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BioMarin (BMRN) Shares Down Despite Q1 Earnings & Sales Beat

Zacks Equity Research

BioMarin Pharmaceutical Inc. BMRN delivered better-than-expected earnings and revenues in the first quarter of 2019.

The company reported first-quarter adjusted earnings of 14 cents per share, which beat the Zacks Consensus Estimate of 9 cents. The bottom line also came ahead of the year-ago earnings of 12 cents. Earnings increased on the back of higher revenues, offset by increased selling, general and administrative (SG&A) expenses.

Total revenues were $400.7 million in the reported quarter, up7.3% from the year-ago period owing to solid product revenues. Moreover, sales beat the Zacks Consensus Estimate of $387.2 million.

In spite of the encouraging earnings result, BioMarin’s shares were down 2.9% in after-hours trading following the earnings release on Thursday. As a matter of fact, the company’s stock has inched up 0.2% so far this year, underperforming the industry’s increase of 3.3%.

Quarterly Details

Product revenues were $394.4 million in the first quarter, reflecting a 15% increase year over year. Royalty and other revenues were $6.3 million in the quarter, higher than $4.3 million in the year-ago period. New drugs — Brineura and Palynziq — did well in the period.

Kuvan revenues rose 8% to $106.9 million, mainly on the back of new patients initiating treatment in the United States and higher sales volume in Europe.

Naglazyme sales increased 16% year over year to $86.9 million on the back of expanded sales volume, driven by favorable government ordering patterns in Brazil.

Vimizim contributed $125.8 million to total revenues, mirroring a 7% rise year over year, attributable to government ordering patterns in certain Latin American, Middle Eastern and European countries.

In the reported quarter, Aldurazyme revenues declined 31% year over year to $45.3 million due to the timing of shipments to Genzyme.

BioMarin has a collaboration agreement with Sanofi’s SNY subsidiary, Genzyme, which is responsible for marketing and selling Aldurazyme to third-parties.

Brineura generated sales of $12.2 million in the first quarter, highlighting a huge surge of 77% from the year-ago quarter’s level as new patients started treatment with the medicine in Germany and in the United States. However, sequential growth of the drug remained flat.

BioMarin’s newest drug, Palynziq (pegvaliase) injection, grossed sales of $12.3 million in the first quarter of 2019 compared with $8.1 million in fourth-quarter 2018. Palynziq was approved last May  for the treatment of phenylketonuria (PKU) and was launched in July across the United States. The drug is also under review in the EU with a decision expected during the second quarter of 2019 and a potential launch in the second half of 2019.

As of Mar 31, 2019, 414 U.S. commercial patients were on treatment with Palynziq. Of the 414 patients, 136 were from clinical studies and 278 were naive to Palynziq treatment. Another 140 patients have been enrolled and are awaiting their first treatment with Palynziq.

Adjusted research and development (R&D) expenses marginally increased 0.2% year over year to support the company’s expansion of its pipeline program. Adjusted SG&A expenses rose 17.6% in the quarter due to marketing expenses associated Palynziq commercial efforts.

2019 Guidance

BioMarin expects total revenues in the range of $1.68-$1.75 billion in 2019.

Vimizim sales are anticipated in the $530–$570 million band. Kuvan sales are projected in the range of $420-$460 million. Naglazyme sales are predicted within $350-$380 million. Brineura sales are expected in the bracket of $55-$75 million while Palynziq sales are envisioned at $70-$100 million.

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

The company expects adjusted net income within $130-$170 million.

All the above expectations remain unchanged from the last reported quarter.

Pipeline Update

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

BioMarin completed the enrollment of initial cohort of patients in the GENEr8–1 study that will be included in a potential accelerated submission. However, the company will take a decision regarding a biologics license application filing through an expedited approval pathway before this year-end.

Another important candidate in its pipeline is vosoritide, which is currently in a phase III study for the treatment of children (aged 5-14 years) with achondroplasia, the most common form of dwarfism. The study is fully enrolled and the top-line data from the same is expected by the current-year end. In addition, BioMarin is conducting a separate phase II study to evaluate the effect of vosoritide on infants and toddlers (aged 0-5 years).

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 programs 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 estimated to be filed during the second half of 2019.

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

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

Zacks Rank & Stocks to Consider

BioMarin currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the healthcare sector are Merus N.V. MRUS and PDL BioPharma, Inc. PDLI, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Merus’ loss per share estimates have been narrowed 28% for 2019 and 30.7% for 2020 over the past 60 days. The stock has rallied 16.3% year to date.

PDL BioPharma’s earnings estimates have been revised 100% upward for 2019 and 30% for 2020 over the past 60 days. The stock has gained 16.5% year to date.

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