Edit Metric
|
||||||||||||||||||||
Details
|
||||||||||||||
BioMarin Pharmaceutical (BMRN)Stock (Biotechnology Industry, Pharma & Healthcare Industry)
BioMarin Pharmaceutical Inc. (BMRN), a developer of enzyme-related therapies (ERT), co-markets Aldurazyme with Genzyme Corporation (GENZ) for the treatment of MPS-I (mucopolysaccharidosis). MPS-I is a rare genetic enzyme deficiency disorder, afflicting roughly 3,000 people worldwide, caused by the lack of a specific enzyme involved in lysosomal storage. More common names for mucopolysaccharidosis are Hurler's Syndrome, Hurler-Scheie, and Scheie's Disease. The company's other developed product, Naglazyme, for MPS-VI, recently entered the market. MPS-VI is also a rare genetic enzyme deficiency disorder, with an estimated 1,100 people suffering from it worldwide. The company's third lead drug, Kuvan, received FDA approval for the treatment of PKU in December 2007. With the recent launch of Kuvan, the company now has three products on the market. The company also receives royalties and license revenue on sales of the Orapred franchise from Alliant Pharmaceuticals. In 2004, the company acquired Orapred, a grape-flavored oral corticosteroid liquid for the treatment of severe asthma in children and subsequently licensed the franchise to Alliant Pharmaceuticals in March 2006. BioMarin, headquartered in Novato, CA, employs roughly 300 people. INVESTMENT THESIS Aldurazyme The company's first approved product, Aldurazyme, received final U.S. and E.U. approval in April and May 2003 respectively, for the treatment of MPS-I (Mucopolysaccharidosis). On October 31, 2006, Aldurazyme was approved in Japan. Aldurazyme was developed in partnership between BioMarin and Genzyme. Pursuant to the joint venture, BioMarin is responsible for manufacturing Aldurazyme and Genzyme is responsible for its commercialization. All expenses and profits are shared equally between the companies. The market for Aldurazyme is small, with a total of about 3,000 to 3,500 patients in the developed world. The company is working towards bringing more of these patients on therapy, and had over 350 patients receiving Aldurazyme. Genzyme and BioMarin are targeting new patients throughout Asia and Europe for additional growth. We believe Aldurazyme should help drive growth, as currently there are no alternative treatments for MPS-I available in the market. Sales of Aldurazyme continued to grow in the third quarter of 2007 with worldwide sales of $32.3 million, representing a 29.2% increase year over year. BioMarin posted $8.4 million profits from the BMRN-GENZ joint venture for the third quarter, up 67% from $5.1 million in the third quarter of 2006. We expect continued growth in the coming quarters due to recent Japan approval. For 2007, we estimate Aldurazyme sales of $123.3 million, a 28.0% growth over 2006. JV profit will be $30.4 million in 2007, up 57.5% from $19.3 million in 2006. Naglazyme Naglazyme (galsulfase) was approved by the FDA on May 31, 2005 and by EMEA on January 30, 2006 for the treatment of MPS-VI. Naglazyme was launched on June 20, 2005 in the US. The product has an orphan drug' status in the U.S., EU and Japan, which will allow BMRN to market it in the U.S. for a period of seven years and in Europe for 10 years, with no competitor in any of these markets. The company has already undertaken a disease awareness campaign in the U.S. with an 11-person sales team to improve sales and to help identify new patients. We believe this initiative, along with the recently established BioMarin Physician and Patient Support (BPPS) service, will help drive sales in the coming quarters. This will be further supported by the safety and efficacy data reported at the 57th Annual Meeting of the American Society of Human Genetics from a 24-week pivotal phase III study, followed by a 72-week extension study, of Naglazyme. Insurance reimbursement for Naglazyme is improving monthly, which should help growth. BioMarin has decided to sell Naglazyme alone in Europe. The company has set up a small commercial infrastructure. The company believes that the cost involved in setting up such a commercial infrastructure will not restrict it from achieving profitability in the first full year of sales following approval. With about 100 patients already identified in Europe, we believe the company will be able to successfully achieve this target. The drug was launched in the second quarter of 2006 in Europe. In countries other than Europe and the U.S., the company is actively looking for partners to commercialize the product. In December 2006, BioMarin partnered with AnGes MG Inc. for the marketing and distribution of Naglazyme in Japan. AnGes submitted a Biologics License Agreement to the Japanese Ministry of Health, Labor and Welfare in August 2007. These efforts suggest that BioMarin is working in the right direction to increase future sales of Naglazyme. Sales of Naglazyme continued to grow strongly in the third quarter of 2007 with sales of $21.3 million. This represents an increase of 65.3% year over year and 1.8% sequentially. We estimate 2007 full year sales of Naglazyme of $83.1 million, representing a 78.6% year over year growth. We believe Naglazyme's peak sales potential will be about $170 million. We model Naglazyme sales will continue to grow in a single digit rate in the 2008-10 period. Kuvan: BioMarin announced the FDA approval of Kuvan, in December 2007 for the treatment of mild-to-moderate forms of the genetic disease phenylketonuria (PKU). This is a disorder affecting at least 50,000 diagnosed patients under the age of 40 in the developed world. An estimated half of these patients have the mild-to-moderate form of the disease, which is caused by a deficiency of the phenylalanine hydroxylase (PAH) enzyme. PAH is required for the metabolism of phenylalanine (Phe), an essential amino acid found in most protein-containing foods. Kuvan is a synthetic form of 6R-BH4. 6R-BH4 is an essential enzyme cofactor that works in conjunction with phenylalanine hydroxylase (PAH) to metabolize phenylalanine (Phe). The FDA has recommended an initial dose of 10 mg/kg/day for Kuvan. The dose may be increased to 20 mg/kg/day if no response is observed in the first one month of treatment. Once the company has established a response, the dose may be adjusted between 5 mg/kg/day and 20 mg/kg/day. Additionally, the drug's label does not mention any age-range of patients who may be treated with Kuvan. We especially like the second part as we believe that the broad label allows treatment of patients, across all age groups, with Kuvan. The company has priced Kuvan at $0.29 per mg, or $29 for a 100 mg tablet. For an average patient weighing 40kg, the annual cost of treatment with Kuvan, on an average dose of 15 mg/kg and a compliance rate of 80%, comes to $57,500. The company expects net sales of Kuvan in 2008 in the range of $35 million to $70 million. Our model assumes sales of Kuvan in 2008 of $65 million that will grow to over $250 million by 2011. BioMarin also announced the initiation of an expanded access program for Kuvan in the U.S. in June 2007. Under an expanded access program, the FDA allows early access to investigational drugs that are being developed to treat serious diseases for which there is no satisfactory alternative therapy. BioMarin will provide Kuvan at no charge to participating patients throughout the duration of the program, which has been allowed by the FDA for patients over eight years of age with a confirmed diagnosis of PKU. The starting dose is 20 mg/kg/day, with dose adjustments allowed at the discretion of prescribing physicians between 5 mg/kg/day and 20 mg/kg/day. At least 500 PKU patients in the U.S. will be guaranteed enrollment in the program. As on December 13, 2007, the company had enrolled 400 patients in the expanded access program. The company has also put in place a BioMarin Patient and Physician Support program (BPPS), with 20 fully trained sales reps. Given the company's success with a similar program for Naglazyme, our expectation regarding the success of this program remain high. Additionally, the FDA had requested a post marketing, two-year extension study for Kuvan. BioMarin had kept the patients enrolled in the phase III trials on therapy post the completion of the trials. The company expects the patients to complete two years of treatment with Kuvan in the second quarter of 2008. Results from the extension study will be available soon thereafter. Positive results form the study will help drive sales of the drug.
BioMarin has partnered Merck Serono for the development of Kuvan and PEG-PAL. According to the terms of the deal with Merck Serono, the company has already received $25 million upfront payment. BioMarin will further receive $232 million milestone payment apart from royalties on sales of the products. Out of $232 million milestone, $45 million payment is related to Kuvan for PKU. Also as per the agreement entered into, in May 2005, Merck Serono will have exclusive rights to market the products in all territories outside the U.S, and Japan, for which they will pay royalties on sales. BioMarin on the other hand will have exclusive rights to market these two products in the U.S. The companies will share development costs on successful initiation of the phase III trials. In our opinion, this is a favorable deal for the company as it has not only reduced the company's drug development risks but has also strengthened its financial position. In December 2007, BioMarin re-acquired the Canadian rights for tetrahydrobiopterin (BH4), including Kuvan from Merck Serono. Acquiring rights to Kuvan in Canada allows BioMarin to better coordinate commercialization efforts in the North American market. The terms of the agreement specify a reduction in royalties owed to BioMarin on Merck Serono sales outside the United States and Japan. Based on the structure of the amended agreement, the reduction in royalties cannot exceed an undisclosed cap. In November 2007, Merck Serono filed the marketing authorization application (MAA) to the European Medicines Agency (EMEA) for the approval of Kuvan. Acceptance of the MAA filing will trigger a $15 million payment to BioMarin the company expects to realize this milestone payment before year-end. The company has also licensed the exclusive rights to data and intellectual property contained in the drug's NDA to Asubio Pharma Co., a subsidiary of Daiichi Sankyo. Asubio will use this data to supplement its current filing to the Japanese Ministry of Health, Labor and Welfare for approval of its BH4 product for the treatment of phenylketonuria (PKU) in Japan. The application is for a label extension of its current BH4 product marketed in Japan for primary BH4 deficiency. BioMarin has received orphan drug designation for Kuvan to treat PKU from both the FDA and EMEA. Positive pivotal phase III data was released in March 2006 and more recently, the final results from the pivotal phase III trial were published in the August 11, 2007 issue of the Lancet. All pre-specified primary and secondary endpoints were met and demonstrated a statistically significant reduction at six weeks in blood phenylalanine (Phe) levels (p<0.0001) in patients receiving Kuvan, compared with those receiving placebo. The results of the 22-week extension study designed to further evaluate the long-term safety and efficacy of the drug was announced in October and December 2006. Results confirmed that all pre-specified safety and efficacy endpoints of the open-label extension study were met. Data demonstrated the long-term safety and tolerability of Kuvan as a treatment to control blood Phe levels across a range of doses in PKU patients. On January 16, 2007, BioMarin announced the positive results of an ongoing phase III diet study designed to assess the increase in Phe tolerance levels in 4-12 year old patients taking Kuvan. In September 2007, BioMarin announced the publication of a meta-analysis of blood-PHE levels in the September/October 2007 issue of Molecular Genetics and Metabolism. The meta-analysis reviewed data from 40 studies and supported the use of the blood PHE levels as the primary endpoint in the Kuvan trials. The company also presented results from a double-blind, placebo-controlled phase III trial in children at the 57th Annual Meeting of the American Society of Human Genetics. The drug demonstrated an acceptable safety profile and maintained adequate blood Phe control. Orapred Franchise Orapred (prednisolone) is a glucocorticoid steroid commonly used to reduce inflammation seen in numerous medical conditions including asthma, cancer and arthritis. Orapred has a grape flavor that helps cover the bitter taste of prednisolone, making it easier for individuals to take without experiencing the natural gag reflex commonly induced by other liquid formulations of prednisolone. It has been a bumpy road with Orapred so far. In December 2000 the FDA granted approval of Orapred at Medicis Pharmaceuticals. BioMarin acquired the product when it purchased the division that sold Orapred, Ascent Pediatrics, from Medicis in May 2004. Excessive inventory in the channel has hampered Orapred sales ever since BioMarin acquired the product. In March 2006, BioMarin licensed Orapred to Alliant Pharmaceuticals for $18 million plus royalties on future sales in North America. Alliant's interest in Orapred steams from the Orapred ODT (oral disintegrating tablet) formulation. Orapred ODT was approved on June 1, 2006, and was launched in late August 2006. Going forward, the Orapred line on our income statement will record royalties and milestones from Alliant on future sales. Drugs under Development PEG-PAL (formerly known as Phenylase): BioMarin and Merck Serono are also developing another product for PKU called PEG-PAL (Poly Ethylene Glycol-Phenylalanine Ammonia Lyase). The primary difference between PEG-PAL and the recently approved Kuvan is the mode of administration, with Kuvan being an oral formulation and PEG-PAL an injectable. PEG-PAL is under pre-clinical studies for the treatment of severe forms of PKU. The preclinical data in the PKU mice demonstrated the PEG-PAL administered subcutaneously once weekly resulted in sustained decrease in blood C levels in a 12-week study. PEG-PAL has also shown potency level reductions in primate studies as well. The company has also initiated preclinical toxicology studies for the drug. BioMarin filed an Investigational New Drug application (IND) with the FDA in November 2007 and advance the drug into clinical trials in the first quarter of 2008. The phase I study will assess the safety and pharmacokinetics of single injections of PEG-PAL in approximately 35 PKU patients in a series of escalating dose cohorts. The patients in the phase I study will be offered continuation into a phase II study that will evaluate the safety and efficacy of weekly injections for eight weeks followed by a dose titration period. Vibrilase: Besides PEG-PAL and the recently approved Kuvan, the company has two additional interesting products in its pipeline one is Vibrilase and the other is 6R-BH4 (tetrahydrobioterin). Vibrilase, an enzyme therapy for use in debridement of serious burns, is currently under phase I trials. Results presented so far have been positive. The company is now looking for an out licensing opportunity for this product, which will help it to focus more on the other products in its pipeline like PEG-PAL and 6R-BH4. 6R-BH4: BioMarin acquired 6R-BH4 from Daiichi Suntory Pharma to treat vascular dysfunction in patients suffering from diabetes and cardiovascular diseases. In Japan, Asubio holds the exclusive rights to commercialize BH4 for all indications. BioMarin will receive a milestone payment on approval as well as double-digit royalties on net sales of BH4 for PKU in Japan. 6R-BH4 is an active pharmaceutical ingredient in Kuvan, the company's phase III candidate for PKU. Tetrahydrobioterin, or 6R-BH4, is a cofactor in the production of nitric oxide (NO). Deficiencies in NO production may lead to the cause of several cardiovascular diseases. Low NO levels are often found in diabetic patients because high glucose levels have been shown to inhibit 6R-BH4. In early July 2006, the company initiated a phase II trial in poorly controlled hypertension patients. On February 20, 2007, BioMarin reported negative results from the phase II trial of 6R-BH4 for hypertension. Results demonstrated that there was no statistically significant or clinically meaningful effect of 6R-BH4 on any efficacy or safety parameter measured, relative to placebo. The company plans to analyze the data in detail to better understand the background therapy and other characteristics of patients in the study. In a post hoc analysis of the phase II trial, 6R-BH4 demonstrated greater blood reducing effect in patients with systolic blood pressure of >150 mmHg. In an effort to better understand the role of BH4 in treating endothelial dysfunction and cardiovascular disease, BioMarin plans to initiate two small exploratory studies in the second half of 2007: A double-blind placebo-controlled study to assess the effect of 6R-BH4 on endothelial dysfunction in approximately 40 subjects with more severe systolic hypertension (SBP >145 mm Hg) and with confirmed and significantly impaired endothelial function. Results from this trial are expected in the second half of 2008. A clinical study to assess the effect of co-administration of Vitamin C with 6R-BH4 on 6R-BH4 pharmacokinetics and efficacy in treating endothelial dysfunction in approximately 40 subjects with more severe hypertension (SBP >150 mm Hg) and significantly impaired endothelial function. Vitamin C can have a direct oxidation protective effect on BH4, and the level of Vitamin C in the formulation from the prior hypertension study was much higher than in the current 6R-BH4 formulation. The company will assess whether this protective effect is meaningful in patients with cardiovascular disease. Results from the trial are expected in the first half of 2008. BioMarin has no immediate plan to change the course of ongoing or planned clinical studies of 6R-BH4, especially the phase II trial for peripheral artery disease (n=210) initiated in January 2007. BioMarin initiated the treatment of the first patient in the phase II clinical study of 6R-BH4 for the treatment of symptomatic peripheral arterial disease (PAD) on January 4, 2007. The study is expected to conclude in the second half of 2008. The phase II, multicenter, multinational, randomized, double-blind, placebo-controlled study is designed to compare oral 6R-BH4 to placebo in subjects with intermittent claudication (IC) caused by peripheral arterial disease. The study will be conducted at approximately 35 multinational sites and will enroll approximately 210 subjects. Study patients will receive oral doses of 800 mg/day of 6R-BH4 or a placebo, divided into two doses for a 24-week period. The primary endpoint analysis will compare the change from baseline to Week 24 in peak walking time between the 6R-BH4 and placebo groups. After reviewing the results of the hypertension study in greater detail, a few additions have been made to the protocol for the ongoing phase II trial for peripheral arterial disease. Measures of endothelial dysfunction and oxidative stress will be added to the protocol at several sites, and given the potential that increased Vitamin C might protect BH4 from oxidation in patients, co-administration of Vitamin C with BH4 or placebo will be added to half of the patients in the study. The company also initiated a phase IIa study of BH4 in sickle cell anemia in May 2007. The phase IIa multi-center, open-label study is designed to assess the safety and biologic activity of escalating doses of 6R-BH4 in patients with SCD. The study will be conducted at approximately six U.S. sites and will enroll approximately 40 subjects. The primary objective of this study is to evaluate the safety of oral 6R- BH4 administered in escalating doses in patients with sickle cell disease. The secondary objective is to evaluate changes in physiological and biochemical markers of endothelial function which underlie some key aspects of SCD. The company expects to announce data from this study in the first half of 2008. Additionally, there are two phase II investigator sponsored studies going on for 6R-BH4. The first is studying the effect of BH4 on arterial compliance and endothelial function in a controlled study of patients with coronary artery disease that is going on at one site in the U.K. The second is an open label study of BH4 on top of existing medications to treat pulmonary arterial hypertension. It is expected to initiate in the second half of 2007 at one site in the U.S. and one site in the U.K. Treatment for Cystic Fibrosis: In August 2007, BioMarin licensed intellectual property covering compounds demonstrated to improve cystic fibrosis transmembrane conductance regulator (CFTR) protein functionality from the University of California, San Francisco (UCSF). Cystic fibrosis is an autosomal recessive disease caused by mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene. Cystic fibrosis is the most common, lethal genetic disease in the U.S. CF affects an estimated 30,000 patients in the U.S. and approximately 40,000 patients outside the U.S. The cystic fibrosis is a well-defined and relatively large orphan disease and aligns well with the company's portfolio of orphan drug candidate. BioMarin expects the lead compounds to undergo additional animal testing and optimization, with the goal of filing an IND in 2009. Financial Position With Aldurazyme sales accelerating and Naglazyme picking up sales momentum, we believe the top-line will get a boost in the coming years. Our model currently suggests that the top-line at BMRN will grow at a compounded annual growth rate of 43.9% through 2010. Addition of Kuvan to the company's marketed products will further drive growth. With these marketed products, we believe the company will be able to turn profitable in 2008. At September 30, 2007, BioMarin had $586.7 million in cash, cash equivalents and marketable securities. This includes the proceeds from the public offering of senior subordinated notes in April 2007. As of September 30, 2007, the company had $172.5 million 2.5% senior subordinated notes due March 29, 2013, and the newly issued $324.875 million 1.875% Senior Subordinated Convertible Notes due 2017. Cash burn is not a concern for us considering the company will generate positive cash flow from operation in 2008.
[edit] References |
The Shelf
|
Edit
History
Bookmark
