Cross Over to BioMarin

Tucked away in the affluent bedroom communities of Marin County in Northern California is BioMarin Pharmaceuticals (BMRN), a small-cap biotech company that hopes to strike gold by improving and extending the lives of patients with rare diseases.

Shares of BioMarin have had a tremendous run over the past two years, rising 339% since hitting a low of $3.87 in November 2004. But there could be more gains around the corner if the company continues to execute with its existing products as well as its pipeline.

BioMarin's bread and butter are two drugs for versions of the rare disorder Mucopolysaccharidosis (MPS). People who suffer from MPS are unable to produce specific enzymes that break down materials in cells. As a result, they may not grow properly, suffer mental retardation and have other physical abnormalities including difficulty in breathing. There is no known cure for the disease, and patients often die before reaching adulthood.

BioMarin's Naglazyme for MPS VI and Aldurazyme for MPS I are the first drugs approved for these indications. The two were granted orphan status, which entitles them to seven years of market exclusivity in the U.S. and Europe. Aldurazyme is manufactured by BioMarin and sold by partner Genzyme (GENZ).

The economics around the two drugs are strong. While it is believed that only 3,000 people worldwide are afflicted with MPS I and just over 1,000 with MPS VI, according to Pacific Growth Equities, treatment doesn't come cheap. Aldurazyme costs an average of just under $200,000 per year per patient, while Naglazyme averages $300,000.