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Is BridgeBio Pharma Stock a Buy on the Dip?

By Cory Renauer – Dec 29, 2021 at 5:41AM

Key Points

  • Shares of BridgeBio Pharma recently collapsed after a surprising phase 3 clinical trial failure.
  • With the exception of the recent late-stage failure, BridgeBio Pharma is a reasonably successful developer of new rare-disease drugs.
  • With two approved treatments and a development pipeline poised to deliver, it looks like the recent stock market thrashing was more severe than it should have been.

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This company's market value plunged by around $8 billion in 2021, leading contrarian investors to suspect a bargain opportunity.

Shares of commercial-stage biopharmaceutical company BridgeBio Pharma (BBIO 9.72%) fell hard recently after it reported a surprising clinical trial failure. The company's highly valued new drug candidate failed to hit the primary endpoint in a pivotal study.

Luckily, there are more clinical-stage candidates coming through the pipeline. Let's look at the strength of BridgeBio's overall pipeline to see if this biotech stock is a buy at its knocked-down price.

Scientists at work in a laboratory.

Image source: Getty Images.

Why BridgeBio Pharma tanked

This company's lead candidate, acoramidis, is an experimental transthyretin (TTR) stabilizer. Thyroid hormones and vitamin A rely on this transport protein to get around, but in rare cases, it breaks apart and aggregates into troublesome plaques that can damage the heart and other organs.

Heart damage, or cardiomyopathy due to TTR amyloidosis (ATTR-CM), is a rare condition, but there are enough patients in need of TTR stabilization to drive blockbuster sales. In 2019, Pfizer (PFE 0.52%) earned Food and Drug Administration (FDA) approval for Vyndamax, a drug similar to acoramidis. Vyndamax sales reached an annualized $2 billion in the third quarter of 2021.

BridgeBio Pharma had hoped long-term outcomes as measured by ATTR-CM patients' scores on a six-minute walking test would make acoramidis seem like a better option. Unfortunately, the phase 3 trial enrolled lightly-affected ATTR-CM patients. 

Six-minute walking test scores for patients in the placebo group only declined by 7 meters after 12 months. That means this patient population's disease wasn't progressing fast enough to show a benefit.   

Beyond acoramidis

BridgeBio Pharma has an ambitious and (with the exception of acoramidis) successful pipeline of rare-disease drugs. In February, the FDA approved Nulibry, a new therapy for MoCD type A, an ultra-rare disease.

The company also markets Truseltiq, a new treatment for cholangiocarcinoma, a rare form of bile duct cancer. It was approved by the FDA in May 2021. Sales of these two drugs haven't been large enough to bother mentioning, partly due to extremely small potential patient populations. Nulibry's target audience is estimated at just 100 patients in the U.S. and E.U. combined.

As a second-line treatment for cholangiocarcinoma, Truseltiq's addressable patient population is limited to around 4,000 patients, but this could expand soon. In 2022, the company will report results from multiple studies that could enlarge Truseltiq's addressable patient population many times over.

BridgeBio's expansive development pipeline has a handful of rare-disease drugs in clinical stage testing. For example, the company is developing encaleret, a calcium-sensing receptor regulator for the treatment of patients living with autosomal dominant hypocalcemia type 1 (ADH1). Treatment with encaleret normalized blood calcium concentrations in a phase 2 trial that produced successful topline results in October 2021. In the first quarter of 2022, the company expects to begin a pivotal phase 3 trial.

A good biotech stock to buy now

BridgeBio Pharma finished September with $599.6 million in cash after burning through $434 million during the first nine months of 2021. At this pace, the pipeline will have several chances to shine before the company needs to raise capital again.

With BridgeBio's market cap plunging to around $1.9 billion at recent prices, the stock market may be underestimating the company's ability to earn approval for new rare-disease drugs. With two approvals under its belt, and several in midstage testing now, it's reasonably safe to expect several more over the next few years. It might not happen overnight, but this stock has a pretty good chance at delivering market-beating gains to patient investors.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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