On Monday, Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE) and Mereo BioPharma Group plc (NASDAQ: MREO) experienced a steep fall in their stock prices, hitting 52-week lows according to market data. This downturn followed the public release of results from two pivotal Phase 3 studies — Orbit and Cosmic — evaluating setrusumab (UX143) as a treatment for Osteogenesis Imperfecta (OI), a genetic condition characterized by defective collagen and fragile bones prone to fractures.
The research collaboration between Mereo BioPharma and Ultragenyx disclosed that neither trial achieved statistical significance against their primary objectives, which targeted reducing annualized clinical fracture rates compared to placebo (Orbit study) or bisphosphonates (Cosmic study). Indeed, the failure to reach these critical benchmarks proved disappointing given the promising data from the preceding Phase 2 trial, signaling a disconnect between increases in bone mineral density and fracture reduction.
"We are surprised and disappointed by these results given the promising data from our Phase 2 study," commented Emil Kakkis, President and CEO of Ultragenyx, emphasizing ongoing efforts to further analyze the datasets to better understand the outcomes. Despite setbacks on primary endpoints, both studies achieved statistically significant secondary endpoints, demonstrating marked improvements in bone mineral density (BMD) relative to comparators. Additionally, the drug's safety profile remained consistent, with no new concerns observed.
Study-Specific Outcomes
Within the Orbit trial, participants treated with setrusumab exhibited substantial and statistically significant improvements in BMD when compared with placebo controls. These enhancements aligned with findings from the Phase 2 portion of the study, confirming the treatment’s capacity to increase bone mineral density in OI patients. However, this improvement did not correspond with meaningful reductions in annualized fracture rates. Notably, the placebo group experienced a low incidence of fractures, which may have affected the study outcomes.
Conversely, the Cosmic trial focused on a pediatric cohort with a notably higher baseline fracture rate than adults enrolled in Orbit. Although setrusumab-treated pediatric patients showed measurable BMD improvements and an associated reduction in fractures compared to those receiving bisphosphonates, the decrease in fracture incidence failed to reach statistical significance.
Corporate and Financial Implications
In view of these mixed results, Ultragenyx is undertaking comprehensive analyses of both studies, considering additional bone health and clinical endpoints beyond fracture rates to determine the future direction of the setrusumab program. The company is also re-evaluating its operational plans and intends to implement significant cost-cutting measures promptly to adapt to the changed outlook.
Despite the disappointment surrounding setrusumab, Ultragenyx continues to expand its commercial portfolio, generating revenue from four approved products. The company is also gearing up for a potentially transformative period with anticipated near-term launches of two gene therapy candidates and a pivotal Phase 3 data readout for Angelman syndrome.
Market Reaction
The market responded swiftly to the released trial data. Ultragenyx shares declined by 43.96% to $19.16 at the time of Monday’s market close. Mereo BioPharma Group’s stock suffered an even more pronounced fall, plummeting 89.32%. Both stocks are currently trading at new lows for the past year, underscoring significant investor concern following the trial outcomes.