Activist investor Elliott has drugmaker BioMarin in its sights

New York — Activist investor Elliott Investment Management has built a stake in BioMarin Pharmaceutical and has been in discussions with the biotechnology company for months about its future, according to two people familiar with the matter.

The hedge fund, which oversees about $60bn in assets, has spent more than $1bn on the stake in BioMarin, which focuses on rare genetic disorders and is valued at about $16bn, the sources said.

The nature of the conversations between San Rafael, California-based BioMarin and Elliott, which is headquartered in West Palm Beach, Florida, and any demands the hedge fund may have made remain under wraps. 

Elliott declined to comment, while a representative for BioMarin did not immediately respond to a request for comment.

BioMarin shares rose 12% to $85.36 on the news in New York on Tuesday.

BioMarin is trying to find its footing amid a change in CEOs and slow progress in the launch of its drug Roctavian to treat haemophilia.

After the company last week lowered its 2023 guidance for Roctavian, some analysts cut sales forecasts for the coming years, even though they still see the drug hitting blockbuster status of $1bn annually in the long run.

Before news of Elliott’s engagement, BioMarin shares were down 24% this year, significantly underperforming the iShares Biotechnology ETF, which is down 8.6%.

The poor share price performance has led some analysts to speculate about whether the company could become a takeover target.

Analysts noted that BioMarin’s therapies are hard to manufacture and that its entire portfolio is excluded from Medicare prescription drug price renegotiations could appeal to buyers.

BioMarin said last week that Jean-Jacques Bienaime, 70, who has led the company since 2005, will be replaced by veteran healthcare and biotechnology executive Alexander Hardy, currently CEO of Genentech, on December 1.

“A new albeit very experienced CEO gets put in place who may explore BioMarin’s strategic value more aggressively,” Jefferies analysts wrote on November 1.

Bienaime will keep his board seat until next year’s annual meeting and remain an adviser to the company through to the end of 2024. Harvey will join the board and Richard Meier, who has served as lead independent director since 2015, will become chair, replacing Bienaime.

Elliott has previously targeted other healthcare companies including Catalent, where it settled for board seats in August, and Syneos, participating in a consortium that took the company private this year.

Elliott also successfully pushed for drugmakers Alexion Pharma and Allergan to be sold.

Reuters