The Redemption of BioMarin Pharmaceutical

BioMarin Pharmaceutical (BMRN) has been in the doghouse in the past years, but the company is heralding 2020 as its redemption year.

This California-based biotechnology innovator has been watching its stock plummet since 2014, with the downward trend starting with BioMarin’s grand plan to find the cure for Duchenne muscular dystrophy.

This vision led to a $680 million gamble on an experimental treatment, Kydrisa. Even before the deal was finalized, however, industry experts opposed the idea like bats out of hell but BioMarin decided to go through with the ill-fated deal.

Unfortunately, the naysayers were proven right all along when the FDA rejected Kydria in 2016.

Four years after, BioMarin has come back swinging.

At the center of its redemption story are two high-value clinical assets: hemophilia gene therapy Valrox and dwarfism treatment Vosoritide.

Valrox is expected to become the most expensive drug in existence with a price tag somewhere between $2 million and $3 million. In comparison, Roche Holdings’ (RHHBY) own hemophilia A treatment, Hemlibra, costs roughly $500,000 annually.

If it receives the go-ahead from the FDA, BioMarin’s treatment will be the first-ever gene therapy available in the United States, with the company planning to target the most common types of hemophilia.

Based on the clinical trials, the patients exhibited significant improvements after the treatment. In fact, some patients had reported zero bleeding incidents for years following their first Valrox injection.

Hemophilia, which hinders a patient’s blood from clotting and causes nonstop bleeding, is known as one of the most expensive diseases to manage. At the moment, the average annual cost of hemophilia medications is $270,000 per patient. If approved, Valrox will actually be able to cut down the costs in the long run.

Barring any unforeseen roadblock, BioMarin’s hemophilia gene therapy will get the FDA green light by the third quarter of 2020.

Meanwhile, dwarfism treatment Vosoritide is now in Phase 3.

This drug is intended for children suffering from achondroplasia, which is the most widely known form of dwarfism and affects 1 in 25,000 infants. Basically, this condition is caused by an error in the patient’s gene that’s supposed to regulate bone growth, particularly in the arms and legs.

So far, BioMarin’s Vosoritide has induced faster bone growth in the patient’s bones compared to a placebo after a year of treatment.

The company plans to discuss the marketing strategy for Vosoritide in early 2021, which means the treatment will be launched in the same year.

Vosoritide is expected to rake in $700 million in peak sales.

If this also gains an FDA nod, Vosoritide will be the first-ever therapy focused on treating the underlying cause of this type of dwarfism.

In and of itself, Valrox is estimated to generate over $1.4 billion in peak sales. Vosoritide has the potential to achieve that level of blockbuster status as well simply because it will be the only approved therapy available in the market for this particular type of disease.

Taken together, both Valrox and Vosoritide have the capacity to more than double the annual revenue of BioMarin as early as 2024.

Given these expectations, the success of both drugs would catapult BioMarin to the top of the biotechnology industry and transform it into the most sought-after stock over the next decade.

So, although the company’s shares don’t exactly come cheap, this rare-disease biotech stock can still post substantial gains in 2020. After all, the primary force behind BioMarin’s growth this year is the company’s decision to create a pipeline focused on finding cures for rare, genetic conditions.

If you carefully think about it, BioMarin is actually undervalued when you consider the progress achieved by its direct competitors and the company’s near-term growth prospects.

Needless to say, BioMarin stock will be one of the red-hot commodities in a few short years.