BioMarin Earnings: 3 Keys from Q3

BioMarin (NAS: BMRN) announced its third quarter results last week. The company experienced some bright spots with total net product revenue increasing nearly 12% compared to the same quarter last year and its net loss shrinking year-on-year from $17.7 million to $5.4 million.

The bigger news with BioMarin is all forward-looking, though. Here are three key things to focus on from the company's Q3 earnings announcement.

1 growing cash stockpile
BioMarin reported cash, equivalents, and short-term and long-term investments totaling $533 million in third quarter. That figure reflects an increase from nearly $525 million at the end of the second quarter. If we exclude long-term investments, BioMarin has grown its readily available financial resources from $195 million at the beginning of 2012 to more than $426 million at the end of the third quarter.

This growing stockpile is important to the company as it seeks to commercialize more products on its own. One of BioMarin's products, Aldurazyme, was launched in a joint venture with Genzyme, which is owned by Sanofi (NYS: SNY) . The company partners with a division of German firm Merck KGaA with another product, Kuvan. Increasing cash and other liquid financial resources reflect an improved ability for BioMarin to develop and launch more products without partnerships.

2 products driving growth
Two products contributed the most to BioMarin's revenue growth in the third quarter. Leading the way in terms of dollars was Naglazyme. The drug, which is used in the treatment of mucopolysaccharidosis VI, increased net product revenue from $55.9 million in the third quarter of 2011 to $62.5 million in third quarter this year.

Kuvan, though, led the way in percentage growth for third quarter. The drug, which is used to treat metabolic disease phenylketonuria, experienced a 19.3% surge in net product revenue year-on-year.

Both Naglazyme and Kuvan obtained orphan drug status in the U.S. and Europe. Continued growth from these two drugs should help BioMarin fund its pipeline development moving forward.

3 bright prospects
And BioMarin's pipeline presents several great opportunities for the company to move to sustained profitability. The company's earnings conference call focused less on the financial results from third quarter as they did the future for its products in development. Three drugs stand out as the brightest prospects.

The top candidate is BioMarin's enzyme replacement for GALNS in the treatment of Morquio A syndrome. The company has a phase 3 trial under way and expects to report top-line results in November.

Another promising drug is PEG-PAL, which targets treatment of phenylketonuria in patients who don't respond well to Kuvan. PEG-PAL is currently in phase 2, and BioMarin plans to move the drug forward into phase 3.

Last but not least is BMN-111. The drug is intended for treatment of achondroplasia, the most common form of dwarfism. Like PEG-PAL, BMN-111 is in phase 2 now, with BioMarin planning to move into phase 3 with the drug.

Counting higher
These three factors should help BioMarin extend its upward climb. Shares have increased around 21% over the past year.

The company hasn't yet experienced the level of success of some taking the rare disease path. Alexion (NAS: ALXN) , for example, has soared to a market cap of more than $18 billion, while shares have more than quadrupled over the past five years.

BioMarin beats out Viropharma (NAS: VPHM) on market cap by several billion dollars. However, Viropharma shares performed much better -- essentially tripling over the past five years while BioMarin shares increased around 40%.

I suspect that BioMarin's solid two mainstay drugs will continue to help the company fund a strong pipeline. And I won't be surprised if that pipeline pays off significantly down the road. Count on higher levels in the future for this stock.

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