TD Cowen named biotech company UroGen as one of the favorites in the mid-cap segment. What is known about it?

Investment bank TD Cowen named UroGen Pharma among its top investment ideas for 2026 among small-cap companies, citing the undervalued potential of its bladder cancer drug. Just last year, those prospects were quite uncertain—in May 2025, an advisory committee of the U.S. Food and Drug Administration (FDA) deemed the drug unsafe and did not recommend its approval. This caused the company’s stock price to plummet by nearly half. However, since then, they have soared by more than 1,000%. Wall Street believes this is not the limit.

UroGen Pharma ( known as TheraCoat until 2015) was founded in 2004 by entrepreneur and scientist Asher Holzer at a business incubator in Tel Aviv. Rather than developing drugs themselves, the company focused on developing a technology that would make existing medications for treating bladder diseases more effective.

The problem the scientists were trying to solve is called the “washout effect.” To treat many bladder conditions, medication is injected directly into the bladder. But because the body constantly produces urine, it quickly dilutes the medication, preventing it from taking effect.

Holzer’s team wanted to ensure that the substance could still be easily administered, but that it would remain in the bladder longer. The solution was a hydrogel with unique thermosensitive properties: it is liquid when cooled, but becomes gel-like at body temperature.

Initially, the company planned to commercialize the product through partnerships with other pharmaceutical companies. They would have added the gel to their medications and sold them, while UroGen would have received royalties. In 2016, UroGen entered into such an agreement with Allergan, the manufacturer of Botox. The company was to pay a $17.5 million upfront payment and receive royalties on sales, and in return, it received the right to use UroGen’s gel in Botox injections for the treatment of overactive bladder. This condition is characterized by uncontrollable urges to urinate. The therapy blocks the transmission of nerve impulses, relaxes the muscles, and reduces false and frequent urges.

At the same time, in the 2010s, UroGen began developing two drugs: one for upper urinary tract cancer and one for bladder cancer. Both are based on the already known substance mitomycin, mixed with UroGen’s thermogel.

Only four drugs have been approved for the treatment of bladder cancer, and each has limitations on its use, UroGen explained. The primary option for many patients was radical surgery—the removal of the kidney, ureter, and part of the bladder.

In its early years, UroGen financed its operations primarily through private placements of shares and convertible bonds, as well as through an advance payment from Allergan.

In 2017, it held an IPO on Nasdaq, offering investors 5.14 million shares at $13 apiece—for a total of approximately $66.9 million. It needed the funds to complete clinical trials of a drug for upper urinary tract cancer and to continue trials of a drug for bladder cancer.

In 2020, the FDA approved UroGen’s first drug, Jelmyto. Sales began in June, and in the fourth quarter of 2020, they generated $8 million in net revenue for the company. But by the first quarter of 2021, sales had already declined, according to data published by The Wall Street Journal (WSJ). The publication called Jelmyto a “commercial failure,” against the backdrop of which UroGen’s stock price fell to $5 per share in 2022.

The WSJ article was published in 2023, after UroGen released positive data from the final phase of trials for UGN-102, a drug for bladder cancer.

This gives the biotech company a second chance to attract investors’ attention, the publication reported. While Jelmyto targets a market of approximately 6,000 patients per year, UGN-102 targets 82,000. In addition, the company’s first drug is difficult to administer because it must travel all the way to the kidney—reaching the bladder is easier, the article noted.

But in May 2025, investors faced another disappointment: an FDA expert committee deemed the side effects of UGN-102 too dangerous and recommended that the regulator not approve it. Against this backdrop, UroGen’s stock price plummeted by 45%.

However, the FDA did not follow the committee’s recommendation and approved the drug, marketed under the brand name Zusduri, in June. The approval is based on clinical data showing that 78% of patients achieved remission after three months of treatment, and 79% of those patients remained relapse-free for the following 12 months, the company reported.

From its launch in July through the end of 2025, Zusduri's net sales revenue totaled $15.8 million, and it has been growing steadily ever since.

In the first quarter of 2026, this figure totaled $29.2 million, thanks to the issuance of a special code that simplified the process of reimbursement for clinics by insurance companies. In April–June, it jumped nearly 73% quarter-over-quarter to $50.4 million. This is approximately $36 million higher than the consensus estimate, according to Investing.com. Following the release of second-quarter results, analysts at Guggenheim raised their price target for UroGen shares by 38% to $58, while maintaining their “buy” rating on the stock.

Experts predict that Zusduri’s sales will exceed $2 billion at their peak, but investment bank TD Cowen believes this may be an underestimate. In June, the firm named UroGen the top investment idea among small- and mid-cap biotech companies for 2026.

This year is crucial for the biotech sector: the therapy’s potential will be confirmed if sales of Zusduri reach $120–150 million, according to analysts at TD Cowen. They note not only the growing number of patients receiving the drug but also the fact that about 40% of doctors prescribe it to more than one patient. This means that healthcare professionals are becoming convinced of the treatment’s results, the investment bank concludes. TD Cowen also highlights the company’s other development projects, which could expand its product portfolio.

On August 17, the company announced that it had filed an application with the FDA to register UGN-103, an improved version of Zusduri. Following this, investment bank HC Wainwright reaffirmed its “buy” rating on the company’s stock and a price target of $75. This is the highest valuation on Wall Street, implying a 63% upside potential relative to the closing price on August 26.

In total, the company's stock has seven "buy" recommendations from Wall Street analysts and one "hold" recommendation. The average price target is 58.25, which is nearly 27% higher than the stock's most recent closing price.

This is not intended as individual investment advice.