It has been about a month since the last earnings report for BioMarin Pharmaceutical (BMRN). Shares have lost about 7.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BioMarin due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
BioMarin Q1 Earnings & Sales Beat Miss
BioMarin announced lower-than-expected earnings and revenues for the second quarter of 2019.
Adjusted earnings of 9 cents per share missed the Zacks Consensus Estimate of 17 cents as well as the year-ago quarter’s earnings of 11 cents per share. Earnings decreased due to higher research and development (R&D) and selling, general and administrative (SG&A) expenses.
Total revenues were $387.8 million in the reported quarter, up 4% from the year-ago period as growth in the PKU franchise offset lower Aldurazyme royalties and lower Vimizim sales. However, sales missed the Zacks Consensus Estimate of $411.0 million.
Product revenues (including Aldurazyme) were $373.3 million in the second quarter, reflecting a 9% increase year over year driven by higher sales of Kuvan and Naglazyme. Product revenues from BioMarin's marketed brands (excludes Aldurazyme) grew 9% year over year. Royalty and other revenues were $8.7 million in the quarter, higher than $5.1 million in the year-ago period.
Its PKU franchise sales rose 21% year over year in the quarter to $132.1 million. Kuvan revenues rose 4% to $113.3 million driven by increased sales volume driven by government ordering patterns from certain European countries.
Palynziq injection sales grossed $18.8 million in the second quarter compared with $12.3 million in the previous quarter driven by new patients initiating therapy in the United States. As of Jun 30, 2019, 551 U.S. commercial patients were on treatment with Palynziq versus 414 at the end of the first quarter. Of the 551 patients, 141 were from clinical studies and 410 were naive to Palynziq treatment. Another 158 patients have been enrolled and are awaiting their first treatment with Palynziq.
Naglazyme sales increased 8% year over year to $98.2 million on the back of expanded sales volume, driven by favorable government ordering patterns in certain Latin American and European countries. Net patient growth was 8% year over year.
Vimizim contributed $122.7 million to total revenues, down 4% year over year due to limited ordering from Brazil. Net patient growth was 10% 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. BioMarin expects sales of both Naglazyme and Vimzim to be higher in the second half over the first half to be supported by continued global organic growth and increased sales in Brazil.
BioMarin received Aldurazyme royalties — totaling $5.8 million — from Genzyme in the quarter, down 76% year over year due to changes in revenue recognition rules.
Brineura generated sales of $14.8 million in the second quarter, higher than $12.2 million reported in the previous quarter.
R&D expenses rose 7.4% year over year to $163.4 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 5% increase in SG&A expenses to $134.0 million.
As of Jun 30, 2019, BioMarin had $1.1 billion in cash, cash equivalents and investments versus $1.3 billion at the end of Mar 31, 2019 due to an $83 million milestone payment made to Merck for the EU approval of Palynziq.
BioMarin maintained its total revenue guidance for 2019 in the range of $1.68-$1.75 billion. The company expects to generate revenues in the middle of the range. In 2020, management expects to generate $2 billion in commercial revenues.Vimizim sales are expected in the range of $530-$570 million in 2019. Kuvan sales are projected in the range of $420-$460 million. Naglazyme sales are projected in the range of $350-$380 million. Brineura sales are expected in the range of $55-$75 million. Palynziq sales are expected in the range of $70-$100 million, mostly from the U.S. market
R&D costs are expected to be within $740-$780 million. SG&A expenses are projected in the range of $650-$690 million. R&D and SG&A expenses in the second half are expected to be consistent with the first half results. The company expects adjusted net income in the range of $130 million to $170 million, a year-over-year improvement of 65% from the mid-point.
The company announced that it is ceasing development of BMN 290, which was in pre-clinical studies for Friedriech's ataxia, a rare neurologic disorder.
How Have Estimates Been Moving Since Then?
Estimates revision followed an upward path over the past two months. The consensus estimate has shifted 385.71% due to these changes.
At this time, BioMarin has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
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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