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BioMarin (BMRN) Beats on Q3 Earnings, Lowers Sales View

Zacks Equity Research
·6 min read

BioMarin Pharmaceutical Inc.’s BMRN adjusted earnings of 54 cents per share beat the Zacks Consensus Estimate of 25 cents. Earnings were up almost 23% year over year due to lower R&D expense.

Total revenues were $476.8 million in the reported quarter, up 3% from the year-ago period. Sales beat the Zacks Consensus Estimate of $460 million.

In the quarter, the company continued to experience a significant impact of COVID-19. The pandemic caused demand interruptions such as missed patient infusions and disruption in new patient starts for some of its products.

Quarterly Details

Product revenues (including Aldurazyme) were $460.7 million in the quarter, down 2.2% year over year. Product revenues from BioMarin's marketed brands (excluding Aldurazyme) declined 2% year over year to $419.8 million. Royalty and other revenues were $16.0 million in the quarter, higher than $10.2 million a year ago.

Kuvan revenues rose 3% to $124.1 million. New product, Palynziq injection sales grossed $46.1 million in the quarter compared with $40.7 million in the previous quarter, driven by new patients initiating therapy as well as the growing number of U.S. patients who have now achieved maintenance dosing.

Naglazyme sales declined 19% to $76.3 million. Vimizim contributed $147.9 million to total revenues, down 10% year over year. Sales of both Naglazyme and Vimizim were hurt by unfavorable timing of orders in Latin America.  Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries, mainly Brazil. Meanwhile, like the previous quarter, missed patient infusions due to COVID-19 also hurt sales of the drugs in the third quarter.

Brineura generated sales of $25.4 million in the quarter, compared with $25.8 million in the previous quarter

Product revenues from Aldurazyme totaled $40.9 million, up 79% year over year due to higher sales volume to Sanofi’s SNY subsidiary Genzyme.

Genzyme is BioMarin's sole customer for Aldurazyme and is responsible for marketing and selling Aldurazyme to third parties.

R&D expenses declined 17.5% year over year to $125.6 million due to lower clinical manufacturing costs for BMN 307, a gene therapy product candidate for phenylketonuria. Launch preparations for Roctavian resulted in a 6.2% increase in SG&A expenses to $150.1 million.

Pipeline Update

In August 2020, the FDA issued a complete response letter (CRL) to the biologics license application for Roctavian (valoctocogene roxaparvovec/valrox), a gene therapy for severe hemophilia A. The BLA application was based on interim data from an ongoing phase III study and the updated three-year results from a long-term phase I/II study

However, the FDA was not satisfied with the data and has asked for two-year follow-up data on annualized bleed rates from the ongoing phase III study (n=134) to provide additional evidence of a durable effect.  One year of follow-up of all patients in the study is expected to be completed this month and the company will announce the one-year top-line data in the first quarter of 2021.

Investors were expecting the FDA to grant accelerated approval to the drug on the PDUFA date of Aug 21. It was expected that Roctavian, if approved, would be a transformational product as it has the potential to dramatically change the treatment paradigm. However, the CRL now pushes potential approval of Roctavian to 2022 and is a major blow to BioMarin’s prospects.

Another important candidate in its pipeline is vosoritide, which has been developed to treat achondroplasia, the most common form of dwarfism. The company filed a regulatory application for vosoritide in the EU in July and in the United States in August. A decision in the United States is expected on Aug 20, 2021. A potential approval will make the drug the first and only approved treatment for achondroplasia in the United States. BioMarin estimates that around 25,000 children suffer from this disorder in its commercial territories, which represents a decent sales growth opportunity.

2020 Guidance

BioMarin lowered its sales guidance for the year to reflect the impact of COVID-19, loss of exclusivity for Kuvan last month and no contribution from Roctavian to 2020 revenues.

BioMarin’s shares were down almost 4% in after-hours trading on Nov 5 due to the guidance cut. BioMarin’s shares have declined 11.3% this year so far compared with the industry’s decrease of 1.1%.

 

 

Total revenue guidance was lowered from a range of $1.85-$1.95 billion to $1.81-$1.87 billion.

Vimizim sales are expected in the range of $515-$545 million compared with $530-$570 million previously. Kuvan sales guidance was maintained in the range of $430-$480 million. Naglazyme sales range was tightened from $360-$400 million to $370-$400 million. Brineura sales are expected within $90-$110 million versus $85-$115 million previously. Palynziq sales guidance was maintained in the range of $160-$190 million.

The guidance for costs was lowered. R&D costs are expected to be within $630-$670 million compared with $675-$725 million. SG&A expenses are anticipated in the range of $725-$765 million versus $780-$830 million.

The company raised its adjusted net income guidance to a range of $280-$330 million from $260-$310 million expected previously.

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

 

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise
BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

BioMarin Pharmaceutical Inc. price-consensus-eps-surprise-chart | BioMarin Pharmaceutical Inc. Quote

Zacks Rank and Stocks to Consider

BioMarin currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the biotech sector include Emergent Biosolutions EBS and Alimera Sciences ALIM. While Emergent has a Zacks Rank #1 (Strong Buy), Alimera Sciences has a Zacks Rank #2 (Buy).

Emergent Biosolutions’ earnings per share estimates have moved up from $6.17 to $8.42 per share for 2021 in the past 60 days. The stock has risen 79.8% so far this year.

Alimera Sciences’ loss per share estimates have narrowed from $1.31 to 96 cents per share for 2020 and from a loss of 52 cents to earnings of 18 cents per share for 2021 in the past 60 days.

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