By Mary Welch
BioMarin Pharmaceutical Inc. raised $58.5 million in an initial public offering (IPO) to fund the final development stages of BM101, an enzyme replacement therapy for the rare genetic disorder MPS-1.
"This money was raised to support our responsibilities in our joint venture with Genzyme," said Bill Anderson, vice president and chief financial officer for the Novato, Calif., company.
BioMarin sold 4.5 million shares of common stock at $13 per share. The underwriters have an option to purchase up to an additional 675,000 shares at the $13 price to cover overallotments. U.S. Bancorp Piper Jaffray Inc., of Minneapolis, and Bank J. Vontobel & Co AG, of Zurich, Switzerland, were the global coordinators. Schroders & Co. Inc., of London, and Leerink Swann & Co., of Boston, co-managed the offering.
The company is listed on Nasdaq exchange under the ticker symbol BMRN, and on the Swiss exchange's SWX New Market as MRN. BioMarin's stock closed on Nasdaq Friday after its first trading day at $13.125.
BioMarin's partner, Genzyme Corp., of Cambridge, Mass., purchased an additional $10 million of its common stock at the $13 price in a private placement. Currently there are 34.7 million shares outstanding.
Of the money raised, about $35 million will be used to cover BioMarin's 50 percent interest in the joint venture's expenses and another $26 million will be committed to infrastructure development. The company is building a 23,000-square-foot manufacturing plant in Novato that eventually will be used to manufacture most of BM101.
Some of the money also will be used to finance a completed manufacturing facility in Torrance, Calif., that is currently undergoing FDA validation and qualification. Initially that factory will produce BM101l. Eventually the bulk of production will switch to the Novato plant. In addition, the company is building a research and development facility.
BM101 is a form of alpha-L-iduronidase intended to replace a deficiency of that enzyme in patients with mucopolysaccharidosis I. "It's a rare and very nasty genetic disease," Anderson said.
MPS-1 (also known as Maroteaux-Lamy Syndrome) is a lysosomal storage disease that is one of seven similar genetic conditions. It is caused by a deficiency in an active enzyme, a-L-iduronidase.
The disease is characterized by a halt in physical development. It causes carbohydrate materials to build up in all parts of the body, leading to enlargement of the liver and spleen, skeletal deformity, vision impairment, stunted growth, hearing loss and fluid on the brain. Although there is a wide spectrum of severity and complications, the average patient's life is about 12 years, and 80 percent of those afflicted die.
The joint venture anticipates filing a rolling biologics license application (BLA) by the end of the year for the product, complete with an FDA fast-track designation, and being on the market by mid-2000. In addition, the partnership is preparing a protocol for a post-approval clinical study, which was requested by the FDA.
"We did a single trial only," Anderson said. "It was a Phase I, II and III together - maybe pivotal would be a better description. We completed patient evaluation after one year and will continue to follow the patients for another year."
There are only about 3,400 children worldwide who suffer from the disorder. "Based on Genzyme's track record with Ceradase and Cerezyme, we believe that BM101 has the potential to be a $500 million drug, if we're able to capture all the patients," Anderson said. "As it is right now, the drug will be a life-long therapy with an infusion once a week."
Ceradase and Cerezyme (recombinant glucocerabrosidase) are Genzyme's enzyme-replacement therapies for Gaucher's disease, another genetic disorder. The company last week reported those drugs accounted for a record $116.9 million in sales for the second quarter of 1999.
BioMarin was spun off from Glyko Biomedical Ltd., of Toronto, in March 1997. Last year BioMarin bought Glyko Inc., a wholly owned subsidiary of Glyko Biomedical, for $14.5 million in stock. Glyko Inc., which already shared BioMarin's facilities in Novato, provides analytic services to laboratories and diagnostic services using carbohydrates as markers. (See BioWorld Today, Oct. 9, 1998, p. 1.)
Glyko Biomedical owns 33.3 percent of BioMarin.
"They are affected directly by this public offering," Anderson said. "Glyko has a modest amount of cash and I'd consider their only meaningful asset to be their holding in BioMarin. Indeed, their stock seemed to anticipate our success in the IPO."
BioMarin and Genzyme entered into their collaboration in September 1998. Genzyme bought $8 million of BioMarin's stock at that time. In addition to that up-front equity purchase and the new $10 million stock purchase, Genzyme has pledged a $12.1 million payment to BioMarin when the FDA approves the enzyme therapy.
Genzyme is the company's third largest shareholder behind Glyko and BB BioVentures LP, of Cambridge, Mass., Anderson said.
He was quick to point out the company has been adept lately at raising money.
"We raised $26 million in April in convertible notes, $56.5 million in the IPO and $10 million from Genzyme," Anderson said. "You add all that up and I'd say we'd be set for the challenges of the next 12 to 18 months. It's a pretty good war chest."