Shares of Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) slumped around 26% on Thursday afternoon after the company and partner Mereo BioPharma said their late-stage study of setrusumab in osteogenesis imperfecta failed to meet a key interim goal.
Ultragenyx is developing setrusumab as a potential first-in-class treatment for osteogenesis imperfecta, a rare genetic bone disorder with no approved therapies in the US.
The setback came after the second interim analysis (IA2) of the pivotal ORBIT trial did not show sufficient efficacy, prompting the companies to continue the study toward a final analysis expected by the end of 2025.
“We anticipate this news will disappoint investors in the near term,” analysts at Baird wrote in a note, while maintaining their Outperform rating on Ultragenyx and a $72 price target.
Despite the negative interim readout, Baird analysts are optimistic about the broader setrusumab program. The firm highlighted that the statistical threshold for the final analysis will be less stringent, potentially making it easier to demonstrate a significant treatment effect.
The final analysis of the ORBIT study will have a less strict statistical hurdle than the interim analysis, making it easier to show a significant result. "This dynamic allows for a less robust effect to be determined to be significant,” Baird analysts wrote.
Baird also pointed to additional patient follow-up as a potential tailwind. The firm cited the Phase 2 study, where efficacy appeared stronger with longer follow-up, as a reason to remain hopeful for the final data.