BioMarin Announces Third Quarter 2010 Financial Results

NOVATO, Calif., Oct. 28 /PRNewswire-FirstCall/ --

Financial Highlights ($ in millions, except per share data, unaudited)

BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) today announced financial results for the third quarter of 2010.  GAAP net income was $217.3 million ($1.68 per diluted share) for the third quarter of 2010, compared to GAAP net income of $6.6 million ($0.07 per diluted share) for the third quarter of 2009.  Non-GAAP net income was $6.0 million ($0.06 per diluted share) for the third quarter of 2010, compared to non-GAAP net income of $15.5 million ($0.14 per diluted share) for the third quarter of 2009.  Non-GAAP net income excludes non-cash stock compensation expense, certain nonrecurring material items and the tax effect of the adjustments.  The reconciliation of the non-GAAP measures to the GAAP net income is detailed in the table provided near the end of the press release.

GAAP net income for the nine months ended September 30, 2010 was $218.0 million ($1.74 per diluted share), compared to GAAP net loss of $5.2 million ($0.05 per diluted share) for the nine months ended September 30, 2009.  Non-GAAP net income was $23.4 million ($0.22 per diluted share) for the nine months ended September 30, 2010, compared to non-GAAP net income of $33.9 million ($0.33 per diluted share) for the nine months ended September 30, 2009.

As of September 30, 2010, BioMarin had cash, cash equivalents and short and long-term investments totaling $440.9 million, as compared to $455.4 million at the end of June 30, 2010.  

"In the third quarter, we saw strong commercial performance, despite being a seasonally weaker quarter.  During the quarter, based upon, among other things, our expectations to generate taxable income for the foreseeable future, we reversed most of our deferred tax asset valuation allowance which resulted in a one-time credit totaling $223.1 million," said Jean-Jacques Bienaime, Chief Executive Officer of BioMarin.  "Our pipeline has advanced tremendously over the last few months as highlighted at our recent R&D Day, and we are committed to investing in advancing the pipeline over the next two years to drive future growth.  We look forward to keeping you updated on the many clinical milestones expected in the coming year."

Reversal of Tax Valuation Allowance

During the third quarter of 2010, the company recorded a non-cash gain in its consolidated statement of operations totaling $223.1 million.  Based upon the company's expectations of generating U.S. taxable income in the future and the resulting expected utilization of its net operating loss carryforwards and R&D tax credits, the company has recorded the $223.1 million non-cash benefit to the Provision for (benefit from) income taxes line item on the consolidated statement of operations and a corresponding increase in other current assets and other assets categories on our balance sheet.

Other Transactions During Q3 2010

During the third quarter of 2010, the company acquired ZyStor Therapeutics, Inc. and incurred one-time costs associated with closing the transaction totaling $1.8 million, which are classified as general and administrative expenses.  

In addition, the company recorded intangible asset amortization and contingent consideration costs during the third quarter of $4.0 million.  The increase in such costs compared with prior quarters is due to the recognition of additional contingent consideration expense associated with the increased likelihood of achieving certain near term milestones related primarily to BMN-673 development including the filing of an IND and clinical milestones.

2010 Guidance

Anticipated Upcoming Milestones

Research and Development Programs

BioMarin continues to make significant investments in research and development to ensure continued growth of the company.  The current pipeline includes programs which are in various stages of development and are focused on treating a range of unmet medical needs.    

Advanced Programs

• Firdapse: BioMarin expects to initiate a Phase III trial for LEMS in the U.S. by early 2011.  If successful, NDA submission is expected in the first half of 2012, followed by approval by the end of 2012.
• GALNS for MPS IVA: BioMarin expects to initiate a 24-week pivotal Phase III study with six-minute walk distance as the primary endpoint early in the first quarter of 2011.
• Kuvan outcomes study/ Hand-Held Blood Phe Monitor: PKU-016, a randomized, placebo-controlled, 13-week Kuvan outcomes study is ongoing.  Endpoints include clinically validated measures of neuropsychiatric symptoms and if successful, may enable a label amendment.  Several other programs are underway to expand and protect the market and to improve the ability of healthcare providers and patients to better manage PKU.  These programs include a state-of-the-art handheld device to measure blood Phe levels in PKU patients. Regulatory approval and commercial availability of the handheld blood Phe monitor are expected in late 2011.

Mid-Stage Programs

• PEG-PAL for PKU: The ongoing Phase II clinical trial is an open-label, multi-center study conducted in a series of dose-escalating cohorts.  The primary treatment period of eight weekly injections at a fixed dose is followed by dose and frequency optimization and an extension period.  All top-line results for the Phase II study, including a study comparing daily and weekly dosing and a formulation study are expected in mid-2011.  The company expects to initiate a Phase III trial in the fourth quarter of 2011 or the first quarter of 2012.

Preclinical Programs

• BMN-673 (PARP inhibitor):  The company expects to file an IND for BMN-673 by the end of 2010 and initiate a Phase 1b trial in the first quarter of 2011.  BioMarin believes that, based upon internal preclinical experiments, BMN-673 may be ultimately superior to other compounds currently in clinical development.
• BMN-701 for Pompe Disease: BioMarin expects to initiate a Phase I/II trial in Pompe patients in December 2010 or January 2011.  The company believes that BMN-701, a novel fusion of  insulin-like growth factor 2 and alpha glucosidase (IGF2-GAA) has the potential to be more efficacious and with a more favorable safety profile as compared to the currently approved product.
• BMN-111 for Achondroplasia: BioMarin expects to file an IND by the end of 2011 and initiate a Phase 1 trial by the first quarter of 2012.  BMN-111 is an analog of C-type Natriuretic Peptide (CNP) for achondroplasia, a small cyclic peptide that is a positive regulator of bone growth.  Achondroplasia is the most common form of dwarfism.  There are approximately between 18,000 and 24,000 patients in the U.S. and Europe, 25 percent of which is the estimated addressable market.
• Other early stage programs: BioMarin is working on multiple early development opportunities.

Non-GAAP Financial Information and Reconciliation

The above results for the three and nine months ended September 30, 2010 and September 30, 2009 and financial guidance for the year ending December 31, 2010 are presented both as determined in accordance with GAAP and on a non-GAAP basis.  As used in this release, non-GAAP income is calculated in accordance with GAAP, but excludes non-cash stock compensation expense, certain nonrecurring material items and the tax effect of the adjustments.  The following tables detail the reconciliation of non-GAAP to GAAP financial metrics:

BioMarin believes that this non-GAAP information is useful to investors, taken in conjunction with BioMarin's GAAP information because it provides additional information regarding the performance of BioMarin's core ongoing business, Naglazyme, Kuvan, Aldurazyme and Firdapse and development of its pipeline.  By providing information about both the overall GAAP financial performance and the non-GAAP measures that focus on continuing operations, the company believes that the additional information enhances investors' overall understanding of the company's business and prospects for the future.  Further, the company uses both the GAAP and the non-GAAP results and expectations internally for its operating, budgeting and financial planning purposes.

Diluted Earnings Per Share Calculation

For the third quarter of 2010, the nine months ended September 30, 2010 and the full year forecast for the year ending 2010, the calculation of GAAP diluted earnings per share includes the 26.3 million shares related to the outstanding convertible debt.  The remaining periods presented excludes the 26.3 million shares related to the outstanding convertible debt from the calculation of GAAP diluted earnings per share as their impact is considered anti-dilutive.  

The calculation of non-GAAP diluted earnings per share for the third quarter and first nine months of 2009 include 16.0 million shares related to the Company's convertible notes due in April 2017.  The calculation of non-GAAP diluted earnings per share for the third quarter of 2009 includes the March 2013 notes reflecting 10.4 million shares.  The remaining periods presented exclude the 26.3 million shares related to the outstanding convertible debt from the non-GAAP diluted earnings per share calculation as their impact is considered anti-dilutive.

Conference Call Details

BioMarin will host a conference call and webcast to discuss third quarter 2010 financial results today, Thursday, October 28, at 5:00 p.m. ET. This event can be accessed on the investor section of the BioMarin website at www.BMRN.com.

About BioMarin

BioMarin develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. The company's product portfolio comprises four approved products and multiple clinical and pre-clinical product candidates. Approved products include Naglazyme® (galsulfase) for mucopolysaccharidosis VI (MPS VI), a product wholly developed and commercialized by BioMarin; Aldurazyme® (laronidase) for mucopolysaccharidosis I (MPS I), a product which BioMarin developed through a 50/50 joint venture with Genzyme Corporation; Kuvan® (sapropterin dihydrochloride) Tablets, for phenylketonuria (PKU), developed in partnership with Merck Serono, a division of Merck KGaA of Darmstadt, Germany; and Firdapse™ (amifampridine phosphate), which has been approved by the European Commission for the treatment of Lambert Eaton Myasthenic Syndrome (LEMS). Other product candidates include GALNS (N-acetylgalactosamine 6-sulfatase), which is currently in clinical development for the treatment of MPS IVA and PEG-PAL (PEGylated recombinant phenylalanine ammonia lyase), which is currently in Phase II clinical development for the treatment of PKU. For additional information, please visit www.BMRN.com. Information on BioMarin's website is not incorporated by reference into this press release.

Forward-Looking Statement

This press release contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including, without limitation, statements about: the expectations of revenue and sales related to Naglazyme, Kuvan, Firdapse, and Aldurazyme; the financial performance of the BioMarin as a whole; the timing of BioMarin's clinical trials of PEG-PAL, GALNS and other product candidates; the continued clinical development and commercialization of Aldurazyme, Naglazyme, Kuvan, Firdapse, and its product candidates; and actions by regulatory authorities. These forward-looking statements are predictions and involve risks and uncertainties such that actual results may differ materially from these statements. These risks and uncertainties include, among others: our success in the continued commercialization of Naglazyme, Kuvan, and Firdapse; Genzyme Corporation's success in continuing the commercialization of Aldurazyme; results and timing of current and planned preclinical studies and clinical trials, particularly with respect to GALNS and PEG-PAL; our ability to successfully manufacture our products and product candidates; the content and timing of decisions by the U.S. Food and Drug Administration, the European Commission and other regulatory authorities concerning each of the described products and product candidates; the market for each of these products and particularly Aldurazyme, Naglazyme, Kuvan and Firdapse; actual sales of Aldurazyme, Naglazyme Kuvan and Firdapse; Merck Serono's activities related to Kuvan; and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, including, without limitation, the factors contained under the caption "Risk Factors" in BioMarin's 2009 Annual Report on Form 10-K, and the factors contained in BioMarin's reports on Form 10-Q. Stockholders are urged not to place undue reliance on forward-looking statements, which speak only as of the date hereof. BioMarin is under no obligation, and expressly disclaims any obligation to update or alter any forward-looking statement, whether as a result of new information, future events or otherwise.

BioMarin®, Naglazyme® and Kuvan® are registered trademarks of BioMarin Pharmaceutical Inc.

Firdapse™ is a trademark of BioMarin Huxley Ltd.

Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC.

SOURCE BioMarin Pharmaceutical Inc.