Ultragenyx stock holds Buy rating at BofA despite setrusumab trial delay

Ultragenyx Pharma (RARE) experienced a setback in its Phase 3 Orbit study for setrusumab in osteogenesis imperfecta, failing to reach statistical significance at the second interim analysis; however, the trial will continue to a final readout expected by year-end 2025 with a revised success threshold. Despite this, major firms including BofA, Goldman Sachs, and Citi have maintained their 'Buy' ratings and high price targets ($80-$110), citing the drug's acceptable safety profile, potential for the extended study to accrue more fracture events and improve success odds, strong underlying revenue growth (33.46% LTM), and a robust pipeline, notably including a recent FDA Breakthrough Therapy Designation for GTX-102 in Angelman syndrome.

Analysis

Ultragenyx Pharma (RARE) faces a mixed but largely positive outlook following a clinical trial update. The company's Phase 3 Orbit study for setrusumab in osteogenesis imperfecta failed to meet the pre-specified statistical significance threshold (p-value < 0.01) at its second interim analysis. However, the trial will continue to a final readout by year-end 2025 with a less stringent success criterion (p-value < 0.04), supported by an acceptable safety profile confirmed by the Data Monitoring Committee. Despite this setback, influential investment banks including BofA, Goldman Sachs, and Citi have maintained their 'Buy' ratings, with price targets ranging from $80 to $110. This analyst conviction is underpinned by a belief that the extended trial duration may enhance the probability of success—with BofA and Citi estimating 60% and 85% chances, respectively—and strong fundamentals, including 33.46% revenue growth over the last twelve months. The investment thesis is further de-risked by a robust pipeline, notably the FDA's granting of Breakthrough Therapy Designation for GTX-102 in Angelman syndrome, which is now advancing to a global Phase 3 study. BofA's valuation attributes approximately $26 per share to the company's base business alone, suggesting a solid foundation independent of the setrusumab outcome.

Key Decisions for Investors

• Investors should weigh the clinical setback and extended timeline for setrusumab against the strong, unified 'Buy' consensus from major analysts and the drug's revised pathway to potential approval in 2025.
• Consider the stock's valuation support from its core business, which BofA values at $26 per share, and the significant de-risking provided by the advancing pipeline, particularly the promising Angelman syndrome candidate, GTX-102.
• Monitor progress on the Phase 3 Aspire study for GTX-102, as positive developments could serve as a key near-term catalyst and further insulate the stock's value from the final setrusumab data readout.
• Acknowledge the heightened risk profile due to the Orbit study's uncertainty, but recognize the substantial upside potential reflected in analyst price targets should the trial ultimately meet its final endpoint.