The revenue model for Kuvan has been updated to reflect an increased estimate of the number of patients eligible for the drug and an increased estimate of pricing. We had previously used the most conservative methodology to determine who would be eligible, but after another analysis of the published data on Kuvan, we are raising our estimates to include roughly 50% more patients. Along with a 20% increase in pricing due to recently released dosing information, this results in higher peak revenue estimates of $245 million in the U.S. and $582 million worldwide in 2017. Previous peak revenue estimates were $118 million in the U.S. and $281 million worldwide.

Due to an increase in the percent of patients eligible to receive Kuvan in our revenue model, along with other small changes to the Company’s estimated profit & loss statement, we now value BMRN’s 5-year pipeline at $20.18/share, up from $15.83/share. The stock is currently trading at ~$27/share. Based on our sensitivity analyses of price & eligibility, in order for the current market value to be justified, BMRN will have to receive =35K/patient/year and =50% of PKU patients will have to be considered eligible for treatment and reimbursement by insurance companies. The BioMarin PKU franchise (a second drug for PKU, Phenylase, will enter clinical development in Q1 2008) is a valuable asset, but we believe that the market is currently overvaluing Kuvan’s prospects as its effectiveness has shown to be limited in patients with the most severe forms of PKU.

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