BioMarin Wraps Up a Good Year

Here's another example of how individual biotech stocks can move unpredictably in the short term. On Friday, BioMarin Pharmaceutical (Nasdaq: BMRN  ) rose 22%, after announcing FDA approval of its enzyme-replacement therapy Kuvan, and then holding a conference call detailing Kuvan's future.

Kuvan had been expected to receive approval in late November. Then BioMarin announced in early November that the FDA had extended its review period by three weeks because of a "staffing constraint" at the agency. In its third-quarter conference call, BioMarin said the three-week delay wouldn't slow its marketing launch of Kuvan this year. As sharp-eyed Rule Breakers analyst Charly Travers noticed, BioMarin tipped its hand during that conference call, letting listeners know that FDA approval was a near-certainty.  

BioMarin tested Kuvan as a treatment for a rare metabolic disease which affects only an estimated 50,000 people in developed countries worldwide, according to BioMarin. Currently, there are no drugs approved to treat this disease, called phenylketonuria (PKU), but BioMarin estimates Kuvan could be effective in anywhere from 30% to 50% of PKU patients.

BioMarin will market Kuvan by itself in the U.S., and it expects to receive an average of $57,000 a year for each patient on Kuvan, but this price could vary widely from person to person depending on patient characteristics, dosing levels, and government reimbursement rules. BioMarin's 2008 sales estimates for the drug are therefore quite wide, at $35 million to $70 million in the U.S.

All these variables make modeling peak Kuvan sales a stab in the dark, at best. Other enzyme replacement therapies, like BioMarin's Aldurazyme, which is co-marketed with Genzyme (Nasdaq: GENZ  ) , brought in $96 million in sales last year. Genzyme's enzyme-replacement drug Cerezyme costs well more than $100,000 a year in some places. Therefore, it's easy to see peak worldwide sales of Kuvan reaching into the low hundreds of millions of dollars.

2007 was a good year for BioMarin, as it made progress with its pipeline and continued ramping up Aldurazyme and Naglazyme sales. Just two years ago, BioMarin was a niche drug developer generating $26 million in revenue, in competition with similar drugmakers such as Transkaryotic Therapies, now owned by Shire (Nasdaq: SHPGY  ) . To see how far BioMarin has come, consider that it generated nearly the same $26 million of revenue in its most recent third quarter alone.

Next year will likely hold more of the same, with Kuvan approval in the European Union likely. But it will be important to see whether BioMarin can also grow its top and bottom lines into its premium-priced market cap.

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