Good News for BioMarin's Pipeline - Analyst Blog

Recently, BioMarin Pharmaceutical Inc.’s (BMRN) pipeline received a boost with the US Food and Drug Administration (FDA) granting orphan drug status to its candidate BMN-701, which is being developed to combat Pompe disease.

The investigational new drug (IND) application for the candidate, which has been effective in pre-clinical studies, was accepted by the FDA with clinical trials expected to commence in the first quarter of 2011.

Orphan Drug Status is granted by the FDA to therapies being developed to treat diseases that affect less than 200,000 people in the US. With the FDA granting orphan drug status to its candidate, BioMarin becomes eligible to receive incentives and assistance for developing BMN-701. Moreover, the status grants seven years of market exclusivity to the candidate, if it manages to clear the developmental and regulatory hurdles and reach the market.

Pompe disease is an enzyme disorder characterized by the progressive degeneration of heart and skeletal muscles. The current standard of care is Genzyme’s (GENZ) Myozyme/Lumizyme. The rare disease affects one out of 40,000 people. The incidence of the disease is more pronounced in adults than in infants as indicated by the incidence of one in 57,000 adults as against the incidence of one in 138,000 infants. We believe that the successful development and commercialization of the candidate will boost BioMarin’s top line.

Our Take

Even though we are pleased with BioMarin’s acquisition of Huxley Pharmaceuticals in 2009, which has added Firdapse to the company’s product portfolio, we remain concerned about the delayed launch of the drug. Furthermore, the disappointing performance of the company’s first approved product–Aldurazyme also concerns us. However, we believe that the company’s other two marketed products, Naglazyme and Kuvan, will continue to perform well in the coming quarters.

We have a short-term Zacks #4 Rank (‘Sell’) on the shares highlighting the near-tem pressure on the stock, arising mainly because of the delayed launch of Firdapse. This caused the company to trim its revenue projection for 2010. However, the stable long-term outlook leads us to reiterate our long-term Neutral rating.