BioMarin Now a Core Biotech

We believe strong sales of BioMarin Pharmaceutical, Inc.’s (BMRN - Analyst Report) recently approved drug Kuvan, coupled with accelerating sales of Aludrazyme and Naglazyme, will drive the company to profitability in 2008 and beyond. The company’s clinical pipeline also remains impressive. As such, we maintain our Buy rating on the stock.

We continue to believe its leading product, Aldurazyme, used for treating the ultra-rare genetic disorder mucopolysaccharidosis-I (MPS-I) and Naglazyme, for the treatment of MPS-VI, will make significant contributions to BioMarin’s top-line growth in the coming years. We also expect meaningful contribution from Kuvan in the coming quarters.

We believe that the company is making steady progress on a number of candidates in its pipeline. The Serono deal has helped to improve the company’s future outlook. The company expects to advance BMN110, an ERT for the treatment of MPS IVA, and BMN 168, a pro-drug formulation for the treatment of phenylketonuria, into clinical trials in 2009.

With $574.5 million in cash and equivalents and GAAP profitability on track for 2008, we remain comfortable with the company’s cash position and management’s ability to successfully bring the clinical compounds into the market. Keeping the above factors in mind we have set a price target of $46 per share.

We arrive at our price target by using a P/S multiple of 14.5x, multiplied by our 2011 sales estimate of $527 million, discounted at 15% for 3 years. We believe the target price is warranted given the company’s competitive advantage in the ultra-rare genetic disorder market since there is practically no competition for Aldurazyme, Naglazyme and Kuvan.

Varun Parwal contributed to this report.

Read the full analyst report on BMRN