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Ultragenyx (RARE) Down 5.7% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Ultragenyx (RARE). Shares have lost about 5.7% in that time frame, underperforming the S&P 500.

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

Ultragenyx Reports Wider-Than-Expected Loss in Q1

Ultragenyx reported loss per share of $1.82 in the first quarter of 2019 against profit of 62 cents in the year-ago quarter. Loss was also wider than the Zacks Consensus Estimate of a loss of $1.73.

For the first quarter, Ultragenyx reported $18. 2 million in total revenues, up from $10.7 million in the year-ago quarter. However, revenues missed the Zacks Consensus Estimate of $19.3 million.

Ultragenyx recognized $14.5 million in total Crysvita revenues. This includes $11.9 million of collaboration revenues in the U.S. profit share territory and $2.0 million of royalty revenues in the European territory from the collaboration and license agreement with Japanese partner, Kyowa Hakko Kirin. Net product sales for Crysvita in other regions were $0.6 million. Revenue also includes $0.3 million received from Bayer  in relation to Ultragenyx’s research agreement with the former to develop adeno-associated virus gene therapies. Mepsevii product revenues were $2.7 million and UX007 revenues were $0.7 million.

Please note that 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.

We remind investors that the FDA approved Crysvita in April 2018 for the treatment of X-linked hypophosphatemia (XLH) in adult and pediatric patients aged one year or older. Strong launch of the drug in the United States continued. Crysvita was approved in Brazil for the treatment of XLH in adults and pediatric patients aged a year or older.

Further, Mepsevii, an enzyme replacement therapy, is the first and the only medicine approved for the treatment of children and adults with mucopolysaccharidosis VII (MPS VII) in the United States.

Pipeline Updates

The FDA granted Fast Track designation and Rare Pediatric Disease designation to UX007 for the treatment of long-chain fatty acid oxidation disorders (LC-FAOD)Ultragenyx is on track to submit a new drug application (NDA) to the FDA for UX007 in mid-2019 to treat LC-FAOD. 

The company reported positive longer-term results from the first cohort of the phase I/II study of DTX401 gene therapy in Glycogen Storage Disease Type Ia (GSDIa). Data from second dose cohort of the phase I/II study in GSDIa is expected by mid-2019.

The company reported data from the first two dose cohorts of DTX301 gene therapy in Ornithine Transcarbamylase (OTC) deficiency. DTX301 phase I/II data from the third dose cohort are expected by mid-2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, 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 indicates a downward shift. 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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