Ultragenyx (RARE): Is the Stock a Buy Ahead of the Setrusumab Final Readout?

The biotech sector is no stranger to volatility, but few companies have experienced such a dramatic swing in sentiment as Ultragenyx (NASDAQ: RARE). After its setrusumab interim data miss in mid-2025 sent shares plummeting 26%, investors now face a critical question: Is this a buying opportunity ahead of the December 2025 final readout, or a risk-laden gamble? This analysis weighs the near-term headwinds against Ultragenyx's long-term potential, anchored by its rare disease pipeline and the transformative upside of setrusumab's success.

The Setrusumab Interim Miss: A Speedbump or Roadblock?
Setrusumab, a first-in-class antibody targeting sclerostin, is being evaluated for osteogenesis imperfecta (OI), a rare genetic disorder causing brittle bones. While the interim analysis (IA2) failed to meet the strict early stopping criteria (p<0.01), the Data Monitoring Committee (DMC) confirmed the drug's safety profile, allowing trials to continue. Analysts at Cowen and Canaccord Genuity argue that the lowered statistical thresholds for the final analysis (p<0.04 for Orbit, p<0.05 for Cosmic) increase the likelihood of success. Notably, the final data will assess annualized fracture rates, a clinically meaningful endpoint.

The interim miss is best viewed as a temporary setback, not a death knell. As William Blair analysts noted, the Phase 2 data already demonstrated fracture reduction trends, and patients in the ongoing trials have been on therapy for over a year. If the final analysis confirms these effects, setrusumab could become the first FDA-approved treatment for OI, addressing a market of ~60,000 patients.

Liquidity and Financial Resilience
Despite a Q1 2025 net loss of $151 million, Ultragenyx's financial footing remains robust. The company reaffirmed its 2025 revenue guidance of $640–$670 million, driven by growth in Crysvita (hypophosphatemia) and Dojolvi (PMM2 deficiency). A current ratio of 2.4 underscores its ability to fund ongoing trials, including setrusumab's Phase 3 programs and late-stage gene therapies like UX111 and DTX401.

Analyst Sentiment: Prudent Optimism
While the stock's post-miss drop to $30.60 reflects investor pessimism, consensus sentiment remains cautiously bullish. Cowen's $86 price target reflects a >70% probability of success, citing the lowered statistical thresholds and the drug's potential to reduce fractures by over 40%. Even skeptical analysts like Morgan Stanley ($65) acknowledge the binary nature of the final readout, with upside potential outweighing downside risks for long-term holders.

Catalysts Beyond Setrusumab
The stock's near-term trajectory hinges on setrusumab, but two other FDA decisions in 2025 provide further upside catalysts:
1. UX111 (Sanfilippo Syndrome Type A): The gene therapy's PDUFA date is August 18, 2025. Phase 2 data showed rapid reductions in heparan sulfate (a biomarker of disease progression) and improvements in cognitive metrics.
2. DTX401 (Glycogen Storage Disease Type Ia): A mid-2025 BLA submission is expected, with the Phase 3 GlucoGene study demonstrating a 60% reduction in cornstarch intake—a life-altering milestone for patients requiring continuous glucose management.

These therapies, if approved, could diversify Ultragenyx's revenue streams and validate its gene therapy platform.

Valuation: A Discounted Pipeline?
At current levels (~$30.60), Ultragenyx trades at a significant discount to its peers. The 12-month forward P/S ratio of ~2.5x is below the rare disease average of ~4–5x, despite its pipeline's potential. Even in a base-case scenario where setrusumab succeeds but UX111 and DTX401 face delays, the stock's upside could exceed 100% if Cowen's $86 target materializes.

Investment Thesis
Ultragenyx presents a compelling risk-reward proposition for investors willing to tolerate binary event risk. The setrusumab final data is the near-term linchpin, but the broader pipeline and strong liquidity position mitigate downside. Key considerations:
- Upside Case: Positive final readouts could catalyze a multi-bagger rally, particularly if setrusumab secures accelerated approval.
- Downside Case: A failure would likely send shares to $20–$25, but the company's diversified pipeline and existing revenue streams reduce existential risk.

Final Call
While the interim miss justifiably spooked short-term traders, the long-term story remains intact. For investors with a 12–18-month horizon, RARE offers asymmetric upside. The stock's valuation, coupled with upcoming catalysts, suggests a strategic entry point ahead of December's final data. Hold for the final readout, but consider accumulating now on dips.

Disclosures: This analysis is for informational purposes only. Consult a financial advisor before making investment decisions.