Ultragenyx Stock Craters Over 40% as Bone Drug Fails Phase 3 Trial
The disappointing result for setrusumab wiped out over $1.4 billion in market value and dealt a heavy blow to partner Mereo BioPharma, whose shares fell nearly 90%.
Shares of Ultragenyx Pharmaceutical (RARE) plummeted more than 41% on Tuesday, wiping out over $1.4 billion in market value after the company’s pivotal late-stage study for a closely watched bone disorder treatment failed to meet its primary goal.
The stock closed at $20.11, a stunning drop of $14.08, after the company announced its experimental drug, setrusumab, did not significantly reduce the rate of fractures in patients with Osteogenesis Imperfecta (OI), a severe genetic disorder known as brittle bone disease.
The disappointing outcome is a major setback for Ultragenyx and the OI community. "We are surprised and disappointed by these results given the promising data from our Phase 2 study and the lack of approved treatment options available to patients with OI who live with significant pain, disability, and disease burden," said Emil Kakkis, M.D., Ph.D., chief executive officer and president of Ultragenyx, in a statement.
The Phase 3 ORBIT and COSMIC trials evaluated setrusumab in patients aged 2 to 25. While the primary endpoint of reducing clinical fractures was not met, the company noted that the studies did achieve their secondary endpoints with strong statistical significance. Specifically, treatment with setrusumab led to substantial improvements in bone mineral density (BMD) compared to both placebo and active-control groups. However, this increase in bone mass did not translate into the hoped-for reduction in fracture rates.
The fallout from the trial failure extended to Ultragenyx’s partner, Mereo BioPharma (MREO), which saw its stock collapse by nearly 90%. Mereo, which holds the commercial rights for setrusumab in Europe and the U.K., was almost entirely dependent on the drug's success. The catastrophic drop in its share price reflects the market's verdict on the drug's commercial viability.
In response to the trial results, Ultragenyx announced it is planning "significant expense reductions" as it reassesses its strategy. The company intends to conduct a deeper analysis of the trial data to understand the gap between the bone density improvements and the lack of fracture reduction. Dr. Kakkis confirmed the company will continue to explore the data "to gain deeper understanding of the findings."
Before the announcement, Wall Street analysts had been broadly optimistic about Ultragenyx, with an average price target of $81.85. The trial's failure forces a dramatic re-evaluation of the company's pipeline and future revenue prospects. For patients and families affected by Osteogenesis Imperfecta, the news means the wait for a transformative new therapy continues.