Ultragenyx (RARE) lost almost half its value in one day in September.
The rare-disease drugmaker’s late-stage trial for an Angelman syndrome drug missed its main goal, and the stock fell to an all-time low. It was the company’s second failed late-stage trial this year.
Then my Sybil scanner, which I use to find stocks setting up to move higher or lower, flagged it. Ultragenyx showed the biggest jump in options buying and open interest of any stock I track.
The chart, I got to admit, does not look good. I like it as an investment anyway, and the reason comes down to which options people are buying.
Why Traders Are Buying 2 Years Of Time In This Stock
Open interest is the number of option contracts that have been opened and not yet closed. Volume counts what traded that day.
A jump in open interest means new positions are being opened, and in Ultragenyx, they’re being opened in options that expire in 2028.
Those traders are buying more than 2 years of time. I call that a fan club.
2 Failed Trials And A $16 Price Target
Open interest doesn’t tell you whether those traders are right, and Ultragenyx has given plenty of reasons for doubt.
In March, its late-stage trial in brittle bone disease also missed, and the stock fell more than 40%. After the Angelman failure, the company said it would make “significant expense reductions.” Evercore ISI then downgraded the stock and set a $16 price target.
Cash is shrinking, too. Ultragenyx had $436 million in cash and investments at the end of June, down from $737 million at the start of the year, according to its second-quarter report.
2 Gene Therapy Approvals Since August
Ultragenyx already sells several rare-disease drugs, led by Crysvita, and in the second quarter, revenue hit a record $214 million, up from $167 million a year earlier. The company expects $730 million to $760 million in revenue this year and says it’s on track to turn a profit in 2027.
In August, the FDA granted accelerated approval to GENGLYCOS, the first gene therapy for a rare metabolic disease called glycogen storage disease type Ia. The disease affects an estimated 1,500 to 2,500 patients in the U.S., and GENGLYCOS carries a list price of $2.7 million per patient.
Accelerated approval means Ultragenyx still has to complete more trials to confirm the drug’s benefit.
On September 17, 2 weeks after the Angelman failure, the FDA approved FAYUVI. It’s the first treatment ever approved for Sanfilippo syndrome type A, a fatal disease that attacks children’s brains.
Both approvals came with a priority review voucher, which speeds up the FDA’s review of a future drug and can be sold to another company.
I just do what Sybil tells me.
I don’t think it’s a today trade. It’s more of an investment, a stock with a big fan club.
To find out what else is on Sybil, click here to learn more.
Andrew Giovinazzi