BioMarin Rolls the Dice on a New Lupus Drug

| About: BioMarin Pharmaceutical (BMRN)

BioMarin Pharmaceutical (NASDAQ:BMRN) and La Jolla Pharmaceutical Company announced that they have entered into an agreement to develop and commercialize Riquent®, La Jolla’s investigational drug for lupus nephritis, in the United States, Europe and all other territories of the world, excluding the Asia Pacific region. Following a successful Phase 3 trial, the parties will share equally in all losses and profits. In the United States, BioMarin and La Jolla will jointly commercialize Riquent. In Europe and other territories outside of Asia, BioMarin will be responsible for all commercialization activities.

Deal Terms


- $15M upfront ($7.5 million in cash and $7.5 million for the purchase of 3,391,035 preferred shares at a price per share of $2.21171. The preferred shares are initially convertible at a rate of three shares of common stock for every one preferred share. This is equivalent to a common stock purchase price of $0.73724, a 20% premium to the average closing price for La Jolla’s common stock over the previous 20 trading days.)

- Up to $92.5 million related to clinical milestones, $55 million for regulatory milestones, and up to approximately $126 million for achieving specified annual net sales milestones beginning at $250 million in sales.

- BioMarin may exercise its option to fully participate and share all losses and profits on a 50:50 basis. Prior to BioMarin’s decision to participate fully, La Jolla will fund 100% of all costs. La Jolla expects consideration from the deal to significantly cover the remaining costs of the Phase 3 ASPEN study.

- The collaboration also provides La Jolla an ability to participate equally in sales and marketing responsibilities in the United States to facilitate building its commercial infrastructure. La Jolla will maintain primary manufacturing responsibility, and work collaboratively with BioMarin to maximize supply chain and process efficiencies.


Interesting deal. Riquent has failed two previous registration studies (previous agreement with Abbott was terminated in ‘99) but La Jolla indicates they feel this one has a larger chance of success (read: blindly hoping it will work). That being said, it still seems like a solid deal. BioMarin is staking only $15M to secure rights to a drug that could be the first therapy approved for lupus nephritis in almost 50 years. The indication is clearly in BioMarin’s wheelhouse and if approved could be BioMarin’s biggest product with potential sales in excess of $800M.

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