Ultragenyx Discontinues Phase 3 GNE Myopathy Study

Shares of Ultragenyx Pharmaceutical Inc RARE tumbled more than 12 percent Wednesday after the company offered a disappointing update concerning a muscle-disease drug study.

The biopharmaceutical company, which focuses on the development of novel products for rare and ultra-rare diseases, said that its Phase 3 study evaluating aceneuramic acid extended release (Ace-ER) in patients with GNE Myopathy (GNEM) failed to achieve its primary endpoint.

The study hoped to show a statistically significant difference in the upper extremity muscle strength composite score compared to placebo. The study also failed to meet its key secondary endpoints.

As such, the company will discontinue further clinical development of the Ace-ER.

JMP Securities: Limited Impact

Ace-ER's discontinuation will have a "limited" impact on Ultragenyx's valuation moving forward even though the data release was disappointing, JMP's Liisa Bayko commented in a brief research report. However, the Ace-ER program was a small contributor to the stock's overall valuation and was valued at just $3 per share based on the analyst's prior analysis.

The decision to terminate the Ace-ER program also prompted the analyst to remove the UX007 Huntington's disease (HD) program, which is valued at $7 per share as the timeline is uncertain.

"However, we are mindful that success in HD could be the biggest source of upside to our valuation as the program represents an ~$3 billion market opportunity if successful," Bayko wrote.

Bottom line, Ultragenyx's stock could see a "turning point" as soon as November with the potential approval of rhGUS for MPS7 by the FDA followed by the second approval of burosumab for XLH next April.

Shares remain Market Outperform rating with a price target lowered from $90 to $80.

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