Goldman Sachs Still Bullish On BioMarin Pipeline Despite Kyndrisa Pullout

Goldman Sachs remains bullish on BioMarin Pharmaceutical Inc. BMRN despite the company withdrawing its EU application for Kyndrisa in Duchenne muscular dystrophy (DMD). The move follows the May 23-26 CHMP meeting which indicated a negative opinion was forthcoming.

Saying that the outcome was expected, analyst Salveen Richter remains positive on the expected pipeline readouts in the second half.

The readouts include "BMN 270 gene therapy in hemophilia A by year end (not in our model, ~$1bn+ opportunity), potential 2017 product launches for cerliponasealfa in Batten (GSe of $421mn peak sales) and pegvaliase in PKU (GSe of $928mn peak sales) and the transition to profitability in 2017+."

Despite the pullout of Kyndrisa, the company's outlook for non-GAAP to breakeven or better in 2017 remains intact.

Following the termination of Kyndrisa and follow-on programs, Richter introduced a one-time $574.1 million charge in the second quarter and expects a reversal of roughly half the accrued contingent value rights for Kyndrisa in the EU totaling $40 million.

The analyst also include a one-time $70.2 million tax benefit and awaits FY16 GAAP net loss guidance (post final restructuring) on the second quarter earnings call. Richter's FY16 GAAP and non-GAAP EPS estimate change to ($0.22)/($5.16) from ($0.51)/($2.06).

Richter has a Buy rating and $126 price target on the stock, which fell 3.7 percent to $86.32.