BioMarin's Bodacious Earnings

There's probably something downbeat buried in BioMarin Pharmaceutical's (Nasdaq: BMRN) just-released financial results. I'm just not sure what it could be. Yesterday, in conjunction with its first earnings announcement of the year, BioMarin raised revenue guidance for all of its marketed drugs, thanks to strong sales so far in 2008.

As with most companies, investors care more about the future than the past, and BioMarin's horizon looks bright. With two out of its three marketed drugs still relatively early in their launch, BioMarin's quarterly revenue rose 165% year over year. The company's new financial guidance calls for full-year 2008 revenue to rise at least 122%,  although it doesn't expect meaningful profitability until next year.

BioMarin's pipeline is also running smoothly. The company is rapidly pushing another enzyme replacement therapy through the clinic, as a complement to its recently launched Kuvan, which treats the rare genetic disorder phenylketonuria (PKU). Demonstrating its speed in ramping up development activities, BioMarin plans to have this compound, dubbed PEG-PAL, in phase 2 testing in the first quarter of 2009 -- less than a year after it started phase 1 testing.

Not everything is perfect with BioMarin. It sports a high $3.3 billion market capitalization, even though it's only starting to become profitable. Any signs of a slowdown in BioMarin's sales growth, or that of its partner Genzyme (Nasdaq: GENZ), will doubtlessly diminish its future profitability prospects and punish its valuation. Governments or other payors that become unwilling to foot the high costs of BioMarin's drugs could pose a particularly big risk.

Understandably, some investors don't like investing in these types of growth situations. Me? I find it exciting.