Why Credit Suisse Sees 25% Upside at BioMarin

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BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) has more or less missed out on the Trump rally that we have seen over the past couple of months. However it might not be too late to catch a ride on the wave, at least according to one analyst. Credit Suisse has an Outperform rating with a $107 price target, implying an upside of 26% from Friday’s close of $84.62.

Since 2017 kicked off, BioMarin has announced positive results from its hemophilia treatment. The company noted that the average annualized bleeding rate dropped about 91% for six of its patients who were receiving the highest dosage and were previously on a particular prophylactic regime.

Credit Suisse sees continued pipeline expansion as well as commercial rare disease company scarcity value at BioMarin. Not to mention, the firm believes that this company has the potential to be best in class in next-generation gene therapy.

Historically, BioMarin has outperformed during product launches, and the firm anticipates the Brineura launch in the second quarter of 2017 and upcoming launches of PEGPAL and vosoritide will drive earnings and investor interest.

Credit Suisse detailed in its report:

We see tailwinds to BioMarin’s gene therapy program from existing expertise with potential for > $900 million in 2025 revenues. We view BMN270 as highly discounted by the Street (we model 35% PoS) and anticipate continued de-risking as BioMarin discloses additional FDA/EMA interactions and moves to registrational development in Q3:17. We anticipate further mgmt. guidance on registrational trial start, trial design, physician/patient sentiment, and reimbursement negotiations will lead to incremental decreases in our risk discounting and future share appreciation.

The firm further noted:

BioMarin plans to file PEG-PAL’s BLA in Q2:17, noting recent FDA interactions indicating a path toward approval on blood phenylalanine levels. We continue to view PEG-PAL as approvable based on its ph3 dataset (open label) and await guidance on a similar path forward in the EU (announcement mid-2017).

It is worth noting that there are some downside risks to this valuation. A negative regulatory decision on Brineura, PEG-PAL and vosoritide and additional pipeline failures, as well as and base business revenues growth below assumptions, could negatively impact the stock.

Shares of BioMarin were trading down 1.5% at $83.37 on Monday, with a consensus analyst price target of $113.67 and a 52-week trading range of $62.12 to $102.49.

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