Assistant Managing Editor

With promising early data and a clear Phase III pathway for its GALNS drug in a rare lysosomal storage disorder, BioMarin Pharmaceuticals Inc. said it is no longer in critical need of late-stage assets to fill out its pipeline.

Nevertheless, the company's move to acquire Lead Therapeutics Inc. in a potential $100 million deal for a preclinical oncology asset left many analysts scratching their heads, wondering why the firm that has made its name in the rare, genetic disease space would jump suddenly into the crowded oncology arena.

Wall Street sent shares (NASDAQ:BMRN) falling 85 cents to close Friday at $19.49.

Executives of the Novato, Calif.-based company defended the acquisition, stating their focus would be on orphan cancers, using a genetic approach. "So we're not straying very far" from BioMarin's area of expertise, CEO Jean-Jacques Bienaime told investors on a conference call.

Lead's most advanced compound, LT-673, a poly (ADP-ribose) polymerase (PARP) inhibitor, has shown activity in mouse xenograft models of cancer, and BioMarin's aim is to develop the drug for rare cancers with PARP-sensitive mutations, as both a single agent and in combination with other DNA-damaging agents, he added. "We're not taking a shotgun approach."

Hank Fuchs, BioMarin's chief medical officer, added that developing LT-673 as an oral therapy and going after rare diseases also could set it apart from some of the other PARP inhibitors in development, most notably Sanofi-Aventis Group unit Bipar Sciences Inc.'s BSI-201, which recently entered Phase III testing in breast cancer.

But many analysts remained unconvinced, with reactions ranging from puzzlement to indifference.

Christopher Raymond, of Robert W. Baird & Co., called the deal "a net negative," pointing to the crowded PARP inhibitor space and BioMarin's limited oncology experience. And Jefferies & Co. analyst Eun K. Yang wrote that the Lead acquisition was "uninspiring."

It also comes at a relatively low cost to BioMarin, which shells out only $18 million up front, with another $11 million due at the time of an investigational new drug application for LT-673, which is expected by year-end. The remaining $68 million in development and launch milestones will be much farther down the road.

For that reason, analyst Phil Nadeau said Cowen and Co. expects "the deal will soon fade from investors' minds."

More attention will be trained on BMN 110, the company's GALNS (N-acetylgalactosamine 6-sulfase) drug for mucopolysaccharidosis Type IVA, which would fit nicely with its existing enzyme replacement therapy franchise comprising Naglazyme (galsulfase) for MPS VI and Aldurazyme (laronidase), marketed with partner Cambridge, Mass.-based Genzyme Corp. for MPS I.

BioMarin surprised investors with early data from the first 24 weeks of its ongoing Phase I/II trial, demonstrating that patients' karatan sulfate levels fell within a few weeks after the start of treatment and improvements were seen in both the six-minute walk and three-minute stair climb tests.

Observers will have to wait until May for detailed top-line results, but Fuchs said he was "encouraged, really, by the preponderance of the data," including the improvement in chemical and clinical markers and clear benefits that are as good or better than results seen with Naglazyme and Aldurazyme.

Further, those data clear BioMarin for a short, six-month pivotal trial testing endurance as the primary endpoint. The firm expects to start a Phase III trial in either the fourth quarter of this year or the first quarter of 2011, with a biologics license application submission by early 2012 and potential commercial launch in the second half of that year, Bienaime said.

BMN 110 could "likely be our largest ERT product," he noted, adding that the drug could end up selling "twice as much as Naglazyme," which is expected to hit about $300 million at its peak.

Also known as Morquio A syndrome, MSP IVA affects about 1,000 to 1,500 people in the U.S.

Given the accelerated development of BMN 110, the upshot is the BioMarin's "need for a late-stage compound is less important now," Bienaime said.

That's a change from a year ago, when the company bought into San Diego-based La Jolla Pharmaceutical Co.'s risky Phase III lupus drug Riquent (abetimus sodium) - albeit through a cleverly structured deal that only cost BioMarin $15 million up front - in an attempt to fill the pipeline gap. The deal collapsed a month later when Riquent development was discontinued following a futility analysis. (See BioWorld Today, Jan. 8, 2009, and Feb. 13, 2009.)

Behind BMN 110, the company is advancing PEG-PAL, a pegylated recombinant phenylalanine ammonia lyase in Phase II studies as an ERT for phenylketonuria, and is in Phase I development with BMN-195, a utrophin regulator for Duchenne's muscular dystrophy.

Amid its flurry of news late Thursday, BioMarin also posted its preliminary revenue guidance for 2010, with total revenues expected to be in the range of $374 million to $405 million. The company is expected to incur about $11 million to $13 million in operating expenses this year due to the Lead acquisition.

Lead, based in San Bruno, Calif., was founded in 2006 to develop drugs for oncology and infectious diseases. In 2007, it raised $17 million in a Series A round. (See BioWorld Today, Nov. 6, 2007.)

Published  February 8, 2010