The Little Orphan That Could

After a rough start to the year, Motley Fool Rule Breakers pick BioMarin Pharmaceutical (NASDAQ:BMRN) is back on track.

The orphan-drug maker posted earnings last night with sales on fire. Total revenue was up 29% year over year, helping the company eke out a $0.01-per-share profit.

BioMarin raised the low end of revenue guidance and tightened its earnings guidance on both sides. Taking a cue from big brother Pfizer (NYSE:PFE), BioMarin has plenty of adjustments to its earnings this year, which will make it look profitable on an adjusted basis. In reality, a couple of high-risk/high-reward investments in small drug companies that didn't pan out will push earnings into the red this year.

The nice thing about developing "orphan" drugs for diseases with very few patients is that there's usually little competition. The bad news is that once a company has maxed out the patient population, it's hard to grow the franchise further. Aldurazyme, which BioMarin sells through Genzyme (NASDAQ:GENZ), is approaching saturation, with 2009 revenue guidance about the same as it was last year.

Kuvan and Naglazyme still have some room to run, but their growth may slow down before BioMarin has a chance to get its next drug candidate to market. Phase 2 results for BioMarin's farthest-along drug candidates, GALNS and PEG-PAL, won't be available until next year, and then they'll have to go through phase 3 testing and regulatory approval.

Like other smaller drug companies such as Celgene (NASDAQ:CELG) and Onyx Pharmaceuticals (NASDAQ:ONXX), you can expect BioMarin's revenue growth to be choppy for the next few years. I'd only suggest investing in BioMarin if you're in it for the long haul. The little engine is climbing up a hill, but there's potential for some flat ground ahead.

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