Analyst Lowers BridgeBio Price Target After Debt Issuance

An analyst at a large Canadian bank is adjusting his stance on biotechnology firm BridgeBio Pharma (NASDAQ:BBIO) after the company upped its convertible senior notes offering.

In a note sent out on Monday (March 9), George Farmer, managing director of biotechnology equity research at BMO Capital Markets, told investors that the firm is lowering its price target for the California-based biotech company to US$46, down from US$52.

BridgeBio Pharma hasn’t fared well in the open markets as of late. On Wednesday (March 11), its share price was down over 16 percent nearing the end of the trading session, at US$23.89.

Farmer said BMO is revising its model under the assumption of a US$475 million convertible senior notes offering from BridgeBio, which comes with an additional US$75 million aggregate principal amount of notes for initial purchasers. The bank’s new price target for the company also takes into account transactions associated with the debt issuance and a 10-K review.

Despite the downgrade, the BMO analyst said that interest in the offering is a marker of investor certainty in the company’s continued growth.

“Apparent appetite for BBIO’s private convertible debt offering signals investor confidence in pipeline success, in our view,” Farmer wrote.

BridgeBio first confirmed the increase in its offering last week after originally informing investors of a US$350 million convertible senior notes offering with access to an additional $52.5 million aggregate principal amount of notes for initial purchasers.

The firm specializes in creating medicine for genetic diseases for patients with unmet needs. Currently, BridgeBio’s pipeline includes treatments for hereditary genetic diseases, as well as targeted oncology and gene therapy treatments.

In its Q4 and full-year 2019 financial results, released last week, BridgeBio Pharma said it has begun its first new drug application with the US Food and Drug Administration for its treatment for molybdenum cofactor deficiency, a disease that causes brain dysfunction that worsens over time.

The firm also added five drug development and discovery programs to its pipeline for treatments for illnesses in a variety of fields, from endocrinology to neurology.

License revenue for Q4 came in at US$13.8 million, while the full year brought in US$40.6 million.

Revenue from licensing was mainly from a payment made to its subsidiary, Eidos Therapeutics (NASDAQ:EIDX), when it activated its licensing agreement with Alexion Pharmaceuticals (NASDAQ:ALXN) to commercialize Eidos’ treatment of transthyretin amyloidosis — a progressive condition that causes a build up of a certain type of protein in the body’s organs and tissues — in Japan.

Net losses for the firm were at US$288 million for its full 2019 fiscal year, up significantly from the US$169 million reported in its 2018 fiscal year.

Analysts on TipRanks have the company listed as “strong buy” with a price target not that far from BMO’s at US$44.20. That represents upside of 84.9 percent from BridgeBio’s current share price.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.