Loss at BioMarin Narrower Than Expected


BioMarin Pharmaceutical Inc.’s (BMRN) first quarter 2014 loss of 27 cents per share was narrower than the Zacks Consensus Estimate of a loss of 50 cents and the year-ago loss of 31 cents per share. The narrower year-over-year loss was primarily due to higher revenues. We expect the huge shrinkage of loss compared to expectations to lead to stock price appreciation.

Total revenues (on an adjusted basis) climbed 19% to $155.3 million in the reported quarter beating the Zacks Consensus Estimate of $145 million. The year-over-year increase was attributable to higher net product revenues.

Net product revenues in the first quarter of 2014 surged approximately 17% to $149 million. Naglazyme, approved for treating MPS-VI, a rare genetic enzyme deficiency disorder, accounted for a significant portion of product revenues recorded in the quarter. Revenues from the drug were up 15.4% to $80.1 million. Sales were positively impacted by the timing of government ordering patterns in some international markets.

Net product revenues from Kuvan tablets, indicated for treating mild-to-moderate forms of phenylketonuria, were up 20.2% to $45.2 million. The impressive rise was due to higher demand for the drug. BioMarin launched Kuvan as powder for oral solution earlier in the year. The launch of the new form will boost the drug’s sales potential. The new version will benefit very young and elderly patients who are intolerant or have difficulty with the tablet version.

BioMarin receives royalties from partner Sanofi (SNY) on Aldurazyme. Revenues to BioMarin (excluding transfer revenues) from Aldurazyme were $21.9 million in the first quarter, up 13.5%.

Net revenues from Firdapse, currently marketed in the EU, came in at $4.7 million in the quarter as opposed to $3.6 million a year ago. Firdapse was launched in Apr 2010, in the EU, for treating patients suffering from LEMS, a rare autoimmune disorder. The drug has performed disappointingly since launch.

The latest entrant into BioMarin’s product portfolio is Vimizim. The drug was cleared in the EU last month for treating patients suffering from MPS IVA. Approval of the drug in the U.S. came in Feb 2014. The drug contributed $0.9 million in the first quarter of 2014 to total revenues.

Both research & development expenses (2.9%) and selling, general & administrative expenses (17.6%) were steeper during the quarter. BioMarin’s efforts to develop its pipeline contributed to the increase in research & development expenses. Costs associated with the launch of Vimizim pushed up selling, general & administrative expenses.

2014 Outlook Maintained

BioMarin maintained its outlook for 2014 that was provided in February this year while releasing the fourth quarter and full year 2013 results. BioMarin expects total revenues in the range of $650–$680 million (the company anticipates 2014 revenues toward the upper end of the guidance range). The Zacks Consensus Estimate of $670 million is within the company’s guidance range. The company still expects total Naglazyme revenues in the range of $290–$310 million and Kuvan net product sales in the range of $180–$200 million. The biopharmaceutical company still projects 2014 Vimizim sales of $60–$70 million with at least 350 patients on therapy by year end.

Selling, general & administrative expenses are still expected in the range of $265–$285 million and research & development expenses are projected in the range of $500-$530 million. The company anticipates exiting 2014 with research & development expenses toward the lower end of the guided range.

Our Take

We are impressed by the strong sales of BioMarin’s products in the first quarter of 2014 leading to a narrower loss. The EU approval of Vimizim is a positive for BioMarin as the market has a greater population of MPS IVA patients compared to the U.S. Consequently, BioMarin should over achieve the 2014 sales guidance on Vimizim. Approval has also been sought in other markets. Moreover, BioMarin’s pipeline is interesting with many pipeline related events lined up in the coming quarters. Successful development and commercialization of the robust pipeline will help drive long-term growth at BioMarin.

BioMarin, a biopharmaceutical company, currently carries a Zacks Rank #3 (Hold). Better-ranked biopharma stocks include Alexion Pharmaceuticals, Inc. (ALXN) and Gilead Sciences, Inc. (GILD). Both stocks carry a Zacks Rank #1 (Strong Buy).

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