Ultragenyx (RARE) Sells Portion of Royalty Interest for $500M

Zacks Equity Research
·3-min read

Ultragenyx Pharmaceutical Inc. RARE announced that it has sold 30% of the royalty interests it receives from partner Kyowa Kirin on future sales of its rare disease drug, Crysvita in the United States and Canada. In return, RARE will receive $500 million, without any dilution of capital.

This money will be used by Ultragenyx to fund its ongoing clinical studies as well as planned commercial activities. In fact, RARE is not required to issue any capital for receiving such payment, which will allow the company to strengthen its financial position.

The transaction has been made with OMERS, one of the largest defined benefit pension plans in Canada. OMERS will start receiving payments on net product sales, starting next April. However, the royalty payments receivable by OMERS shall be capped at 1.45 times the purchase price.

Shares of Ultragenyx have plunged 23.2% so far this year compared with the industry’s 20.6% decline.

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Crysvita is being developed by Ultragenyx Pharmaceutical in partnership with Japan-based, Kyowa Kirin, as part of a collaboration and license agreement reached between the two companies in 2013.

Please note that Crysvita is a monoclonal antibody, which is approved by the FDA for two rare diseases, namely X-linked hypophosphatemia (XLH) and tumor-induced osteomalacia (TIO). The drug is also approved for similar indications in Canada. Per Ultragenyx, Crysvita generated more than $1.3 billion in net sales in the first four years from the North America market.

Apart from Crysvita, the company has two other products in its portfolio, namely Mepsevii and Dojolvi. While Mepsevii is the first medicine approved for the treatment of children and adults with MPS VII in the United States, Dojolvi is approved for treating all forms of long-chain fatty acid oxidation disorders, with a molecularly-confirmed diagnosis.

Ultragenyx Pharmaceutical Inc. Price

Ultragenyx Pharmaceutical Inc. Price
Ultragenyx Pharmaceutical Inc. Price

Ultragenyx Pharmaceutical Inc. price | Ultragenyx Pharmaceutical Inc. Quote

Zacks Rank & Stocks to Consider

Ultragenyx currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the overall healthcare sector include Jazz Pharmaceuticals JAZZ, Merck MRK and Spectrum Pharmaceuticals SPPI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Jazz Pharmaceuticals’ 2022 earnings have increased from $17.05 to $17.06 in the past 30 days. The earnings estimates for 2023 have increased from $18.05 to $18.15 in the past 30 days. Shares of JAZZ have risen 21.8% in the year-to-date period.

Earnings of Jazz Pharmaceuticals beat estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 12.8%. In the last reported quarter, JAZZ delivered a negative earnings surprise of 0.5%.

Estimates for Merck’s 2022 earnings have increased from $7.28 to $7.31 in the past 30 days. Shares of MRK have risen 22.5% in the year-to-date period.

Earnings of Merck beat estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 13.4%. In the last reported quarter, MRK delivered an earnings surprise of 18.2%.

Estimates for Spectrum Pharmaceuticals’ 2022 loss have narrowed from 55 cents to 52 cents in the past 30 days. The loss estimates for 2023 have also narrowed from 10 cents to 7 cents in the past 30 days. Shares of SPPI have fallen 34.9% in the year-to-date period.

Earnings of Spectrum Pharmaceuticals beat estimates in two of the last four quarters and missed the mark on the other two occasions, the average surprise being 5.7%. In the last reported quarter, SPPI delivered an earnings surprise of 50%.


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