BioMarin Pharmaceutical(US:BMRN)2024-10-31 19:01PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company reported significant Q3 and YTD 2024 revenue and net income growth, with total assets at $6.85 billion and reduced liabilities Condensed Consolidated Statements of Comprehensive Income (Q3 & YTD) | Financial Metric | Q3 2024 (in thousands) | Q3 2023 (in thousands) | YTD 2024 (in thousands) | YTD 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $745,740 | $581,329 | $2,106,602 | $1,773,019 | | Income from Operations | $113,893 | $30,525 | $322,807 | $158,495 | | Net Income | $106,080 | $40,378 | $301,916 | $147,270 | | Diluted EPS | $0.55 | $0.21 | $1.56 | $0.77 | Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | Sept 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $675,448 | $755,127 | | Total Current Assets | $3,056,590 | $2,956,088 | | Total Assets | $6,851,195 | $6,841,603 | | Total Current Liabilities | $715,658 | $1,177,024 | | Total Liabilities | $1,437,799 | $1,890,054 | | Total Stockholders' Equity | $5,413,396 | $4,951,549 | Condensed Consolidated Statements of Cash Flows (YTD) | Cash Flow Activity | Nine Months Ended Sept 30, 2024 (in thousands) | Nine Months Ended Sept 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $387,214 | $131,776 | | Net cash provided by (used in) investing activities | $60,087 | $(46,281) | | Net cash used in financing activities | $(529,306) | $(29,567) | | Net (Decrease) in Cash | $(79,679) | $60,883 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, debt repayment, revenue recognition, a 2024 restructuring plan, and a DOJ subpoena - Effective January 1, 2024, the company changed its accounting presentation for foreign currency transaction gains/losses and idle plant costs, revising prior periods for comparability3132 Net Product Revenues by Product (YTD) | Product | YTD 2024 (in thousands) | YTD 2023 (in thousands) | | :--- | :--- | :--- | | VOXZOGO | $526,597 | $324,146 | | VIMIZIM | $548,694 | $525,453 | | NAGLAZYME | $369,584 | $322,040 | | PALYNZIQ | $254,634 | $216,105 | | ALDURAZYME | $144,849 | $88,533 | | KUVAN | $92,576 | $144,047 | | ROCTAVIAN | $15,516 | $822 | - The company repaid its $495.0 million 0.599% convertible notes due August 1, 2024, while $600.0 million of 1.25% notes remain outstanding62 - A 2024 restructuring plan reduced the global workforce by approximately 395 employees, incurring $86.0 million in charges for severance and asset impairments8083101 - The company is cooperating with a U.S. Department of Justice (DOJ) subpoena regarding sponsored testing programs for VIMIZIM and NAGLAZYME, with unknown outcome89 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Strong financial performance driven by VOXZOGO sales and strategic portfolio review, with increased operating expenses due to restructuring and strong liquidity despite debt repayment - The company is executing a strategic realignment focused on maximizing VOXZOGO growth, establishing ROCTAVIAN opportunity, and advancing high-potential R&D assets like BMN 333, BMN 349, and BMN 351100101 - As part of its strategic review, the company committed to reducing its global workforce by approximately 395 employees in Q2 and Q3 2024101 Key Financial Metrics (MD&A) | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | YTD 2024 (in millions) | YTD 2023 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $745.7 | $581.3 | $2,106.6 | $1,773.0 | | R&D Expense | $184.9 | $191.3 | $573.7 | $540.5 | | SG&A Expense | $253.5 | $215.8 | $742.4 | $632.9 | | Net Income | $106.1 | $40.4 | $301.9 | $147.3 | Results of Operations Net product revenues increased due to VOXZOGO, ALDURAZYME, and NAGLAZYME, while gross margin slightly decreased in Q3, and SG&A rose significantly from restructuring charges Net Product Revenue Changes (Q3 2024 vs Q3 2023) | Product | Q3 2024 Revenue (in millions) | Change from Q3 2023 (in millions) | | :--- | :--- | :--- | | VOXZOGO | $189.9 | +$66.8 | | VIMIZIM | $178.2 | +$19.3 | | NAGLAZYME | $131.9 | +$23.0 | | ALDURAZYME | $71.0 | +$57.2 | | KUVAN | $28.1 | -$14.8 | - G&A expense increased by $50.7 million in Q3 2024 and $113.6 million YTD, primarily due to severance and restructuring costs from the 2024 organizational redesign124126 - R&D expense for the nine months ended Sep 30, 2024, increased by $33.2 million YoY, driven by higher spending on pre-clinical activities for new VOXZOGO indications and prioritized pipeline120121122 Financial Condition, Liquidity and Capital Resources Cash and investments totaled $1.49 billion, decreasing due to $495.0 million convertible note repayment, while operating cash flow significantly increased, and a new $600.0 million credit facility was established Cash, Cash Equivalents, and Investments | Category | Sept 30, 2024 (in millions) | Dec 31, 2023 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $675.4 | $755.1 | | Short-term investments | $255.0 | $318.7 | | Long-term investments | $562.0 | $611.1 | | Total | $1,492.4 | $1,684.9 | - Net cash used in financing activities increased to $529.3 million, primarily due to the $495.0 million settlement of the 2024 Notes that matured in August 2024140142 - As of September 30, 2024, purchase obligations totaled approximately $474.1 million, with $269.8 million expected to be paid in 2024, mainly for APIs and R&D services146 Quantitative and Qualitative Disclosures about Market Risk The company's market risks have not materially changed from those disclosed in its 2023 Annual Report on Form 10-K - No material changes to the company's market risks occurred during the nine months ended September 30, 2024154 Controls and Procedures Disclosure controls were effective as of September 30, 2024, with no material changes in internal control, though a new ERP system implementation will lead to process changes - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2024156 - The company is implementing a new global ERP system in phases through 2025, which will result in changes to processes and internal controls158 PART II. OTHER INFORMATION Legal Proceedings Shareholder derivative actions related to ROCTAVIAN settlement were not approved, and a stockholder class action was dismissed after Elliott waived challenged provisions - A proposed settlement in two shareholder derivative lawsuits concerning ROCTAVIAN was not approved by the Delaware Court of Chancery in July 2024160 - A stockholder class action regarding the Cooperation Agreement with Elliott Investment Management was dismissed as moot after Elliott waived the challenged provisions161 Risk Factors The company faces significant risks in gene therapy commercialization, supply chain, regulatory compliance, manufacturing complexity, substantial indebtedness, and management changes - Gene therapy products like ROCTAVIAN face unique commercial challenges, including uncertainty in pricing, coverage, reimbursement for high-cost treatments, and potential outcomes-based repayment obligations171172173 - The company's growth management, especially for products like VOXZOGO, is critical, as strong demand has previously led to supply challenges333 - Recent changes in senior management, including a new CEO, CCO, Chief R&D Officer, and Chief Business Officer, pose potential retention, morale, and operational risks331 - The company's substantial indebtedness of $600.0 million may decrease business flexibility, supplemented by a new $600.0 million revolving credit facility established in August 2024249250 - Significant risks arise from macroeconomic conditions, including inflation, geopolitical instability (Russia/Ukraine, Middle East), and economic volatility in product markets369370 Other Information Two executives adopted Rule 10b5-1 trading plans in Q3 2024 for future sales of company securities Adoption of Rule 10b5-1 Trading Plans (Q3 2024) | Name | Position | Adoption Date | Total Shares to be Sold | | :--- | :--- | :--- | :--- | | Brian R. Mueller | EVP and CFO | Sep 13, 2024 | up to 39,314 | | Cristin M. Hubbard | EVP and CCO | Sep 13, 2024 | up to 6,022 and all ESPP shares to be acquired |