Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

A major FDA drug rejection is usually met with wails of anguish, gnashing of teeth, rending of clothes, and a great selling of shares. BioMarin's investors mostly just shrugged.  

In a move expected since November, the FDA on Thursday rejected Kyndrisa, BioMarin's treatment for Duchenne muscular dystrophy, a deadly wasting disease that affects boys. The company paid $680 million for the drug in 2014, which had the potential to pass $1 billion in yearly sales if approved.

BioMarin says it plans to keep seeking FDA approval, which would require a new phase 3 trial for Kyndrisa, and will try to get approved in Europe. But the company should consider ditching a rescue operation and focus instead on its pipeline of other rare disease medicines. If the FDA rejection isn't enough to dissuade BioMarin, an FDA panel will review a competing Duchenne drug by Sarepta Therapeutics on January 22nd. 

Out-of-the-blue pipeline shocks have been known to gut companies; bad news for a Clovis Oncology cancer drug sent that company's shares down 69 percent in one day last fall. BioMarin's disappointment may already have been baked in; its shares fell 18 percent between the FDA's November warning and its rejection on Thursday. 

Still, it's a little surprising that BioMarin was down only about 2 percent on Thursday, and even went green several times during the day -- not the typical reaction to a negative FDA ruling. 

No Approval? No Problem
Investors appear to have already accounted for the rejection of BioMarin's Duchenne drug.
Source: Bloomberg
Intraday times are displayed in ET.

Maybe investors hope Kyndrisa will still somehow make it to market. More likely, though, they are happy BioMarin can finally focus on other drugs. 

The company has five rare disease drugs on the market and expects to do $1 billion in sales this year without Kyndrisa. It hasn't released 2015 results yet, but its most recent guidance was for $880 to $900 million in sales. 

BioMarin unveiled promising late-stage trial data for its treatment for a rare lung condition this week. And at JPMorgan's health care conference this week, CEO Jean-Jacques Bienaime said BioMarin may file for two new approvals in 2016. The company will reveal new data on four different rare disease treatments in the next four months, he added.

Even without Kyndrisa, BioMarin remains an appealing acquisition target in the "orphan drug" space -- meaning treatments for rare diseases -- which has been red-hot, including Shire's rare-disease-focused $31 billion deal for Baxalta.

On the Right Track
BioMarin expects to pass a billion in revenue next year
Source: Bloomberg

Kyndrisa was always a long shot, having failed in two out of three pivotal clinical trials. But investors hoped BioMarin's record of getting rare-disease drugs to market would work magic, and its shares went as high as $149 over the summer. Orphan drugs get special treatment from the FDA, with accelerated reviews and longer periods of market exclusivity. The bar for approval is not quite as high for rare-disease drugs that lack viable alternatives. 

None of that matters if tests can't produce results, however. Fortunately, after several months to get accustomed to the idea of rejection, the market seems willing to move on from Kyndrisa. BioMarin should, too. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net