BioMarin: Maintaining Our Fair Value Estimate Following Roctavian’s U.S. Approval

BioMarin’s BMRN hemophilia A gene therapy Roctavian has received U.S. Food and Drug Administration approval, and management expects the first patients could begin to receive treatment in September, with patients able to begin navigating eligibility requirements starting today. We’ve removed the probability weighting on our sales forecast for the drug, although we’ve slightly reduced our assumed peak patients treated annually to less than 900 per year, leading us to maintain our $96 fair value estimate.

The U.S. net price is expected to be around $1.9 million after discounts, and we’re maintaining our $1.2 million average global price in our model, with the assumption that pricing outside the U.S. could be closer to $1 million (while Roctavian was approved in Europe last year, BioMarin is still negotiating pricing in Germany). Part of the discounting relates to warranties on efficacy, as BioMarin is guaranteeing four years of efficacy or will refund part of the purchase price. In the phase 3 trial, 12% of enrolled patients reverted to prophylaxis therapy during the first four years, so we think this warranty will have a relatively small effect on sales.

With first-quarter results, management lowered Roctavian sales guidance for 2023 to a range of $50-$150 million to factor in reimbursement delays in Europe, and our $93 million forecast fits in this range. Overall, we still think Roctavian is likely to reach peak sales of roughly $1 billion and that BioMarin’s rare disease portfolio warrants a narrow moat.