Ultragenyx Pharmaceutical (RARE): Valuation in Focus After Launching FDA Submission for DTX401 Gene Therapy

If you have been tracking Ultragenyx Pharmaceutical (RARE), the latest regulatory move may have caught your eye. The company just kicked off a rolling submission for its Biologics License Application to the FDA, targeting approval for DTX401, an AAV gene therapy designed for Glycogen Storage Disease Type Ia. This step is backed by data from its Phase 3 trial, with encouraging reductions in patient daily cornstarch needs. It is also supported by several FDA designations that signal a real possibility of bringing a much-needed therapy to market. This BLA submission seems to have sparked fresh conversations about where Ultragenyx could go next, especially following a stretch of underperformance. Shares have climbed 6% in the past month, hinting at renewed optimism, although momentum has struggled this year and the stock is down nearly 48% over the past twelve months. Other recent announcements, such as the grant of restricted stock units to new hires, add some context but do not overshadow the company’s clear focus on DTX401’s development. The longer-term view also shows a company still working to reverse a multiyear decline, despite strong double-digit revenue growth and substantial improvement in annual net income. After a challenging year and a recent bounce, the key question is whether Ultragenyx is trading at a discount, or if the market is now looking ahead and factoring in its future potential.

Most Popular Narrative: 65.4% Undervalued

According to community narrative, Ultragenyx Pharmaceutical is considered highly undervalued, with a calculated fair value much higher than the current market price. This view is driven by aggressive expectations for both earnings and revenue growth in the coming years.

The accelerating global identification and diagnosis of rare diseases, supported by advancements in genomics and genetic testing, are expanding the addressable patient pool for Ultragenyx's existing and future therapies. This trend is expected to drive sustained long-term revenue growth. Healthcare payers and regulatory agencies are increasingly recognizing the value of orphan drugs, as seen with faster development timelines (such as the FDA Breakthrough Therapy designation for GTX-102) and ongoing pricing and reimbursement wins in regions like Latin America and EMEA. These factors support robust revenue streams and pricing power over the next several years.

Can Ultragenyx live up to the numbers? The sharp projected gains all hinge on a few critical financial assumptions. Curious about what is fueling one of the largest valuation gaps in biotech? The main driver of this fair value is a bold path to profitability that could shift the entire investment case. See why this narrative stands out from the consensus.

Result: Fair Value of $86.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent losses or regulatory setbacks could still derail Ultragenyx’s path to profitability and challenge the optimistic outlook that is currently driving sentiment.

Find out about the key risks to this Ultragenyx Pharmaceutical narrative.

Another View: What Does the SWS DCF Model Say?

Taking a different approach, our DCF model looks beyond earnings multiples and focuses on future cash flows. This method also suggests Ultragenyx is trading well below its fair value. Will the market eventually catch up?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Ultragenyx Pharmaceutical for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Ultragenyx Pharmaceutical Narrative

If you see things differently or enjoy digging into the details yourself, it is easy to review the data and shape your own story in just a few minutes. Give it a try and do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Ultragenyx Pharmaceutical.

Looking for more investment ideas?

Do not let your next opportunity pass you by. The right screener can quickly identify stocks that fit your strategy and open doors to powerful trends. Explore these specially curated selections to spot growth potential and strengthen your investment approach:

• Explore companies that are shaping the future of healthcare by using healthcare AI stocks to take advantage of the growth in AI-powered innovation transforming patient care and diagnostics.
• Find value opportunities with undervalued stocks based on cash flows, where stocks trading below their intrinsic worth may provide your next investment advantage.
• Enhance your income portfolio and pursue reliable returns by seeking out dividend stocks with yields > 3% with attractive yields and consistent payouts.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com