Ultragenyx Pharmaceutical has several growth opportunities ahead that could lead its share price to boom over the next year, according to RBC Capital Markets. Analyst Luca Issi initiated research coverage of the pharmaceutical company, which develops treatments for rare and ultra-rare diseases, with an outperform rating and $77 price target. That suggests shares could climb 82% over the next 12 months. The stock has lost 9.5% so far in 2024, but climbed 2.5% on Monday. “We find risk/reward particularly attractive given an undemanding valuation and a clear path to profitability should any (not all) of the late stage pipeline work out,” Issi wrote in a note Monday. “Importantly, the base business continues to grow at a steady pace (~30% CAGR over the last four years), it is IRA insulated (no Medicare exposure), [loss of exclusivity] is later this decade/early next and we think the business can peak in the low $1b range and offers material downside protection,” he added. Ultragenyx is forecasting between $500 million and $530 million in revenue for 2024, driven by rare bone disease drug Crysvita, long-chain fatty acid oxidation disorder drug Dojolvi, as well as therapies Mepsevii and Evkeeza. The company also has several drugs in its pipeline that could push its share price significantly higher in the future, according to Issi. The analyst pointed to a “highly de-risked” opportunity for the company’s treatment of genetic bone disorder Osteogenesis Imperfecta, or brittle bone disease, which affects roughly 60,000 people in the developed world and currently has no approved therapies. Ultragenyx, however, has an anti-sclerostin monoclonal antibody that promotes bone formation and has provided a 67% reduction in bone fracture in a Phase II trial, lending confidence to Issi’s bullish thesis on the stock. He said he believes Phase III for this treatment is likely to follow from first interim results later this year. “Overall, we fundamentally think RARE has a drug for OI, will likely be first to market, and we see a $1b opportunity,” Issi said. The analyst is also looking ahead to Ultragenyx’s treatments for Angelman syndrome, Glycogen storage disease type 1, or GSD1a, plus Wilson’s disease as potential opportunities to drive up the stock. The company’s treatment for Angelman syndrome is a “longer shot,” he said, adding that he still finds its Phase II data to be strong and that “favorable alignment” with the U.S. Food and Drug Administration could boost the stock. In the world of gene therapy, while Issa likes GSD1a in light of its upcoming Phase III trial, the analyst believes Ultragenyx’s therapy for Wilson’s disease “can move the needle given a sizable opportunity, impressive initial data and likely better pricing power.” Wilson’s disease is a rare genetic disorder that prevents the body from eliminating copper, which then leads it to accumulate in the liver, brain and other organs.
