Ultragenyx Pharmaceutical (RARE)

The first stock we’ll look at is Ultragenyx, a biopharma company working at both the commercial and clinical stages.

Ultragenyx boasts a suite of approved drugs on the market and generating revenues, along with an active research pipeline pursuing multiple tracks at once.

Ultragenyx has its focus on rare diseases, defined by the FDA as impacting fewer than 1 in 50,000 people. While this small patient base can limit the sales potential of the commercial drugs, the company can share the costs through partnership programs with other biotechs.

The company has found success on all of these fronts. Starting with commercialization and revenues, Ultragenyx has a leading product, burosumab (trade name Crysvita), on the market as a treatment for two conditions, X-linked hypophosphatemia and tumor-induced osteomalacia.

Crysvita generates the larger portion of Ultragenyx’ quarterly revenues; in 3Q22, the last reported, Crysvita sales accounted for $64.5 million of the total top line of $90.7 million, and European sales generated $5.4 million in royalty payments.

Also contributing to the company’s top line were sales of Dojolvi, a treatment for long-chain fatty acid oxidation disorders. Dojolvi, the brand name of triheptanoin, brought in 13.3 million during the quarter. Ultragenyx’ revenues in 3Q22 were up 11% year-over-year; the company’s sales income has been remarkably consistent for the last half-dozen quarters, coming in between $80 million and $90 million.

On the pipeline side, the company’s most important development comes from its Phase 1/2 clinical trial of GTX-102, a potential treatment for Angelman Syndrome. Enrollment and dosing in this trial is ongoing, with the expansion cohorts expected to receive dosing during 1H23. Interim clinical data was described as ‘encouraging,’ and further data releases are expected later this year.

In an interesting move, Ultragenyx last summer purchased GeneTx Biotherapeutics, its partner in the GTX-102 clinical program. The acquisition was made for $75 million.

All of this points to a company with a sound footing in its niche, and that prompted Canaccord’s Whitney Ijem to rate the stock a Buy along with a $90 price target. That figure indicates a potential for 94% share growth in the coming year.

Backing her bullish stance, Ijem writes: “Ultragenyx has built an impressive, and truly patient-focused, rare disease company. By leveraging CEO Emil Kakkis’ rare disease connections and regulatory prowess, the company has built an impressive and diversified rare disease business with global commercial capabilities…”

“We like the combination of a growing top line and multi-modal earlier stage pipeline, plus the company’s commitment to R&D spend discipline. On the commercial side we model sales approaching $1B in 2030 representing a ~10% CAGR for the existing commercial business for the next several years. For the pipeline, we’re most focused in the near term on GTX-102 for Angelman Syndrome and expect the Ph1/2 update coming sometime this year will be an important catalyst,” Ijem added.

Wall Street is mostly in agreement that this stock is a Strong Buy, as the 12 recent analyst reviews break down 11 to 1 in favor of Buys over Holds. The shares are selling for $46.44 and their $89 average price target indicates potential for ~92% upside by year’s end.