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BioMarin's Strong Pipeline And Recent Success Expected To Turn It Profitable

|About: BioMarin Pharmaceutical Inc. (BMRN)

Summary

BioMarin's approved drugs have been granted orphan drug status in the U.S. and EU, providing them with at least seven and 10 years of market exclusivity.

BMRN has a growing pipeline with focus on Drisapersen for DMD, BMN-111 for achondroplasia, BMN-190 in Batten Disease and BMN-270 as a gene therapy in Hemophilia A, with many key.

BioMarin is also well-positioned to treat the entire spectrum of patients with phenylketonuria, or PKU, one of the world's most common metabolic disorders.

BioMarin Pharmaceutical Inc. (BMRN)

Recent Fundamental Highlights

Founded in 1996, BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes drugs primarily for orphan indications. The company's product portfolio consists of five approved products and multiple investigational product candidates. Approved products include Naglazyme, Kuvan, Aldurazyme, Firdapse and Vimizim.

Genzyme (now Sanofi) and BioMarin formed a 50/50 joint venture to market BioMarin's first drug, Aldurazyme, for the treatment of mucopolysaccharidosis I, or MPS I. BioMarin's MPS VI drug, Naglazyme, is seeing strong growth due to use in emerging markets like Brazil and higher (more expensive) dosing as young patients mature; we think peak sales expected to surpass $500M.

Moat Trend

  • BioMarin's life-saving therapies may serve only a few thousand patients globally, but with six-figure price tags on most products and high barriers to entry, we see this as a very attractive marketplace
  • BioMarin's drugs target rare chronic conditions that often require treatment from a very young age, and while locating eligible patients on a global level is challenging, the firm has high patient retention rates
  • BioMarin's acquisition of Prosensa brings BioMarin a potential blockbuster drug for DMD with near-term approval potential in both the U.S. and E.U.
  • With a deep in-house pipeline, new manufacturing capacity, and the ability to supplement growth with strategic acquisitions like Prosensa, BioMarin is in a strong position for growth in the coming years

Major Risks

  • Patents- BMRN does not have composition of matter patents on BH4, the active ingredient in Kuvan. Its intellectual property strategy entails use patents and manufacturing patents in PKU and hypertension/vascular disease. These patents are generally recognized as weaker than composition of matter patents, and therefore, BMRN could be subject to patent challenges
  • Clinical, regulatory and commercial risks are major risks for biotechnology companies
  • Biotechnology companies require significant amounts of capital in order to develop their clinical programs, and raising capital is always challenging as there is a risk that the necessary capital to complete development may not be readily available

Outlook

  • Vimizim's launch continues to progress, along with sales of more mature products, Naglazyme and Kuvan
  • AdCom is expected to be a key growth driver given the robust catalyst path and analyst see many paths to additional value creation, with an FDA AdCom for drisapersen in late 2015 among the most visible and highest impact events in biotech this year
  • FY 2015 guidance for total revenue of $840M-$870M represents a 10-13% increase over 2014 revenue and with 2Q sales of $249M it is expected to reach upper end of its guidance
  • Translarna's E.U. approval a positive for drisapersen - CHMP's about face last year on PTC Therapeutics' (NASDAQ:PTCT) Translarna and its subsequent E.U. approval demonstrate a willingness to use post hoc analyses and natural history data to approve DMD (Duchenne muscular dystrophy) drugs. Translarna's approval in Europe set a positive precedent and lowered the bar for drisapersen

Investment Rationale

BioMarin has five marketed products with three enzyme replacement therapies (NASDAQ:ERT), and two small molecules for ultra-rare diseases. The ERTs are Aldurazyme, Naglazyme, and VIMIZM for three different types of mucopolysaccharidoses (accumulation of waste products within cells): MPS I, MPS VI, and MPS IV, respectively. BioMarin has established itself as a leader in the orphan space with growing revenues and a sizeable pipeline and is focused on the development of novel therapeutics for orphan diseases.

Strong rare disease pipeline - BMRN is developing drisapersen for DMD, with potential US approval by YE15, PEG-PAL, and an enzyme replacement therapy for PKU, which has entered Phase III testing for Kuvan non-responders. In addition, BMN-701 is advancing into late-stage clinical testing in Pompe Disease, and BMN-673 (PARP inhibitor) is in a Phase III trial in BRCA-mutated breast cancer

BioMarin is also well-positioned to treat the entire spectrum of patients with phenylketonuria, or PKU, one of the world's most common metabolic disorders. Kuvan is approved to treat mild to moderate PKU, and Peg-Pal is expected to see pivotal data in severe PKU in 2016. PKU is well-diagnosed with state-mandated newborn screening programs, and no alternative drug therapies exist.

Stock performance

BioMarin currently trades at $136.02 (closing price as of Aug 11th) and looks attractive with strong upside potential over medium to long term with high visibility of growth and optimism arising from its key products, including Drisapersen, BMN-111 and BMN-190. With key clinical read-outs and additional POC (proof of concept) data on BMN-701 for Pompe within the next 12 months, BMRN remains a core biotech holding with strong positive outlook for the stock in 2015 and 2016.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Sources : Morningstar, Company website, SEC, Company Press Release, Yahoo Finance, Street Insider, Company - Investor presentations, PMLiVE, S&P Capital IQ, Reuters