Why Is Ultragenyx (RARE) Up 10.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Ultragenyx (RARE). Shares have added about 10.7% 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 the most recent earnings report in order to get a better handle on the important drivers.

Ultragenyx Q1 Earnings & Sales Fall Short of Estimates

Ultragenyx reported loss per share of $2.04 for the first quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $1.60 as well as the year-ago loss of $1.82 per share.

For the first quarter, Ultragenyx’s total revenues grossed $36.3 million, almost doubling $18.1 million in the year-ago quarter. Revenues, however, missed the Zacks Consensus Estimate of $38 million.

Crysvita’s total revenues were $31.4 million, which included $27.2 million of collaboration revenues in the North American profit share territory (U.S. and Canada), $1.6 million of net product sales from the drug in other regions (Latin America, Turkey) and $2.6 million of non-cash royalty revenues related to the sales of Crysvita in the European territory. Ultragenyx sold its rights to Crysvita in the European territory to Royalty Pharma in December 2019. In Ultragenyx territories (North America, Latin America and Turkey), Crysvita revenues were $28.8 million.

Mepsevii product revenues were $2.6 million and UX007 revenues were $1.4 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.

Pipeline Updates

The company is also looking to expand the label of Crysvita, which was developed for the treatment of tumor-induced osteomalacia (TIO). A supplemental biologics license application is under priority review with the FDA

An important pipeline candidate is UX007, developed for the treatment of long-chain fatty acid oxidation disorders (LC-FAOD). A new drug application seeking approval of UX007 for LC-FAOD is under standard review of the FDA with decision expected on Jul 31. Along with the earnings release, management confirmed that the FDA reviews of Crysvita for TIO and UX007 for LC-FAOD are on track with the decisions pending on the scheduled dates.

UX007 is also being evaluated in a phase III study in patients with glucose transporter type-1 deficiency syndrome (Glut1 DS), a brain energy deficiency. Such patients are also experiencing movement disorders.

The company also has some gene therapy candidates in its pipeline including DTX301, an adeno-associated virus 8 (AAV8), which is being evaluated in a phase I/II study for treating patients with Ornithine transcarbamylase (OTC) deficiency. The company plans to begin enrollment in a phase III study on DTX301 in the first half of 2021.

DTX401 is also an AAV8 gene-therapy candidate, presently being evaluated in a phase I/II study for the treatment of patients with glycogen storage disease type Ia, (GSDIa). Enrollment is complete in the study’s confirmatory cohort with data expected in the second quarter.

An investigational new drug (IND) application for UX701 is expected by the end of 2020 for a new gene therapy for Wilson disease, a larger, rare metabolic disease.

2020 Guidance

Ultragenyx expects Crysvita revenues from its territories between $125 million and $140 million, excluding European territory revenues.

The company also expects more than 20% reduction in net cash burn during 2020 compared with 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 subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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 has been net zero. 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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