BioMarin (BMRN) to Acquire Rights to Phenylketonuria Drugs
BioMarin Pharmaceutical Inc.’s BMRN shares were up 4.2% with the company’s announcement of acquiring all global rights to Kuvan and pegvaliase from Merck Serono, a division of Merck KGaA MKGAF for the treatment of phenylketonuria (PKU). The transaction is slated to close in Jan 2016.
Terms of the Agreement
Merck Serono is entitled to receive an upfront payment of €340 million from BioMarin. In addition, Merck Serono will receive €60 million in milestones if combined sales of Kuvan and pegvaliase reach undisclosed cumulative sales thresholds and €125 million for regulatory milestones related to pegvaliase. From Jan 2016, BioMarin will begin commercializing Kuvan in additional 55 countries with the exception of Japan.
We remind investors that Kuvan is approved for the treatment of hyperphenylalaninemia (HPA) due to PKU in patients who have responded to Kuvan, or due to tetrahydrobiopterin deficiency. Kuvan sales came in at $110.3 million in the first half of 2015. Meanwhile, pegvaliase is currently in pivotal studies for the treatment of PKU. Data results expected in Mar/Apr 2016.
The company also provided guidance for Kuvan sales in 2016. The full-year total Kuvan revenue to BioMarin is expected in the range of $320 million – $350 million including $70 million – $80 million revenue from new rest of the world territories. In addition, the transaction is expected to be accretive to earnings starting from in 2016.
Our Take
BioMarin’s decision to acquire global rights to Kuvan is a significant strategic move. By regaining the rights to Kuvan which has orphan drug exclusivity in Europe until 2020, BioMarin has the opportunity to expand its commercial efforts across the company's territories.
BioMarin carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Nexvet Biopharma Public Limited Company NVET and Regeneron Pharmaceuticals, Inc. REGN, each sporting a Zacks Rank #1 (Strong Buy).
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