Dive Brief:

• Ultragenyx lost almost half its value Thursday after reporting the failure of a key experimental treatment for the rare condition known as Angelman syndrome.
• Known as GTX-102 or apazunersen, the therapy missed on both the primary and secondary endpoints in the study, Ultragenyx said Wednesday after the market closed. “There were no differences between the treated and control groups that could support efficacy,” it said.
• Ultragenyx now plans to evaluate the GTX-102 program and “make a decision on its disposition.” In the meantime, the company is looking for “significant expense reductions” as it focuses more on approved products and strives toward profitability in 2027.

Dive Insight:

Investors had eagerly anticipated the Phase 3 study in Angelman syndrome after the treatment showed promise in early research. While study failure announcements can include a glimmer of hope about a certain subgroup or future analysis, the language from Ultragenyx “leaves very little room for an optimistic interpretation,” Leerink Partners analyst Joseph Schwartz wrote in a note to clients.

The setback may also have a ripple effect. Two companies — Ionis Pharmaceuticals and Oak Hill Bio — are developing Angelman therapies that work in a similar way. Ionis shares fell 4% in early trading Wednesday; Oak Hill cut a deal in July to go public by the end of the year. Still, multiple analysts believe those companies may see better results by offering higher doses or superior potency.

Angelman is a rare neurogenetic disorder that causes issues in both the brain and body. Some patients can’t walk, and most can’t speak; they need care their whole lives. The condition has no approved treatment and a history of unsuccessful attempts by drugmakers hoping to bring the first therapy to market.

For Ultragenyx, the study outcome fundamentally shifts the view of the company for investors, Schwartz wrote. Although Ultragenyx has five approved products — including its first gene therapy as of August — it has yet to achieve profitability. None of its marketed medications are poised for blockbuster status. And the company’s latest plan to seek cost cuts comes after layoffs and a restructuring announced in February.

While Ultragenyx has another therapy for a rare condition called Sanfilippo syndrome that may be approved in coming weeks, the potential doesn’t match what’s now lost with the Angelman treatment, analysts wrote. Some expect peak sales for that medication, UX111, to reach $120 million to around $240 million, compared with previous estimates of $1.8 billion or more for GTX-102.

“The investment case has changed shape,” Schwartz wrote to clients. Ultragenyx “is clearly now a commercial and expense story rather than a pipeline execution story.”