On October 27, 2016 BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) reported financial results for the third quarter ended September 30, 2016 (Press release, BioMarin, OCT 27, 2016, View Source [SID1234516056]). GAAP net loss was $43 million, or $(0.26) per basic and diluted share, for the third quarter of 2016, compared to GAAP net loss of $91 million, or $(0.57) and $(0.60) per basic and diluted share, respectively, for the third quarter of 2015. Non-GAAP income was $3 million for the quarter ended September 30, 2016, compared to non-GAAP loss of $41 million for the third quarter of 2015.
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The change in GAAP net loss and non-GAAP income and loss compared to the prior year quarter was primarily due to increased gross margins from Naglazyme, Kuvan and Vimizim net product revenues, partially offset by increased selling, general and administrative expenses for Vimizim and Kuvan.
Total BioMarin Revenues were $280 million for the third quarter of 2016, an increase of 34% compared to the same period in 2015. Vimizim net product revenues increased to $81 million, a 25% year over year increase. Patients on therapy for Vimizim increased 46% year over year. The decrease in Vimizim net product revenues quarter to quarter was attributable to forward buying in Latin America and the Middle East in the second quarter of 2016. Naglazyme net product revenues increased to $78 million, a 44%, year over year increase, due to the timing of central government orders from Latin America in the current quarter. Naglazyme patients on therapy continue to show consistent growth with an increase of 10% year over year. Kuvan net product revenues increased to $91 million, a 42% year over year increase, including $71 million contributed from revenue in North America due to a 15% increase in patients on therapy, and $20 million contributed from net product revenues in the newly acquired ex-North American territories.
As of September 30, 2016, BioMarin had cash, cash equivalents and investments totaling $1.4 billion, which includes $713 million of net proceeds from the August 12, 2016 public offering, as compared to $1.0 billion on December 31, 2015.
Commenting on the quarter, Jean-Jacques Bienaimé, Chairman and Chief Executive Officer of BioMarin, said, "In the third quarter of 2016 we shared proof-of-concept data from our BMN 270 gene therapy program for the treatment of Hemophilia A, currently the only factor VIII product in clinical development in this indication. In addition, our regulatory filings for approval of Brineura, for the treatment of Batten disease, were accepted and validated in both the U.S. and EU. With the Prescription Drug User Fee Act (PDUFA) goal date for an FDA approval decision of April 27, 2017, we hope to have an approved treatment option for this devastating childhood disease in the near future."
Mr. Bienaimé continued, "In addition, just last week we announced the results of the 30µg/kg dose cohort from our Phase 2 study with vosoritide in achondroplasia, which demonstrated similar efficacy as the lower dose of 15µg/kg. Based on these results, we intend to initiate a one-year, randomized, placebo-controlled Phase 3 study in children with achondroplasia ages 5-14 at the 15µg/kg dose with a subsequent open-label extension by year-end. If the data from both the vosoritide and BMN 270 gene therapy programs continue to mature as we hope, we believe that each of these product candidates has the potential to ultimately drive a billion dollars in annual revenue, if approved and successfully commercialized."
Net Product Revenues (in millions of U.S. dollars, unaudited)
Total BioMarin Revenues
Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 $ Change % Change 2016 2015 $ Change % Change
Vimizim (1) $ 81 $ 65 $ 16 25 % $ 260 $ 170 $ 90 53 %
Naglazyme (1) 78 54 24 44 % 222 243 (21 ) (9 )%
Kuvan (2) 91 64 27 42 % 258 175 83 47 %
Aldurazyme 24 21 3 14 % 59 59 — —
Firdapse 4 4 — — 13 11 2 18 %
Net product revenues $ 278 $ 208 $ 70 34 % $ 812 $ 658 $ 154 23 %
Collaborative, royalty, license and other revenues $ 2 $ 1 $ 1 $ 5 $ 4 $ 1
Total BioMarin Revenues $ 280 $ 209 $ 71 34 % $ 817 $ 662 $ 155 23 %
(1) Vimizim and Naglazyme net product revenues experience quarterly fluctuations primarily due to the timing of government ordering patterns in certain countries. The Company does not believe these fluctuations reflect a change in underlying demand.
(2) North America contributed $71 million in the third quarter with an additional $20 million coming from the newly acquired ex-North American territories.
Details of Net Product Revenues Attributable to Aldurazyme
Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 $ Change % Change 2016 2015 $ Change % Change
Aldurazyme revenue reported by Genzyme $ 59 $ 54 $ 5 9 % $ 169 $ 164 $ 5 3 %
Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 $ Change 2016 2015 $ Change
Royalties earned from Genzyme $ 27 $ 23 $ 4 $ 71 $ 69 $ 2
Net product transfer revenues (3) $ (3 ) $ (2 ) $ (1 ) $ (12 ) $ (10 ) $ (2 )
Total Aldurazyme net product revenues $ 24 $ 21 $ 3 $ 59 $ 59 $ —
(3) To the extent units shipped to third party customers by Genzyme exceed BioMarin inventory transfers to Genzyme, BioMarin will record a decrease in net product revenues from the royalty payable to BioMarin for the amount of previously recognized product transfer revenue. If BioMarin inventory transfers exceed units shipped to third party customers by Genzyme, BioMarin will record incremental net product transfer revenues for the period. Positive net product transfer revenues result in the period if BioMarin transferred more units to Genzyme than Genzyme sold to third-party customers.
Updated 2016 Financial Guidance
Revenue Guidance ($ in millions)
Item
Provided August 4, 2016 Updated October 27, 2016
Total BioMarin Revenues $1,100 to $1,150 Unchanged
Vimizim Net Product Revenues $340 to $360 Unchanged
Naglazyme Net Product Revenues $290 to $320 Unchanged
Kuvan Net Product Revenues $340 to $360 Unchanged
Select Income Statement Guidance ($ in millions, except percentages)
Item
Provided August 4, 2016 Updated October 27, 2016
Cost of Sales (% of Total BioMarin Revenues) 18.0% to 19.0% Unchanged
Selling, General and Admin. Expense $470 to $490 $460 to $480
Research and Development Expense $670 to $690 $650 to $670
GAAP Net Loss $(620) to $(650) $(600) to $(630)
non-GAAP Loss $(30) to $(50) $(10) to $(30)
Recent Key Program Updates
BMN 270 gene therapy product for hemophilia A: On October 13, 2016, the Company announced that the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom approved continued enrollment into the open-label Phase 1/2 study of BMN 270. BioMarin had previously announced that after enrolling the first nine patients in the study, that dosing of patients had been suspended due to observed increases in ALT levels that exceeded a pre- specified threshold set by the Company.
The agency also approved the Company’s proposed amendments to the study, which included eliminating the requirement for prophylactic corticosteroids and increasing potential additional enrollment from up to three additional patients to up to six additional patients. Based on protocol amendments agreed to with the MHRA three patients will be enrolled at a dose of 4 x 1013 vg/kg, and an additional three may be enrolled at this dose or the previously tested high dose of 6 x 1013 vg/kg. In the up to six additional patients, the threshold for starting therapeutic corticosteroids has been increased. BioMarin intends to provide an update on the ongoing Phase 1/2 study in December 2016. Safety and efficacy data from these patients will inform the Phase 2b study planned to begin in the second half of 2017.
Vosoritide for achondroplasia: On October 19, 2016, the Company provided an update on its Phase 2 study of vosoritide, an analog of C-type Natriuretic Peptide (CNP), in children with achondroplasia, the most common form of dwarfism, at the American Society of Human Genetics 2016 Meeting. Results from eight children in cohort 4, who completed six months of daily dosing at 30 µg/kg/daily experienced a 46% or 2.1 cm/year increase in mean annualized growth velocity from baseline (p-value = 0.03). These data are comparable to those observed at the lower dose of 15 µg/kg/day in cohort 3. Results from 10 children in cohort 3, who completed six months of daily dosing at 15 µg/kg/day experienced a 50% or 2.0 cm/year increase in mean annualized growth velocity from baseline (p-value = 0.01). Based on these data, the Company intends to initiate a one-year, randomized, placebo-controlled Phase 3 study in children with achondroplasia ages 5-14 with a subsequent open-label extension by year-end with the 15 µg/kg/day dose. Children in this study will have completed a minimum six-month natural history study to determine their respective baseline growth velocity prior to entering the Phase 3 study.
Brineura for CLN2, late-infantile form of Batten disease: During the quarter, the Company announced that the U.S. Food and Drug Administration (FDA) had accepted for review the submission of a Biologics License Application (BLA) for Brineura, an investigational therapy to treat children with CLN2 disease, a form of Batten disease. The Prescription Drug User Fee Act (PDUFA) goal date for a decision is April 27, 2017. The FDA granted Brineura Priority Review status, which is designated for drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists. Brineura was previously granted Orphan Drug Designation and Breakthrough Therapy Designation by the FDA. BioMarin also received validation of the Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for Brineura. Assuming a positive opinion from the CHMP and standard assessment timing, a decision from the European Commission is anticipated by the third quarter of 2017. The EMA previously granted Brineura Orphan Drug Designation.
Pegvaliase for phenylketonuria (PKU): Pivotal results for the Phase 3 PRISM-2 study (formerly referred to as 165-302) that pegvaliase met the primary endpoint of change in blood phe compared with placebo (p<0.0001) were announced in the first quarter of 2016. The pegvaliase treated group maintained mean blood phe levels at 527.2 umol/L compared to their Randomized Discontinuation Trial (RDT) baseline of 503.9 umol/L, whereas the placebo treated group mean blood phe levels increased to 1385.7 umol/L compared to their RDT baseline of 536.0 umol/L. The treatment effect demonstrated in this study represents an approximately 62% improvement in blood phe compared to placebo. Based on the supportive data results, the Company plans to submit a BLA to the FDA in the first quarter of 2017.