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How to Prepare for BioMarin's (and Biotech's) Biggest Event of 2015


Game on, BioMarin Pharmaceuticals (BMRN - Get Report) .

On Nov. 24, a panel of outside experts convened by the U.S. Food and Drug Administration is set to review drisapersen, BioMarin's experimental drug for Duchenne muscular dystrophy (DMD).

Investors have been debating the future of drisapersen for years, so it's exciting to be finally on the cusp of a definitive outcome for the drug. Obviously, the people suffering from DMD and their families have even more at stake.

I'm not over-selling when I say the BioMarin drisapersen FDA panel is a really big deal. To get you prepared, let's dig into the hot issues and burning questions.

Are investors optimistic or pessimistic about drisapersen's chances at the FDA advisory panel?

Investor sentiment skews positive. The drisapersen clinical data are a mess (for reasons I'll discuss below) and the questioning may get heated at times, but Wall Street does expect BioMarin to exit the FDA panel with a recommendation favoring approval.

And what about the impact on BioMarin's stock price?

There's probably more downside risk than upside in BioMarin's current stock price given the positive sentiment. One investor source who spends a lot of time using options to play big biotech catalyst events like the drisapersen FDA panel says there's probably $25-ish in downside versus $15-$20 upside.

At BioMarin's current stock price of $108, that means a move to $125-$130 (round numbers) on a positive panel vote or down to $85 on a negative vote.

RBC Capital analyst Michael Yee predicts a similar range for BioMarin -- a 15% move higher to $123 on a positive vote or a fall to $80-$85 on a negative vote.

Big events can exaggerate the already-high volatility seen in biotech stocks, so don't be surprised if BioMarin shares shoot past these forecasts, at least initially.

Can we trade BioMarin on Nov. 24?

Biotech stocks are usually halted for FDA advisory panels. The drisapersen panel will start around 8 a.m. ET and runs all day, so if BioMarin is halted, it won't open for trading until well after the 4 p.m. close.

And what about Nov. 20? Won't that be a crazy day for BioMarin's stock price?

Ah! You're getting ahead of me. The FDA will post briefing documents for the...