BBIO - BridgeBio Pharma: A Lot Of Paths To Potential Success

2023-05-15 06:29:07 ET

Summary

• We put BridgeBio Pharma, Inc. in the spotlight for the first time since last summer as the company continues to have buyout speculation around it.
• BridgeBio also has had some positive recent trial developments and executed a needed capital raise in March.
• An updated investment analysis follows in the paragraphs below.

The most effective way to destroy people is to deny and obliterate their own understanding of their history .”? George Orwell

We concluded our last article on small cap developmental firm BridgeBio Pharma, Inc. ( BBIO ) in August of last year in the following way:

The company's pipeline has been interesting enough to bring major drug makers into collaboration deals. Insiders are not selling and there are plenty of trial milestones on the horizon. Given all of this, BBIO probably merits only a small 'watch item' holding at this time pending further developments ."

It has been an interesting few months for the company as they have raised needed funding, seen some trial developments and has been once again the focus of additional buyout rumors. We recap recent events and update our analysis on BridgeBio Pharma in the paragraphs below.

Company Overview

This California headquartered clinical stage biotech concern has a pipeline of over two dozen development programs that include product candidates ranging from early discovery to late-stage development. The company also has two approved products (TRUSELTIQ and Nulibry) as well. They provide minimal revenue as are licensed to partners and are not key to this analysis on the company. BridgeBio developmental efforts are aimed at genetic diseases. The stock trades right at $13.50 a share and sports an approximate market capitalization of $2.3 billion.

Due to a large amount of drug candidates at BridgeBio, we will concentrate on some the primary ones for the purpose of this analysis as they are among the company's key assets and the furthest along in development.

Acoramidis or AG10 – A transthyretin (TTR) stabilizer

BBP - 398 - A SHP2 inhibitor for MAPK/RAS driven cancers

BBP-418 – A glycosylation substrate

Encaleret – A calcium-sensing receptor (CaSR) inhibitor

Low-dose infigratinib – A FGFR1-3 inhibitor

Recent Developments:

There has been quite a bit of news flow around the company since we last profiled it late summer. In early March, the company raised $150 million of much needed funding via a secondary offering . There has also been some movement the product portfolio and pipeline front. The capital raise came the same day BridgeBio's stock soared after the company announced positive announced positive Phase 2 data for its candidate infigratinib, which is being evaluated to treat children for achondroplasia , the most common cause of disproportionate short stature. The data showed that the baseline for annualized height velocity or AHV for the ten children in the trial with six-month visits rose to 6.77 cm/yr after treatment. The compares to the 3.73 cm/yr expected range for children with achondroplasia. Eight of these children were 'responders', as defined by an increase from baseline AHV of at least 25%. A registrational Phase 3 trial is already enrolling patients.

Some other developments since our last peek at BridgeBio Pharma

Sept 20th - Nulibry receives market authorization in Europe.

October 11th -The FDA provided fast track designation to BridgeBio's candidate BBP-398 in combination with Amgen's ( AMGN ) Lumakras. The indication approved was for adult patients with previously treated, KRAS G12C-mutated, metastatic non-small cell lung cancer or NSCLC. The first person in a Phase 1/2 trial evaluated this combination therapy to treat NSCLC was also dosed in October.

The company is also evaluating BBP-398 in combination with Bristol Myers Squibb's ( BMY ) blockbuster Opdivo. A Phase 1/2 trial to study this combination to treat advanced NSCLC with a KRAS mutation who were unresponsive to standard of care was initiated in March of this year.

A phase 3 registrational study evaluating BBP-418 to treat l imb-girdle muscular dystrophy Type 21 or LGMD2I should kick off sometime over the summer. The company is engaging the FDA around the design of this study and posted encouraging data from an ongoing Phase II trial. The addressable population of this rare infliction in the U.S. and Europe is approximately 7,000 people.

Finally, in late March ( I , II ) the company was again subject of potential takeover rumors, although nothing has come out of that conjecture to this point.

Analyst Commentary & Balance Sheet

The analyst community is quite positive on BridgeBio's prospects. Over the past two months, nine analyst firms including JP Morgan and BTIG have reiterated Buy/Outperform ratings on the stock. Price targets proffered range from $18 to $40 a share. Evercore ISI initiated the shares as a new Outperform with a Street High $40 price target on April 19th. The analyst there believes that the potential of those two assets: Encaleret for autosomal dominant hypocalcemia type 1 (ADH1) in phase 3 and infigratinib in phase 2 achondroplasia have potential ' blockbuster ' status. He further states that encaleret addresses an unmet medical need, is potentially superior to BioMarin Pharmaceutical's ( BMRN ) drug Voxzogo and could pull in ~$1 billion in peak sales. Both drugs combined could account for ~$3 billion in peak sales. Voxzogo launched in 2022 and in the first quarter of 2023 did just under $88 million of sales, up nearly 350% from 1Q2022.

He also noted that acoramidis for transthyretin amyloidosis (ATTR) is in phase 3 development. A Phase 3 registrational trial of acoramidis for transthyretin amyloid cardiomyopathy (ATTR-CM) recently completed enrollment. Topline month 30 registrational data from that trial is scheduled to be announced in late July of this year.

Approximately 15% of the outstanding shares in the stock are currently held short. BridgeBio ended the first quarter with $467 million of cash and marketable securities on its balance sheet which management has stated will fund all planned activities into the second half of 2024. Notably, the company's CFO and CEO have taken some chips off the table in 2023 and have sold just over $10 million worth of equity so far this year.

Verdict

BridgeBio has a lot of moving parts, to say the least as well as some potential key catalysts on the horizon. Top line registrational trial data around encaleret in ADH1 is due out in first half of 2024. Approximately 25,000 individuals in the U.S. and Europe are affected by ADH1. If approved, encaleret could be the first therapy specifically indicated for the treatment of ADH1.

Infigratinib looks like a potentially valuable asset and is now in late-stage development. In addition, BBP-398 development continues to proceed on multiple fronts. Finally, development of BB-418 and acoramidis are advancing nicely.

To say BridgeBio has multiple ' shots on goal ' is understating things. I did not even go into the company's early-stage gene therapy candidates or its emerging RAS franchise. If the Evercore analyst is close to being on target, just the potential of Encaleret and Infigratinib should merit a small stake in BBIO.

The company's cash burn is significant and the recent insider selling bears watching as does the large short interest in the stock. The company also has had its share of setbacks in recent years as we highlighted in our last article on BridgeBio. However, given the company's numerous paths to potential and successful commercialization, BBIO continues to merit at least a small holding within a well-diversified portfolio. If buyout rumors come to fruition, that would just be icing on the cake.

History is a set of lies agreed upon .”? Napoleon Bonaparte

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