BioMarin Pharmaceutical Inc. Reports Operating Results (10-Q)

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Oct 29, 2012
BioMarin Pharmaceutical Inc. (BMRN, Financial) filed Quarterly Report for the period ended 2012-09-30.

Biomarin Pharmaceutical, Inc. has a market cap of $4.8 billion; its shares were traded at around $38.85 with and P/S ratio of 10.9.

Highlight of Business Operations:

Naglazyme net product revenues for the three and nine months ended September 30, 2012 totaled $62.5 million and $193.9 million, respectively, of which $54.1 million and $168.5 million, respectively, was earned from customers based outside the U.S. The impact of foreign currency exchange rates on Naglazyme sales denominated in currencies other than the U.S. dollar was negative by $0.2 million and negative by $1.4 million for the three and nine months ended September 30, 2012, respectively. Naglazyme gross margins for the three and nine months ended September 30, 2012 were 85% in both periods, compared to the three and nine months ended September 30, 2011 when Naglazyme gross margins were 83% in both periods. The increased Naglazyme gross margins for the three and nine months ended September 30, 2012 were consistent with expectations for the three and nine months ended September 30, 2012 as a result of our purchase of the Naglazyme royalty rights from SA Pathology in November 2011 and the price increase in the U.S. and Latin America that occurred in March 2012. Prior to the purchase, we licensed the intellectual property from SA Pathology to whom we paid a five percent royalty on net sales of Naglazyme. For additional discussion of the transaction see Note 10 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011.

Net product revenue for Kuvan for the three and nine months ended September 30, 2012 was $36.4 million and $103.1 million, respectively, compared to $30.5 million and $86.0 million for the three and nine months ended September 30, 2011, respectively. Kuvan gross margins for the three and nine months ended September 30, 2012 were 84% in both periods, compared to the three and nine months ended September 30, 2011 when gross margins were 83% and 84%, respectively. Cost of goods sold for the three and nine months ended September 30, 2012 and 2011 reflect royalties paid to third-parties of 10%. Kuvan gross margins for the three and nine months ended September 30, 2012 were consistent with expectations and are not expected to fluctuate significantly in the future. The four percent royalties earned from Merck Seronos net sales of Kuvan during the three and nine months ended September 30, 2012 were $0.5 million and $1.5 million, respectively, compared to $0.4 million and $1.2 million for the three and nine months ended September 30, 2011, respectively.

Net product revenue for Firdapse during the three and nine months ended September 30, 2012 was $3.6 million and $10.8 million, respectively, compared to $3.5 million and $9.8 million for the three and nine months ended September 30, 2011, respectively. Firdapse gross margins for the three and nine months ended September 30, 2012 were 82% and 81%, respectively, compared to the three and nine months ended September 30, 2011 when gross margins were 83% in both periods. Cost of goods sold for the periods presented reflect royalties paid to third-parties of approximately 8%. Firdapse gross margins for the three and nine months ended September 30, 2012 decreased, compared to the three and nine months ended September 30, 2011 due to increased manufacturing costs and the depletion of previously expensed inventory. Firdapse gross margins for the three and nine months ended September 30, 2012 were consistent with expectations and are not expected to fluctuate significantly in the future.

Total cost of sales for the three and nine months ended September 30, 2012 was $24.6 million and $65.3 million, respectively, compared to $22.4 million and $62.5 million, respectively, for the three and nine months ended September 30, 2011. The increase in cost of sales was primarily attributed to the increase in product sales, and the amortization of the cost of the Naglazyme royalty rights purchased in the fourth quarter of 2011 and the shift in Aldurazyme revenue mix between royalty revenue and net product revenues. Additionally, Aldurazyme cost of goods sold during the nine months ended September 30, 2012 included a $0.8 million write-off of finished goods inventory in the first quarter of 2012.

On October 23, 2009, we acquired Huxley Pharmaceuticals Inc. (Huxley), which has rights to Firdapse for a total purchase price of $37.2 million, of which $15.0 million was paid in cash and $22.2 million represented the acquisition date fair value of contingent acquisition consideration payable. In connection with the acquisition, we agreed to pay the Huxley stockholders additional consideration in future periods of up to $41.9 million (undiscounted) in milestone payments if certain annual sales, cumulative sales and U.S. development milestones are met. During 2011, 2010 and 2009 we made milestone payments of $3.0 million, $6.5 million and $1.0 million, respectively, related to the attainment of development milestones.

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