Why Is Ultragenyx (RARE) Down 22% Since Last Earnings Report?

It has been about a month since the last earnings report for Ultragenyx (RARE). Shares have lost about 22% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ultragenyx due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ultragenyx Q4 Loss Narrows Y/Y, Revenues Beat Estimates

Ultragenyx reported a loss per share of 37 cents for the fourth quarter of 2020 compared with a loss of $1.62 in the year-ago quarter. However, the fourth-quarter 2020 loss included one-time gain of $79.1-million of increase in the fair value of investments in equity securities. Excluding this one-time gain, the loss came in at $1.59 per share in the fourth quarter of 2020 compared with a loss of $1.64 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $1.06 per share.

For the fourth quarter, Ultragenyx reported $91.5 million in total revenues, up f157% from the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $71 million.

Ultragenyx markets three drugs, Crysvita, Mepsevii and Dojolvi (UX007). While Crysvita is approved for the treatment of X-linked hypophosphatemia, an inherited disorder due to the excessive loss of phosphate, Mepsevii is approved to treat Mucopolysaccharidosis VII (MPS VII), also known as Sly syndrome. In June 2020, the FDA approved Dojolvi for the treatment of pediatric and adult patients with any form of Long-Chain Fatty Acid Oxidation Disorders (LC-FAOD) with a molecularly-confirmed diagnosis

Crysvita’s total revenues were $40.4 million, which included $37.5 million of collaboration revenues in Ultragenyx territories and $2.9 million of net product sales for the drug in other regions. Total royalty revenues related to European Crysvita sales were $3.6 million. Ultragenyx sold its Crysvita rights in the European territory to Royalty Pharma in December 2019.

Mepsevii product revenues were $3.7 million in the quarter. Dojolvi (UX007) product revenues were $6.4 million. Revenues for the fourth quarter also included $37.5 million related to the collaboration and license agreement with Daiichi Sankyo for Ultragenyx’s proprietary AAV-based gene therapy manufacturing technologies, which was executed in March 2020.

Full-Year 2020 Results

The company reported a loss of $3.07 per share for 2020, narrower than a loss of $7.12 in 2019. However, the 2020 loss included a one-time gain $170.4-million fair value of investments in equity securities. Excluding this one-time gain, the loss came in at $5.88 per share in 2020 compared with a loss of $7.36 in 2019. The Zacks Consensus Estimate was pegged at a loss of $3.82 per share for 2020.

For 2020, Ultragenyx reported $271 million in total revenues, up 161.3% from the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $253.25 million.

2021 Guidance

The company reaffirmed the guidance range for Crysvita which it provided at the beginning of 2021 when it released preliminary sales numbers for the drug. This range is $180 million to $190 million in the Ultragenyx territories

Pipeline Update

The Investigational New Drug (IND) application for UX701 for Wilson disease was cleared by the FDA in January 2021. The company currently expects to initiate a seamless, single-protocol phase I/II/III study in the first half of 2021.

Following scientific advice with the European Medicines Agency (EMA) and an end of phase II meeting with the FDA, the company expects to initiate a phase III study for DTX401 for glycogen storage disease type Ia (GSDIa) in the first half of 2021.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -24.09% due to these changes.

VGM Scores

Currently, Ultragenyx has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ultragenyx has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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