NEW YORK (TheStreet) -- Shares of drugmaker BioMarin Pharmaceutical (BMRN) are slipping this morning after research firm Baird broke with the recent trend of positive coverage on the stock with a downgrade.
BACKGROUND: On Wednesday, June 17, BioMarin announced results of a Phase 2 proof-of-concept and dose finding study of vosoritide in children with achondroplasia, a mutation that is a common cause of dwarfism. 10 of the 26 children participating in the study that were treated with 15 micrograms per kilogram per day had a mean increase of 50% in their annualized growth velocity compared to their annualized prior 6 month natural history baseline growth velocity, the company reported. After the study data was announced, Piper Jaffray analyst Joshua Schimmer raised his price target on BioMarin to $147, stating that he views the drug as "de-risked" following the update and sees potential peak revenue of above $1B for vosoritide. Analysts at Barclays, meanwhile, told investors that the study, in effect, returned children with achondroplasia to normalized growth patterns and the firm raised its price target for BioMarin to $156. SunTrust, which said it believed that the data for vosoritide in dwarfism was "compelling," raised its target on the stock to $170 from $151 per share.
WHAT'S NEW: In a note to investors this morning, Baird transferred coverage of the stock to Brian Skorney, who then downgraded the shares to a Neutral rating from Outperform. Skorney noted that vosoritide showed meaningful benefit for achondroplasia, but believes BioMarin's recent pipeline updates are now fairly valued in the stock's current price. Further, the analyst attributes drisapersen, the Duchenne Muscular Dystrophy drug the company acquired by buying Prosensa earlier this year, as a significant driver for BioMarin's 37% move higher year-to-date, but he is skeptical that drisapersen has a beneficial therapeutic index. Even if the drug gets approved, a competing treatment being developed by Sarepta (SRPT) would also need to be rejected by the FDA for BioMarin's drug to live up to commercial expectations, Skorney contends. In conjunction with the transfer and rating change, Skorney did raise his target on the stock to $133 from the firm's prior $125.