BioMarin Pharmaceutical (BMRN)

Q3 2011 Earnings Call

October 27, 2011 5:00 pm ET

Executives

Stephen Aselage - Chief Business Officer and Executive Vice President

Henry Fuchs - Chief Medical Officer and Executive Vice President

Jean-Jacques Bienaimé - Chief Executive Officer and Director

Eugenia Shen - Senior Manager of IR

Jeffrey H. Cooper - Chief Financial Officer and Senior Vice President

Analysts

Nicholas Bishop

Eun K. Yang - Jefferies & Company, Inc., Research Division

Liana Moussatos - Wedbush Securities Inc., Research Division

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Navdeep Singh - Deutsche Bank AG, Research Division

Laura A. Ekas - Collins Stewart LLC, Research Division

Shin Kang - Wells Fargo Securities, LLC, Research Division

Tim Lugo - William Blair & Company L.L.C., Research Division

Alan Leong - Biotech Stock Research

Joseph P. Schwartz - Leerink Swann LLC, Research Division

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 BioMarin Pharmaceutical Inc. Earnings Conference Call. My name is Jennifer, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I now would like to turn the presentation over to your host for today's conference, Ms. Eugenia Shen, Investor Relations of the BioMarin. Please proceed.

Eugenia Shen

Thank you. On the call today is J.J. Bienaimé, BioMarin's Chief Executive Officer; Jeff Cooper, Chief Financial Officer; Hank Fuchs, Chief Medical Officer; and Steve Aselage, Chief Business Officer.

This nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product program, actions of regulatory authority, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. And now I'd like to turn the call over to J.J., BioMarin's CEO.

Jean-Jacques Bienaimé

Thank you, Eugenia. Good afternoon, and thank you for joining us on today's call. As usual, a few introductory comments before Jeff reviews the financials for the third quarter of this year, and Steve provides more details on the commercial activities, and then Hank will provide an update on a few of our ongoing R&D programs before we open the call for questions.

So we are pleased with the progress we have made so far this year. Starting with our commercial portfolio in the third quarter of 2011, there was a year-over-year increase in BioMarin's net product revenues of 17% to $113 million. Our cash balance was $370 million at the end of the quarter, down from $412 million at the end of the second quarter. The primary reason for the decline was the $48.5 million spent on our new manufacturing facility in Ireland, which was completed during the third quarter.

Excluding this, our cash balance increased quarter-over-quarter. As for our clinical and preclinical programs, we have made important progress on advancing our pipeline. We have several major clinical milestones expected in the next year or so, including results for the Phase II trial for PEG-PAL, the pivotal Phase III trial for GALNS, the Phase I/II trial for BMN-701 for Pompe, the Phase I/II trial for BMN-673 for genetically defined cancers and the neurocognitive trial for Kuvan. The positive outcome in one of these trials or more of these trials could have significant implications for the future of the company. And with this in mind, the successful execution of our pipeline is a top priority for the company and we plan to host an R&D day in New York on December 8 to discuss our pipeline progress in more details.

Moving on to the investigator-sponsored trial of Kuvan in autism. The data from this small single-center Phase II study was presented in a poster presentation at the American Academy of Child and Adolescent Psychology on October 20. The study did not need its primary or secondary endpoints. However, 3 subscale secondary measurements, we did it to social awareness, autism mannerisms and language with statistical significance. Since the open-labeled portion of the trial is ongoing, it is premature right now to speculate on additional study outcomes or any next potential steps for BioMarin. We do not believe that the results from the autism trial will be predictive of our ongoing neurocognitive study for Kuvan in PKU, as it is likely that the mechanism of actions defers in this 2 indications. Kuvan's ability to lower Phe levels in some patients and the correlation between high Phe levels and neurocognitive deficits in PKU patients has been well documented through different meta-analyses, and whereas the cause of autism is still unknown.

And in terms of guidance, we have made a few adjustments. We increased the bottom end of our Kuvan expectations from a range of $112 million to $120 million to a range of $115 million to $120 million. We also raised our expectations for R&D spend from a range of $200 million to $205 million to a range of $205 million to $210 million. The higher spend is attributable to our increased efforts for the successful execution of our pipeline programs, which resulted in better-than-anticipated enrollment in our clinical studies. Our new non-GAAP adjusted EBITDA is in the range of $45 million to $55 million. Now I would like to turn the call over to Jeff Cooper, who will review the financial results for the third quarter of 2011.

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