RBC (TSX:RY) Capital Markets has reiterated its Outperform rating on Ultragenyx Pharmaceutical (TADAWUL:2070) Inc. (NASDAQ:RARE) with a maintained price target of $77.00.
The firm expressed a positive outlook on the company's drug for Osteogenesis Imperfecta (OI), anticipating Phase III data release imminently. Despite acknowledging risks associated with the trial, such as a small Phase II cohort, sicker Phase III patients, and challenges in modeling the placebo response, RBC Capital remains optimistic about the drug's potential success.
The analyst at RBC Capital highlighted the drug's journey through various companies, including its discovery by Novartis (SIX:NOVN), subsequent licensing to Mereo BioPharma, and current development by Ultragenyx. The firm's confidence is bolstered by what it describes as compelling data from three separate trials conducted by different companies, showing consistent pharmacodynamic effects and promising fracture data. Furthermore, the literature suggests that achieving positive outcomes in fracture reduction in OI, even in small trials, is feasible.
RBC Capital also drew parallels between the drug's mechanism of action (MOA) and treatments for osteoporosis, another disease that weakens bones. The MOA has already been approved for osteoporosis based on data from a large trial demonstrating fracture reduction when compared to bisphosphonates.
The exact timing of the Phase III data release is uncertain, and RBC Capital refrained from statistical modeling due to the numerous unknowns that could affect the analysis. However, the firm anticipates potential regulatory flexibility even if the results are not overwhelmingly positive.
RBC Capital's outlook for Ultragenyx is buoyed by the company's base business, which is believed to protect the downside with an estimated value of $35 per share. Moreover, the OI drug is seen as offering significant upside potential, with a 32% risk-adjusted possibility of success. The firm also notes additional opportunities for Ultragenyx in the fields of Angelman syndrome and gene therapy, contributing to its selection as the top pick for the year 2025.
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