock-based compensation, revenue recognition, and the liabilities for sales of future royalties. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market accounts.
Restricted cash primarily consists of money market accounts used as collateral for the Company’s obligations under its facility leases and to guarantee the fulfillment of certain sales orders to certain government-sponsored customers.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in millions):
December 31,
Restricted cash included in other current assets 13 7 2
Restricted cash included in other non-current assets 2 3 3
Marketable Securities
All marketable securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such designation as of each balance sheet date. Investments with a maturity of one year or less from the balance sheet date are reported as current marketable securities and investments with a maturity of greater than one year from the balance sheet date are reported as non-current marketable securities. Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive loss. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in other expense. The cost of securities sold is based on the specific-identification method. Interest on investments is included in interest income.
Equity Investments
The Company records investments in equity securities, other than equity method investments, at fair market value, using market quotes when readily determinable. Equity securities with no readily determinable fair values are recorded using the measurement alternative of cost adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer less impairment, if any. Investments in equity securities are recorded in other assets on the Company's Consolidated Balance Sheets. Unrealized gains and losses are reported in change in fair value of equity investments on the Company’s Consolidated Statements of Operations. The Company regularly reviews its non-marketable equity securities for indicators of impairment.
F-10
ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Concentration of Credit Risk, Credit Losses, and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, and investments. The Company’s cash, cash equivalents, and investments are held by financial institutions that management believes are of high credit quality. The Company’s investment policy limits investments to fixed income securities denominated and payable in U.S. dollars such as U.S. government obligations, money market instruments and funds, corporate bonds, commercial paper, and asset-backed securities and places restrictions on maturities and concentrations by type and issuer. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents and its accounts are monitored by management to mitigate risk. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents, corporate issuers, and other financial instruments, to the extent recorded in the Consolidated Balance Sheets.
The Company is exposed to credit losses primarily through receivables from customers and collaborators and through its available-for-sale debt securities. For trade receivables and other financial instruments, the Company uses a forward-looking expected loss model that recognizes a current period charge for losses that are expected to be incurred over the life of the financial instrument.
The Company’s expected loss allowance methodology for the receivables is developed using historical collection experience, current and future economic market conditions, a review of the current aging status and financial condition of the entities. Specific allowance amounts are established to record the appropriate allowance for customers that have a higher probability of default. Balances are written off when determined to be uncollectible. The Company’s expected loss allowance methodology for the debt securities is developed by reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition. There were no material credit losses recorded for receivables and available-for-sale debt securities which were attributable to credit risk for the years ended December 31, 2025 and 2024.
For available-for-sale debt securities with unrealized losses, the losses are recognized as allowances rather than as reductions in the amortized cost of the securities. There was no allowance for losses on available-for-sale debt securities which were attributable to credit risk for the years ended December 31, 2025 and 2024.
The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.
Inventory
The Company values inventory at the lower of cost and net realizable value and determines the cost of inventory using the average cost method. The Company expenses costs associated with the manufacture of product candidates prior to regulatory approval. Inventories consist of currently approved products. The Company periodically reviews its inventories for excess amounts or obsolescence and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value. Management determines excess inventory based on expected future demand. Estimates related to future demand are sensitive to significant inputs and assumptions such as acceptance by patients and physicians and the availability of formulary coverage and adequate reimbursement from private third-party payers for the product.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets. Depreciation and amortization begins when the asset is placed in service. Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready to be placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation or amortization are removed from the balance sheet and the resulting gain or loss, if any, is reflected in operations. See “Note 4. Balance Sheet Components” for further disclosure on the useful lives of property, plant, and equipment.
F-11
ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Intangible Assets
Finite-lived intangibles consist of contractual payments made in conjunction with license agreements and collaboration agreements. The contractual payments are recorded as intangible assets and are amortized over their estimated useful lives. The Company reviews its definite-lived intangible assets when events or circumstances may indicate that the carrying value of these assets is not recoverable and exceeds their fair value. The Company measures fair value based on the estimated future undiscounted cash flows associated with these assets in addition to other assumptions and projections that the Company deems to be reasonable and supportable.
Indefinite-lived intangibles consist of acquired in-process research and development, or IPR&D. IPR&D assets represent capitalized incomplete research projects that the Company acquired through business combinations. Such assets are initially measured at their acquisition date fair values and are tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When development of the project is complete, which generally occurs when regulatory approval to market a product is obtained, the associated assets will be deemed finite-lived and will be amortized over a period that best reflects the economic benefits provided by these assets.
If it is determined that an intangible asset becomes impaired, the carrying value is written down to its fair value with the related impairment charge recognized in Consolidated Statements of Operations in the period in which the impairment occurs. The Company has not recorded any impairments of intangible assets to date.
Goodwill
Goodwill represents the excess of purchase price over fair value of net assets acquired in a business combination and is not amortized. Goodwill is subject to impairment testing at least annually during the fourth quarter or when a triggering event occurs that could indicate a potential impairment. If it is determined that the goodwill becomes impaired, the carrying value is written down to its fair value with the related impairment charge recognized in Consolidated Statements of Operations in the period in which the impairment occurs. The Company has not recorded any impairments of goodwill.
Impairment of Long-Lived Assets
The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. The Company has not recorded material impairment of any long-lived assets.
Accruals of Research and Development Costs
The Company records accruals for estimated costs of research, preclinical and clinical studies and manufacturing development. These costs are a significant component of the Company’s research and development expenses. A substantial portion of the Company’s ongoing research and development activities are conducted by third-party service providers, including contract research organizations. The Company accrues the costs incurred under its agreements with these third parties based on actual work completed in accordance with agreements established with these third parties. The Company determines the actual costs through obtaining information from external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services.
Liabilities for Sales of Future Royalties
The Company sold the right to receive certain royalty payments from net sales of Crysvita in certain territories to RPI Finance Trust, or RPI, an affiliate of Royalty Pharma, and to OCM LS23 Holdings LP, an investment vehicle for Ontario Municipal Employees Retirement System, or OMERS, as further described in “Note 10. Liabilities for Sales of Future Royalties.” At inception, the Company recorded a liability based upon estimated future cash flows discounted at a market rate. The liability is amortized using the effective interest method over the estimated life of the applicable arrangement. To determine the amortization of the liability, the Company estimates the total amount of future royalty payments to be received by the Company and paid to RPI and OMERS. Any estimated royalty payments in excess of the initial liability are recorded as non-cash interest expense. Consequently, the Company estimates imputed interest on the unamortized portion of the liabilities and records interest expense based on the estimated term of the arrangements.
F-12
ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
The Company 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 the Company’s initial estimates or the timing of such payments is materially different than its original estimates, the Company employs the prospective method to adjust the amortization of the liabilities and the effective interest rate.
Revenue Recognition
Product Sales
The Company sells its approved products through a limited number of distributors. Under Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers, revenue from product sales is recognized at the point in time when control is transferred to these distributors. The Company also recognizes revenue from sales of certain products on a “named patient” basis, which are allowed in certain countries prior to the commercial approval of the product. Prior to recognizing revenue, the Company makes estimates of the transaction price, including any variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. Product sales are recorded net of estimated government-mandated rebates and chargebacks, estimated product returns, and other deductions.
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 to be claimed on the related sales and are reviewed periodically and adjusted as necessary. The Company’s estimates of government mandated rebates, chargebacks, estimated product returns, and other deductions depend on the identification of key customer contract terms and conditions, as well as estimates of sales volumes to different classes of payors. If actual results vary, the Company may need to adjust these estimates, which could have a material effect on earnings in the period of the adjustment.
Collaboration, License, and Royalty Revenue
The Company has certain license and collaboration agreements that are within the scope of ASC 808, Collaborative Agreements, which provides guidance on the presentation and disclosure of collaborative arrangements. Generally, the classification of the transactions under the collaborative arrangements is determined based on the nature of contractual terms of the arrangement, along with the nature of the operations of the participants. The Company records its share of collaboration revenue, net of transfer pricing related to net sales in the period in which such sales occur, if the Company is considered as an agent in the arrangement. The Company is considered an agent when the collaboration partner controls the product before transfer to the customers and has the ability to direct the use of and obtain substantially all of the remaining benefits from the product. Funding received related to research and development services and commercialization costs is generally classified as a reduction of research and development expenses and selling, general and administrative expenses, respectively, in the Consolidated Statements of Operations, because the provision of such services for collaborative partners are not considered to be part of the Company’s ongoing major or central operations.
The Company utilizes certain information from its collaboration partners to record collaboration revenue, including revenue from the sale of the product, associated reserves on revenue, and costs incurred for development and sales activities. For the periods covered in the financial statements presented, there have been no material changes to prior period estimates of revenues and expenses. The Company also records royalty revenues under certain of the Company’s license or collaboration agreements in exchange for the license of intellectual property.
As described in “Note 10. Liabilities for Sales of Future Royalties”, for certain royalty payments from net sales of Crysvita in applicable territories that were sold to RPI and OMERS, the Company records the non-cash royalty revenue on a prospective basis as royalty revenue in the Consolidated Statements of Operations over the term of the applicable arrangement.
The terms of the Company’s collaboration and license agreements may contain multiple performance obligations, which may include licenses and research and development activities. The Company evaluates these agreements under ASC 606, Revenue from Contracts with Customers, to determine the distinct performance obligations. The Company analogizes to ASC 606 for the accounting for distinct performance obligations for which there is a customer relationship. Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. Total consideration may include nonrefundable upfront license fees, payments for research and
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ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
development activities, reimbursement of certain third-party costs, payments based upon the achievement of specified milestones, and royalty payments based on product sales derived from the collaboration.
If there are multiple distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based on its relative standalone selling price. The standalone selling price is generally determined based on the prices charged to customers or using expected cost-plus margin. The Company estimates the efforts needed to complete the performance obligations and recognizes revenue by measuring the progress towards complete satisfaction of the performance obligations using input measures.
Deferred Compensation Plan
The Company maintains a nonqualified deferred compensation plan whereby certain employees and members of the board of directors are able to defer certain equity awards and other compensation. Amounts deferred are invested into shares of the Company's common stock and corporate-owned life insurance. The plan complies with the provisions of Section 409A of the Internal Revenue Code. All the investments held in the plan are recorded in other non-current assets in the Consolidated Balance Sheets. The short-term portion of the corresponding liability for the plan is included in accrued expenses. The long-term portion of the liability is included in other non-current liabilities in the Consolidated Balance Sheets. Changes in the value of the deferred compensation assets and liabilities are recorded in earnings as they occur. Certain equity awards deferred under the plan are required to be settled through the issuance of Company stock. These awards are recorded as treasury stock and deferred compensation obligation within stockholders’ equity (deficit).
Leases
Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases. The Company determines if an arrangement includes a lease at inception. Right-of-use lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The right-of-use lease asset includes any lease payments made and excludes lease incentives. Incremental borrowing rate is used in determining the present value of future payments. The Company applies a portfolio approach to the property leases to apply an incremental borrowing rate to leases with similar lease terms. The lease terms may include options to extend or terminate the lease. The Company recognizes the options to extend the lease as part of the right-of-use lease assets and lease liabilities only if it is reasonably certain that the option would be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the non-cancelable lease term. The Company has elected to not separate lease and non-lease components. See “Note 9. Leases” for further disclosure.
Comprehensive Loss
Comprehensive loss is the change in stockholders’ equity (deficit) from transactions and other events and circumstances other than those resulting from investments by stockholders and distributions to stockholders. The Company’s other comprehensive loss is comprised of unrealized gains and losses on investments in available-for-sale securities and foreign currency translation adjustments.
Research and Development
Research and development costs are expensed as incurred and consist of salaries and benefits, stock-based compensation expense, lab supplies and facility costs, as well as fees paid to other nonemployees and entities that conduct certain research and development activities on the Company’s behalf. Amounts incurred in connection with license agreements are also included in research and development expense. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred. The deferred amounts are expensed as the related goods are delivered or the services are performed.
Stock-Based Compensation
Stock-based awards issued to employees, including stock options, performance stock options, or PSOs, restricted stock units, or RSUs, and performance stock units, or PSUs are recorded at fair value as of the grant date and recognized as expense on a straight-line basis over the employee’s requisite service period (generally the vesting period). PSOs and PSUs vest only if certain specified criteria are achieved and the employees’ continued service requirements are met; therefore, the expense recognition occurs when the likelihood of the PSOs and PSUs being earned is deemed probable. Stock compensation expense on awards expected to vest is recognized net of estimated forfeitures.
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ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Income Taxes
The Company uses 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. The Company must then 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. Due to the Company’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance.
In conjunction with the acquisition of Dimension Therapeutics, Inc., or Dimension, a deferred tax liability was recorded reflecting the tax impact of the difference between the book basis and tax basis of acquired IPR&D. Such deferred income tax liability is not used to offset deferred tax assets when analyzing the Company’s valuation allowance as the acquired IPR&D is considered to have an indefinite life until the Company completes or abandons development of the acquired IPR&D.
The Company recognizes 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. The Company’s 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.
Foreign Currency
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where the local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates for the period. Transactions which are not in the functional currency of the entity are remeasured into the functional currency and gains or losses resulting from the remeasurement recorded in other expense.
Net Loss per Share
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Shares of common stock into which pre-funded warrants may be exercised are considered outstanding for the purposes of computing basic net loss per share because the shares may be issued for little or no consideration, are fully vested and are exercisable after the original issuance date. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive. In periods when we have incurred a net loss, options and warrants to purchase common stock are considered common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect is antidilutive.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures requiring public entities to disclose disaggregated information about their effective tax rate reconciliation and additional information about income taxes paid. Disclosure requirements will be applied on a prospective basis. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 during the year ended December 31, 2025.
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ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
3.
Fair Value Measurements
Certain financial assets and liabilities are recorded at fair value. The carrying amount of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The carrying amounts of liabilities for the sales of future royalties also approximate their fair value. Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
The Company’s financial instruments consist of Level 1, Level 2, and Level 3 assets. Where quoted prices are available in an active market, securities are classified as Level 1. Money market funds and U.S. Government treasury bills are classified as Level 1. Level 2 assets consist primarily of corporate bonds, asset backed securities, commercial paper, U.S. Government Treasury and agency securities, and debt securities in government-sponsored entities based upon quoted market prices for similar movements in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Where applicable these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third-party data providers, including but not limited to, benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.
The Company determines the fair value of its equity investment in Solid Biosciences, Inc., or Solid, by using the quoted market prices, which are Level 1 fair value measurements.
The following tables set forth the fair value of the Company’s financial assets and liabilities remeasured on a recurring basis based on the three-tier fair value hierarchy (in millions):
Level 1 Level 2 Level 3 Total
Financial Assets:
Money market funds $ 320 $ — $ — $ 320
Time deposits — 10 — 10
Commercial paper — 37 — 37
U.S. Government Treasury and agency securities 12 23 — 35
Investment in Solid common stock 3 — — 3
Deferred compensation assets — 19 — 19
Financial Liabilities:
Deferred compensation liabilities $ — $ 19 $ — $ 19
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ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Level 1 Level 2 Level 3 Total
Financial Assets:
Money market funds $ 114 $ — $ — $ 114
Time deposits — 10 — 10
Commercial paper — 21 — 21
U.S. Government Treasury and agency securities — 159 — 159
Investment in Solid common stock 2 — — 2
Deferred compensation assets — 15 — 15
Financial Liabilities:
Deferred compensation liabilities $ — $ 16 $ — $ 16
Deferred compensation liabilities consist of short-term liabilities of $1 million and $1 million as of December 31, 2025 and 2024, respectively, included in accrued liabilities on the Consolidated Balance Sheets, and long-term liabilities of $18 million and $15 million as of December 31, 2025 and 2024, respectively, included in other non-current liabilities on the Consolidated Balance Sheets. There have been no material net gains or losses on deferred compensation assets or liabilities for the periods presented.
4.
Balance Sheet Components
Cash Equivalents and Marketable Securities
The fair values of cash equivalents and marketable securities classified as available-for-sale securities consist of the following (in millions):
Amortized Gross Unrealized Estimated
Cost Gains Losses Fair Value
Money market funds $ 320 $ — $ — $ 320
Time deposits 10 — — 10
Commercial paper 37 — — 37
U.S. Government Treasury and agency securities 35 — — 35
Amortized Gross Unrealized Estimated
Cost Gains Losses Fair Value
Money market funds $ 114 $ — $ — $ 114
Time deposits 10 — — 10
Commercial paper 21 — — 21
U.S. Government Treasury and agency securities 159 — — 159
At December 31, 2025, the remaining contractual maturities of available-for-sale securities were less than two years. The cost of securities sold is based on the specific-identification method. There have been no significant realized gains or losses on available-for-sale securities for the periods presented. All marketable securities with unrealized losses at December 31, 2025 have been in a loss position for less than 12 months or the loss is not material and is temporary in nature.
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ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Inventory
Inventory consists of the following (in millions):
December 31,
Work-in-process $ 27 $ 22
Total inventory $ 52 $ 45
Property, Plant, and Equipment, net
Property, plant, and equipment, net consists of the following (in millions):
December 31,
Leasehold improvements Shorter of lease term or estimated useful life 55 58
Research and development equipment 5 65 60
Furniture and office equipment 5 7 6
Computer equipment and software 3-5 16 16
Land Not applicable 17 17
Other Varies by asset 1 2
Property, plant, and equipment, gross 380 378
Less: accumulated depreciation (136 ) (112 )
Property, plant, and equipment, net $ 244 $ 266
Depreciation expense for the years ended December 31, 2025, 2024, and 2023 was $27 million, $30 million and $22 million, respectively. Amortization of leasehold improvements and software is included in depreciation expense.
Accrued Liabilities
Accrued liabilities consist of the following (in millions):
December 31,
Research and clinical study expenses $ 23 $ 24
Payroll and related expenses 89 94
Revenue related reserves 57 33
Manufacturing and related expenses 67 25
Commercial and development milestones 5 45
Total accrued liabilities $ 265 $ 241
5.
Intangible Assets, net
Indefinite-lived Intangibles
As a result of the accounting for our acquisition of Dimension Therapeutics, Inc. in November 2017, the Company has IPR&D assets of $129 million as of December 31, 2025 and 2024. IPR&D assets represent the fair value of acquired programs to develop an AAV gene therapy for OTC deficiency and to develop an AAV gene therapy for glycogen storage disease type Ia. IPR&D assets are considered to be indefinite-life until the completion or abandonment of the associated research and development efforts.
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ULTRAGENYX PHARMACEUTICAL INC.
Notes to Consolidated Financial Statements (continued)
Finite-lived Intangibles