Analysis focus: RARE
Ultragenyx (NASDAQ:RARE), which we recommended as a buy in October 2017 when it was trading at 52-week lows, has been up 50% since our recommendation. We recommended it on the basis of an upcoming approval of its Sly syndrome treatment MEPSEVII in November – which happened; and another approval of borosumab (Crysvita) in April – which also happened. We also liked its cash position, both then and now, and its sale of a Rare Disease Priority Review voucher for $130mn. We didnt like its two trial failures from before, and its overpaid purchase of another drug company – but those were already factored into the low price, and the new catalysts, we assumed, would take the stock higher. This too, happened.
The latest news for RARE Is that its Crysvita showed that it could beat conventional therapy in pediatric patients with X-linked hypophosphatemia (XLH), an inherited form of rickets (vitamin D deficiency). These conventional therapies for this rare disease, with about 12,000 patients in the US, are oral phosphate and active vitamin D, which have been used traditionally to improve pediatric rickets. Borosumab demonstrated superiority to these therapies, as we would expect since its approval. The molecule is a fully human recombinant monoclonla IgG1 antibody that binds to (inhibits) the phosphaturic hormone fibroblast growth factor 23 (FGF23), a hormone that reduces blood levels of phosphorus and active vitamin D by regulating phosphate excretion and active vitamin D production by the kidney.
What we also liked about RARE is its strong collaboration with Takeda, with milestone payments of $65mn and more in royalties. The company still has about $250mn in cash, and although the burn rate has increased by about 30%, theres still cash enough to last another year. However, theres some risk of dlution – and although we expected, or rather hoped, that the stock would reach $90s at some point after November last, I think that moment has passed.
The stock has moved strongly since the April approval. There are some upcoming catalysts in the form of a phase 2 data of borosumab in tumor-induced osteomalacia, where they already showed us some good data points. This is an ultrarare indication with only 1000 patients, but still adds to borosumabs virtuosity. There may be a filing and an approval for its UX007 product as early as end-2018, targeting long chain fatty acid oxidation disorder. The company also has a gene therapy pipeline through an acquisition. Bottomline is, while the stock has done well since we called it out last year for our subscribers, theres still some upside to it based on these catalysts.
Stocks in News: Analysis of SPPI, SNDX
Spectrum Pharma up 17% on late-stage Rolontis data
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Syndax down 22% on mid-stage entinostat data
Discussion: Syndax Pharma (NASDAQ:SNDX) reported updated results from an ongoing phase 2 study of entinostat + Merck’s Keytruda (pembrolizumab) across a range of cancers, including NSCLC, melanoma and microsatellite stable CRC. Response rate and duration in second-line NSCLC patients was poor, but the company says it has identified a subgroup with a better response rate and longer duration.
In other news
Exelixis (NASDAQ:EXEL) produced some more good news in the form of an European approval for CABOMETYX (cabozantinib) for the first-line treatment of adults with intermediate- or poor-risk advanced renal cell carcinoma (RCC), up from a second line treatment in 2016.
Dicerna (NASDAQ:DRNA) drug for primary hyperoxaluria received orphan status from the FDA.
Minerva Neurosciences (NASDAQ:NERV) drug roluperidone showed treatment effect in schizophrenia patients according to a publication in The Journal of Clinical Psychiatry. This is in line with previous publication from the same trial.
Pfizers (NYSE:PFE) Lyrica met its primary endpoint in a phase 3 trial in pediatric epilepsy patients for partial onset seizures. Lyrica is currently approved to treat epilepsy patients at least four years old, in addition to other indications.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.