Bayer snagged commercial rights to BridgeBio Pharma's lead asset, acoramidis, in Europe for $310 million. But BridgeBio stock toppled Monday.
Acoramidis is an experimental treatment for transthyretin amyloid cardiomyopathy, an inherited disease in which abnormal protein builds up on the heart. Regulators in the U.S. and Europe are now reviewing BridgeBio's application for approval. The FDA is expected to make its decision by Nov. 29. European approval could come in 2025.
Notably, the deal with Bayer includes a tiered royalty on sales that starts in the low-30% range. The $310 million payment includes upfront funding and near-term sales milestone payments. BridgeBio could also receive additional undisclosed sales milestone payments.
Leerink Partners analyst Mani Foroohar applauded the deal in a report Monday.
"Given the expense and operational lift of building EU commercial infrastructure to support the (transthyretin amyloid cardiomyopathy) launch, engaging a pharma partner with global cardiology sales muscle makes sense to us — both to maximize EU sales potential and ease (operating expense) burden/bolster the balance sheet," he said in a report.
On today's stock market, BridgeBio stock sank 9.2% to 32.35. Shares remain below their 50-day moving average, and are currently consolidating with a buy point at 44.32, according to MarketSurge.com.
BridgeBio Stock: Rivaling Pfizer
If approved, BridgeBio's acoramidis will go up against Pfizer's Vyndaqel. Last year, Vyndaqel sales climbed 36% on a strict, as-reported basis to $3.32 billion. This year, analysts polled by FactSet expect Vyndaqel to bring in $4.03 billion in sales.
BridgeBio's Ananth Sridhar, senior vice president of corporate development for cardio-renal, says laboratory testing shows acoramidis is nearly two times as potent as tafamidis in tackling the toxic elements of the disease.
Acoramidis sales are expected to start slowly with $18.7 million this year and reach blockbuster status by 2029 with $1.29 billion in sales.
Foroohar, the Leerink analyst, raised his price target on BridgeBio stock to 59 from 57. He kept his outperform rating.
Today, BridgeBio stock has a strong Relative Strength Rating of 97, according to IBD Digital. This puts shares in the top 3% of all stocks in terms of 12-month performance.
A 'Highly Competitive' Process
In July, BridgeBio said 81% of patients who received acoramidis were still alive after 30 months. In comparison, just 74% of placebo recipients survived that long. Further, acoramidis led to a 50% lower risk of hospitalization for cardiovascular-related problems. Patients who received acoramidis also had a significant improvement in how far they could walk for six minutes, a measure of disease severity.
Since then, investors have been asking BridgeBio about a European partnership for acoramidis, Mizuho Securities analyst Salim Syed said in a report. The Bayer deal "checks this box." But Syed cut his price target on BridgeBio stock to 53 from 60. He raised his peak acoramidis sales estimate to about $4 billion, up from his previous $3 billion forecast.
Syed noted BridgeBio described the deal as a "highly competitive" process. Jake Bauer, the former chief business offer for MyoKardia consulted for BridgeBio on the deal. MyoKardia sold to Bristol Myers Squibb for $13.1 billion in 2020.
Bayer makes fundamental and operational sense for BridgeBio's European partner, Syed said. But it probably wasn't who most biotech specialists would have picked. About 40% of Bayer's business comes from its pharmaceutical products, with its biggest segment being crop science.
Still, Bayer's cardiovascular business is quite large and one of its flagship cardiovascular drugs, a blood thinner called Xarelto, is going off patent this year in Europe. He noted Bayer's senior leadership was involved in the deal — a sign "that the deal matters to the company." Further, Bayer likely did its due diligence, implying the company isn't worried about Pfizer or other looming competitors.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
