BioMarin Pharmaceutical (NASDAQ:BMRN) announced today that it has submitted a New Drug Application with the FDA for its phenylketonuria (PKU) drug, Kuvan.

Kuvan will almost certainly get priority review status with the FDA, which puts a decision on BioMarin's marketing application sometime near the end of the year. Investors shouldn't mistake a priority review as any sign of how the FDA views the drug's odds for approval, but Kuvan did produce durable efficacy and safety data in its phase 3 studies.

Kuvan should gain approval once the FDA review comes up after successfully meeting the primary endpoints in its key studies. If approved, BioMarin estimates the market potential for Kuvan will be no more than 25,000 patients in the U.S. and the rest of the developed world. This doesn't sound like a large sales opportunity, but BioMarin and European partner Merck Serono will have the markets all to themselves for a minimum of seven years in the U.S. and 10 in the EU due to the orphan drug exclusivity that Kuvan received.

With two approved drugs under its belt, BioMarin has proven its ability to bring novel compounds through the clinical trial process and to market. The only question about the company is whether its $1.7 billion valuation is justified. If BioMarin is assigned a fairly normal 30 times forward price/earnings ratio, then it will need nearly $60 million in earnings at today's share count to justify this valuation. This sort of diluted earnings is possible for BioMarin in the next couple of years, but will require it to keep its future research and development spending down on 6R-BH4/Kuvan and to keep shareholder dilution to a minimum.  

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.