BIOMARIN PHARMACEUTICAL INC - 10-Q Quarterly Report

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 000-26727

BIOMARIN PHARMACEUTICAL INC.

(Exact name of registrant issuer as specified in its charter)


Delaware		68-0397820
(State of other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

371 Bel Marin Keys Blvd., #210, Novato, California		94949
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number: (415) 506-6700

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of The Exchange Act). Yes x No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 64,497,636 shares common stock, par value $0.001, outstanding as of November 3, 2004.

BIOMARIN PHARMACEUTICAL INC.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Cash Flows	5

	Notes to Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	37

Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Submission of Matters to a Vote of Security Holders	38

Item 5.	Other Information	38

Item 6.	Exhibits	38

SIGNATURE		39

PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements (Unaudited)

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)


	December 31, 2003 ⁽¹⁾			September 30, 2004
				(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	121,406		$	34,981
Short-term investments		84,951			51,570
Restricted cash		—			25,198
Accounts receivable		—			119
Inventory		—			3,090
Investment in and advances to BioMarin/Genzyme LLC		16,058			22,650
Other current assets		2,854			3,079

Total current assets		225,269			140,687
Property and equipment, net		25,154			35,620
Acquired intangible assets, net		—			99,123
Goodwill		—			32,250
Other assets		5,917			4,550

Total assets	$	256,340		$	312,230

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	10,098		$	24,541
Current portion of acquisition obligation, net of discount		—			48,747
Other current liabilities		2,717			2,427

Total current liabilities		12,815			75,715
Convertible debt		125,000			125,000
Equipment and facility loan		—			6,986
Long-term portion of acquisition obligation, net of discount		—			90,076
Other long-term liabilities		672			290

Total liabilities		138,487			298,067

Stockholders’ equity:
Common stock, $0.001 par value: 150,000,000 shares authorized; 64,156,285 and 64,388,138 shares issued and outstanding December 31, 2003 and September 30, 2004, respectively		64			64
Additional paid-in capital		414,110			420,758
Warrants		5,219			—
Deferred compensation		(145	)		—
Accumulated other comprehensive loss		(17	)		(260	)
Accumulated deficit		(301,378	)		(406,399	)

Total stockholders’ equity		117,853			14,163

Total liabilities and stockholders’ equity	$	256,340		$	312,230

⁽¹⁾	December 31, 2003 balances were derived from the audited consolidated financial statements.

See accompanying notes to consolidated financial statements.

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2003 and 2004

(In thousands, except per share data, unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2004			2003			2004
Net product sales	$	—		$	181		$	—		$	4,744
Milestone revenue		—			—			12,100			—

Total revenue		—			181			12,100			4,744

Operating expenses:
Cost of sales (excludes amortization of developed product technology)		—			35			—			648
Research and development		14,211			11,806			36,784			37,670
Selling, general and administrative		1,956			12,761			9,364			24,304
Amortization of acquired intangible assets		—			1,694			—			2,513
Acquired in-process research and development		—			—			—			35,444
Equity in the loss of BioMarin/Genzyme LLC		4,503			507			16,642			3,965

Total operating expenses		20,670			26,803			62,790			104,544

Loss from operations		(20,670	)		(26,622	)		(50,690	)		(99,800	)
Interest income		781			573			1,787			1,997
Interest expense		(1,402	)		(3,429	)		(1,745	)		(7,218	)

Net loss from continuing operations		(21,291	)		(29,478	)		(50,648	)		(105,021	)
Gain on disposal of discontinued operations		—			—			577			—

Net loss	$	(21,291	)	$	(29,478	)	$	(50,071	)	$	(105,021	)

Net loss per share, basic and diluted:
Net loss from continuing operations	$	(0.33	)	$	(0.46	)	$	(0.82	)	$	(1.63	)
Gain on disposal of discontinued operations		—			—			0.01			—

Net loss	$	(0.33	)	$	(0.46	)	$	(0.81	)	$	(1.63	)

Weighted average common shares outstanding, basic and diluted		63,815			64,384			61,450			64,316

See accompanying notes to consolidated financial statements.

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2003 and 2004

(In thousands, unaudited)


	Nine Months Ended September 30,
	2003			2004
Cash flows from operating activities:
Net loss from continuing operations	$	(50,648	)	$	(105,021	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		7,232			12,680
Acquired in-process research and development		—			35,444
Lease liability reversal		(2,002	)		—
Gain on disposals of property and equipment		—			(104	)
Changes in operating assets and liabilities:
Accounts receivable		—			(119	)
Inventory		—			(790	)
Investment in and advances to BioMarin/Genzyme LLC		(5,355	)		(6,592	)
Other current assets		299			(225	)
Note receivable from officer		203			917
Other assets		(902	)		(172	)
Accounts payable and accrued liabilities		9,469			8,107
Other liabilities		(248	)		199

Net cash used in continuing operations		(41,952	)		(55,676	)
Net cash provided by discontinued operations		140			—

Net cash used in operating activities		(41,812	)		(55,676	)

Cash flows from investing activities:
Purchase of property and equipment		(2,637	)		(16,401	)
Proceeds from sale of equipment		28			—
Ascent Pediatrics transaction		—			(14,742	)
Increase in restricted cash		—			(25,198	)
Sale of short-term investments		74,056			70,575
Purchase of short-term investments		(88,020	)		(37,435	)

Net cash used in investing activities		(16,573	)		(23,201	)

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