BioMarin Pharmaceutical Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This annual filing reports full-year results, not standalone fourth-quarter results. BioMarin develops and commercializes therapies for rare diseases and reported seven commercial products.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $1.846 billion | $1.860 billion |
| Net product revenue | $1.783 billion | $1.806 billion |
| Gross margin | 74.5% | 71.8% |
| Operating loss | $82.3 million | $36.8 million |
| Net income (loss) | $(64.1) million | $859.1 million |
| Cash from operating activities | $304.5 million | $85.4 million |
| Cash, cash equivalents and investments at year-end | $1.522 billion | $1.351 billion |
Cost of sales was $470.5 million, R&D expense $628.8 million, and SG&A expense $759.4 million in 2021. The company reported $1.1 billion of convertible-note principal: $495 million due August 2024 and $600 million due May 2027. Its $200 million revolving credit facility had no borrowings at year-end; BioMarin said it was in compliance with its covenants. Management believed cash and investments, together with product cash generation, would meet liquidity needs for at least 12 months.
Material changes and business developments
- Revenue decreased $14.2 million year over year. Kuvan revenue fell $171.9 million to $285.8 million, primarily from U.S. generic competition following loss of exclusivity in October 2020.
- Growth in Vimizim ($623.1 million), Palynziq ($237.5 million), and Brineura ($128.0 million) partly offset Kuvan’s decline. Voxzogo, approved in the U.S., EU, and Brazil during 2021, contributed $5.9 million as its launch began.
- Gross margin improved from 71.8% to 74.5%, principally because 2020 included a $87.2 million pre-launch valoctocogene roxaparvovec inventory charge. The filing also reports a $24.3 million inventory charge in 2021 and notes that no pre-launch inventory remained at year-end.
- The 2021 net loss contrasts with 2020 net income, which included an $835.1 million tax benefit from an intra-entity transfer of intellectual property and a $59.5 million gain on the Firdapse divestiture. Neither item recurred in 2021.
- Operating cash flow increased to $304.5 million, mainly reflecting timing of customer and licensee receipts, vendor payments, and tax refunds. Investing cash outflow rose to $366.3 million, largely due to net purchases of debt securities.
Outlook, risks, and unusual items
- Management expected growth in net product revenue from Voxzogo and other existing products, while anticipating continued significant Kuvan declines. It expected 2022 gross margin of 75%–77% and higher R&D and SG&A spending. The filing provides no numeric 2022 revenue or earnings guidance.
- BioMarin targeted a second-quarter 2022 U.S. BLA resubmission for valoctocogene roxaparvovec, a gene therapy for severe hemophilia A, following an FDA Complete Response Letter requesting two-year Phase 3 follow-up data. European review was also underway. Approval and timing remained uncertain.
- The FDA placed BMN 307’s Phase 1/2 study on clinical hold after liver tumors and vector integration were observed in mice at the highest dose in a preclinical study. In February 2022, the FDA requested additional nonclinical studies, expected to take several quarters.
- COVID-19 continued to disrupt patient infusions, treatment starts, clinical studies, and operations; management anticipated ongoing effects in 2022. Other key risks include pricing and reimbursement pressure, generic competition, reliance on a small number of customers, foreign-exchange exposure, and manufacturing or supply interruptions.
- In February 2022, BioMarin agreed to sell the Voxzogo-related rare pediatric disease priority review voucher for $110 million, subject to customary closing conditions. The proceeds were not 2021 revenue.
- The company disclosed two shareholder securities class actions, one concerning valoctocogene roxaparvovec and one concerning BMN 307. BioMarin said it intended to defend both; damages sought were unspecified.
- Potential contingent milestone payments were approximately $788.5 million if specified development, regulatory, and commercial milestones are achieved; these are contingent obligations, not all currently payable. The company also reported $133.3 million of short-term purchase commitments and $205.1 million in unrecognized tax benefits.
Most important facts for investors to verify
- Whether Voxzogo adoption and revenue growth can offset the ongoing Kuvan decline, and how much 2022 growth is reflected in actual results.
- Regulatory progress, durability and safety data, and commercialization prospects for valoctocogene roxaparvovec, including the outcome and timing of the FDA resubmission.
- Whether BMN 307 can resume clinical development after the FDA-requested nonclinical work.
- Cash generation, the timing and funding of the 2024 and 2027 note maturities, and the status of contingent milestone obligations.
- The effects of COVID-19, payer negotiations, government order timing, and customer concentration on revenue and cash collections.