A month has gone by since the last earnings report for BioMarin Pharmaceutical (BMRN). Shares have added about 11% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BioMarin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BioMarin Q3 Earnings & Sales Beat
BioMarin announced better-than-expected earnings and revenues for the third quarter of 2019.
Adjusted earnings of 43 cents per share beat the Zacks Consensus Estimate of 34 cents and came ahead of the year-ago quarterly earnings of 34 cents. Earnings increased on higher product revenues and R&D expense management.
Total revenues were $461.1 million in the reported quarter, up 18% from the year-ago period, driven by higher product revenues. Sales too beat the Zacks Consensus Estimate of $456 million.
Product revenues (including Aldurazyme) were $450.9 million in the third quarter, reflecting a 16.7% increase year over year, driven by higher sales of Vimizim and newest brands, Palyzniq and Brineura. Product revenues from BioMarin's marketed brands (excluding Aldurazyme) grew 19% year over year to $428.1 million. Royalty and other revenues were $10.2 million in the quarter, higher than $5.4 million a year ago.
Its PKU franchise sales rose 23% year over year in the quarter to $144.7 million. Kuvan revenues rose 6% to $120.6 million driven by patient growth in North America.
Palynziq injection sales grossed $24.1 million in the third quarter compared with $18.8 million in the previous quarter, driven by new patients initiating therapy as well as the growing number of patients who have now achieved once-daily dosing. The majority of Palynziq sales came from the United States. As of Sep 30, 2019, 670 U.S. commercial patients were on treatment with Palynziq versus 551 at the end of the second quarter. Of the 670 patients, 142 were from clinical studies and 528 were naive to Palynziq treatment. Another 153 patients have been enrolled and are awaiting their first treatment with Palynziq.
Regarding the EU launch, where Palynziq injection was approved in May, BioMarin said that its physicians in Germany now treating patients. The company said that it will take time to realize material revenue contributions from Europe and does not expect meaningful contribution from European sales of Palynziq until 2020.
Naglazyme sales decreased 8% to $94.4 million as higher revenues from Brazil were offset by lower volumes due to unfavorable government ordering patterns from certain Latin American and European countries.
Vimizim contributed $163.5 million to total revenues, up 33% year over year owing to increased sales volume on the back of government orders in certain Middle Eastern countries and a large order from Brazil. Net global patient growth was 11% year over year.
Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries, mainly Brazil.
Brineura generated sales of $19.8 million in the third quarter, higher than $14.8 million reported in the previous quarter due to patient growth.
BioMarin received Aldurazyme royalties — totaling $22.8 million — from Genzyme in the quarter, down 17% year over year due to changes in revenue recognition rules.
R&D expenses rose 8.7% year over year to $152.3 million due to late-stage pipeline development. Marketing expenses associated with Palynziq commercial efforts and launch preparations for its pipeline candidate, valoctocogeneroxaparvovec or valrox resulted in 19.55% increase in SG&A expenses to $141.3 million.
As of Jun 30, 2019, BioMarin had $1.2 billion in cash, cash equivalents and investments versus $1.1 billion at the end of Jun 30, 2019.
BioMarin tightened its total revenue guidance for 2019 from a range of $1.68-$1.75 billion to $1.69-$1.72 billion. The company expects to generate revenues in the middle of this range. Total revenues are expected to be hurt by currency impact in the range of approximately $20 million to $25 million. In 2020, management expects to generate $2 billion in commercial revenues.
Vimizim sales are expected in the range of $540-$570 million for the full year compared with $530-$570 million expected earlier. Kuvan sales are projected within $455-$475 million compared with $420-$460 million expected earlier. Naglazyme sales are predicted in the band of $360-$380 million compared with $350-$380 million expected earlier. Brineura sales are expected within $55-$75 million. Palynziq sales are forecast in the $80-$100 million band, mostly from the U.S. market. The prior expectation for Palynziq sales was $70-$100 million.
R&D costs are expected to be within $710-$740 million lower than the prior range of $740-$780 as it has ceased development of BMN-290 and licensed BMN-250 to Allievex. SG&A expenses are anticipated in the range of $670-$690 million compared with $650-$690 million. SG&A is expected to come in at the upper end of the guided range.
The company expects adjusted net income in the range of $150-$170 million, tightened from the prior guidance of $130-$170 million. The company expects earnings to come at the higher end of the range due to continued R&D expense management.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -52.63% due to these changes.
At this time, BioMarin has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BioMarin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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