Biotech Bets

08/18/2006 12:00 am EST

Focus:

Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

Growth guru Jim Collins finds another company whose stock has tremendous investment potential. Focusing on treating several rare, often-fatal diseases, with a strong and growing pipeline of products, this company is not a one-trick wonder…

 

BioMarin Pharmaceutical (BMRN NASDAQ) develops enzyme therapies to treat serious, life-threatening diseases and medical conditions. Additionally, it has formed strategic partnerships to maximize the value of its products and to realize the potential of its investigational product opportunities.

 

“In 2003, Aldurazyme for the treatment of Mucopolysaccharidosis I (MPS I) disease, became BioMarin’s first product to be approved. MPS I is a progressive debilitating and life-threatening genetic disease caused by the deficiency of (alpha)-L-iduronidase, an enzyme responsible for breaking down certain carbohydrates. There are currently no other drugs on the market for the treatment of MPS I.

 

“Naglazyme, approved in the US in May 2005 and the EU in January 2006, is an enzyme replacement therapy for the treatment of mucopolysaccharidosis VI (MPS VI), an inherited life-threatening lysosomal storage disorder caused by a deficiency of a certain enzyme. As the first drug approved for MPS VI, the FDA and European Commission have both designated Naglazyme as an orphan drug, conferring seven years of market exclusivity in the US and ten years of market exclusivity in the EU.

 

“In May 2004, BioMarin acquired Ascent Pediatrics, which included Orapred, primarily used to treat asthma exacerbations in children and other inflammatory conditions, and two additional proprietary formulations of Orapred. Orapred’s net product sales for 2005 totaled $6.9 million, compared to $18.6 million for 2004, as the product faces generic competition.

 

“BioMarin has a promising pipeline outside of Aldurazyme, Naglazyme, and Orapred, including Phenoptin, an investigational small-molecule oral therapeutic for the treatment of phenylketonuria (PKU), an inherited metabolic disease that can result in serious neurological damage. An estimated 50,000 people under 40 years of age are living with the disease in developed countries. Phenoptin has received orphan drug status in the US and European Union. The company expects to file its application in the first quarter of 2007.

“During the second quarter, BioMarin’s revenues grew by 550% to $23.5 million from a year ago and include a one-time payment of $7.5 million from Alliant due to the approval of Orapred ODT. Net losses fell to $(1.3) million, or $(0.02) per share, from $(21.3) million, or $(0.33) per share last year, better than anticipated results.

 

“BioMarin stock has been on a steady uptrend since December, except for a small volatile blip in March. Volume has increased steadily, averaging 850,000. Banks and mutual funds own 40% of the shares and management owns 2%. The stock carries a relative strength of 97 and gets a B+ for accumulation/distribution.”

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