What happened

Shares of the rare-disease drugmaker Ultragenyx Pharmaceutical (NASDAQ:RARE) are under pressure today after the company announced that its late-stage study assessing aceneuramic acid extended release (Ace-ER) in patients with the genetically inherited muscle-wasting disorder GNE myopathy failed to meet its primary endpoint of improving upper-extremity muscle strength compared to placebo. The study also failed to meet its secondary endpoints. As of 2:20 p.m. EDT, Ultragenyx's shares are down by over 13% as a result of this significant clinical setback.  

Man holding his forehead and standing in front of a downward-trending chart.

Image source: Getty Images.

So what

Besides being one of Ultragenyx's most advanced clinical candidates, Ace-ER was forecast to have blockbuster potential as a treatment for this rare but severe muscle-wasting disorder. More broadly, drugs that target so-called orphan indications, or diseases with extremely small patient populations, like Ace-ER are highly valued commodities within the pharmaceutical space, because they tend to come with certain tax benefits, shortened review times, and extended periods of exclusivity. In short, this double-digit pullback is arguably an appropriate reaction by the market now that Ace-ER appears to be a dead end.  

Now what

Not surprisingly, Ultragenyx's management plans on discontinuing Ace-ER's clinical program after the treatment missed both its primary and secondary endpoints in this pivotal stage trial. As a result, the company's other lead orphan-drug candidates, vestronidase
alfa and burosumab, indicated for the genetically based disorders MPS 7 and XLH, respectively, are now going to play an even larger role in its near-term growth prospects. Fortunately, Ultragenyx is currently barreling toward regulatory decisions for both of these advanced drug candidates.  

So while this clinical setback is certainly disappointing, the company does have other irons in the fire that could help it to rebound in the not-so-distant future. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.