BioMarin Pharmaceutical Inc. today announced financial results for the fourth quarter and year ended December 31, 2008. Net income was $24.5 million ($0.21 per fully diluted share) for the fourth quarter of 2008, compared to net income of $2.6 million ($0.03 per fully diluted share) for the fourth quarter of 2007. Non-GAAP net income was $31.9 million ($0.27 per fully diluted share) for the fourth quarter of 2008, compared to non-GAAP net income of $8.1 million ($0.08 per fully diluted share) for the fourth quarter of 2007. Non-GAAP net income/loss excludes non-cash stock compensation expense, which was $7.4 million for the three months ended December 31, 2008 and $5.5 million for the three months ended December 31, 2007.
Net income for the year ended December 31, 2008 was $30.8 million ($0.29 per fully diluted share), compared to a net loss of $15.8 million ($0.16 per fully diluted share) for the year ended December 31, 2007. Non-GAAP net income was $56.1 million ($0.52 per fully diluted share) for the year ended December 31, 2008, compared to non-GAAP net income of $2.5 million ($0.03 per fully diluted share) for the year ended December 31, 2007. Non-cash stock compensation expense for the year ended December 31, 2008 and December 31, 2007 was $25.3 million and $18.3 million, respectively.
As of December 31, 2008, BioMarin had cash, cash equivalents, and short-term investments totaling $559.8 million.
“We achieved our first profitable full year in 2008, with an increase of 144 percent in total revenue over 2007 driven by our three growing commercial products. We ended the year with a strong cash position and a promising development pipeline,” said Jean-Jacques Bienaime, Chief Executive Officer of BioMarin. “In 2009, we look forward to the advancement of several programs including PEG-PAL for PKU and GALNS for MPS IVA. We also plan to continue making investments in growth opportunities as we look for attractive in- licensing or acquisition opportunities.”
Net Product Revenue
Net product revenue from Naglazyme (galsulfase), an enzyme replacement therapy for mucopolysaccharidosis VI (MPS VI), was $36.5 million for the fourth quarter of 2008, an increase of 43.1 percent compared to Naglazyme net product revenue of $25.5 million for the fourth quarter of 2007. Net product revenue from Naglazyme for the year ended December 31, 2008 was $132.7 million, an increase of 53.9 percent from Naglazyme net product revenue of $86.2 million for the year ended December 31, 2007.
Net sales of Aldurazyme (laronidase), an enzyme replacement therapy for mucopolysaccharidosis I (MPS I) recorded by Genzyme, were $37.6 million for the fourth quarter of 2008, an increase of 6.2 percent compared to net sales by Genzyme of $35.4 million for the fourth quarter of 2007. Net sales of Aldurazyme recorded by Genzyme for the year ended December 31, 2008 were $151.3 million, an increase of 22.3 percent compared to net sales by Genzyme of $123.7 million for the year ended December 31, 2007.
Net product revenue to BioMarin related to Aldurazyme was $14.4 million for the fourth quarter of 2008. This reflects a reduction in net product revenue from the royalty payable to BioMarin by Genzyme due to the timing of inventory transfers to Genzyme, which were less than units shipped to third party customers by Genzyme during the fourth quarter of 2008. Net product revenue to BioMarin related to Aldurazyme was $72.5 million for the year ended December 31, 2008, which included $12.4 million of net incremental product transfer revenue during 2008.
Beginning January 1, 2008, as a result of the restructuring of the joint venture with Genzyme, BioMarin receives a royalty of 39.5% to 50% of worldwide net sales. BioMarin recognizes a portion of this amount as product transfer revenue when product is released to Genzyme. This amount will eventually be credited against the calculated royalties earned when the product is sold by Genzyme to third parties.
Net product revenue from Kuvan (sapropterin dihydrochloride) Tablets, a product for the treatment of phenylketonuria (PKU), was $15.1 million for the fourth quarter of 2008 and $46.7 million for the year ended December 31, 2008.
Collaborative Agreement Revenues
Collaborative agreement revenues for the fourth quarter of 2008 were $31.5 million and included the $30 million milestone payment from Merck Serono for Kuvan marketing approval in the E.U., compared to $17.5 million for the fourth quarter of 2007 which included the $15 million milestone payment from Merck Serono for the filing of the MAA for Kuvan. Collaborative agreement revenues for the year ended December 31, 2008 were $38.9 million, compared to $28.3 million for the year ended December 31, 2007.
Impairment Loss on Investments
In the fourth quarter of 2008, BioMarin recorded an impairment charge of $4.1 million for the decline in the value of its equity investment in Summit Corporation plc. Based on the current market conditions, the low volume of trading in Summit securities and its current financial condition, BioMarin determined that its investment in Summit was impaired as of year end and adjusted the recorded amount of its investment to the stock’s market price on December 31, 2008. The remaining investment in Summit Corporation plc. of $1.6 million is reflected on the balance sheet as of December 31, 2008.
BioMarin estimates that top line product revenue will grow approximately 20% to 25% in 2010 and approximately 15% to 20% in 2011. These revenue estimates reflect growth from existing commercial products and do not include potential sales from additional new products. BioMarin expects GAAP net income in the range of $35 million to $40 million in 2010 and in the range of $60 million to $65 million in 2011. Excluding stock compensation expense, non-GAAP net income is projected to be in the range of $70 million to $80 million in 2010 and in the range of $95 million to $105 million in 2011. These estimates are based on BioMarin’s current business plan and do not include the effect of any significant business development transaction that the company may choose to do in the future.
Non-GAAP Financial Information and Reconciliation
The above results for the fourth quarter and full year of 2007 and 2008 and financial guidance for 2009, 2010 and 2011 include actual and Management’s 2009, 2010 and 2011 estimated net income, respectively, determined in accordance with GAAP and non-GAAP net income. As used in this release, non-GAAP income is net income calculated in accordance with GAAP, but excluding non-cash stock compensation expense, a non-GAAP financial measure. Stock compensation expense excluded in the calculation of non-GAAP net income was $7.4 million for the fourth quarter of 2008, $5.5 million for the fourth quarter of 2007, $25.3 million for the year ended December 31, 2008 and $18.3 million for the year ended December 31, 2007. Management estimates stock compensation expense of $32.0 million to $35.0 million in 2009, approximately $35.0 million to $40.0 million in 2010 and approximately $35.0 million to $40.0 million in 2011. The reconciliation of this measure to the estimated GAAP net income is as follows (in millions):
Management believes that this non-GAAP information is useful to investors, taken in conjunction with BioMarin’s GAAP information because Management uses such information internally for its operating, budgeting and financial planning purposes, and to enhance investors’ overall understanding of the company’s prospects for the future.
Diluted Earnings Per Share Calculation
GAAP diluted earnings per share for the fourth quarter of 2008 and non-GAAP diluted earnings per share for the fourth quarter and full year 2008 includes 26.3 million shares related to the outstanding convertible debt. The calculation of GAAP diluted earnings per share for the fourth quarter of 2008 and non-GAAP diluted earnings per share for the fourth quarter and full year 2008 reflects the exclusion of the theoretical interest expense from net earnings that would no longer be incurred if the debt was converted into shares. For the full year 2008 GAAP diluted earnings per share and the fourth quarter and full year 2007 GAAP and non-GAAP diluted earnings per share, the 26.3 million shares related to the convertible debt are excluded from the diluted earnings per share calculation as their impact is considered anti-dilutive.
BioMarin will host a conference call and webcast to discuss fourth quarter and full year 2008 financial results today, Wednesday, February 18, at 5:00 p.m. ET (22:00 CET). This event can be accessed on the investor section of the BioMarin website at http://www.BMRN.com.
About BioMarin
BioMarin develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. The company’s product portfolio comprises three approved products and multiple clinical and pre-clinical product candidates. Approved products include Naglazyme(R) (galsulfase) for mucopolysaccharidosis VI (MPS VI), a product wholly developed and commercialized by BioMarin; Aldurazyme(R) (laronidase) for mucopolysaccharidosis I (MPS I), a product which BioMarin developed through a 50/50 joint venture with Genzyme Corporation; and Kuvan(R) (sapropterin dihydrochloride) Tablets, for phenylketonuria (PKU), developed in partnership with Merck Serono, a division of Merck KGaA of Darmstadt, Germany. Other product candidates include 6R-BH4 for cardiovascular indications, which is currently in Phase 2 clinical development for the treatment of sickle cell disease, and PEG-PAL (PEGylated recombinant phenylalanine ammonia lyase), which is currently in Phase 1 clinical development for the treatment of PKU. For additional information, please visit http://www.BMRN.com. Information on BioMarin’s website is not incorporated by reference into this press release.
Forward-Looking Statement
This press release contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including, without limitation, statements about: the expectations of revenue and sales related to Naglazyme, Kuvan, and Aldurazyme; the financial performance of the BioMarin as a whole; the timing of BioMarin’s clinical trials of 6R-BH4 for other indications, PEG-PAL, GALNS and other product candidates; the continued clinical development and commercialization of Aldurazyme, Naglazyme, Kuvan, and its product candidates; and actions by regulatory authorities. These forward-looking statements are predictions and involve risks and uncertainties such that actual results may differ materially from these statements. These risks and uncertainties include, among others: our success in the continued commercialization of Naglazyme and Kuvan; Genzyme Corporation’s success in continuing the commercialization of Aldurazyme; results and timing of current and planned preclinical studies and clinical trials; our ability to successfully manufacture our products and product candidates; the content and timing of decisions by the U.S. Food and Drug Administration, the European Commission and other regulatory authorities concerning each of the described products and product candidates; the market for each of these products and particularly Aldurazyme, Naglazyme and Kuvan; actual sales of Aldurazyme, Naglazyme and Kuvan; Merck Serono’s activities related to Kuvan; the results of the final analysis of the ASPEN trial by La Jolla Pharmaceuticals; and those factors detailed in BioMarin’s filings with the Securities and Exchange Commission, including, without limitation, the factors contained under the caption “Risk Factors” in BioMarin’s 2007 Annual Report on Form 10-K, and the factors contained in BioMarin’s reports on Form 10-Q. Stockholders are urged not to place undue reliance on forward-looking statements, which speak only as of the date hereof. BioMarin is under no obligation, and expressly disclaims any obligation to update or alter any forward-looking statement, whether as a result of new information, future events or otherwise.
BioMarin(R), Naglazyme(R) and Kuvan(R) are registered trademarks of BioMarin Pharmaceutical Inc.
The following is the stock-based compensation expense included in the respective captions of the consolidated statements of operations above:
CONTACT: investors, Eugenia Shen, +1-415-506-6570, or media, Susan Berg,
+1-415-506-6594, both of BioMarin Pharmaceutical Inc.
Web site: http://www.bmrn.com//
