UroGen: The mid-cap bladder cancer biotech that is TD Cowen's top sector pick in 2026

TD Cowen has named UroGen Pharma as one of its top investment ideas for 2026 in the smid-cap space, arguing that the market is underestimating the prospects of its bladder cancer drug. Just last year, those prospects looked much less certain: in May 2025, an expert committee advising U.S. regulators deemed the drug unsafe and recommended against its approval. UroGen shares almost halved on the news. Since then, however, they have surged more than 1,000%. Wall Street believes there is still more room to run.

UroGen Pharma, which until 2015 was known as TheraCoat, was founded in 2004 by entrepreneur and scientist Asher Holzer with the support of a Tel Aviv business incubator. Rather than developing drugs from scratch, the company set out to create a technology that could make existing treatments for bladder diseases more effective.

The problem its scientists sought to solve is known as drug washout. Many treatments for bladder conditions are administered directly into the bladder, but because the body continuously produces urine, the drug is quickly diluted and flushed out before it has enough time to work.

Holzer’s team wanted a substance that could still be administered easily but would remain in the bladder for longer. The solution was a hydrogel with unusual temperature-sensitive properties: it is liquid when cold but turns into a gel at body temperature.

Initially, the company intended to commercialize the technology through partnerships with other pharma companies. They would combine the gel with their own medicines and sell the resulting products, with UroGen receiving royalties. In 2016, UroGen signed such an agreement with Botox maker Allergan. Allergan agreed to pay $17.5 million upfront, while UroGen would also receive royalties on sales. In return, Allergan received the right to use UroGen’s gel to deliver Botox for the treatment of overactive bladder. The condition is characterized by an uncontrolled urge to urinate. The therapy blocks nerve signals, relaxes the muscles, and reduces false and frequent urges to urinate.

At the same time, during the 2010s, UroGen began developing two drugs, one for upper-tract urothelial cancer and another for bladder cancer. Both were based on the already known drug mitomycin mixed with UroGen’s thermogel.

Only four drugs had been approved to treat bladder cancer, and each had limitations on its use, UroGen explained. The main option for many patients was radical surgery, involving removal of the kidney, ureter, and part of the bladder.

In its early years, UroGen financed its operations primarily through private share placements and convertible bonds, as well as the upfront payment from Allergan.

In 2017, it held an IPO on the Nasdaq, offering investors 5.14 million shares at $13 apiece, for total proceeds of around $66.9 million. The proceeds were intended to complete clinical trials of its upper-tract urothelial cancer drug and continue trials of its bladder cancer treatment.

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 product revenue. But sales declined as early as the first quarter of 2021, noted the Wall Street Journal in a 2023 article. The Journal called Jelmyto a “commercial flop.” UroGen shares fell to as low as $5 per share in 2022.

The Journal article came after UroGen reported in July 2023 positive phase III trial data for UGN-102, its bladder cancer drug. The therapy offered the biotech “a second chance” with investors. While Jelmyto targets a market of around 6,000 patients a year, that for UGN-102 is 82,000. In addition, UroGen’s first drug is harder to administer because it has to travel all the way up to the kidney, while reaching the bladder is easier, the Journal article noted.

But in May 2025, UroGen investors suffered another setback: an FDA advisory committee concluded that UGN-102’s side effects were too risky and recommended that the regulator not approve it. UroGen shares plunged 45% on the news.

The FDA, however, did not follow the committee’s recommendation, and in June it approved the drug under the brand name Zusduri. The approval was based on clinical data showing that 78% of patients achieved a complete response after three months of treatment, and 79% of those responders remained event-free over the following 12 months, the company reported.

From its launch in July through the end of 2025, Zusduri generated net sales of $15.8 million, and the figure has continued to rise since then. In the first quarter of 2026, Zusduri net sales reached $29.2 million, helped by simplified reimbursement procedures for clinics and insurers. In April-June, revenue jumped around 73% quarter over quarter to $50.4 million. That was about $36 million above the consensus estimate, notes Investing.com. After UroGen reported its second-quarter results, Guggenheim raised its target price on UroGen 38% to $58 per share while maintaining a “buy” rating.

Zusduri could eventually generate more than $2 billion in peak sales, and even that may prove conservative, reckons TD Cowen. In June, the investment bank named UroGen its top 2026 smid-cap biotech investment idea.

This year is critical for UroGen: Zusduri sales of $120-150 million would validate the therapy’s trajectory, TD Cowen believes. It points not only to growth in the number of patients receiving the drug but also to the fact that around 40% of prescribers are treating multiple patients. That suggests physicians are gaining confidence in real-world outcomes. TD Cowen also highlights other UroGen programs that could broaden its portfolio.

On August 17, the company said it had submitted an application to the FDA for approval of UGN-103, an improved version of Zusduri. H.C. Wainwright subsequently reiterated its “buy” rating at a target price of $75 per share. That is the highest target price on Wall Street and implies 63% upside from Wednesday’s closing price.

Overall, UroGen has seven “buy” calls from Wall Street analysts versus a single “hold.” The consensus target price is $58.25 per share, around 27% above the last close.

This text is for informational purposes only and does not constitute personalized investment advice.