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Ultragenyx (RARE) Up 13.6% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Ultragenyx (RARE). Shares have added about 13.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ultragenyx due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Ultragenyx Reports Wider-Than-Expected Loss in Q3

Ultragenyx reported a loss per share of $1.96 in the third quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $1.71. The loss includes an unrealized gain of $2.2 million from the fair value adjustment on the investment in Arcturus equity. However, excluding this, the adjusted loss was $1.92 per share compared with a loss of $1.74 in the year-ago quarter.

For the third quarter, Ultragenyx reported $25.8 million in total revenues, up from $11.8 million in the year-ago quarter. Revenues missed the Zacks Consensus Estimate of $29 million.

Crysvita revenues were $22.6 million, which include $19.5 million of collaboration revenues in the North American profit share territory and $2 million of royalty revenues in the European territory from the collaboration and license agreement with Japanese partner, Kyowa Hakko Kirin. Net product sales for the drug in other regions were $1.1 million. Revenues also included $0.1 million received from Bayer regarding Ultragenyx’s research agreement with the former to develop adeno-associated virus gene therapies. Mepsevii product revenues were $2.4 million and UX007 revenues were $0.7 million.

Though UX007 is not an approved product, the company recognizes sales from the candidate on a “named patient” basis. This is allowed in certain countries prior to the commercial approval of a product.

Crysvita is approved in the United States for the treatment of X-linked hypophosphatemia in patients aged one year or above. The drug continues to deliver a strong performance in the United States.

Pipeline Updates

The FDA approved a label expansion for Crysvita, which now includes clinical data demonstrating superiority of treatment with Crysvita versus conventional therapy in pediatric patients, and improvement in stiffness and maintenance of efficacy in adult patients with longer-term treatment. Ultragenyx plans to submit a supplemental biologics license application (sBLA) to the agency for the drug for the treatment of tumor-induced osteomalacia (TIO) in the first half of 2020.

The new drug application (NDA) for UX007 for the treatment of long-Chain fatty acid oxidation disorders (LC-FAOD) is under review by the FDA and the agency has set an action date of Jul 31, 2020. 

Ultragenyxreported positive long-term results from the first two dose cohorts of DTX401 gene therapy in Glycogen Storage Disease Type Ia.  Based on these data, it is conducting a confirmatory expansion cohort of three patients at the second cohort dose of 6.0 × 10^12 GC/kg. Data from this cohort are expected in the first half of 2020.

Ultragenyx and GeneTx collaborated on the development of GeneTx’s GTX-102, an antisense oligonucleotide, for the treatment of Angelman syndrome, which is a debilitating and rare neurogenetic disorder.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Ultragenyx has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Ultragenyx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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