Bloomberg News

BioMarin Seeks to Buttress Rare-Disease Push With Deals

February 01, 2012

(Updates with closing share price in the fifth paragraph.)

Jan. 27 (Bloomberg) -- BioMarin Pharmaceutical Inc., with five drugs in clinical trials, is seeking to buy smaller companies to expand its pipeline for treatment of rare diseases, not be acquired itself, Chief Executive Officer Jean-Jacques Bienaime said in an interview.

The number of trials is the most ever at one time for BioMarin, a maker of drugs for rare diseases, Bienaime said. The Novato, California-based company will follow a similar acquisition strategy to one used for purchases such as Zystor Therapeutics Inc., which BioMarin bought in 2010 for $22 million in upfront cash. That acquisition gained the company a medicine now being tested for Pompe disease, a muscle-disabling disorder.

“These were acquisitions around $20 million or less upfront,” Bienaime said. The company had about $224.4 million in cash and short-term investments as of Sept. 30, according to data compiled by Bloomberg.

BioMarin has a market value of $4 billion and four approved products. The company isn’t being managed to be sold, Bienaime said. If an acquirer came after the company “aggressively, it would have to be an exciting premium,” he said.

BioMarin rose 2.7 percent to $35.85 in New York trading. The shares have gained 40 percent in the past 12 months.

In any case, Bienaime said he doesn’t anticipate interest from an acquirer until BioMarin reports later this year on final testing on GALNS, a treatment for the rare genetic bone disease Morquio A syndrome.

Michael Yee, an analyst at RBC Capital Markets in San Francisco, described GALNS as the biggest driver and most important data set of the year for BioMarin.

$500 Million in Sales

The drug has the potential for about $500 million in peak sales in 2020, potentially doubling the company’s revenues over the long term, Yee said in a telephone interview. Suitors, he said, would probably prefer to wait for definitive data on GALNS and the Pompe disease drug BMN-701 before considering a bid.

BioMarin has said it anticipates BMN-701 will start the last phase of testing usually needed for U.S. marketing approval in 2013. It is being groomed to compete with Lumizyme and Myozyme, from Sanofi’s Genzyme unit, which generated $412 million in revenue in 2010.

BioMarin is one in a growing field of drugmakers looking to profit by treating rare diseases.

Costly Medicines

These companies develop medicines for as few as 5,000 to 10,000 patients worldwide and make returns by charging as much as $400,000 a year per patient for drugs. The U.S. and Europe give drugmakers exclusive marketing rights to focus on these so- called orphan diseases with no other treatment options, and smaller patient populations mean fewer participants are needed for clinical trials.

As an acquirer, BioMarin will probably focus on making small in-licensing deals, Yee said, as the company already has a large pipeline of drugs at various stages of testing.

At the same time, nearly all large global pharmaceutical companies and specialty-drug makers, including Shire Plc and Pfizer Inc. have expressed interest in the orphan disease market, Yee said.

BioMarin remains a “top mid-cap takeout candidate over the longer-term given its proprietary orphan drug pipeline, global commercial infrastructure and biologics expertise,” Yee wrote in an earlier Jan. 9 note to clients.

--Editors: Reg Gale, Andrew Pollack

To contact the reporter on this story: Sasha Damouni in New York at sdamouni2@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net; Brad Skillman at bskillman1@bloomberg.net


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