BBIO - BridgeBio Pharma: Taking Some Profits

2023-12-04 16:44:43 ET

Summary

• BridgeBio Pharma, Inc. has seen its stock more than double since May, triggered by positive trial results for its late-stage asset Acoramidis.
• The company has a unique business model focused on developing therapies for individual diseases and building centralized commercial capabilities.
• Analysts are optimistic about BridgeBio's prospects, with price targets ranging from $35 to $60 per share.
• Where does the stock go from here?  An updated analysis follows below.

History will be kind to me for I intend to write it .”? Winston S. Churchill.

Today, we put mid-cap biopharma concern BridgeBio Pharma, Inc. ( BBIO ) back in the spotlight for the first time since May of this year. That article concluded that BridgeBio merited a small holding within a well-diversified biotech portfolio. The stock has more than doubled since then, triggering another review. An updated analysis follows below.

Company Overview:

Palo Alto-headquartered BridgeBio Pharma has two approved compounds on the market in TRUSELTIQ and Nulibry, which are out-licensed and generate little revenue. More importantly, BridgeBio has a pipeline of more than two dozen candidates within a vast pipeline focused on genetic diseases. These range from early discovery to late-stage development assets. Click here for a full overview of BridgeBio's pipeline candidates. The stock currently trades around $31.00 a share and sports an approximate market capitalization of $5.4 billion.

The company has a fairly unique business model, which it describes thusly:

Our hub-and-spoke network of affiliate companies are hyper-focused on developing therapies for individual diseases. At the same time, we are building centralized commercial capabilities that prioritize efficiency, rigor and scale ."

Recent Developments:

The primary trigger for the stock's big rise since we last looked at BridgeBio was trial results around the company's main late-stage asset, Acoramidis. In mid-July, the company disclosed encouraging Phase 3 results evaluating acoramidis to treat transthyretin amyloid cardiomyopathy, or ATTR-CM .

Management presented further data from this pivotal study at the European Society of Cardiology Congress six weeks later. BridgeBio plans to file a marketing application seeking approval for acoramidis to treat ATTR-CM in the U.S. by the end of this year. The company will do the same for global approvals in 2024.

BridgeBio's near and medium-term future will largely be driven by acoramidis approval and rollout to treat ATTR-CM. Management did provide a good synopsis around its progress with the myriad other compounds in development within its diverse pipeline within its third quarter earnings press release .

Analyst Commentary & Balance Sheet:

The analyst community is very optimistic about BridgeBio's prospects. Since Q3 results were posted on November 2nd, seven analyst firms including Goldman Sachs and JPMorgan have reissued Buy/Outperform ratings on the stock. Price targets proffered range from $35 to $60 a share.

In late October, Cantor Fitzgerald initiated coverage on BridgeBio with an Overweight rating and $50 price target. Here is the commentary from the analyst at Cantor, which called BBIO a "conviction pick" in the biotech space:

We expect BridgeBio to generate more than $5B in peak sales in 2030, mainly from its investigational therapy acoramidis, which has already generated promising data against cardiomyopathy in ATTR amyloidosis (ATTR-CM). Acoramidis could generate over $1B in peak sales, even though the company will find it difficult to take share from Pfizer (PFE) , which markets a rival amyloidosis therapy called Tafamidis ."

An article on Seeking Alpha went into how acoramidis might stack up against Tafamidis. ATTR-CM is a large and growing market, it should be noted.

Approximately 15% of the outstanding float in the shares is currently held short. Several insiders have been frequent sellers of the stock in 2023. So far in the fourth quarter, they have sold nearly $2.4 million worth of equity collectively. In early November, the company filed a prospectus related to the proposed resale of just over nine million shares by selling shareholders.

The company ended the third quarter with just over $520 million worth of cash and marketable securities on its balance sheet . Of which, some $316 million was raised via PIPE financing late in September. The company has posted a net loss of just over $480 million in the first nine months of 2023 as well as just under $80 million of stock-based compensation expenses. BridgeBio also lists just over $1.7 billion in long-term debt on its third quarter 10-Q . Of which, $543 million is from notes due in 2027 and $736 million is from notes due in 2029.

Verdict:

When we last took a look at BridgeBio Pharma, the stock was selling at just under $14.00 a share. The stock has more than doubled since then, and a lot of good news seems baked into the shares at over $30 a share. In addition, BridgeBio Pharma, Inc. insiders seem to be taking more money off the table, and the company's balance sheet has a good slug of debt contained on it.

Therefore, I am letting discretion be the better part of valor and taking profits in half my position on my small " watch item" holding in BBIO. That way I have a " free ride" on my remaining 50% stake in BBIO which could prosper significantly if the company gets anywhere close to Cantor's $5 billion in sales projections for 2030.

The first duty of a man is to think for himself” .? Jose Marti.

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