MW These biotech stocks are getting hammered by shocking brittle-bone treatment study results

By Tomi Kilgore

Shares of both Ultragenyx and Mereo BioPharma were seeing record selloffs after disappointing trial results for setrusumab

Shares of Ultragenyx and Mereo BioPharma were rocked by disappointing late-stage trial results of their brittle-bone disease treatment.

It's looking like a poor end to 2025 for investors in two biotechnology companies that on Monday reported surprisingly disappointing trial results for a treatment for a rare bone disease.

Shares of both Ultragenyx Pharmaceutical $(RARE)$ and Mereo BioPharma Group $(MREO)$ were suffering record one-day selloffs and heading toward record lows as the biggest losers on the New York Stock Exchange.

The two biotechs are partners, as they are collaborating in the development of setrusumab for the treatment of osteogenesis imperfecta - a rare genetic bone metabolism disorder known as brittle-bone disease.

On Monday, the companies announced that Phase 3 studies of setrusumab failed to achieve their primary endpoints of statistical significant reduction in fracture rates when compared with a placebo.

"We are surprised and disappointed by these results given the promising data from our Phase 2 study and the lack of approved treatment options available to patients with OI who live with significant pain, disability and disease burden," said Ultragenyx CEO Emil Kakkis.

Cantor Fitzgerald analyst Kristen Kluska was also shocked by the trial results and the stock moves, writing in a note to clients that "we were wrong on this call."

Earlier this month, Kluska was much more optimistic about the trials after meeting with Mereo management, who were "very pleased" with trial retentions. Kluska had said then that it was a "potentially bullish signal" that patients who were on setrusumab were staying on the drug, suggesting it could be working.

If there is a bright side to the trial results, it's that the studies achieved their secondary endpoints of improvements in bone mineral density.

"Whilst we are disappointed by these results, we will be conducting additional analyses on the data to assess next steps and the best path forward for the program, especially in pediatrics given the totality of the data and lack of other treatment options for individuals with OI," said Mereo CEO Denise Scots-Knight.

Ultragenyx's stock plunged 43.3% in recent midday trading, to put it on track to break its current record one-day decline of 25.1% seen on July 11. It was also headed for its lowest close since going public in January 2014.

Shares of Mereo were doing even worse, plummeting 90.3% toward their lowest close since going public in April 2019. Their previous record-low close was 33 cents a share back on May 11, 2022.

Ultragenyx was losing about $1.43 billion in market value to bring its market capitalization down to $1.87 billion, while Mereo was shedding $1.65 billion in market value as its market cap dropped to just $35.8 million.

Mereo said it was "carefully managing" its cash resources, and was immediately cutting precommercial and manufacturing activities.

With the outsize declines, Cantor's Kluska said her bullish conviction on the stocks had been lowered substantially, but added she's "not ready to throw in the towel" yet.

Her new price targets imply that Ultragenyx shares could rise fivefold from current levels over the next 12 months, while Mereo's stock price could rise nearly 14 times what it is now within a year.

-Tomi Kilgore

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December 29, 2025 13:05 ET (18:05 GMT)

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