BioMarin Pharmaceutical (BMRN) is a biotechnology company with a strong track record of developing and commercializing therapies for serious and life-threatening rare diseases and medical conditions, suggests analyst Kevin Huang in CFRA Research's flagship newsletter The Outlook.
BMRN selects product candidates for diseases and conditions that represent a significant unmet medical need, have well-understood biology, and provide an opportunity to be first-to-market or offer a significant benefit over existing products.
By net product revenue, BMRN's bestselling drugs in 2020 were Vimizim ($544 million in sales), Kuvan ($458 million), and Naglazyme ($391 million). Together, those three drugs comprised 75% of total revenues.
However, these drugs are not the reason we have a Strong Buy rating. We are most excited by the company's late-stage clinical pipeline — namely Voxzogo (i.e., vosoritide) for achondroplasia and Roctavian for hemophilia A — because we believe that these two orphan drugs will greatly accelerate BMRN's revenue and earnings growth.
These drugs, if approved, will be transformative to the company's growth profile. Without Voxzogo and Roctavian, we estimate that BMRN's revenue and EPS will respectively grow at compound rates of 6% and 26% from 2020 to 2025. With the two drugs, we expect revenue and EPS to grow at compound rates of 19% and 36% from 2020 to 2025.
For reference, hemophilia A is a rare genetic disorder that causes people to bleed longer and more easily than most others, significantly impacting day-to-day life. There are approximately 72,500 patients worldwide living with hemophilia A, with an estimated 75% of that population having moderate to severe disease.
Achondroplasia is a rare disorder of bone growth, characterized by dwarfism, that affects an estimated 21,000 people worldwide. Aside from the obvious physical traits, achondroplasia can also cause serious health complications and delay the development of early motor skills.
In our opinion, BMRN's recent share pricing does not give enough credit to the company's late-stage pipeline because investor sentiment was severely damaged by the FDA's non-approval decision for Roctavian in August 2020.
Shares traded down 35% on the day of the unexpected decision. Nonetheless, we remain confident about the odds of approval for both drug candidates given the strength of clinical trial data presented so far.
In addition, we forecast that the commercial launches will be quite robust because both drugs target well-defined patient populations with limited to no treatment options. For Voxzogo, we anticipate a 3Q21 launch in Europe and a 4Q21 or 1Q22 launch in the U.S.
Meanwhile, Roctavian appears to be on track for U.S. and E.U. launches in the second half of 2022. Of the two, we see more potential for Roctavian, which we forecast will generate over $300 million in its first full year of sales (probably 2023).
Our Strong Buy rating reflects the approvability and commercial opportunity of Voxzogo and Roctavian, something that is, in our opinion, underappreciated by investors.
Our target price of $117 is based on our net present value analysis of BMRN's commercial and developmental therapies. Risks to our opinion and target price include complications in commercializing key pipeline candidates, competitive pressures, and weaker-than-expected sales of commercialized therapies.
