Why Ultragenyx Pharmaceutical Stock Is Sinking Today

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What happened

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Shares of the rare-disease drugmaker Ultragenyx Pharmaceutical (NASDAQ: RARE) are under pressure today after the company announced that its late-stage study assessing aceneuramic acid extended release (Ace-ER) in patients with the genetically inherited muscle-wasting disorder GNE myopathy failed to meet its primary endpoint of improving upper-extremity muscle strength compared to placebo. The study also failed to meet its secondary endpoints. As of 2:20 p.m. EDT, Ultragenyx's shares are down by over 13% as a result of this significant clinical setback.  

So what

Besides being one of Ultragenyx's most advanced clinical candidates, Ace-ER was forecast to have blockbuster potential as a treatment for this rare but severe muscle-wasting disorder. More broadly, drugs that target so-called orphan indications, or diseases with extremely small patient populations, like Ace-ER are highly valued commodities within the pharmaceutical space, because they tend to come with certain tax benefits, shortened review times, and extended periods of exclusivity. In short, this double-digit pullback is arguably an appropriate reaction by the market now that Ace-ER appears to be a dead end.  

Now what

Not surprisingly, Ultragenyx's management plans on discontinuing Ace-ER's clinical program after the treatment missed both its primary and secondary endpoints in this pivotal stage trial. As a result, the company's other lead orphan-drug candidates, vestronidase
alfa and burosumab, indicated for the genetically based disorders MPS 7 and XLH, respectively, are now going to play an even larger role in its near-term growth prospects. Fortunately, Ultragenyx is currently barreling toward regulatory decisions for both of these advanced drug candidates.  

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So while this clinical setback is certainly disappointing, the company does have other irons in the fire that could help it to rebound in the not-so-distant future. 

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.