Merrill Lynch believes BioMarin offers investors a unique opportunity to invest in a story with above-peer growth, several new product launches, a strong pipeline and the pricing power of the orphan drug market. Coverage of BioMarin was reinstated based on a probability-adjusted net present value analysis.
The company is focused on developing therapies for rare diseases. The current product portfolio has set a strong base. Merrill Lynch estimates strong sales growth in the range of 20% to 30% annually over the next few years with new product introductions.
The brokerage firm considers BioMarin to have a robust pipeline portfolio, which consists of six clinical candidates and several early development opportunities. Overall the year should be catalyst rich with a number of data releases that are expected to drive shares higher.
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Some of the scheduled releases going forward are:
- Phase 2 data from BMN-111 for achondroplasia in the second quarter of 2015
- Phase 2/3 data for BMN-701 in late-onset Pompe disease in the fourth quarter of 2015
- Phase 1/2 data for BMN-190 in Batten disease in the fourth quarter of 2015
BioMarin may also receive FDA approval for the recently acquired drisapersen for Duchenne muscular dystrophy by the end of the year as well. However in this case, Merrill Lynch assigned a 60% probability of approval, given the primary endpoint miss and uncertainty about the FDA’s acceptance of post-hoc analysis.
Total revenues are set to surpass $700 million in 2014, but the company is still running at a net loss due to high operating expenses. R&D spending has increased to $455 million to $470 million in 2014, roughly 65% of total sales, from $67 million in 2006. Seemingly, this investment has paid off, as the company is on track to launch six new products over the next four years, which are expected to contribute about $2 billion to the top line by 2020.
BioMarin shares were up 0.7% at $94.50 with two hours left in the trading day. The stock has a consensus analyst price target of $108.71 and a 52-week trading range of $55.04 to $100.95.
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