BIOMARIN PHARMACEUTICAL INC [BMRN] Filings

10-Q 1 bmrn-20220630.htm 10-Q bmrn-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

Form 10-Q

______________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-26727

______________________________________

BioMarin Pharmaceutical Inc.

(Exact name of registrant as specified in its charter)

______________________________________


Delaware			68-0397820
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

770 Lindaro Street	San Rafael	California	94901
(Address of principal executive offices)			(Zip Code)

(415) 506-6700

(Registrant’s telephone number including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

BMRN

The Nasdaq Global Select Market

______________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 185,473,867 shares of common stock, par value $0.001, outstanding as of July 28, 2022.

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Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “BioMarin,” the “Company,” “we,” “us,” and “our” refer to BioMarin Pharmaceutical Inc. and, where appropriate, its wholly owned subsidiaries.

BioMarin®, Brineura®, Kuvan®, Naglazyme®, Palynziq®, Vimizim® and Voxzogo® are our registered trademarks. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. All other brand names and service marks, trademarks and other trade names appearing in this report are the property of their respective owners.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under securities laws. Many of these statements can be identified by the use of terminology such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “may,” “will,” “could,” would,” “projects,” “continues,” “estimates,” “potential,” “opportunity” or the negative versions of these terms and other similar expressions. Our actual results or experience could differ significantly from the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in “Risk Factors,” in Part II, Item 1A of this Quarterly Report on Form 10-Q as well as information provided elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (the SEC) on February 25, 2022. You should carefully consider that information before you make an investment decision.

You should not place undue reliance on these types of forward-looking statements, which speak only as of the date that they were made. These forward-looking statements are based on the beliefs and assumptions of the Company’s management based on information currently available to management and should be considered in connection with any written or oral forward-looking statements that the Company may issue in the future as well as other cautionary statements the Company has made and may make. Except as required by law, the Company does not undertake any obligation to release publicly any revisions to these forward-looking statements after completion of the filing of this Quarterly Report on Form 10-Q to reflect later events or circumstances or the occurrence of unanticipated events.

The discussion of the Company’s financial condition and results of operations should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and the related Notes thereto included in this Quarterly Report on Form 10-Q.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, financial condition, operating results, cash flows or stock price. Discussion of the risks listed below, and other risks that we face, are discussed in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Business and Operational Risks

•The COVID-19 pandemic could continue to materially adversely affect our business, results of operations, and financial condition.

•Because the target patient populations for our products are relatively small, we must achieve significant market share and maintain high per-patient prices for our products to achieve and maintain profitability.

•If we fail to obtain and maintain an adequate level of coverage and reimbursement for our products by third-party payers, the sales of our products would be adversely affected or there may be no commercially viable markets for our products.

•If we fail to compete successfully with respect to product sales, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product and our revenues could be adversely affected.

•Changes in methods of treatment of disease could reduce demand for our products and adversely affect revenues.

•If we fail to develop new products and product candidates or compete successfully with respect to acquisitions, joint ventures, licenses or other collaboration opportunities, our ability to continue to expand our product pipeline and our growth and development would be impaired.

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•The sale of generic versions of Kuvan by generic manufacturers has adversely affected and will continue to adversely affect our revenues and may cause a decline in Kuvan revenues faster than expected.

•If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our product candidates may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.

Regulatory Risks

•If we fail to obtain regulatory approval to commercially market and sell our product candidates, or if approval of our product candidates is delayed, we will be unable to generate revenues from the sale of these product candidates, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will increase.

•Any product for which we have obtained regulatory approval, or for which we obtain approval in the future, is subject to, or will be subject to, extensive ongoing regulatory requirements by the Food and Drug Administration, the European Medicines Agency and other comparable international regulatory authorities, and if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, we may be subject to penalties, we will be unable to generate revenues from the sale of such products, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will be increased.

•To obtain regulatory approval to market our products, preclinical studies and costly and lengthy clinical trials are required and the results of the studies and trials are highly uncertain. Likewise, preliminary, initial or interim data from clinical trials should be considered carefully and with caution because the final data may be materially different from the preliminary, initial or interim data, particularly as more patient data become available.

•Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our current and future products, which would adversely affect our revenues and results of operations.

•Government healthcare reform could increase our costs and adversely affect our revenues and results of operations.

Risks Related to Valoctocogene Roxaparvovec

•Our valoctocogene roxaparvovec program is based on a gene therapy approach, which, as a novel technology, presents additional development and treatment risks in relation to our other, more traditional drug development programs.

•As compared to our other, more traditional products, our gene therapy product candidate valoctocogene roxaparvovec, if approved, may present additional problems with respect to the pricing, coverage, and reimbursement and acceptance of the product candidate.

Financial and Financing Risks

•If we continue to incur operating losses or are unable to sustain positive cash flows for a period longer than anticipated, we may be unable to continue our operations at planned levels and be forced to reduce our operations.

Manufacturing Risks

•If we fail to comply with manufacturing regulations, our financial results and financial condition will be adversely affected.

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•If we are unable to successfully develop and maintain manufacturing processes for our product candidates to produce sufficient quantities at acceptable costs, we may be unable to support a clinical trial or be forced to terminate a program, or if we are unable to produce sufficient quantities of our products at acceptable costs, we may be unable to meet commercial demand, lose potential revenue, have reduced margins or be forced to terminate a program.

•Supply interruptions may disrupt our inventory levels and the availability of our products and product candidates and cause delays in obtaining regulatory approval for our product candidates, or harm our business by reducing our revenues.

Risks Related to International Operations

•We conduct a significant amount of our sales and operations outside of the United States (U.S.), which subjects us to additional business risks that could adversely affect our revenues and results of operations.

•A significant portion of our international sales are made based on special access programs, and changes to these programs could adversely affect our product sales and revenues in these countries.

Intellectual Property Risks

•If we are unable to protect our intellectual property, we may not be able to compete effectively or preserve our market shares.

•Competitors and other third parties may have developed intellectual property that could limit our ability to market and commercialize our products and product candidates, if approved.

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BIOMARIN PHARMACEUTICAL INC.

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		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, 2022 and 2021	4
	Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2022 and 2021	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	64

SIGNATURES		66

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2022 and December 31, 2021

(In thousands, except share amounts)


	June 30, 2022		December 31, 2021 ⁽¹⁾
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	619,802	$	587,276
Short-term investments	489,945		426,599
Accounts receivable, net	466,507		373,399
Inventory	802,315		776,669
Other current assets	139,029		110,442
Total current assets	2,517,598		2,274,385
Noncurrent assets:
Long-term investments	412,503		507,793
Property, plant and equipment, net	1,049,464		1,035,461
Intangible assets, net	369,368		388,652
Goodwill	196,199		196,199
Deferred tax assets	1,448,912		1,449,075
Other assets	151,797		151,760
Total assets	$	6,145,841	$	6,003,325
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	434,773	$	491,590
Short-term contingent consideration	29,954		48,232
Total current liabilities	464,727		539,822
Noncurrent liabilities:
Long-term convertible debt, net	1,081,047		1,079,077
Long-term contingent consideration	—		15,167
Other long-term liabilities	95,260		98,519
Total liabilities	1,641,034		1,732,585
Stockholders’ equity:
Common stock, $0.001 par value: 500,000,000 shares authorized; 185,452,454 and 183,912,514 shares issued and outstanding, respectively	186		184
Additional paid-in capital	5,272,666		5,191,502
Company common stock held by the Nonqualified Deferred Compensation Plan	(9,290)		(9,689)
Accumulated other comprehensive income	18,472		14,432
Accumulated deficit	(777,227)		(925,689)
Total stockholders’ equity	4,504,807		4,270,740
Total liabilities and stockholders’ equity	$	6,145,841	$	6,003,325

(1)December 31, 2021 balances were derived from the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three and Six Months Ended June 30, 2022 and 2021

(In thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
REVENUES:
Net product revenues	$	517,660	$	486,670	$	1,023,185	$	954,439
Royalty and other revenues	16,138		15,023		29,972		33,284
Total revenues	533,798		501,693		1,053,157		987,723
OPERATING EXPENSES:
Cost of sales	123,126		127,062		240,091		247,228
Research and development	158,190		161,107		319,026		309,832
Selling, general and administrative	196,835		184,161		391,454		358,479
Intangible asset amortization and contingent consideration	16,495		17,691		34,107		35,426
Gain on sale of nonfinancial assets, net	—		—		(108,000)		—
Total operating expenses	494,646		490,021		876,678		950,965
INCOME FROM OPERATIONS	39,152		11,672		176,479		36,758

Interest income	2,505		4,471		4,325		6,910
Interest expense	(3,859)		(3,817)		(7,665)		(7,621)
Other income (expense), net	(2,947)		1,830		(4,101)		1,337
INCOME BEFORE INCOME TAXES	34,851		14,156		169,038		37,384
Provision for income taxes	7,187		1,215		20,576		7,072
NET INCOME	$	27,664	$	12,941	$	148,462	$	30,312
NET INCOME PER SHARE, BASIC	$	0.15	$	0.07	$	0.80	$	0.17
NET INCOME PER SHARE, DILUTED	$	0.15	$	0.07	$	0.79	$	0.16
Weighted average common shares outstanding, basic	185,254		182,844		184,710		182,311
Weighted average common shares outstanding, diluted	187,448		185,427		191,096		185,089

COMPREHENSIVE INCOME	$	47,013	$	6,998	$	152,502	$	45,512

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Six Months Ended June 30, 2022 and 2021

(In thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Shares of common stock, beginning balances (1)	184,902		182,671		183,913		181,741
Issuances under equity incentive plans	551		651		1,540		1,581
Shares of common stock, ending balances	185,453		183,322		185,453		183,322

Total stockholders' equity, beginning balances (1)	$	4,391,315	$	4,162,010	$	4,270,740	$	4,106,002
Common stock:
Beginning balances (1)	185		183		184		182
Issuances under equity incentive plans, net of tax	1		—		2		1
Ending balance	186		183		186		183
Additional paid-in capital:
Beginning balance (1)	5,206,287		5,010,619		5,191,502		4,993,407
Issuances under equity incentive plans, net of tax	18,480		18,825		(15,153)		(11,091)
Stock-based compensation	47,998		53,738		96,716		101,147
Common stock held by the Nonqualified Deferred Compensation Plan (the NQDC)	(99)		649		(399)		368
Ending balance	5,272,666		5,083,831		5,272,666		5,083,831
Company common stock held by the NQDC:
Beginning balance (1)	(9,389)		(9,558)		(9,689)		(9,839)
Common stock held by the NQDC	99		(649)		399		(368)
Ending balance	(9,290)		(10,207)		(9,290)		(10,207)
Accumulated other comprehensive income (loss):
Beginning balance (1)	(877)		5,004		14,432		(16,139)
Other comprehensive income (loss)	19,349		(5,943)		4,040		15,200
Ending balance	18,472		(939)		18,472		(939)
Accumulated Deficit:
Beginning balance (1)	(804,891)		(844,238)		(925,689)		(861,609)
Net income	27,664		12,941		148,462		30,312
Ending balance	(777,227)		(831,297)		(777,227)		(831,297)
Total stockholders' equity, ending balances	$	4,504,807	$	4,241,571	$	4,504,807	$	4,241,571

(1)The beginning balances for the six-month periods were derived from the audited Consolidated Financial Statements included in Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2022 and 2021

(In thousands)

(unaudited)


	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	148,462	$	30,312
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	52,614		55,214
Non-cash interest expense	2,062		2,082
Amortization of premium on investments	3,070		1,878
Stock-based compensation	94,911		104,346
Gain on sale of nonfinancial assets, net	(108,000)		—

Deferred income taxes	3,455		1,204
Unrealized foreign exchange gain	(12,333)		(1,004)
Non-cash changes in the fair value of contingent consideration	1,338		4,488
Other	(18)		(376)
Changes in operating assets and liabilities:
Accounts receivable, net	(92,562)		17,420
Inventory	(1,431)		6,379
Other current assets	(12,001)		34,331
Other assets	9,149		321
Accounts payable and other short-term liabilities	(76,345)		(60,884)
Other long-term liabilities	(1,576)		585
Net cash provided by operating activities	10,795		196,296
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(55,971)		(48,106)
Maturities and sales of investments	311,598		348,941
Purchases of investments	(304,805)		(484,572)
Proceeds from sale of nonfinancial assets	110,000		—
Purchase of intangible assets	(2,739)		(6,400)
Other	—		(908)
Net cash provided by (used in) investing activities	58,083		(191,045)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of awards under equity incentive plans	29,493		27,640
Taxes paid related to net share settlement of equity awards	(44,377)		(38,731)


Payment of contingent consideration	(21,054)		—

Principal repayments of financing leases	(1,122)		(1,941)
Other	—		(381)
Net cash used in financing activities	(37,060)		(13,413)
Effect of exchange rate changes on cash	708		537
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	32,526		(7,625)
Cash and cash equivalents:
Beginning of period	$	587,276	$	649,158
End of period	$	619,802	$	641,533
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes	$	11,821	$	10,159
Cash paid for interest	$	5,137	$	5,195
SUPPLEMENTAL CASH FLOW DISCLOSURES FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in accounts payable and accrued liabilities related to fixed assets	$	1,012	$	(9,393)
Increase in accounts payable and accrued liabilities related to intangible assets	$	6,563	$	1,397

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

(1) BUSINESS OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

BioMarin Pharmaceutical Inc. (the Company) is a global biotechnology company that develops and commercializes innovative therapies for people with serious and life-threatening rare diseases and medical conditions. The Company selects product candidates for diseases and conditions that represent a significant unmet medical need, have well-understood biology and provide an opportunity to be first-to-market or offer a significant benefit over existing products. The Company’s portfolio consists of seven commercial products and multiple clinical and preclinical product candidates for the treatment of various diseases.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared pursuant to United States generally accepted accounting principles (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (the SEC) for Quarterly Reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements, although the Company believes that the disclosures herein are adequate to ensure that the information presented is not misleading. The Condensed Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K. The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022 or any other period.

Use of Estimates

U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from those estimates. The Condensed Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The full extent to which the COVID-19 pandemic could continue to directly or indirectly impact the Company’s business, results of operations and financial condition, including revenues, expenses, reserves and allowances, manufacturing, clinical trials and research and development costs, will depend on future developments that remain uncertain at this time, particularly as virus variants continue to spread. As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in future periods.

Management performed an evaluation of the Company’s activities through the date of filing of this Quarterly Report on Form 10-Q, and has concluded that there were no subsequent events or transactions that occurred subsequent to the balance sheet date prior to filing this Quarterly Report on Form 10-Q that would require recognition or disclosure in the Condensed Consolidated Financial Statements.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2022, as compared to the significant accounting policies disclosed in Note 1 – Business Overview and Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

There have been no new accounting pronouncements adopted by the Company or new accounting pronouncements issued by the Financial Accounting Standards Board during the six months ended June 30, 2022, as compared to the recent accounting pronouncements described in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, that the Company believes are of significance or potential significance to the Company.

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

(2) FINANCIAL INSTRUMENTS

All marketable securities were classified as available-for-sale at June 30, 2022 and December 31, 2021.

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category for each period presented:


	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-term Marketable Securities (1)		Long-term Marketable Securities (2)
Level 1:
Cash	$	355,318	$	—	$	—	$	355,318	$	355,318	$	—	$	—

Level 2:
Money market instruments	264,484		—		—		264,484		264,484		—		—
Corporate debt securities	560,401		3		(12,450)		547,954		—		273,400		274,554
U.S. government agency securities	263,184		15		(2,734)		260,465		—		180,952		79,513
Commercial paper	33,107		—		(23)		33,084		—		33,084		—
Asset-backed securities	58,888		8		(633)		58,263		—		—		58,263
Foreign and other	2,562		124		(4)		2,682		—		2,509		173
Subtotal	1,182,626		150		(15,844)		1,166,932		264,484		489,945		412,503
Total	$	1,537,944	$	150	$	(15,844)	$	1,522,250	$	619,802	$	489,945	$	412,503


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-term Marketable Securities (1)		Long-term Marketable Securities (2)
Level 1:
Cash	$	301,177	$	—	$	—	$	301,177	$	301,177	$	—	$	—

Level 2:
Money market instruments	285,099		—		—		285,099		285,099		—		—
Corporate debt securities	584,000		386		(2,086)		582,300		—		200,304		381,996
U.S. government agency securities	224,774		182		(325)		224,631		—		146,421		78,210
Commercial paper	68,384		—		—		68,384		1,000		67,384		—
Asset-backed securities	56,936		10		(95)		56,851		—		9,451		47,400
Foreign and other	3,097		141		(12)		3,226		—		3,039		187
Subtotal	1,222,290		719		(2,518)		1,220,491		286,099		426,599		507,793
Total	$	1,523,467	$	719	$	(2,518)	$	1,521,668	$	587,276	$	426,599	$	507,793

(1) The Company’s short-term marketable securities mature in one year or less.

(2) The Company’s long-term marketable securities mature between one and five years.

As of June 30, 2022, the Company had the ability and intent to hold all investments that were in an unrealized loss position until maturity. The Company considered its intent and ability to hold the securities until recovery of amortized cost basis, the extent to which fair value is less than amortized cost basis, conditions specifically related to the security’s industry and geography, payment structure and history and changes to the ratings (if any) in determining that the decline in fair value compared to carrying value is not related to a credit loss.

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

The Company has certain investments in non-marketable equity securities, measured using unobservable valuation inputs and remeasured on a nonrecurring basis, which are collectively considered strategic investments. As of June 30, 2022 and December 31, 2021, the fair value of the Company’s strategic investments was $23.8 million and $16.5 million, respectively. These investments were recorded in Other Assets in the Company’s Condensed Consolidated Balance Sheets.

(3) SUPPLEMENTAL FINANCIAL STATEMENTS INFORMATION

Supplemental Balance Sheet Information

Inventory consisted of the following:


	June 30, 2022		December 31, 2021
Raw materials	$	104,493	$	80,269
Work-in-process	429,486		415,261
Finished goods	268,336		281,139
Total inventory	$	802,315	$	776,669

Inventory as of June 30, 2022, included manufacturing-related costs for the commercial production of valoctocogene roxaparvovec totaling $31.8 million. Valoctocogene roxaparvovec is an investigational gene therapy product candidate for the treatment of severe hemophilia A. The Company must receive marketing approval from the applicable regulators before the valoctocogene roxaparvovec inventory can be sold commercially. Starting in the first quarter of 2022, the Company believed that material uncertainties related to the ultimate regulatory approval of valoctocogene roxaparvovec by the European Medicines Agency had been significantly reduced and the Company expects to realize economic benefit in the future. A number of factors were taken into consideration, including the current status in the drug development process, pivotal clinical trial results for the underlying product candidate, results from meetings and correspondence with the relevant regulatory authority following the submission of the additional two-year follow-up safety and efficacy data requested by the regulatory authority in the third quarter of 2020, historical experience, as well as potential impediments to the approval process such as product safety or efficacy, and commercialization and marketplace trends.

See Note 1 – Business Overview and Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information related to the Company’s policies on inventory produced prior to regulatory approval.

Property, Plant and Equipment, Net consisted of the following:


	June 30, 2022		December 31, 2021
Property, plant and equipment, gross	$	1,811,263	$	1,756,035
Accumulated depreciation	(761,799)		(720,574)
Total property, plant and equipment, net	$	1,049,464	$	1,035,461

Depreciation expense, net of amounts capitalized into inventory, for the three and six months ended June 30, 2022 was $9.5 million and $21.2 million, respectively. Depreciation expense, net of amounts capitalized into inventory, for the three and six months ended June 30, 2021 was $11.8 million and $24.3 million, respectively.

Intangible Assets, Net consisted of the following:


	June 30, 2022		December 31, 2021
Finite-lived intangible assets	$	689,499	$	677,350
Accumulated amortization	(320,131)		(288,698)
Net carrying value	$	369,368	$	388,652

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of U.2. Dollars, except per share amounts or as otherwise disclosed)

Accounts Payable and Accrued Liabilities consisted of the following:


	June 30, 2022		December 31, 2021
Accounts payable and accrued operating expenses	$	199,251	$	193,003
Accrued compensation expense	127,929		204,446
Accrued rebates payable	62,485		47,987
Accrued royalties payable	15,620		15,215
Foreign currency exchange forward contracts	10,224		6,263
Lease liabilities	10,611		10,464
Value added taxes payable	2,472		1,935
Accrued income taxes	1,568		1,213
Deferred revenue	305		6,956
Other	4,308		4,108
Total accounts payable and accrued liabilities	$	434,773	$	491,590

Supplemental Statement of Comprehensive Income Information

Gain on Sale of Nonfinancial Assets, Net for the six months ended June 30, 2022 consisted of the completed sale of a Rare Pediatric Disease Priority Review Voucher (PRV) the Company received from the Food and Drug Administration (FDA) in connection with the U.S. approval of Voxzogo. As a result of the PRV sale, the Company recognized a $108.0 million net gain on sale of nonfinancial assets in the Company's Consolidated Statement of Comprehensive Income.

(4) FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value in accordance with the policy described in Note 1 – Business Overview and Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

The following tables present the classification within the fair value hierarchy of financial assets and liabilities not disclosed elsewhere in these Condensed Consolidated Financial Statements that are remeasured on a recurring basis as of June 30, 2022 and December 31, 2021. Other than the Company’s fixed-rate convertible debt disclosed in Note 6 – Debt, there were no financial assets or liabilities that were remeasured using a quoted price in active markets for identical assets (Level 1) as of June 30, 2022 or December 31, 2021.


	Fair Value Measurements as of June 30, 2022
		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Other current assets:
NQDC Plan assets		$	2,232	$	—	$	2,232
Other assets:
NQDC Plan assets		19,336		—		19,336
Restricted investments (1)		2,468		—		2,468
Total other assets		21,804		—		21,804
Total assets		$	24,036	$	—	$	24,036
Liabilities:
Current liabilities:
NQDC Plan liability		$	2,232	$	—	$	2,232
Contingent consideration		—		29,954		29,954
Total current liabilities		2,232		29,954		32,186
Other long-term liabilities:
NQDC Plan liability		19,336		—		19,336


Total liabilities		$	21,568	$	29,954	$	51,522


	Fair Value Measurements as of December 31, 2021
	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Other current assets:
NQDC Plan assets	$	2,043	$	—	$	2,043
Other assets:
NQDC Plan assets	23,929		—		23,929
Restricted investments (1)	2,940		—		2,940

Total other assets	26,869		—		26,869
Total assets	$	28,912	$	—	$	28,912
Liabilities:
Current liabilities:
NQDC Plan liability	$	2,043	$	—	$	2,043
Contingent consideration	—		48,232		48,232
Total current liabilities	2,043		48,232		50,275
Other long-term liabilities:
NQDC Plan liability	23,929		—		23,929
Contingent consideration	—		15,167		15,167
Total other long-term liabilities	23,929		15,167		39,096
Total liabilities	$	25,972	$	63,399	$	89,371

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

(1) The restricted investments at June 30, 2022 and December 31, 2021 secure the Company's irrevocable standby letters of credit obtained in connection with certain commercial agreements.

There were no transfers between levels during the three and six months ended June 30, 2022.

Liabilities measured at fair value using Level 3 inputs consisted of contingent consideration. The following table represents a roll-forward of contingent consideration.


Contingent consideration as of December 31, 2021	$	63,399
Milestone payments to Ares Trading S.A. (Merck Serono)	(33,293)
Realized foreign exchange gain on settlement of contingent consideration	(133)
Changes in fair value of contingent consideration	2,860
Foreign exchange remeasurement of Euro denominated contingent consideration	(2,879)
Contingent consideration as of June 30, 2022	$	29,954

(5) DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

The Company uses foreign currency exchange forward contracts (forward contracts) to protect against the reduction in value of forecasted foreign currency cash flows resulting from revenues and operating expenses denominated in currencies other than the U.S. Dollar (USD), primarily the Euro. Certain of these forward contracts are designated as cash flow hedges and have maturities of up to two years. The Company also enters into forward contracts to manage foreign exchange risk related to asset or liability positions denominated in currencies other than USD. Such forward contracts are considered to be economic hedges, are not designated as hedging instruments and have maturities of up to three months. The Company does not use derivative instruments for speculative trading purposes. The Company is exposed to counterparty credit risk on its derivatives. The Company has established and maintains strict counterparty credit guidelines and enters into hedging agreements with financial institutions that are investment grade or better to minimize the Company’s exposure to potential defaults. The Company is not required to pledge collateral under these agreements.

The following table summarizes the aggregate notional amounts for the Company’s derivatives outstanding as of the periods presented.


Forward Contracts	June 30, 2022		December 31, 2021
Derivatives designated as hedging instruments:
Sell	$	585,370	$	740,667
Purchase	$	121,257	$	183,256

Derivatives not designated as hedging instruments:
Sell	$	113,793	$	113,257
Purchase	$	—	$	31,068

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

The fair value carrying amounts of the Company’s derivatives, as classified within the fair value hierarchy, were as follows:


Balance Sheet Location	June 30, 2022		December 31, 2021
Derivatives designated as hedging instruments:
Asset Derivatives - Level 2 (1)
Other current assets	$	35,654	$	17,357
Other assets	6,853		4,991
Subtotal	$	42,507	$	22,348

Liability Derivatives - Level 2 (1)
Accounts payable and accrued liabilities	$	10,151	$	5,487
Other long-term liabilities	1,848		1,378
Subtotal	$	11,999	$	6,865

Derivatives not designated as hedging instruments:
Asset Derivatives - Level 2 (1)
Other current assets	$	18	$	427


Liability Derivatives - Level 2 (1)
Accounts payable and accrued liabilities	$	73	$	776



Total Derivatives Assets	$	42,525	$	22,775
Total Derivatives Liabilities	$	12,072	$	7,641

(1) For additional discussion of fair value measurements, see Note 1 – Business Overview and Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

The following tables summarize the impact of gains and