Activist investor Elliott Investment Management has reportedly built a $1 billion stake in BioMarin Pharmaceutical, Reuters reported Tuesday as BMRN stock rocketed.
The report comes amid continued struggles for BioMarin's gene therapy, Roctavian. The Food and Drug Administration approved Roctavian in June for adults with severe hemophilia A. Last week, BioMarin reported light third-quarter earnings and sales, and cut its guidance for Roctavian.
Further, BioMarin announced last week that Alexander Hardy would succeed Chief Executive Jean-Jacques Bienaime on Dec. 1. Bienaime is retiring and Hardy is coming over from Genentech, a Roche subsidiary where he is currently the CEO.
"Given recent mixed execution, we are not entirely surprised to see an activist potentially getting involved here," RBC Capital Markets analyst Luca Issi said in a note. "However, we are a bit surprised about the timing given the new CEO was announced last week and we wonder if he was aware of this."
On today's stock market, BMRN stock surged 12.2% to 85.49.
BMRN Stock: Gene Therapy Struggles Continue
Representatives from BioMarin didn't respond to a request for comment from Investor's Business Daily. An Elliott representative said the firm declined to comment.
Elliott is known for targeting other health care firms. The firm recently played a key role in shake-ups involving Catalent, Syneos, Alexion Pharmaceuticals and Allergan. Catalent ceded some board seats to Elliott, Syneos was taken private, while Alexion sold to AstraZeneca and AbbVie bought Allergan.
"Overall, we can see multiple directions Elliott could potentially take this to unlock value (including mergers and acquisitions, cut research and development, breaking it up, take private, divest gene therapy, etc.)," RBC's Issi said. "We continue to see a relatively limited buyer's universe and await further clarity on the potential new vision for the company."
Roctavian Sales Miss Expectations
Issi kept his sector perform rating on BMRN stock.
Last week, BioMarin reported $581.3 million in third-quarter revenue, up 15%. But that meaningfully missed most expectations for $609 million to $610.2 million, according to various reports. Leerink Partners analyst Joseph Schwartz expected a lower $577.3 million.
For another quarter, Voxzogo sales topped forecasts. Voxzogo helps improve height in children with a growth disorder called achondroplasia. Sales came in at $117.6 million, below the Street's view for $123.1 million, according to FactSet.
But Roctavian brought in just $800,000 in sales, far below estimates for $12.5 million.
"Management emphasized that the slower Roctavian launch in the U.S. is due to one-time administrative requirements that should be solved soon," Leerink's Schwartz said in a report. He has an outperform rating on BMRN stock.
But the company lowered its expectations for full-year sales of Roctavian to less than $10 million. Three months ago, BioMarin expected Roctavian to generate $50 million to $150 million in sales.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
