BMRN:
Initiating with Buy and $17 price objective
We are initiating coverage of BioMarin with a Buy rating and $17 price objective.
We believe BioMarin stands apart from many small cap biotech stories by
offering: (1) developmental and commercial expertise in rare enzyme deficiency
diseases; (2) two marketed products, Aldurazyme and Naglazyme; (3) a lead
product candidate, Phenoptin, which has already demonstrated positive phase III
data; (4) a well-articulated path to profitability; and (5) strategic management.
Two products for rare enzyme deficiency diseases
BioMarin has two marketed products. Aldurazyme, partnered with Genzyme in a
JV, and Naglazyme address rare enzyme deficiency diseases called MPS I and
MPS VI, respectively. We estimate peak sales for Aldurazyme at about $250mn
and for Naglazyme at about $160mn, but we believe there is upside potential.
Positive phase III data for Phenoptin in PKU
BioMarin’s lead product candidate, Phenoptin, has already demonstrated positive
phase III data in the treatment of mild to moderate phenylketonuria (PKU), and
assuming approval in 2008, we estimate peak sales at about $125mn.
Price objective and risks
We do not expect BioMarin to be profitable until at least 2008, but we believe the
stock is undervalued at current levels based our prospective sum-of-the-parts
NPV analysis. Key risks are weak sales of Aldurazyme and Naglazyme and
failure to commercialize Phenoptin. |
