Credit Suisse Cuts BioMarin Price Target As Company Gives Up Revenue For Profit


BioMarin Pharmaceutical Inc. BMRN announced the termination of the development of BMN-701 for Pompe disease, besides saying that it was planning to out-license the asset. Credit Suisse’s Alethia Young maintained an Outperform rating for the company, while reducing the price target from $114 to $103.

Reasons For Discontinuation

Management announced that it is focusing on products worth more than $500M and that BMN-701 represented a $400 million opportunity. Another reason cited by the company was the presence of another treatment for Pompe disorder.

Continued development of BMN-701 might have also proved expensive for BioMarin in light of the company’s 2017 guidance for non-GAAP profitability, analyst Alethia Young pointed out. The company is now seeking a partner to bring the asset into a Phase II trial.

Reduced Contribution From BMN-701

“We had previously given the company full economic credit for development. Now, we are adjusting to give BioMarin a 20% royalty on peak sales of ~$350M for BMN-701,” Young wrote. The probability of success of the treatment has also been lowered from 65 percent to 50 percent.

BioMarin’s shares have lost 9 percent over the past one week after the company announced the termination of Drispersen and modification of its Pompe strategy.

“We didn’t think drisapersen was in the valuation, but a negative headline. Pompe is impactful to the valuation, but likely the right decision. We want the company to focus development on highest value programs,” the analyst commented.






Posted In: Analyst ColorLong IdeasPrice TargetReiterationAnalyst RatingsTrading IdeasAlethia YoungCredit Suisse