Biotech Market Update - Gabelli Research Analyst Jing He (4-9-2018)

Biotech Market Update - Gabelli Research Analyst Jing He (4-9-2018)

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Transcript:Hi. My name is Jing He and I’m a biotech analyst at Gabelli. Today Novartis announced the acquisition of Avexis, ticker AVXS, for $8.7 billion or $218 dollars per share in cash. This represents a premium of 88 percent to its last closing price of $116. Its leading product is AVXS-101, a gene therapy to treat a rare disease called spinal muscular atrophy, or SMA, the leading genetic cause of infant mortality. Although Novartis has an SMA drug in pipeline, we do not expect antitrust issues due to different mechanism of actions. The deal is expected to close in mid-2018. We believe the deal indicates that buyers are becoming more risk seeking in acquiring technology platforms. It is positive for other gene therapy companies including BioMarin, ticker BMRN, Bluebird Bio, ticker BLUE, Spark Therapeutics, ticker ONCE and Sangamo Therapeutics, ticker SGMO. We have a Buy recommendation on BioMarin, which has 179 million shares out, trading at $78.80, equity market cap $14.1 billion, net cash $600 million and total enterprise value $13.5 billion. We believe its gene therapy for hemophilia A, the most advanced gene therapy for a major rare disease, is undervalued within its comprehensive orphan drug portfolio.



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