On Thursday, Goldman Sachs shifted its stance on Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE), upgrading the stock from Neutral to Buy and establishing a price target of $67.00. The firm's increased conviction in Ultragenyx's monoclonal antibody setrusumab for treating the bone disorder osteogenesis imperfecta (OI) was cited as a key reason for the upgrade. The diverse rare disease pipeline of the company also contributed to the positive outlook.
The analyst highlighted the encouraging results from the Phase 2 study of setrusumab, with additional data expected in the second half of the year, which demonstrated clinically meaningful fracture reduction and improvements in bone mineral density. The potential of setrusumab to enhance bone formation and strength, which differentiates it from the current standard-of-care bisphosphonates, was also noted as a significant advantage.
Goldman Sachs emphasized the enthusiasm from both patients and physicians for setrusumab, particularly in moderate-to-severe cases. This sentiment is expected to contribute to a favorable clinical and commercial outlook as the company approaches the first interim analysis of Phase 3 data by the end of 2024 or early 2025.
In addition to the developments in OI treatment, Goldman Sachs is closely monitoring progress in other areas of Ultragenyx's pipeline. This includes the Phase 3 clarity for GTX-102 in Angelman syndrome, with an FDA end-of-Phase 2 meeting anticipated in mid-2024, and the development of gene therapy UX701 for Wilson’s disease, with Stage 1 safety and early efficacy data due in the latter half of the year to inform the pivotal Stage 2 study.
The report also projected a potential 2026 approval and launch for gene therapy DTX401 in GSD1a following positive Phase 3 data, with Phase 3 enrollment completion for DTX301 in OTC expected in the second half of the year. Goldman Sachs forecasts that Ultragenyx will reach GAAP profitability in 2027.
In other recent news, Ultragenyx Pharmaceutical Inc. has been the focus of several analyst firms following positive outcomes from its Phase 3 GlucoGene study.
The study evaluated the company's gene therapy candidate, DTX401, aimed at treating glycogen storage disease type Ia (GSDIa). Baird raised the price target for Ultragenyx shares to $72, citing the Phase 3 results as a strong indicator of a likely approval for DTX401, with a Biologics License Application anticipated in 2025. Similarly, Stifel increased the price target on Ultragenyx shares to $127, noting the significant reduction in the need for cornstarch, a dietary supplement used to manage the condition.
Piper Sandler maintained an Overweight rating and a $135.00 price target on Ultragenyx, pointing to sustained glucose control and significant reductions in daily cornstarch intake. Lastly, Canaccord Genuity raised the price target to $111, signaling confidence in Ultragenyx's prospects. These developments underline the growing confidence in the potential success of Ultragenyx's DTX401 therapy.
InvestingPro Insights
Following Goldman Sachs' upgrade of Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) to a Buy rating with a price target of $67.00, InvestingPro data and insights further illuminate the company's financial health and market performance. With a market capitalization of $3.44 billion, the company's financial metrics reveal challenges such as a negative P/E ratio of -5.21, reflecting investor concerns over profitability. This aligns with an InvestingPro Tip noting that analysts do not expect the company to be profitable this year. Additionally, the high Price / Book multiple of 24.55 suggests that the stock is trading at a premium relative to its book value, which may warrant caution among value-focused investors.
Despite these financial hurdles, Ultragenyx's liquid assets surpass its short-term obligations, providing some financial stability as it advances its drug pipeline. While the company's gross profit margin is negative at -60.26%, indicating a current inability to translate revenues into profits, the revenue growth of 15.29% over the last twelve months as of Q1 2024 suggests that Ultragenyx is expanding its market presence. Investors should also note that Ultragenyx does not pay a dividend, which is common for growth-focused biotech companies reinvesting earnings into research and development.
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