BioMarin Pharmaceutical's CEO Discusses Q1 2012 Results - Earnings Call Transcript

BioMarin Pharmaceutical (BMRN)

Q1 2012 Earnings Call

April 26, 2012 5:00 pm ET

Executives

Eugenia Shen -

Jean-Jacques Bienaimé - Chief Executive Officer and Director

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

Henry J. Fuchs - Chief Medical Officer and Executive Vice President

Stephen Aselage - Chief Business Officer and Executive Vice President

Analysts

Bryan Huang

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

Navdeep Singh - Deutsche Bank AG, Research Division

Salveen J. Richter - Canaccord Genuity, Research Division

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

Joseph P. Schwartz - Leerink Swann LLC, Research Division

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

Charmaine Chan - RBC Capital Markets, LLC, Research Division

Matthew Harrison - UBS Investment Bank, Research Division

Nicholas Bishop

Liana Moussatos - Wedbush Securities Inc., Research Division

Presentation

Operator

A very good day to you, ladies and gentlemen, and welcome to your Q1 2012 BioMarin Pharmaceutical Inc. Earnings Conference Call, hosted by Eugenia Shen, Investor Relations, amongst other presenters. My name is Chris, and I'll be your conference coordinator for today. [Operator Instructions] I would just like to remind all party, this conference is being recorded for replay purposes today. Thank you. At this time, I would like to turn the call over to Eugena to start. Please go ahead.

Eugenia Shen

Thank you. On the call today is J.J. Bienaimé, BioMarin's CEO; Jeff Cooper, CFO; Hank Fuchs, Chief Medical Officer; and Steve Aselage, Chief Business Officer. This nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceuticals, 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 programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the 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. So I have as usual a few introductory comments before Jeff reviews the financials for the first quarter and Hank provides an update on our research and development programs. And then Steve will provide more details on our commercial portfolio before we open the call for questions.

So we are very pleased with the progress we have made in the first quarter and we believe we're off to a strong start in 2012. Starting with our commercial portfolio, we exceeded $100 million in quarterly revenues for BioMarin marketed products for the first time in Q1 of this year. This was driven by a year-over-year increase in Naglazyme net product revenue of 13%, and that despite a weaker euro than last year and a year-over-year increase in equivalent net product revenues of 20%.

As we have communicated previously in early January, we booked an order from Brazil that was delayed from Q4 2011. But even without this order, Q1 would have been our strongest Naglazyme quarter since March. Jeff will explain. Net product transfer revenue had a negative $6.4 million impact on net Aldurazyme revenue to BioMarin. And despite the negative effect of product transfer revenue, we will receive $18.4 million of royalties in cash from Genzyme for this quarter. And had product transfer revenue been neutral in Q1, total BioMarin revenue would have been $123 million.

Net of Aldurazyme product revenue is expected to be neutral or positive in Q2 and positive in the second half of the year. More importantly, the total number of Aldurazyme treated patients keeps growing with a 9.1% increase in the first quarter of 2012 as compared to the first quarter of 2011.

Also, the number of patients treated with Naglazyme continues to increase steadily during the same period, and we are in a trajectory to reach top sales well above $300 million.

Following this record quarter in both Naglazyme sales and the number of patients treated, we decided to increase the lower end of our Naglazyme guidance -- revenue guidance by $10 million for the whole 2012 year.

Our cash balance were $288 million at the end of the first quarter, down slightly from $290 million at the end of 2011.

Our R&D pipeline remains our top priority for 2012. We are on track for 5 significant clinical readouts by the end of the year, including the Phase III trial for GALNS, the Phase II trial for PEG-PAL, the Phase I/II trial for BMN-701 for Pompe disease, the Phase I/II trial for BMN-673 for solid tumors and the Phase I trials in healthy volunteers for BMN-111 for achondroplasia. Positive results for one or more of these patients-based trials could be transformative for the company.

Our increased R&D spend in the first quarter is linked primarily to clinical manufacturing costs and enrollment of an additional 16 patients in the GALNS Phase III trial as compared to our initial objectives because of the overwhelming enthusiasm for the study in the Morquio community.

Also please keep in mind that almost 20% of our projected R&D spend of $265 million to $275 million in 2012 is totally for direct supply. If Phase III GALNS is approved, approximately $7 million of expenses from the manufacturing campaign in 2012 who would support named patient and commercial sales in the future, so the spend -- some of the spend is actually an investment in working capital. Also despite the expectations for higher R&D spend, our projected net income remains unchanged.

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