When BioMarin Pharmaceutical (NASDAQ:BMRN) acquired Prosensa last fall for $680 million in upfront cash, some investors worried that it had overpaid to get its hands on drisapersen, a therapy for Duchenne's muscular dystrophy, or DMD, that had previously suffered setbacks in clinical trials. However, with the FDA awarding BioMarin a chance for a priority review voucher in connection with drisapersen last week that could be worth hundreds of millions of dollars, it appears that BioMarin's deal could be quite savvy.
Making its way to market
Because there's no cure for DMD, and the quality of life for patients with DMD can diminish significantly over the course of their lifetime, there's a significant need for new therapies like drisapersen that can delay disease progression. Drisapersen is an exon-skipping therapy that may help restore production of dystrophin, an enzyme important to muscle function, in roughly 13% of DMD patients.
Although drisapersen is currently under FDA review for approval, drisapersen has taken a circuitous path to the regulator's desk. In 2013, drisapersen, which at the time was being co-developed by GlaxoSmithKline and Prosensa, failed to improve muscle function in a phase 3 trial, prompting GlaxoSmithKline to hand back its rights to the drug to Prosensa. However, shortly thereafter, prompting by patient advocacy groups resulted in guidance from the FDA resurrecting drisapersen's potential for commercialization, leading to BioMarin's acquisition.
In May, BioMarin made good on plans to advance drisapersen to market when it announced that the FDA had accepted its filing for priority review of the drug, clearing the way for a go-no-go decision on December 27.
Quick return on its investment
News that the FDA has granted drisapersen status as a treatment for a rare pediatric disease last week, in turn qualifying BioMarin to receive a priority review voucher that it can sell if drisapersen is approved, suggests that BioMarin could end up generating a quick return on its investment in Prosensa that could conceivably approach 50% of Prosensa's upfront cost.
These vouchers, which can be sold any number of times, and then redeemed by a purchaser to shave four months off the FDA's regulatory review timeline, have become increasingly valuable to big biopharma companies looking to speed potential blockbusters to market. Last year, Regeneron and Sanofi handed over $67.5 million to acquire one of these vouchers, which it used to accelerate the FDA review timeline for its cholesterol-busting PCSK9 drug Praluent.
In May, Sanofi bought another of these vouchers for $245 million for use on another undisclosed pipeline drug, and last week, AbbVie handed over a whopping $350 million in cash to obtain yet another similar voucher.
It's not a done deal
The increasing value of these vouchers shows that the FDA's plan to create them to spark interest in developing therapies for rare diseases affecting children is working. However, before investors get too excited about the impact of this voucher, they need to remember that BioMarin needs to win regulatory approval before receiving it -- and that may not happen.
If it does, then BioMarin may chose to use it, rather than sell it, to speed up approval for one of its own drugs. If BioMarin does decide to sell the voucher, there's also no guarantee that prices being paid for them will remain at these levels, or higher.
Regardless, as it stands today, the potential to receive this voucher makes BioMarin's purchase price for Prosensa appear to be a much better bargain than it appeared to be originally, and that may make BioMarin shares more attractive to investors.