BioMarin Pharmaceutical Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; financial statements are unaudited and prepared under U.S. GAAP. BioMarin develops and commercializes therapies for rare diseases and reported seven commercial products.
Financial performance
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Total revenue | $519.4 million | $486.0 million | +6.9% |
| Net product revenue | $505.5 million | $467.8 million | +$37.7 million |
| Gross margin | 77.5% | 75.3% | +2.2 percentage points |
| Operating income | $137.3 million | $25.1 million | Includes $108.0 million PRV-sale gain |
| Net income | $120.8 million | $17.4 million | Includes benefit of PRV-sale gain |
| Diluted EPS | $0.63 | $0.09 | — |
| Cash from operating activities | $(45.4) million | $113.5 million | Down $158.9 million |
Product revenue growth was led by Vimizim ($183.1 million, up $24.8 million), Naglazyme ($128.0 million, up $20.7 million), Brineura ($36.2 million, up $8.9 million) and Voxzogo ($19.7 million, launched after approvals in 2021). Kuvan declined $11.5 million to $59.3 million, largely due to generic competition. Aldurazyme revenue marketed by Sanofi fell $25.6 million to $24.4 million, primarily reflecting order timing. Royalty and other revenue decreased $4.5 million to $13.8 million.
Gross margin improved with product mix, lower inventory reserves and lower Palynziq unit manufacturing costs. Research and development expense rose to $160.8 million from $148.7 million; selling, general and administrative expense increased to $194.6 million from $174.3 million.
Liquidity, cash flow and debt
- Cash, cash equivalents and investments totaled $1.519 billion at March 31, 2022, versus $1.522 billion at December 31, 2021. Cash and cash equivalents were $605.4 million.
- Operating cash outflow was $45.4 million, compared with $113.5 million inflow in Q1 2021. Management attributed the decline mainly to customer receipt timing, absence of the prior-year federal tax refund and higher compensation payments.
- Investing activities provided $87.8 million, including $110.0 million proceeds from the PRV sale. Financing activities used $25.3 million. Cash increased $18.2 million during the quarter.
- Convertible notes had $1.1 billion aggregate principal outstanding: $495 million due August 2024 and $600 million due May 2027. The $200 million revolving facility had no borrowings; the company reported covenant compliance.
- Current assets were $2.394 billion and current liabilities $490.4 million. Management said available resources and expected commercial cash generation should meet liquidity needs for at least 12 months.
Material developments, outlook and risks
- The company recognized a $108.0 million net gain from selling the Rare Pediatric Disease Priority Review Voucher received with Voxzogo’s U.S. approval; the cash proceeds were $110.0 million.
- Management expected gross margin of approximately 75%–77% over the next 12 months, and expected R&D and SG&A expenses to rise as development and launch activities expand. It expected interest income to increase with higher rates and interest expense to remain broadly stable.
- Voxzogo’s global launch was underway, with treatment numbers and active markets increasing. Japan and Australia reviews were in progress, with potential approvals anticipated in 2022. The company planned to discuss next steps for expanding access to younger children following Phase 2 results.
- For valoctocogene roxaparvovec, the EMA review continued, with a committee opinion expected mid-year 2022. BioMarin targeted BLA resubmission to the FDA in June 2022 and anticipated a six-month review if accepted. A reported salivary gland mass in a Phase 2 participant was deemed unrelated by the investigator; the company reported no evidence that vector integration contributed to the mass.
- BMN 307 remained on FDA clinical hold; in February 2022 the FDA requested additional nonclinical studies, with next steps not yet specified. BMN 331 dosing began in a Phase 1/2 study; the single-ascending-dose arm of BMN 255’s first-in-human study was complete and under analysis.
- COVID-19 continued to disrupt infusions and delay treatment starts; management expected effects to continue during 2022, with duration and magnitude uncertain. Other significant exposures include generic competition for Kuvan, foreign-exchange movements, inconsistent government order timing, international payment and reimbursement risks, and supply/manufacturing constraints.
- At quarter-end, $64.0 million of acquisition-related contingent consideration was recorded as a current liability; BioMarin expected to pay €30 million in Q2 2022 for a Palynziq sales milestone. Separately, reasonably possible contingent payments totaled $788.5 million, including large potential obligations tied to licensed early-stage programs. Short-term purchase commitments were approximately $117.5 million.
- Two securities class actions were pending: one concerning valoctocogene roxaparvovec (motion to dismiss denied in January 2022) and one concerning BMN 307. The company said it considers the claims without merit and intends to defend them.
Important facts for investors to verify
- How much reported earnings growth reflects recurring product performance versus the one-time PRV-sale gain.
- Whether operating cash flow improves as customer receipts normalize, and how working-capital needs evolve.
- Regulatory progress and clinical evidence for valoctocogene roxaparvovec, including FDA resubmission and EMA review outcomes.
- BMN 307’s path forward after the FDA clinical hold and requested nonclinical work.
- Voxzogo’s launch, geographic expansion, reimbursement and potential younger-patient indication progress.
- The pace of Kuvan erosion, Aldurazyme order variability, COVID-related treatment interruptions, and the size and timing of contingent payments.