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BioMarin (BMRN) Down 8% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for BioMarin Pharmaceutical (BMRN). Shares have lost about 8% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

BioMarin Q4 Earnings Beat, Sales Miss

BioMarin’s adjusted earnings of 25 cents per share beat the Zacks Consensus Estimate of 21 cents. In the year-ago quarter, the company had incurred loss of 6 cents per share.

Total revenues were $454.4 million in the reported quarter, up 29% from the year-ago period, driven by higher product revenues. Sales missed the Zacks Consensus Estimate of $462 million.

Quarterly Details

Product revenues (including Aldurazyme) were $436.6 million in the fourth quarter, reflecting a 25.7% increase year over year. Product revenues from BioMarin's marketed brands (excluding Aldurazyme) grew 25% year over year to $412.7 million. Royalty and other revenues were $17.9 million in the quarter, higher than $6.0 million a year ago.

Its PKU franchise sales rose 28% year over year in the quarter to $154.3 million. Kuvan revenues rose 9% to $122.6 million driven by patient growth in North America.

Palynziq injection sales grossed $31.7 million in the quarter compared with $24.1 million in the previous quarter, driven by new patients initiating therapy as well as the growing number of patients who have now achieved maintenance dosing. The majority of Palynziq sales came from the United States. As of Dec 30, 2019, 762 U.S. commercial patients were on treatment with Palynziq versus 670 at the end of the third quarter. Of the 762 patients, 137 were from clinical studies and 625 were naive to Palynziq treatment. Another 143 patients have been enrolled and are awaiting their first treatment with Palynziq.

In the EU, Palynziq injection was approved in May. BioMarin said that multiple clinics across Germany were now treating patients. The company is working to get reimbursement approvals in other European countries and expects meaningful contribution from European sales of Palynziq in 2020.

Naglazyme sales rose 24% to $94.8 million mainly due to orders from Brazil.

Vimizim contributed $132.3 million to total revenues, up 16% year over year owing to patient growth in the United States and orders from Brazil.

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 $25.2 million in the fourth quarter, higher than $19.8 million reported in the previous quarter due to patient growth.

BioMarin received Aldurazyme royalties totaling $23.9 million from Genzyme in the quarter, up 37% year over year.

R&D expenses rose 3.9% year over year to $155.5 million due to costs for pipeline development. Marketing expenses associated with Palynziq commercial efforts and launch preparations for valrox resulted in 15.6% increase in SG&A expenses to $161.2 million.

As of Dec 31, 2019, BioMarin had $1.2 billion in cash, cash equivalents and investments, same as at the end of Sep 30, 2019.

2019 Results

Full-year 2019 sales rose 14% to $1.70 billion, slightly missing the Zacks Consensus Estimate of $1.71 billion. However, sales were within the guided range of $1.69-$1.72 billion.

Adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate of 89 cents. Earnings rose 82% year over year.

2020 Guidance

BioMarin expects total revenues in 2020 to come in the range of $1.95-$2.05 billion, which indicates growth of 17% at the middle of the range. Vimizim sales are expected in the range of $560-$610 million for the full year. Kuvan sales are projected within $430-$480 million. Naglazyme sales are predicted in the band of $380-$420 million. Brineura sales are expected within $85-$115 million. Palynziq sales are forecast in the $180-$210 million band.
 
R&D costs are expected to be within $675-$725 million. SG&A expenses are anticipated in the range of $780-$830 million.

The company expects adjusted net income in the range of $260-$310 million, the midpoint of which indicates growth of more than 70%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -27.34% due to these changes.

VGM Scores

Currently, BioMarin has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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.

Outlook

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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