Ultragenyx Faces Setback as Bone Drug Fails in Phase III Trials

Ultragenyx Pharmaceutical Inc. has experienced a significant setback in its clinical development program, as its genetic bone disease therapy failed to meet the primary endpoint in two Phase III trials. The news has sent shockwaves through the pharmaceutical industry, resulting in a substantial market value loss for the company and raising questions about the future of its rare disease pipeline.

Trial Results and Market Impact

Setrusumab (UX143), a therapy developed in partnership with Mereo BioPharma, was being evaluated in the Orbit and Cosmis Phase III studies for osteogenesis imperfecta, a rare genetic bone disorder. The drug failed to reduce fracture rates in patients aged 5 to 25 with three different subtypes of the condition, despite showing improvements in bone mineral density as a secondary endpoint.

The announcement led to an immediate and severe market reaction:

• Ultragenyx's stock plummeted by approximately 43%, resulting in a loss of $1 billion in market value.
• As of the most recent trading day, Ultragenyx shares were down 32% from pre-announcement levels, trading at $22.67.
• Mereo BioPharma, Ultragenyx's partner, saw its shares plunge by 81% to 42 cents.

Corporate Responses and Future Strategies

In response to the trial failures, both Ultragenyx and Mereo BioPharma have announced plans to reevaluate their strategies:

• Ultragenyx CEO Emil Kakkis expressed surprise at the outcome, given the promising results from earlier Phase II trials. The company plans to conduct additional analyses on bone health and clinical endpoints beyond fractures.
• Ultragenyx is exploring potential expense reductions, although specific details have not been provided.
• Mereo BioPharma CEO Denise Scots-Knight announced "immediate reductions in our pre-commercial and manufacturing activities" and plans to accelerate partnering efforts for alvelestat in AATD lung disease.

Analyst Perspectives and Industry Implications

The trial results have sparked diverse reactions from industry analysts:

• William Blair analysts expressed shock at the outcome, noting the increased enrollment of patients with more severe disease types in the Phase III trials.
• Truist Securities, however, had been skeptical about setrusumab's potential, arguing that forming more "inherently defective" bone was unlikely to reduce fractures in osteogenesis imperfecta patients.

As the industry digests this news, attention is shifting to Ultragenyx's upcoming milestones, including:

• A Phase III readout for antisense oligonucleotide apazunersen in Angelman syndrome, expected in the third quarter of 2026.
• Potential approvals for two gene therapies, which could bolster Ultragenyx's portfolio of rare disease medicines.

The setback for Ultragenyx highlights the challenges and risks inherent in rare disease drug development, serving as a reminder of the complexities faced by pharmaceutical companies in bringing novel therapies to market.