What: 2015 was a great year to be a shareholder of Ultragenyx Pharmaceutical (NASDAQ:RARE), a clinical-stage biopharmaceutical company focused on developing therapies to treat rare diseases. Investors enjoyed a 141% return during the year, according to data from S&P Capital IQ.

RARE Chart

So what: Ultragenyx showered investors with positive updates all year long. Here are a few of the key announcements made during the year: 

  • In April, Ultragenyx released data the study of its investigational drug triheptanoin (UX007) as a treatment for movement disorders associated with glucose transporter type-1 deficiency syndrome. Triheptanoin showed an ability to reduce the number of movement disorder events, and it was well tolerated in all patients.
  • Also in April, the company announced that it received two additional orphan-drug designations for triheptanoin. One came from the Food and Drug Administration for its use as a treatment of fatty acid oxidation disorders, and another came from the EU as a treatment of glucose transporter type-1 deficiency syndrome (Glut1 DS). 
  • In June, Ultragenyx released positive data from its ongoing pediatric phase 2 study of experimental compound KRN23's ability to treat X-linked hypophosphatemia, or XLH. The data showed that KRN23 reduced serum phosphorus levels in patients with no serious adverse events, giving the company confidence to initiate phase 3 trials. The data also provided a potential pathway for a conditional approval in Europe. 
  • In September, UX007 grabbed three more orphan-drug designations in Europe for Long-Chain 3-Hydroxyacyl-CoA Dehydrogenase deficiency, Trifunctional Protein deficiency, and Carnitine Palmitoyltransferase II deficiency.
  • In October, it reported positive data from a phase 2 study of triheptanoin's ability to treat patients with long-chain fatty acid oxidation disorder. The study showed that patients who used the experimental drug experienced improvements in their exercise tolerance assessments, giving the company confidence to move the drug into phase 3 trials.

All this positive clinical news caused its share price to spike and the company took advantage of its good fortune by raising capital twice during the year. As of September, it held more than $580 million in cash on its balance sheet.

Now what: Investing in companies that specialize in treating rare diseases can be very profitable -- just ask shareholders of Alexion Pharmaceuticals (NASDAQ:ALXN). Alexion Pharmaceuticals has been a multibagger for investors even though for years it only had one drug on the market that was only approved to treat two very rare diseases. That didn't stop it from generating billions of dollars in revenue, and the company has since grown to become a $36 billion behemoth.

If Ultragenyx Pharmaceuticals is ultimately successful at bringing a few of its compounds to market, then it's possible that it could become the next Alexion Pharmaceuticals. However, until it starts generating revenue from its compounds, it will remain a high-risk but high-reward investment.

Still, with all the great progress it made in 2015, I can understand why investors are so excited about this company's long-term potential.