BioMarin Pharmaceutical Inc. (BMRN, Financial) filed Quarterly Report for the period ended 2009-03-31.
BioMarin Pharmaceutical Inc. is a developer of carbohydrate enzyme therapies for debilitating life-threatening chronic genetic disorders and other diseases and conditions. The company completed a six-month evaluation of patients being treated with BioMarin's lead product BM101 for the treatment of mucopolysaccharidosis-I or MPS-I. Patients were treated with BM101 as part of a pivotal clinical trial completed to determine the safety and efficacy of the drug in humans. BioMarin Pharmaceutical Inc. has a market cap of $1.37 billion; its shares were traded at around $13.69 with a P/E ratio of 44.2 and P/S ratio of 4.6.
Aldurazyme net product revenue during the first quarter of 2009 was $17.0 million, compared to $24.1 million in the first quarter of 2008. Aldurazyme net product revenues in the first quarter of 2009 was comprised of $14.5 million in royalty revenues and incremental net product transfer revenue of $2.5 million. Aldurazyme net product revenue in the first quarter of 2008 was comprised of $14.6 million of royalty revenue and $9.5 million of net product transfer revenue. Royalty revenue from Genzyme is based on 39.5% of net Aldurazyme sales by Genzyme, which totaled $36.8 million in the first quarters of 2009 and 2008. Incremental Aldurazyme net product transfer revenue reflects incremental shipments of Aldurazyme to Genzyme to meet future product demand. In January 2008, we transferred existing finished goods on-hand to Genzyme under the restructured terms of the BioMarin/Genzyme LLC agreements, resulting in the recognition of significant incremental product transfer revenue during 2008. In the future, to the extent that Genzyme Aldurazyme inventory quantities on hand remain flat, we expect that our total Aldurazyme revenues will approximate the 39.5% to 50% royalties on net product sales by Genzyme. In the first quarter of 2009, Aldurazyme gross profit was $13.2 million, representing a gross margin of 77%, which reflects the profit earned on royalty revenue and net incremental product transfer revenue. For the same period in 2008, Aldurazyme gross profit was $13.2 million, representing a gross margin of 55%. The increase in gross margins is attributed to a shift in revenue mix between royalty revenue and net product transfer revenues. In the first quarter of 2009, the revenue mix was 85% royalty revenues and 15% net product transfer revenues, compared to the first quarter of 2008, where the revenue mix was 61% royalty revenues and 39% net product transfer revenues. Aldurazyme gross margins are expected to fluctuate depending on the mix of royalty revenue, from which we earn higher gross profit, and product transfer revenue, from which we earn a lower gross profit.
Collaborative agreement revenues in the first quarters of 2008 and 2009 were $2.5 million and $0.5 million, respectively. Collaborative agreement revenues in the first quarter of 2009 were comprised of reimbursable Kuvan development costs, compared to the first quarter of 2008 which included amortization of the $25.0 million up-front license payment received from Merck Serono and reimbursable Kuvan development of $1.5 million and $1.0 million, respectively. Kuvan development costs decreased during the first quarter of 2009 as compared to the first quarter of 2008 due to reductions in Kuvan clinical trial activities.
Royalty and license revenue for the first quarter of 2009 totaled $1.6 million, compared to $0.3 million in the first quarter of 2008. Royalty and license revenues for the three months ended March 31, 2009 included royalty revenues from Orapred product sold by the sublicensee of $1.4 million and Kuvan royalty revenues for products sold in Japan and Europe of $0.2 million. Royalty and license revenues for the first quarter of 2008 included royalty revenues from Orapred product sold by the sublicensee of $0.3 million.
Kuvan license payments, recorded as intangible assets, made to third parties as a result of the Food and Drug Administration (FDA) approval of Kuvan in December 2007 and the European Medicines Agency (EMEA) approval of Kuvan in December 2008 are being amortized over approximately 7.0 years and 10.0 years, respectively. Amortization of the Kuvan intangible assets is recorded as a component of cost of goods sold and is expected to approximate $0.6 million annually through 2014 and $0.3 million annually through 2018. Amortization expense related to the Kuvan intangible assets for the three months ended March 31, 2008 and 2009 was $0.1 million and $0.2 million, respectively. The increase in Kuvan related amortization expense is attributed to the EMEA approval milestone paid in December 2008.
From December 31, 2008 to March 31, 2009, our inventory increased by approximately $3.3 million. Our accounts receivable increased by $7.1 million due to increased sales of Naglazyme and Kuvan and receivables from Genzyme for Aldurazyme product transfer and royalty revenues. Other current assets decreased approximately $26.5 million from December 31, 2008 to March 31, 2009, primarily as a result of the subsequent receipt of the $30.0 million related to the EMEA milestone earned from Merck Serono in December 31, 2008. Our net property, plant and equipment increased by approximately $17.3 million from December 31, 2008 to March 31, 2009, primarily as a result continued expansion and improvements to our facilities practically offset by depreciation expense during the period. We expect property, plant and equipment to increase in future periods, due to several ongoing facility improvement projects.
Read the The complete ReportBMRN is in the portfolios of PRIMECAP Management.
BioMarin Pharmaceutical Inc. is a developer of carbohydrate enzyme therapies for debilitating life-threatening chronic genetic disorders and other diseases and conditions. The company completed a six-month evaluation of patients being treated with BioMarin's lead product BM101 for the treatment of mucopolysaccharidosis-I or MPS-I. Patients were treated with BM101 as part of a pivotal clinical trial completed to determine the safety and efficacy of the drug in humans. BioMarin Pharmaceutical Inc. has a market cap of $1.37 billion; its shares were traded at around $13.69 with a P/E ratio of 44.2 and P/S ratio of 4.6.
Highlight of Business Operations:
We received marketing approval for Kuvan in the U.S. in December 2007 and began shipping product that same month. Net product revenue for Kuvan in the U.S. during the first quarter of 2009 was $15.5 million, compared to $5.8 million during the first quarter of 2008. Gross profit from Kuvan in the first quarter of 2009 was approximately $13.1 million, representing gross margins of approximately 84%. During the first quarter of 2008, gross profit from Kuvan was approximately $5.1 million, representing gross margins of 88%. Both periods reflect royalties paid to third parties of 11%. In accordance with our inventory accounting policy, we began capitalizing Kuvan inventory production costs after U.S. regulatory approval was obtained in December 2007. As a result, the product sold in 2008 had an insignificant cost basis. We expect that a significant portion of Kuvan sold during 2009 will be previously expensed product and will have a minimal cost basis. The cost of sales for Kuvan for the first quarters of 2008 and 2009 is primarily comprised of royalties paid to third parties based on Kuvan net sales.Aldurazyme net product revenue during the first quarter of 2009 was $17.0 million, compared to $24.1 million in the first quarter of 2008. Aldurazyme net product revenues in the first quarter of 2009 was comprised of $14.5 million in royalty revenues and incremental net product transfer revenue of $2.5 million. Aldurazyme net product revenue in the first quarter of 2008 was comprised of $14.6 million of royalty revenue and $9.5 million of net product transfer revenue. Royalty revenue from Genzyme is based on 39.5% of net Aldurazyme sales by Genzyme, which totaled $36.8 million in the first quarters of 2009 and 2008. Incremental Aldurazyme net product transfer revenue reflects incremental shipments of Aldurazyme to Genzyme to meet future product demand. In January 2008, we transferred existing finished goods on-hand to Genzyme under the restructured terms of the BioMarin/Genzyme LLC agreements, resulting in the recognition of significant incremental product transfer revenue during 2008. In the future, to the extent that Genzyme Aldurazyme inventory quantities on hand remain flat, we expect that our total Aldurazyme revenues will approximate the 39.5% to 50% royalties on net product sales by Genzyme. In the first quarter of 2009, Aldurazyme gross profit was $13.2 million, representing a gross margin of 77%, which reflects the profit earned on royalty revenue and net incremental product transfer revenue. For the same period in 2008, Aldurazyme gross profit was $13.2 million, representing a gross margin of 55%. The increase in gross margins is attributed to a shift in revenue mix between royalty revenue and net product transfer revenues. In the first quarter of 2009, the revenue mix was 85% royalty revenues and 15% net product transfer revenues, compared to the first quarter of 2008, where the revenue mix was 61% royalty revenues and 39% net product transfer revenues. Aldurazyme gross margins are expected to fluctuate depending on the mix of royalty revenue, from which we earn higher gross profit, and product transfer revenue, from which we earn a lower gross profit.
Collaborative agreement revenues in the first quarters of 2008 and 2009 were $2.5 million and $0.5 million, respectively. Collaborative agreement revenues in the first quarter of 2009 were comprised of reimbursable Kuvan development costs, compared to the first quarter of 2008 which included amortization of the $25.0 million up-front license payment received from Merck Serono and reimbursable Kuvan development of $1.5 million and $1.0 million, respectively. Kuvan development costs decreased during the first quarter of 2009 as compared to the first quarter of 2008 due to reductions in Kuvan clinical trial activities.
Royalty and license revenue for the first quarter of 2009 totaled $1.6 million, compared to $0.3 million in the first quarter of 2008. Royalty and license revenues for the three months ended March 31, 2009 included royalty revenues from Orapred product sold by the sublicensee of $1.4 million and Kuvan royalty revenues for products sold in Japan and Europe of $0.2 million. Royalty and license revenues for the first quarter of 2008 included royalty revenues from Orapred product sold by the sublicensee of $0.3 million.
Kuvan license payments, recorded as intangible assets, made to third parties as a result of the Food and Drug Administration (FDA) approval of Kuvan in December 2007 and the European Medicines Agency (EMEA) approval of Kuvan in December 2008 are being amortized over approximately 7.0 years and 10.0 years, respectively. Amortization of the Kuvan intangible assets is recorded as a component of cost of goods sold and is expected to approximate $0.6 million annually through 2014 and $0.3 million annually through 2018. Amortization expense related to the Kuvan intangible assets for the three months ended March 31, 2008 and 2009 was $0.1 million and $0.2 million, respectively. The increase in Kuvan related amortization expense is attributed to the EMEA approval milestone paid in December 2008.
From December 31, 2008 to March 31, 2009, our inventory increased by approximately $3.3 million. Our accounts receivable increased by $7.1 million due to increased sales of Naglazyme and Kuvan and receivables from Genzyme for Aldurazyme product transfer and royalty revenues. Other current assets decreased approximately $26.5 million from December 31, 2008 to March 31, 2009, primarily as a result of the subsequent receipt of the $30.0 million related to the EMEA milestone earned from Merck Serono in December 31, 2008. Our net property, plant and equipment increased by approximately $17.3 million from December 31, 2008 to March 31, 2009, primarily as a result continued expansion and improvements to our facilities practically offset by depreciation expense during the period. We expect property, plant and equipment to increase in future periods, due to several ongoing facility improvement projects.
Read the The complete ReportBMRN is in the portfolios of PRIMECAP Management.
