Is BioMarin A Buy Ahead Of This Important Data Release?

In a report published Monday, Leerink analyst Joseph P. Schwartz reiterated an Outperform rating and price target of $136 on BioMarin Pharmaceutical Inc. (NASDAQ: BMRN). The analyst believes that the stock's offers a positive risk/reward profile heading into the release of the BMN-111 data.

The analyst expects a 25 percent probability of success for the drug candidate, based on the positive preclinical data, as well as its mechanism of action, which was offset by the limited visibility into the impact on achondroplasia patients. "The major unknown is whether BMRN can find a dose which is effective and does not cause excessive symptomatic hypotension," Schwartz stated.

At the same time, the analyst expects the efficacy data from BMN-111's Phase 2 dose escalation study in achondroplasia to provide limited information. "Due to the small size and short duration of the study we believe that more meaningful height velocity improvements are likely to be seen than bone growth ratio improvements (so-called anthropomorphic benefits, which clinicians believe are more important for their patients' health). However, the former may be considered a rough surrogate for the likelihood of improving the latter with chronic treatment," the Leerink report said.

BioMarin targets a minimum improvement of 50 percent in height velocity, which the analyst believes would be a "relatively small addition in stature" of a mere 2cm per year. Given this low target and the "very impressive" animal data, the analyst expressed optimism that the trial would meet its endpoint.

However, the Leerink report also added that "although KOLs that we have spoken with believe that as little as a 10-25 percent enlargement in a patients' spinal canal aperture could translate into a significant health improvement for their patients who often have many physical complications and require many surgeries as a result."

The analyst now expects a 25 percent probability of BMN-111 being launched in 2018 and achieving peak sales of $1 billion per year.