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Biogen spinoff Bioverativ focuses on hemophilia

March 10, 2017

Bioverativ (BIVV) is not your standard biotech startup.

For one, the drug developer is profitable. It also holds a wad of cash with no debt. And the maker of treatments for blood disorders is looking at the prospect of $1 billion in sales this year.

Not bad for a company that’s barely a month old. Waltham, Mass.-based Bioverativ, spun off from pharmaceutical giant Biogen (BIIB) on Feb. 1, has $325 million in cash and no debt. The company began trading on the Nasdaq on Feb. 2, with the stock closing at 44.98 on the first day. The stock was off 1.6% in Friday trades, standing at 52.75 by mid-morning.

“We have a vision to build a great rare disease company that is focused on blood disorders and has the potential to create significant value for shareholders,” Bioverativ Chief Executive John Cox said recently.

With its spinoff, Bioverativ inherited two hemophilia drugs that were launched by Biogen in 2014 — Eloctate for hemophilia A and Alprolix for hemophilia B. Hemophilia A is considered to be the more serious strain of the rare genetic disorder that impairs the ability of a person’s blood to clot due to reduced levels of a certain protein.

The World Federation of Hemophilia estimates there were 187,000 people with hemophilia worldwide in 2015, of which about 18,500 are in the U.S. That’s up from 172,000 in 2014, and about 80% of those patients have hemophilia A. Bioverativ, however, estimates the hemophiliac population is much larger, at about 400,000.


Hemophilia is usually diagnosed at birth or at a very young age, and predominantly affects males. It can lead to recurrent and extended bleeding episodes that can cause pain, joint damage and life-threatening hemorrhages.

According to Bioverativ, therapies for hemophilia topped $10 billion in 2016, a figure that is growing about 7% a year. But the market for such drugs is fragmented. Shire (SHPG) has one-third of the market share, while Novo Nordisk (NVO), Bayer (BAYRY), Pfizer (PFE), CSL and Bioverativ each have 10% to 15%.

“We are aware of a number of companies, including large biopharmaceutical companies, such as Bayer, Pfizer, CSL, Roche Holding (RHHBY) and Shire that currently market or are pursuing the development of products for the treatment of hemophilia,” Bioverativ said in its filing with the Securities and Exchange Commission for the spinoff.

With a strong presence in North America and Japan, Bioverativ has generated and expects to continue to generate positive cash flows from operations since the third quarter of 2015. The company says that cash should “allow us to further invest in our marketed products and pipeline, and to pursue strategic opportunities to enhance growth.”

Double-Digit Gains

For the nine-month period ended Sept. 30, Bioverativ reported revenue of $631.2 million, up 63% from the same period a year ago, with net income of $148 million. Bioverativ revenue is expected to top $1 billion this year. In the third quarter, revenue rose 43% to $229.2 million. Adjusted earnings came in at 75 cents a share, up 60%.

Raymond James analyst Christopher Raymond initiated coverage on Bioverativ with a strong buy rating and price target of 59. In a research report Raymond said he expects Bioverativ to grow at a 10% compound annual growth rate, with revenue reaching $1.48 billion by 2021.

“And while other competitors will likely emerge, we think the portfolio is well positioned,” Raymond wrote. “We believe Bioverativ shares offer a unique mix of newly launching assets, a diverse development pipeline, and a strong balance sheet, all of which leaves it well positioned in this competitive area.”

A less enthusiastic report came from Morgan Stanley analyst Mathew Harrison, who initiated coverage on Bioverativ with an underweight rating and price target of 41, saying Bioverativ faces key risks from competition and the potential to be leapfrogged by newer therapies given its very early stage pipeline.

“We believe Bioverativ revenues are sustainable, but will face a slowing growth profile, flattening by 2020,” Harrison wrote.

Longer Lasting

One key advantage held by Bioverativ is that its two drugs last longer and thus require fewer dosages than competing products. But in the next one to three years, “two potential game-changing products which can be dosed at monthly or greater intervals (vs. weekly for Bioverativ) from Roche and Alnylam could come to market,” wrote Harrison.

Stifel Nicolaus analyst Thomas Shrader initiated Bioverativ with a buy rating and a price target of 54. Shrader views Eloctate and Alprolix as “cash cows” with strong growth prospects.

Gabelli analyst Jing He initiated coverage on Bioverativ with a buy rating and price target of 58, saying it’s the only pure-play hemophilia company and could be an attractive takeout target down the road.

“Bioverativ is an attractive takeout target but there are no near-term buyers,” wrote He. “We anticipate that competitors such as Shire and Novo Nordisk would be interested in Bioverativ and could benefit from cost synergies. However, we do not expect a takeover in the near term.”

Possible Threats

One threat to Bioverativ would be the successful development of other new technologies, such as gene therapies, which if successfully developed and approved would compete with Eloctate or Alprolix

“New therapies and technologies have the potential to transform the standard of care for hemophilia patients, and our products may be unable to compete successfully with such new therapies and technologies that may be developed and marketed by other companies,” Bioverativ said.
The new company is developing longer acting therapies that will enter clinical development this year. It will also accelerate the development of bispecific antibodies and hemophilia-related gene therapy programs. It plans to move to clinical studies with a therapy similar to the long-acting Eloctate drug. A second drug is in early-stage studies, aimed at offering a less frequent and more efficient and convenient dosing schedule, the company says.

“In addition, we intend to leverage our expertise and early research work to pursue adjacent disease areas, including other blood disorders, such as sickle cell disease and beta-thalassemia,” Bioverativ said.

Bioverativ has a co-development, commercialization and royalty bearing agreement with Swedish Orphan Biovitrum, or Sobi. Bioverativ holds rights to commercialize both agents in the U.S., Japan, Canada, and Australia. Sobi has commercialization rights in Europe, Russia, and countries in the Middle East and Northern Africa, and pays a royalty to Bioverativ based on net sales.


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