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Goldman Sachs Sets BioMarin Target 75% Above Current Price

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With sales of $1.6 billion over the past year, BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) will get a hefty revenue boost with the introduction of its hemophilia A therapy, which is expected later this year.

Valrox is forecast to reach sales of more than $1.2 billion by 2024, according to pharmaceutical intelligence provider Evaluate. The San Francisco-based biotech's application is currently being reviewed by regulators in the U.S. and Europe.

In anticipation of a 2020 launch, the company is gearing up manufacturing at its Novato, California plant, more than doubling capacity to 10,000 doses.

The upgrade is important "because first-mover advantage in gene therapy is fundamental in a sense that every time you treat a patient that patient is off the market," BioMarin Chairman and CEO Jean-Jacques Bienaime said at the annual J.P. Morgan Healthcare Conference.

The company's shares trade at about $86, a bit higher than the middle of its 52-week range. The 23 analysts offering 12-month price forecasts for have a median target of $113, with a high estimate of $159 and $77 on the low side, reported CNN Business. It is rated a buy.

Goldman Sachs (NYSE:GS) is one of those most bullish about BioMarin's prospects. The company made the investment bank's coveted Conviction List, according to an article on 24/7 Wall St. The list is made up of the firm's top picks for high net worth and institutional accounts. Goldman's objective for the shares is $159.

Goldman likes that the company posted solid earnings last year and, in addition to Valrox, is developing a treatment for achondroplasia, which causes dwarfism. The company also sells a number of drugs, including Palynziq, an enzyme-substitution therapy that treats phenylketonuria, a genetic disorder that affects the brain. Another factor might be built into Goldman's price objective: the chance that BioMarin could be acquired, with Roche (RHHBY) mentioned as a likely suitor.


One of the company's top sellers, Kuvan, which also treats phenylketonuria, does face generic competition by the end of 2020. But RBC Capital Markets analyst Kennen MacKay downplayed the impact in a note, according to a recent Barrons article. "We believe the market is already pricing in what we see as a very severe impact of genericization," MacKay wrote, "And see upside to estimates arising from the potential of BMRN's high-touch patient support efforts to retain patients."

MacKay upgraded BioMarin to outperform from sector perform and set a new price target of $113, up from $111.

BioMarin is in the lead for hemophilia A treatments, but does face challenges from Roche acquisition Spark Therapeutics and Sangamo Therapeutics Inc. (NASDAQ:SGMO). Early results from Sangamo's studies indicate its gene therapy could be a formidable competitor.

Disclosure: The author holds no positions in any of the companies mentioned in this article.

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This article first appeared on GuruFocus.