BioMarin reports $0.5 million GAAP net loss for second-quarter 2010

BioMarin Pharmaceutical Inc.Aug 3 2010

BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) today announced financial results for the second quarter of 2010. GAAP net loss was $0.5 million ($0.01 per diluted share) for the second quarter of 2010, compared to GAAP net income of $1.3 million ($0.01 per diluted share) for the second quarter of 2009.  Non-GAAP net income was $8.6 million ($0.08 per diluted share) for the second quarter of 2010, compared to non-GAAP net income of $9.0 million ($0.09 per diluted share) for the second quarter of 2009.  Non-GAAP net income excludes non-cash stock compensation expense, certain nonrecurring material items and the tax effect of the adjustments.  

GAAP net income for the six months ended June 30, 2010 was $0.7 million ($0.01 per diluted share), compared to GAAP net loss of $11.8 million ($0.12 per diluted share) for the six months ended June 30, 2009.  Non-GAAP net income was $17.4 million ($0.17 per diluted share) for the six months ended June 30, 2010, compared to non-GAAP net income of $18.4 million ($0.18 per diluted share) for the six months ended June 30, 2009.

As of June 30, 2010, BioMarin had cash, cash equivalents and short and long-term investments totaling $455.4 million, as compared to $452.4 million at the end of March 31, 2010.  

"Our pipeline has advanced tremendously over the last few months with encouraging preliminary safety and efficacy data from the PEG-PAL trial, positive discussions with regulatory authorities regarding the GALNS Phase III trial design, a clear development strategy for Firdapse in the U.S. and initiation of the Kuvan outcomes study is expected imminently.  Also, we generated operating cash flow of $22.2 million in the second quarter of 2010, compared to $3.3 million in the first quarter of 2010," said Jean-Jacques Bienaime, Chief Executive Officer of BioMarin.  "With our solid commercial foundation and advancing pipeline, we believe that we are well-positioned for long-term growth.  We look forward to many additional clinical milestones in the second half of the year and remain committed to investing in the pipeline to drive additional value for the company."

(1)  Changes in foreign currency rates, net of hedges, had a $1.4 million and $1.5 million negative impact on Naglazyme sales in the three months and six months ended June 30, 2010, respectively.  Naglazyme revenues experience quarterly fluctuations due to the timing of distributor purchases.  The number of Naglazyme patients increased 4.9 percent in the second quarter of 2010, as compared to the first quarter of 2010, and increased 21.8 percent as compared to the second quarter of 2009.

(2)  The quantity of commercial tablets dispensed to patients in the U.S., increased 36.6 percent in the second quarter of 2010 compared to the second quarter of 2009 and increased 14.7 percent in the second quarter of 2010 compared to the first quarter of 2010.

(3)  A product for the treatment of Lambert Eaton Myasthenic Syndrome (LEMS) which was launched in the EU in April 2010.

(4)  Changes in foreign currency rates caused a decrease to Aldurazyme sales by Genzyme of $0.8 million in the three months ended June 30, 2010 and an increase to Aldurazyme sales by Genzyme of $0.9 million for the six months ended June 30, 2010.  

(5)  To the extent units shipped to third party customers by Genzyme exceeded BioMarin inventory transfers to Genzyme, BioMarin will record a decrease in net product revenue from the royalty payable to BioMarin for the amount of previously recognized product transfer revenue.  If BioMarin inventory transfers exceed units shipped to third party customers by Genzyme, BioMarin will record incremental net product transfer revenue for the period.

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.  BioMarin is also making significant investments in manufacturing and laboratory facilities to support the advancement of these programs.  The company plans to host an R&D Day on October 19, 2010 to highlight ongoing R&D programs.

Advanced Programs

• Firdapse: After meeting with the FDA regarding the development strategy in the U.S. in the second quarter of 2010, the company has defined a clear development pathway.  BioMarin expects to initiate a Phase III trial by late 2010 or early 2011, file in the second half of 2011 and if successful, receive approval for LEMS by the third quarter of 2012.
• GALNS for MPS IVA: BioMarin recently met with regulatory authorities and has support for conducting a six-month study.  The company is incorporating health authority input into a final protocol and expects to initiate a pivotal Phase III study with primary endpoint of six minute walk distance by January 2011.  
• Kuvan outcomes study/ Lifecycle development:  BioMarin expects to initiate PKU-016, a randomized, placebo-controlled, 13-week Kuvan outcomes study imminently.  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. Human studies of this device are planned for the fourth quarter of 2010.  Regulatory approval and commercial availability of the handheld blood Phe monitor are expected in mid-2011.

Mid-Stage Programs

• PEG-PAL for PKU: The ongoing Phase II clinical trial is an open-label, multi-center study to be conducted in a series of dose-escalating cohorts.  The primary treatment period of eight once weekly injections at a fixed dose will be followed by dose and frequency optimization and an extension period.  An encouraging trial update has been provided in a separate press release issued today.  Highlights include: (1) 23 adult patients have been enrolled in the study and patients have been followed a median of 111 days; (2) Seven patients have received at least 1 mg/kg/week for at least four weeks in several different dosing frequencies (up to three times per week).  Of these, six have sustained Phe levels below 600 umol/L for at least three weeks and in some cases up to three months; (3) A total of three patients have discontinued the study prematurely for personal reasons, though one of these patients also had a generalized rash.  No other patients have discontinued due to treatment-related adverse events; (4) Injection site reaction is the most common treatment emergent adverse event, occurring in 43% of patients.  Injection site reactions are generally mild to moderate, self-limited and unaccompanied by other sequelae.  The company expects to initiate a Phase III trial in the fourth quarter of 2011.

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.
• Utrophin upregulator for Duchenne Muscular Dystrophy: BioMarin announced Phase I results for BMN-195 and concluded that due to pharmaceutical and pharmacokinetic data obtained, the company will not pursue further development of BMN-195 as a treatment for DMD.  However, BioMarin continues to believe that utrophin upregulation is a viable approach for the treatment of DMD and is currently working on additional candidates to possibly take forward into early human studies.
• Other early stage programs: BioMarin is working on multiple early development opportunities, of which two undisclosed biologics are advancing toward IND-enabling decisions.  The company plans to announce a new candidate for IND-filing at the upcoming R&D Day on October 19, 2010.

Non-GAAP Financial Information and Reconciliation

The above results for the three and six months ended June 30, 2010 and June 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.  

Diluted Earnings Per Share Calculation

The calculation of both GAAP and non-GAAP diluted earnings per share for all periods presented excludes the 26.3 million shares related to the outstanding convertible debt as their impact is considered anti-dilutive.