RBC Capital Comments on BioMarin (BMRN) Following Prosensa (RNA) Deal

RBC Capital maintained an Outperform rating on BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) with a price target of $87. Earlier BioMarin announced a deal to acquire Prosensa (Nasdaq: RNA) for $680 million plus milestone payments. Analyst Michael J. Yee thinks BioMarin stock could be weak today, but overall he remains positive, and it doesn't change his view on BioMarin's pipeline.

"Reasons BMRN investors may view the deal with skepticism: 1) BMRN is viewed as a mid-cap more likely to be acquired itself, not making acquisitions, so some M&A premium might be taken out in short term; 2) some may read that BMRN might be less bullish on its 2015 pipeline including achondroplasia, if it finds it needs to make an acquisition 6 months before dwarfism data; 3) RNA's Phase III data failed on prespecified primary endpoint and GSK already gave the drug back," said Yee.

"While we agree chances of FDA approval could be tough on first goround given a failed Phase III trial, we'd be buyers because: 1) this deal is relatively small compared to its market cap of $13B+ so it's not that big in the broader sense; 2) consensus already believes it's a fairly low likelihood of approval for now without additional data so it wouldn't be a surprise if initially rejected on first pass; 3) GSK was the original partner on RNA's drug but then like many others - gave the drug back...this also happened to Amicus (FOLD) whose drug ended up working later on after GSK gave it back...; 4) it's only one of only 5 other drugs that BMRN has data for reading out in 2015 which are the real key reasons why we'd be a buyer of BMRN on any weakness today for a longer-term view towards its more interesting pipeline including Phase II achondroplasia data in Q2:15, Phase III Peg-PAL data, and '701 data etc. all reading out next year; 5) FDA will probably hold a panel and could be swayed by patient advocates..." added the analyst.

For an analyst ratings summary and ratings history on BioMarin Pharmaceutical Inc. click here. For more ratings news on BioMarin Pharmaceutical Inc. click here.

Shares of BioMarin Pharmaceutical Inc. closed at $85.83 yesterday.

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