Blueprint Medicines Corporation

Blueprint Medicines Corporation (NASDAQ: BPMC) is a global precision therapy company focused on inventing life-changing therapies for people with cancer and hematologic disorders. The company is currently delivering AYVAKIT/AYVAKYT (avapritinib) for the treatment of patients with PDGFRA exon 18 mutant gastrointestinal stromal tumors (GIST), and GAVRETO (pralsetinib) for the treatment of metastatic RET fusion-positive non-small cell lung cancer (NSCLC), advanced or metastatic RET-mutant medullary thyroid cancer (MTC), and advanced or metastatic RET fusion-positive thyroid cancer. BPMC delivers approved medicines directly to patients in the United States and Europe and is also globally advancing multiple programs for genomically defined cancers, systemic mastocytosis, and cancer immunotherapy. As of May 24, 2021, the company’s market capitalization stood at USD 5.63 billion.

Encouraging Trial Data for GAVRETO: On May 19, 2021, the company announced the presentation of the updated Phase 1/2 ARROW trial data demonstrating durable clinical benefits of GAVRETO in metastatic RET fusion-positive non-small cell lung cancer NSCLC and other advanced solid tumors. GAVRETO showed high response rates in treatment-naive patients with RET fusion-positive NSCLC, and included clinical activity across several RET fusion-positive tumor types.

Rapidly Advancing Pipeline (Source: Pipeline Report, April 12, 2021)

Q1FY21 Results: The company reported a sharp uptick of 249.86% in total revenue to USD 21.57 million in Q1FY21 (ending March 31, 2021) compared to USD 6.17 million in Q1FY20. The collaboration revenue, under collaborations with F. Hoffmann-LaRoche Ltd. and Genentech, Inc. (collectively, Roche) and CStone Pharmaceuticals, was USD 12.62 million in Q1FY21, 3.66x of USD 2.71 million generated in Q1FY20. Net loss for Q1FY21 was USD 99.71 million, lower than USD 110.96 million in Q1FY20.

Key Risks: The company has two approved precision therapies (AYVAKIT/AYVAKYT and GAVRETO). While it has initiated the commercial launch of both the therapies in the US and of AYVAKYT in Europe, it has limited experience as a commercial company. Should it fail to successfully commercialize its current or future approved drugs, its operations and financial state of affairs could be seriously affected. Further, the company is dependent on third-party suppliers for the production of its drugs and does not have a manufacturing facility of its own. This may hamper its ability to meet product demand and hence, the business as a whole.

Outlook: In its Q1FY21 Report, the company stated that it expects to obtain regulatory approval from the FDA and launch AYVAKIT for the treatment of patients with advanced SM and initiate a global Phase 1 trial of BLU-945 in Q2FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BPMC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Stock Recommendation: BPMC has declined by 4.02% in the past 6 months and is currently at the mid-point of the 52-week range of USD 61.50 to USD 125.61. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 108.73. Considering the strong financial performance, commercialization attempts, and successful collaborations with Roche and CStone, we recommend a “Buy” rating on the stock at the closing price of USD 94.79, down by 1.69% as of May 24, 2021.