BioMarin Pharmaceutical Inc., ProSensa Holding N.V. Marriage Makes Sense for Investors If Regulatory Hurdles Can Be Overcome

Published: Nov 24, 2014

BioMarin, Prosensa Marriage Makes Sense for Investors If Regulatory Hurdles Can Be Overcome

November 24, 2014

By Riley McDermid, Breaking News Sr. Editor

BioMarin Pharmaceutical Inc. ’s acquisition today of ProSensa Holding N.V. for $680 million, plus up to $160 million in contingent milestones payments, was unexpected but could provide “considerable” value for investors, said Joshua Schimmer, biotech analyst with Piper Jaffray, on Monday. It will also acquire the company’s promising Duchennne muscular dystrophy drug candidate, drisapersen.

Under the terms of the deal, BioMarin will buy all of Prosensa’s issued and outstanding shares and all ordinary share equivalents with cash for $17.75 per share. There are then two built-in regulatory milestones that will have to be met before the Prosensa can cash in: The first for U.S. approval of drisapersen in the U.S. no later than May 15, 2016, and the second for approval in Europe no later than Feb. 15, 2017.

Schimmer said the deal made sense when synergies are considered. “BioMarin’s expertise in Orphan Drug approvals and synergy with its other programs for inherited muscle diseases make this a strategic acquisition for a modest price,” wrote Schimmer in a note to investors.

“We agree that experience with PTC Therapuetics' (PTCT) Ataluren in EU bodes well for drisapersen approval, and given the unmet need in the U.S. we believe FDA approval is likely as well.”

Still, there is still substantial hurdles to be overcome before the deal is done and dusted, said Schimmer. “There is unquestionably both regulatory and competitive risk,” he said. “As a result, while we are adding drisapersen to our model, we are also increasing our discount rate for the company overall.”

Schimmer said that BioMarin had a “decent explanation” for mixed datasets for the drug, telling analysts it emphasizes the totality of the data, an explanation for the missed Phase III clinical trial results (new clinical centers, more severe patient population, prolonged time to treatment benefit) and de-emphasized dystrophin expression data while emphasizing MRI fat infiltration data.

“Given the enormous unmet need and patient demand for a new therapy, we believe these will suffice for both U.S. and EU approval, although obviously that's not a slam dunk,” said Schimmer. “The NDA submission will be completed in 1Q15 and the MAA filing in the EU is likely to be completed in 2015. BMRN did have access to communication from the regulatory authorities which should help them better gauge approval prospects.”

If BioMarin can navigate all of those different challenges, it may have a major payday waiting—the company estimates there are 10,000 patients with a suitable genetic mutation with DMD who may be eligible for drisapersen globally.

“As such, this represents a multi-billion dollar product opportunity even if the market is split,” said Schimmer. “Ultimately our greater focus is increasingly on gene therapy programs for DMD, and we note BioMarin's emerging gene therapy platform may position the company strategically in that field as well.”

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