Biomarin Pharmaceutical Inc. followed up its win over Sarepta Therapeutics Inc. in the patent dispute regarding Duchenne muscular dystrophy (DMD) therapies with news that the firm will regain global rights to the phenylketonuria (PKU) drugs Kuvan (sapropterin dihydrochloride) and Peg-Pal (pegvaliase) from Merck Serono.

Chief commercial officer of Biomarin, Jeff Ajer, said during a conference call that "if things fall together correctly, we have the opportunity of having two very different therapies on the market to treat PKU – one [Peg-Pal] oriented toward adults with severe PKU and the other [Kuvan] oriented toward children and PKU patients with the less severe phenotype. That allows us to introduce [Peg-Pal] into a very safe environment. Imagine a time in 2020 or beyond [when], if Kuvan is losing its exclusive position, we will have had plenty of time" to establish Peg-Pal in the market, he said.

The San Rafael, Calif.-based firm is paying Merck €340 million (US$380.5 million) up front and another €60 million if combined sales hit levels that were undisclosed. Merck, a division of Darmstadt, Germany-based Merck KGaA, divested the PKU drugs in favor of its main therapeutic spaces cancer, immunology, and neurology. Biomarin, of San Rafael, Calif., had exclusive rights to Kuvan in the U.S. and Canada, holding Peg-Pal rights in the U.S. and Japan under an earlier arrangement. According to the new terms, Biomarin retains exclusive worldwide rights to Kuvan and Peg-Pal, with the exception of Kuvan in Japan, where the drug is called Biopten and sold by Daiichi Sanyko Co. Ltd., of Tokyo. (See BioWorld Today, Dec. 14, 2007.)

Kuvan was cleared by the FDA in 2007 for PKU and the following year in the EU, while Peg-Pal, which is intended for people whose disease is not controlled by Kuvan, remains in pivotal studies meant for approval, with results due in the first half of next year. Biomarin said it expects Kuvan and Peg-Pal together will sell as much as $1 billion worldwide, but did not estimate when this might happen, since it's dependent on the timing of approvals. But CEO Jean-Jacques Bienaime said "We believe that the opportunity is there based on some very thorough marketing research for Peg-Pal around the world. Merck Serono has a different kind of organization and different kind of orientation toward specialists and more particularly not an orientation toward metabolic geneticists. We think that is a leverage point and advantage," he said.

Biomarin has been receiving a 4 percent royalty on EU sales. Cowen and Co. analyst Phil Nadeau noted that Merck Serono "had not been involved in Peg-Pal's development, and therefore Biomarin will need to discuss a regulatory plan with the [European regulators] to determine if the U.S. phase III trial will be sufficient to support an EU filing." Biomarin aims to define an EU regulatory strategy by the middle of next year.

Kuvan guidance provided by Biomarin called for worldwide revenue in 2016 of $320 million to $350 million, including $70 million to $80 million from new rest-of-world territories. "We think that this is an attractive financial transaction for Biomarin," Nadeau concluded in his research report. "While Kuvan is mature in the EU, Biomarin suggested some growth could be possible in Latin America. Moreover, the company noted that Kuvan's ex-North America revenue comes largely from territories in which it is already selling Naglazyme [galsulfase, Biomarin's drug for mucopolysaccharidosis VI]," he said.

ETEPLIRSEN DATA SOLID

"Biomarin expects to need to add a 'limited' number of new ex-U.S. sales people to support Kuvan," which means minimal cost, Nadeau said. What's more, with the compound maintaining exclusivity in the U.S. and EU through at least 2020, "and likely having some commercial life after [though admittedly in decline because of generic competition], we think that the up-front payment of approximately five times 2016 revenue can be justified on Kuvan sales alone," he wrote. "However, we are optimistic that Peg-Pal will be approved, and could be a $200 million to $300 million-per-year product itself, ex-U.S."

Like Merck, Biomarin has been working on a tighter focus, but in rare diseases. In August, South San Francisco-based Medivation Inc. agreed to pay $410 million up front for global rights to Biomarin's talazoparib, a phase III poly ADP ribose polymerase inhibitor for BRCA-mutated breast cancer and other malignancies.

The asset purchase agreement included $160 million in milestones and mid-single-digit royalties for Biomarin on net sales of products that contain talazoparib during the deal's undisclosed royalty term. Medivation gained all talazoparib-related assets including all patents, data, know-how, third-party agreements, regulatory materials and inventories. The money for the Merck deal will come largely from the payout collected from Medivation. (See BioWorld Today, Aug. 25, 2015.)

Right on time in April, Biomarin finished off the rolling new drug application for exon 51-skipping drisapersen to treat DMD, situating the firm a few months ahead of Sarepta Therapeutics Inc. with eteplirsen, another exon 51 DMD therapy. Biomarin gained drisapersen in the late 2014 buyout of Prosensa Holding NV, of Leiden, the Netherlands, which agreed to a cash acquisition deal worth about $680 million up front, with another $160 million possible in two near-term regulatory milestone payments. (See BioWorld Today, Nov. 25, 2014, and April 29, 2015.)

In the victory over Cambridge, Mass.-based Sarepta, disclosed earlier this week, the U.S. Patent Trial and Appeal Board ruled in favor of Biomarin on claims to the use of exon 51 antisense oligonucleotides to treat DMD. "We await decisions on two additional composition-of-matter interferences for exon 51 and 53-skipping drugs," Piper Jaffray analyst Edward Tenthoff wrote in a research report. "Sarepta has appealed that decision, and we expect the proceedings to run past regulatory decisions on eteplirsen and drisapersen."

Meanwhile, Sarepta shares were enjoying a ride after the firm disclosed more efficacy and safety data from the company's phase IIb program with eteplirsen.

The data demonstrated that the compound provided a statistically significant advantage of 151 meters in the ability of study participants to walk at three years, compared with external controls. Further, the fourth biopsy data confirmed the mechanism of action of eteplirsen, demonstrating exon skipping in all patients and dystrophin production in nearly all patients. Safety data remained consistent with prior results, the company said.

Sarepta's stock (NASDAQ:SRPT) closed Thursday at $38.28, up $7.17, or 22.3 percent. Biomarin shares (NASDAQ:BMRN) ended at $109.79, up $4.47.