Kyndrisa decision

The FDA (U.S. Food and Drug Administration) is expected to decide on Kyndrisa’s approval in the US market by December 27, 2015, the PDUFA (Prescription Drug User Fee Act) date.

Investors consider a new drug’s PDUFA date extremely important for an innovator company. The FDA’s decision is one of the key factors that determines whether the drug will have access to the United States, the largest pharmaceutical market in the world. An FDA rejection of a new drug means wasted research and development (or R&D) expenses for the innovator company.

BioMarin’s Share Price Falls on Negative Investor Sentiment

BioMarin Pharmaceutical’s share price

The above diagram shows that BioMarin Pharmaceutical’s share price rose 61.8%, from $92.17 on January 2, 2015, to a high of $149.13 on July 20, 2015. Investor sentiment turned positive for BioMarin in this period because on June 29, 2015, the FDA accepted for review the company’s new drug application (or NDA) for Kyndrisa (drisapersen) for the treatment of Duchenne Muscular Dystrophy (or DMD) Amenable to Exon 51 Skipping drug.

However, on August 25, 2015, Sarepta Therapeutics announced that the FDA had also accepted for review its NDA for eteplirsen, its innovative DMD drug. The potential entry of a strong competitor in the DMD space affected BioMarin Pharmaceutical’s share price, which was $121.14 on August 25.

BioMarin Pharmaceutical’s share price received another blow on November 24, 2015, when the majority of the members of the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee voted against Kyndrisa. The committee raised concerns regarding both the efficacy and safety profile of the drug. However, it’s not mandatory for the FDA ruling to agree with the committee’s opinion.

Analysts project that there is a 50% probability of Kyndrisa receiving FDA approval. But investor sentiment has been deeply affected by the committee’s opinion, resulting in a sharp fall in BioMarin’s share price. The share price has already witnessed a fall of about 35.2% from its high in July 2015. BioMarin stock was $96.60 on December 10, 2015.

Since September 2015, BioMarin Pharmaceutical’s (BMRN) share price has also been negatively affected by rising drug pricing pressures in the United States. This is similar to peers such as Amgen (AMGN), Gilead Sciences (GILD), and Celgene (CELG).

Investors can participate in the upside potential of Kyndrisa and still avoid excessive company-specific risks by investing in the First Trust NYSE Arca Biotechnology Index Fund (FBT). BioMarin Pharmaceutical accounts for about 2.8% of FBT’s total holdings.

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