After the FDA adopted a more positive stance towards uniQure's (QURE) gene therapy for Huntington's Disease, AMT-130, the agency is likely to approve the biologic treatment. As a result, QURE stock is dramatically undervalued compared with its long-term potential. However, it still poses a significant risk, making it a buy for long-term growth investors with a meaningful tolerance for risk.
www.barchart.com The FDA Is Likely to Approve the Biologic
On June 17, uniQure reported that, during a meeting with the FDA, the agency had stated that the results of a Phase I/II study of AMT-130 “would be acceptable as the primary basis” for an application for “accelerated approval” of the treatment. Given the agency's willingness to accept an early-stage study as the “primary basis” for the application, along with its decision to expedite the process, it appears that it is upbeat on AMT-130 and interested in approving the biologic. The company plans to submit the application in the third quarter of this year.
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In March, the FDA had refused to allow uniQure to submit an application for the approval of AMT-130. At that time, the agency wanted the company to conduct “a placebo-controlled trial.”
uniQure's data consists of a comparison of patients’ condition while using the drug to the “typical progression” of Huntington's without any treatment. The latter information is based on “an outside database.” Using that criteria, uniQure has reported that its gene therapy “slowed (Huntington) disease progression by 75% in a Phase 1/2 trial,” according to CNBC.
There are currently no approved treatments that slow or prevent the progression of Huntington's. Only drugs that reduce the intensity of its symptoms have been approved by the FDA.
The FDA likely became much more positive towards uniQure because its new acting commissioner, Kyle Diamantas, and the Department of Health and Human Services seem to be intent on being more flexible when it comes to approving treatments for rare diseases.
Assessing uniQure's Potential Revenue and Profits From AMT-130
In the U.S., life-saving gene therapies typically cost between $2 million and $4.5 million per dose. Since there are currently no approved treatments for Huntington's and it is such a debilitating, 100% fatal disease, it's likely that AMT-130 will be at the high end of the range or $4 million. There are currently about 40,000 Americans with the disease. Between 2013 and 2016, an estimated annual average of 1,383 privately insured U.S. individuals were diagnosed with the disease.
If 10,000 individuals receive the therapy annually and it costs $4 million per person, that would equate to an annual revenue of $40 billion for uniQure. In 2025, the company's combined cost of goods and operating expenses was $202 million. If we double that total to account for the cost of selling and manufacturing the biologic, we get a total of $404 million. Subtracting $404 million from $40 billion yields operating income of $39.6 billion.
The Potential Valuation of QURE Stock
Even if the shares trade at just two times operating income to reflect the fact that the company's profits will drop sharply in a few years after most patients have been treated, its market capitalization would be $79.2 billion, versus its current market capitalization of $1.7 billion. So QURE stock would soar 46.6 times under this scenario.
Significant Risks and a Likely Long Wait
On the downside, uniQure reported that the FDA wants the company to agree with the agency on the terms of a “confirmatory study” before it applies for approval of the biologic. The study may involve comparing AMT-130 results to those of standard-of-care therapy. The trial could take a year or two to be completed, and the FDA may not agree to approve AMT-130 until the results are in.
Additionally, of course, there's a chance that the results of the trial will not be favorable. But given the very positive data that uniQure has obtained on AMT-130's efficacy, the results will probably be upbeat.
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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