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BioMarin (BMRN) Q4 Earnings & Sales Miss, Shares Decline

Zacks Equity Research

BioMarin Pharmaceutical Inc. BMRN missed estimates for earnings as well as revenues in the fourth quarter of 2018.

The biotech, which makes rare disease drugs, reported adjusted loss of 7 cents per in the fourth quarter in contrast to the Zacks Consensus Estimate of earnings of 10 cents. Adjusted loss per share was 1 cent in the year-ago quarter.

The adjusted loss excludes amortization, depreciation, stock-based compensation and a contingent consideration expense; benefit from income tax; and a gain on sale of intangible assets.

Total revenues were $353.2 million in the reported quarter, down 1% from the year-ago period due to lower product revenues. Moreover, sales also missed the Zacks Consensus Estimate of $380 million.

In response to the poor quarterly performance, shares were down almost 6% in after-hours trading. In the past year, BioMarin’s shares have risen 7% while the industry witnessed a decline of 17.7%.

 

 

Quarterly Details

Product revenues were $347.2 million in the fourth quarter, down 1.2% year over year, due to lower Naglazyme sales and Aldurazyme sales volume. Royalty and other revenues were $6.06 million in the quarter, higher than $4.7 million in the year-ago period. New drugs Brineura and Palynziq did well in the quarter.

Kuvan revenues rose 4% to $112.2 million. Kuvan sales were hurt, to an extent, by patient switching to Palynziq, given its superior efficacy profile.

Naglazyme sales declined 18% year over year to $76.7 million due to volatility of central government ordering patterns. Vimizim contributed $114.0 million to total revenues, flat 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 received Aldurazyme royalties – totaling $17.4 million – from Sanofi’s SNY subsidiary, Genzyme in the quarter, down 39% year over year owing to lower volume of product sales to Genzyme due to unfavorable timing of shipments.

Brineura generated sales of $12.2 million in the fourth quarter compared with $9.9 million in the previously reported quarter, indicating a sequential increase of 23.2% as BioMarin continued to add new commercial patients.

BioMarin’s newest drug, Palynziq (pegvaliase) injection grossed sales of $8.1 million in the fourth quarter compared with $4.1 million in the third quarter of 2018. Palynziq was approved in May 2018 for the treatment of phenylketonuria (PKU) and was launched in July.

As of Feb 15, 2019, 335 U.S. commercial patients were on treatment with Palynziq. Of the 335 patients, 123 were from clinical studies and 212 were naive to Palynziq treatment. Another 131 patients have enrolled and are awaiting their first treatment with Palynziq. In the EU, a marketing application is under review with a decision expected in the second quarter of 2019.

Research and development (R&D) expenses rose 1.6% year over year to support expansion of its pipeline program. Selling, general and administrative (SG&A) expenses increased 2.6% in the quarter due to marketing expenses associated with Brineura and Palynziq commercial efforts.

2018 Results

Full-year 2018 sales rose 14% to $1.49 billion, marginally missing the Zacks Consensus Estimate of $1.51 billion. Revenues were within the guided range of $1.47 −$1.53 billion.

Adjusted earnings for 2018 were 40 cents, which missed the Zacks Consensus Estimate of 65 cents. However, earnings rose 53.9% year over year.

2019 View

BioMarin expects total revenues in the range of $1.68 −$1.75 billion in 2019. This indicates year-over-year growth of approximately 15% based on the presently approved products.

Vimizim sales are expected in the range of $530–$570 million. 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.

R&D costs are expected to be within $740-$780 million. SG&A expenses are projected in the range of $650-$690 million.

The company expects adjusted net income in the range of $130 - $170 million, a 65% year-over-year improvement from the midpoint.

Pipeline Update

BioMarin is developing valoctocogene roxaparvovec, a gene therapy for severe hemophilia A. It is conducting two separate phase III studies on the candidate - GENEr8–1 (6e13 vg/kg dose) and GENEr8–2 (4e13 vg/kg dose) — in patients without pre-existing AAV5 antibodies. Enrollment in both the studies is expected to be completed by the third quarter of 2019.

BioMarin completed enrollment of the initial cohort of patients in the GENEr8–1 study that will be included in a potential accelerated submission. However, BioMarin will take a decision regarding a biologics license application submission through an accelerated approval pathway in the second half of 2019.

BioMarin is also conducting a separate phase I/II study to evaluate the 6e13 vg/kg dose in severe hemophilia A patients with pre-existing AAV5 antibodies.

Another important candidate in its pipeline is vosoritide, which is currently in a phase III study for the treatment of children (ages 5-14) with achondroplasia, the most common form of dwarfism. The study is fully enrolled and top-line data from this study is expected by the end of 2019. 42 month data from the study presented at R&D day in November demonstrated an average cumulative height gain of 5.7 cm on treatment with vosoritide.

In addition, BioMarin is conducting a separate phase II study to evaluate the effect of vosoritide in infants and toddlers (ages 0-5 years) in June 2018.

Other interesting candidates include enzyme replacement therapy tralesinidase alfa/BMN 250 (phase I/II for Sanfilippo B syndrome or MPS IIIB) and BMN 290 (in pre-clinical studies for Friedriech's ataxia, a rare neurologic disorder).

Moreover, a gene therapy program (BMN 307) for PKU is expected to move into clinical studies in 2019. An investigational new drug application (IND) for BMN 307 is expected to be filed in the second half of 2019. At its R&D day, BioMarin discussed compelling preclinical BMN 307 data. In a mouse model, BMN 307 produced large and rapid reductions in phe.

Zacks Rank & Stocks to Consider

BioMarin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

 

 

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

 

Some better-ranked stocks in the biotech sector are BioDelivery Sciences International, Inc. BDSI and Celgene Corporation CELG, both with a Zacks Rank #1.

Celgene has gained 38.3% this year so far. Its earnings estimates have risen 3.1% for 2019 and 2.2% for 2020 over the past 30 days.

Shares of BioDelivery Sciences are up 27.8% this year so far. Its loss estimates for 2019 have narrowed from 24 cents to 22 cents over the past 30 days.

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