Summary
- Today, we take a look at BridgeBio Pharma, whose stock had a large fall at the end of 2021 on some disappointing trial results.
- However, the company has several other late-stage candidates in development as well as collaboration deals with drug giants like Bristol Myers Squibb.
- An investment analysis follows in the paragraphs below.
Might and wrong combined, like iron magnetized, are endowed with irresistible attraction ."? Nathaniel Hawthorne
Today, we put BridgeBio Pharma, Inc. ( BBIO ) in the spotlight. This small biotech concern has had a huge sell-off over the past eight months, but the shares do seem to be trying to form a floor at current trading levels. Temporary reprieve or a hard bottom? An analysis follows below.
Company Overview:
BridgeBio Pharma is based in Palo Alto, California. The company is focused on developing medicines for genetic diseases. BridgeBio Pharma has a pipeline of 30 development programs that include product candidates ranging from early discovery to late-stage development. The stock currently trades just above $10.50 a share and sports an approximate market capitalization of just north of $1.5 billion.
The company has two products approved and on the market. The first is TRUSELTIQ. This is described on the company's website as:
A prescription medicine used to treat adults with bile duct cancer (cholangiocarcinoma) that has spread or cannot be removed by surgery, who have already received a previous treatment, and whose tumor has a certain type of abnormal "FGFR2" gene ."
TRUSELTIQ was approved in May of last year and is licensed to Helsinn Group.
The company also has Nulibry on the market. This medication is used to reduce the risk of death due to a rare genetic disease known as molybdenum cofactor deficiency type A. It is the only drug approved to treat this rare affliction. Nulibry was approved in the U.S. in the first quarter of 2021 and is on the verge of approval in Europe. BridgeBio sold the rights to Nulibry in March of this year to Sentynl Therapeutics. BridgeBio will receive payments from Sentynl based on the achievement of certain regulatory and commercial milestones as well as tiered royalties on sales. The company also sold the priority review voucher received when Nulibry was approved by the FDA for $110 million this May to bolster its balance sheet.
Neither of these products are key to BridgeBio's future. The main value for investors is the company's vast pipeline with some 20 compounds in development for a wide range of rare indications, several in late stage development.
As you can see above, BridgeBio's pipeline is diverse and is targeting multiple indications, many within collaboration deals with larger drug companies like AstraZeneca ( AZN ).
Recent Developments:
Unfortunately for BridgeBio's shareholders, 2021 did not end on a high note. During the last week of the year, the company announced that its ongoing Phase 3 study for acoramidis in transthyretin (TTR) amyloid cardiomyopathy (ATTR-CM) did not meet the primary endpoint at Month 12.
Acoramidis was the most important asset in the company's pipeline and had the largest potential market. BBIO fell some 70% on the day that this news came out. While leadership remains hopeful that full data from this study will support a marketing application when it comes out in mid-2023, the analyst community is not sanguine on acoramidis' prospects.
The trial results triggered analyst firms to ratchet down price targets on BBIO at end of 2021. Based on views at the time, trial results took the drug's chances of approval down to around 20% from 80% prior to that data coming out.
Fortunately, the company has several late-stage candidates that are moving forward in its pipeline, so it is not a ' one trick pony '. Various positive study results have come out since the disappointment from the month 12 results from the acoramidis trials.
In addition, in May of this year, the company signed a significant collaboration deal with drug giant Bristol Myers Squibb ( BMY ) around its SHP2 inhibitor BBP-398. This deal expands an earlier agreement between BridgeBio and Bristol Myers Squibb to study BBP-398 in combination with OPDIVO® (nivolumab) in advanced solid tumors with KRAS mutations. BridgeBio received a $90 million upfront payment as part of this expanded agreement and will be eligible for up to $815 million in potential milestone payouts as well as royalties on any commercialization. BridgeBio will continue to lead its three current Phase 1 monotherapy and BBP-398 combination therapy trials with additional support from Bristol Myers Squibb; future clinical trials will be performed and funded by the drug giant. This will further reduce operational costs for BridgeBio.
Analyst Commentary & Balance Sheet:
Analysts haven't totally ' given up the ghost ' on BridgeBio Pharma despite the company's recent travails. Since late June, Bank of America ($13 price target, up from $12 previously), Goldman Sachs ($22 price target), SVP Securities ($30 price target) and Mizuho Securities ($23 price target) have all reissued Buy or Outperform ratings on the stock.
Investors don't seem as sanguine given more than one out of every four shares of outstanding float is currently held short. A director added nearly $350,000 to his holdings in the first quarter of this year. That has been the only insider activity in the shares so far in 2022.
BridgeBio Pharma recently secured a two-year deferral for first principal payment on the company's senior debt and ended the second quarter with just under $690 million in cash and marketable securities on its balance sheet. The company has just under $1.7 billion of long-term debt outstanding. The company is focusing on reducing its quarterly cash burn by prioritizing its portfolio as well as some headcount reduction. Leadership will also look at additional collaboration agreements and other potential deals to reduce debt.
As one can see above, the company has myriad key trial milestones that will take place in 2022 and 2023. Positive news could boost the outlook and price of the stock, at which time I would not be surprised if BridgeBio took advantage of any rally in its shares to raise additional capital at that time.
Verdict:
BridgeBio Pharma is a complex company to analyze. It has myriad ' shots on goal ' and numerous developmental partnerships with larger drug companies. The ATTR-CM trial data in late 2021 was obviously a huge disappointment. However, BridgeBio Pharma has three to four other late-stage candidates that could target markets of at least $1 billion if approved.
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.
Scoundrels will be corrupt and unconcerned citizens apathetic under even the best constitution ."? William Earl Maxwell
For further details see:
BridgeBio Pharma: Down But Not Out