Ultragenyx Poised To Perform Well On Multiple Catalysts

Summary

Ultragenyx has multiple drug candidates in advanced stages.

The company expects to receive the FDA decision for its rhGUS for MP7 in November.

MP7 does not have any approved therapy yet.

Ultragenyx Pharmaceutical Inc. (RARE) is a biopharmaceutical company focusing on genetic diseases. The company is currently engaged in developing several therapies which are at various stages of progression. Ultragenyx also has multiple drug candidates under the review of regulators in the US and Europe. Those decisions will make for good upcoming catalysts for a stock that is currently trading well below its highs and thus has the potential to provide good returns to investors.

The company recently announced reaching an agreement with the FDA for its Pre-Biologics License Application (pre-BLA) meeting for the clinical package pertaining to the BLA filing for KRN23 to treat X-linked hypophosphatemia. Now that the FDA has allowed the company to file the BLA with the currently available clinical data, the company can look forward to submitting the application during the second half of 2017. The FDA will review the drug for both pediatric and adult indications, thus giving the company another positive boost. The company is also not required to file data from the pediatric Phase 3 study (CL301).

KRN23 is the lead drug candidate for Ultragenyx and is being studied for treating X-Linked Hypophosphatemia (XLH) which involve overactivated FGF23 hormone. The treatment was given Breakthrough Therapy Designation for X-Linked Hypophosphatemia pediatric patients. The designation provides for various benefits such as intensive FDA guidance and eligibility for rolling and priority review of the application. Ultragenyx faced setbacks with KRN23 as earlier this year as it had failed to meet a secondary endpoint during the trial. At the same time, the drug had shown impressive results for its primary endpoint which was the proportion of patients achieving serum phosphorus levels above the lower normal limit vis a vis placebo. The drug has already been accepted by the European Commission for the approval process, where it also has Orphan Drug designation. Ultragenyx is set to have an important catalyst up ahead as X-linked hypophosphatemia presents a highly lucrative market.

However, Ultragenyx is not dependent on KRN23 alone. The company has a strong pipeline with other drug candidates such as rhGUS and UX001 in advanced stages. rhGUS is being developed for treating Mucopolysaccharidosis 7 or Sly Syndrome. Currently, this ailment does not have any approved therapy, giving Ultragenyx a unique chance to become a first mover in the market. The company had reported impressive topline data from its Phase 3 study, which showed the treatment meeting its primary endpoint of reducing urinary GAG (dermatan sulfate) excretion after 24 weeks of treatment, demonstrating a reduction from baseline of 64.8 percent (p<0.0001). The treatment was given priority review designation by the FDA and the company expects to receive the decision in November this year, presenting yet another catalyst for the company stock. The treatment is also under consideration in the EU as its Marketing Authorization Application was accepted by the EU earlier this year. The Committee for Medicinal Products for Human Use is expected to announce its opinion in the first half of 2018.

It is not only the company’s pipeline which is impressive, Ultragenyx has solid position on the financial front as well. It reported $506.1 million in Cash, cash equivalents, and investments as of March 31, 2017. While the company presents an interesting investment opportunity, its growing net loss may be a cause of concern for the investors. For the first quarter of the year, the company reported its net loss at $68.3 million, up from $52.8 million in net loss it had reported for the corresponding quarter of the previous year. However, the increase in net loss was mainly attributed to the increase in operating expenses due to the company investing funds in growing its pipeline and operational area. With the upcoming FDA decisions, the company is in position to realign its financials as it has high probability of seeing steady sources of revenue in the future.

While Ultragenyx has fairly high chances of getting positive results from its upcoming catalysts, minor technical details such as the company’s inability to meet a few of its secondary endpoints have come as minor hurdles. However, the company was able to make up for these deficiencies by meeting its primary endpoints.

This year has been pretty hectic for the company as it filed various submissions for its drug candidates. The performance has been replicated in the stock market as well as the stock gained over 21 percent in the past 12 months. It is currently trading nearly 30 percent below its 52 weeks high of $91.35, which gives the stock a decent runway to climb up. The forthcoming catalysts are expected to further provide boost to the stock, making it a good investment for short term. However, as the company repositions itself with solid products in portfolio, the stock is expected to provide robust returns in the long run as well.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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