Ultragenyx Pharmaceutical Inc. Stock Compensation Disclosure

Equity Plan Awards

Under the terms of the Company's 2023 Incentive Plan, or 2023 Plan, and Employment Inducement Plan, or Inducement Plan, awards may be granted at an exercise price not less than fair market value. The exercise price of an option may not be less than the fair market value. The term of an award granted under the 2023 Plan and Inducement Plan may not exceed ten years. Typically, the vesting schedule for option grants to employees provides that 1/4 of the grant vests upon the first anniversary of the date of grant, with the remainder of the shares vesting monthly thereafter at a rate of 1/48 of the total shares subject to the option. Typically, the vesting schedule for RSU grants provides that 1/4 of the grant vests upon the annual anniversary of the date of grant over the period of four years.

Under the 2014 Employee Stock Purchase Plan, or ESPP, eligible employees may purchase common stock at 85% of the lesser of the fair market value of common stock on the offering date or the purchase date with a six-month look-back feature. ESPP purchases are settled with common stock from the ESPP’s previously authorized and available pool of shares. During the year ended December 31, 2025, the Company issued 0.2 million shares of common stock under the ESPP.

The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock.

Performance Stock Options

During the year ended December 31, 2022, PSOs were granted to certain nonexecutive employees. PSOs are subject to vest only if specified operational milestones are achieved and the employees’ continued service with the Company. The Company uses the Black-Scholes method to calculate the fair value at the grant date and is recognizing stock-based compensation expense for the PSOs that are expected to vest. Stock-based compensation for PSOs is recognized over the service period, beginning in the period the Company determines it is probable that a milestone will be achieved. Forfeitures of PSOs are recognized as they occur. The Company reassesses the probability of the performance condition at each reporting period and adjusts the compensation cost based on the probability assessment. As of December 31, 2025, certain operational milestones had been achieved. The aggregate intrinsic values of PSOs outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the PSOs and the fair value of the Company’s common stock. The total estimated grant date fair value of PSOs vested during the years ended December 31, 2025, 2024, and 2023 was $14 million, $10 million, and $3 million, respectively.

Restricted Stock Units

The fair value of the RSUs is determined on the grant date based on the fair value of the Company’s common stock. The fair value of the RSUs is recognized as expense ratably over the vesting period of one to four years. The total grant date fair value of the RSUs vested during the years ended December 31, 2025, 2024, and 2023 was $85 million, $63 million, and $55 million, respectively. The aggregate intrinsic value of the shares of the RSUs vested during the years ended December 31, 2025, 2024, and 2023 was $62 million, $54 million, and $33 million, respectively.

Performance Stock Units

The fair value of the PSUs is determined on the grant date based on the fair value of the Company’s common stock, except for certain PSUs with a market vesting condition, for which fair value is estimated using a Monte Carlo simulation model. PSUs are subject to vest only if certain specified criteria are achieved and the employees’ continued service with the Company. For certain PSUs, the number of PSUs that may vest are also subject to the achievement of certain specified criteria, including both performance conditions and market conditions. As of December 31, 2025, certain specified criteria were deemed probable of achievement or already achieved. Stock-based compensation for PSUs is recognized over the service period beginning in the period the Company determines it is probable that the performance criteria will be achieved. The total grant date fair value of the PSUs vested during the years ended December 31, 2025, 2024, and 2023 was $12 million, $3 million, and $4 million, respectively, with an aggregate intrinsic value of the shares of $9 million, $2 million and $1 million, respectively.

Stock-Based Compensation Expense

Stock-based compensation of $2 million, $3 million, and $2 million was capitalized into inventory for the years ended December 31, 2025, 2024, and 2023, respectively. Capitalized stock-based compensation is recognized as cost of sales when the related product is sold.

As of December 31, 2025, the total unrecognized compensation expense related to unvested equity awards, net of estimated forfeitures, was $232 million, which the Company expects to recognize over an estimated weighted-average period of 2 years. In determining the estimated fair value of the stock options, PSOs and ESPP, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

Expected Volatility—The Company’s expected volatility is based on historical volatility over the look-back period corresponding to the expected term.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividend—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

Strike price for options awards and PSOs is equal to the closing market value of our common stock on the date of grant.