Ultragenyx (RARE) Q2 Loss Wider Than Expected, Revenues Beat
Ultragenyx Pharmaceutical Inc. RARE incurred a loss of $2.25 per share in second-quarter 2023, wider than the Zacks Consensus Estimate of a loss of $2.11. The company reported a loss of $2.26 per share in the year-ago quarter.
Ultragenyx’s total revenues amounted to $108.3 million in the reported quarter, up 21% year over year. The top line surpassed the Zacks Consensus Estimate of $105 million.
The company markets four drugs, namely Crysvita, Mepsevii, Dojolvi and Evkeeza. Crysvita is approved for treating X-linked hypophosphatemia, an inherited disorder and tumor-induced osteomalacia, an ultra-rare disease. Mepsevii is approved to treat Mucopolysaccharidosis VII (MPS VII), also known as Sly syndrome. Dojolvi was approved in June 2020 for all forms of long-chain fatty acid oxidation disorders.
In January 2022, Ultragenyx announced a license and collaboration agreement with Regeneron Pharmaceuticals REGN. Per the deal, RARE has obtained the rights to develop, commercialize and distribute Evkeeza (evinacumab) outside the United States. The regions include the European Economic Area. The collaboration with Regeneron for Evkeeza gives Ultragenyx a fourth-approved product that adds to the top line. However, Regeneron will continue to solely commercialize Evkeeza in the United States.
Shares of RARE have lost 10.9% in the year-to-date period compared with the industry’s decline of 13%.
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Quarter in Detail
Crysvita’s total revenues were $83 million, up 20% year over year, driven by increased demand for approved indications. Crysvita revenues from North America were $61.3 million in the second quarter, up 19% from the year-ago quarter. Total product revenues related to sales of Crysvita from Latin America amounted to $16 million and that of in the European region were $6 million. Ultragenyx sold its Crysvita rights in the European territory to Royalty Pharma in December 2019. In April 2023, RARE entered into a licensing agreement withKyowa Kirin to transition commercialization responsibilities for Crysvita in North America to its partner.
Mepsevii product revenues were $8.4 million in the second quarter compared with $4.9 million reported in the year-ago quarter. Dojolvi product revenues were $16.5 million compared with $13.5 million in the year-ago quarter, driven by strong new patient demand. Evkeeza recorded sales of $0.4 million in the reported quarter.
Operating expenses increased 11% to $256.3 million in the second quarter. Operating expenses for the reported quarter include research and development expenses of $164.9 million (up 6.7%) and selling, general and administrative expenses of $81.4 million (up 19.5%).
Cash, cash equivalents and marketable debt securities amounted to $618.4 million as of quarter-ended Jun 30, 2023, compared with $714.6 million as of Mar 31, 2023.
2023 Guidance Reaffirmed
Ultragenyx expects total revenues in 2023 between $425 million and $450 million. Crysvita revenues are expected in the range of $325-$340 million (including all regions where Ultragenyx will recognize revenues, including the royalties in Europe, which have been ongoing and the royalties in North America, which began in April 2023). Dojolvi revenues are expected between $65 million and $75 million.
Operating expenses are expected to decrease in 2023 (net cash used in operations is expected to be less than $400 million) as the company manages headcount and increases operational leverage while executing high-value programs.
Pipeline Updates
Ultragenyx is evaluating GTX-102 for treating Angelman syndrome, a rare neurogenetic disorder. In May 2023, the company announced that the FDA has agreed to a protocol amendment, after review, of the phase I/II study of GTX-102 in pediatric patients with Angelman syndrome. This ruling by the regulatory body will enable Ultragenyx to harmonize dose ranges in the United States with those being used in study cohorts outside the United States.
The company has reportedly been actively enrolling and dosing patients in the expansion cohorts to verify the GTX-102 dose and treatment regimen to be used in the subsequent phase III program. As of Aug 3, 2023, 19 patients have reportedly had more than 12 months of exposure to GTX-102, with the longest approaching two years.
An interim update, from the expansion cohorts of the phase I/II study, is expected in mid-October 2023. Subsequently, RARE also expects to share data from the dose expansion cohorts on at least 20 patients who have been in therapy for at least six months in the first half of 2024.
During the quarter, Ultragenyx and partner Mereo BioPharma MREO announced positive data from the mid-stage portion of the phase II/III ORBIRT study of setrusumab (UX 143) for patients with osteogenesis imperfecta (OI). Ultragenyx entered into a licensing and collaboration agreement with Mereo in December 2020 to co-develop setrusumab.
Per the deal, Mereo granted Ultragenyx an exclusive license to develop and commercialize setrusumab in the United States, Turkey and the rest of the world. However, Mereo retained its commercial rights in the European Economic Area, the U.K. and Switzerland, also known as the Mereo Territory. Ultragenyx is responsible for bearing global development costs as well as making tiered royalty payments to Mereo based on net sales in its territory. Mereo is also liable to pay Ultrageyx a fixed royalty on net sales in the Mereo Territory.
The positive outcomes from the phase II portion support the selection of the 20 mg/kg dose for the phase III program. Additional data from the phase II portion of the ORBIT study is anticipated in mid-October.
Ultragenyx has also initiated another late-stage COSMIC study on UX143 in pediatric patients (> 5 years) with OI, in the second quarter of 2023. In July 2023, Ultragenyx reported dosing the first patientsin both phase III ORBIT and COSMIC studies. The ORBIT and COSMIC studies are expected to enroll about 195 and 65 patients worldwide, respectively.
Apart from these, RARE has three other gene-therapy candidates in its pipeline, currently under development, are expecting milestone achievements in the first half of 2024.
Ultragenyx Pharmaceutical Inc. Price, Consensus and EPS Surprise
Ultragenyx Pharmaceutical Inc. price-consensus-eps-surprise-chart | Ultragenyx Pharmaceutical Inc. Quote
Zacks Rank & Stock to Consider
Ultragenyx currently has a Zacks Rank #4 (Sell).
A better-ranked stock in the same industry is ADC Therapeutics ADCT, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 90 days, the Zacks Consensus Estimate for ADC Therapeutics’ 2023 loss per share has widened from $2.60 to $2.61. During the same period, the estimate for ADC Therapeutics’ 2024 loss per share narrowed from $2.75 to $2.55. Year to date, shares of ADCT have lost 60.9%.
ADCT beat estimates in three of the trailing four quarters, missing the mark on one occasion, delivering an average earnings surprise of 10.70%.
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