BioMarin Q2 Loss Narrower than Expected, Revenue Guidance Up - Analyst Blog


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BioMarin Pharmaceutical 's ( BMRN ) second quarter 2014 loss on an adjusted basis of 19 cents per share was much narrower than the Zacks Consensus Estimate of a loss of 42 cents but wider than the year-ago loss of 16 cents per share. The narrower-than-expected loss was primarily due to higher-than-expected revenues.

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Total revenues (on an adjusted basis) climbed 36.7% to $192 million in the reported quarter, beating the Zacks Consensus Estimate of $159 million. The year-over-year increase was attributable to higher net product revenues.

Net product revenues in the second quarter of 2014 surged 42.1% to $188.2 million. Naglazyme, approved for treating MPS-VI, a rare genetic enzyme deficiency disorder, accounted for a significant portion of product revenues in the quarter. Revenues from the drug were up 40.6% to $98.3 million. Sales were positively impacted by the timing of government ordering patterns in some international markets.

Net product revenues from Kuvan tablets, indicated for treating mild-to-moderate forms of phenylketonuria, were up 14.7% to $46.9 million. The impressive rise was due to higher demand for the drug. BioMarin had launched Kuvan in powder form for oral solution earlier in the year. The launch of the new form will boost the drug's sales potential. The new version will benefit very young and elderly patients who are either intolerant to or have difficulty with the tablet version. BioMarin receives royalties from partner Sanofi ( SNY ) on Aldurazyme. Aldurazyme royalties (excluding transfer revenues) amounted to $24.4 million in the second quarter, up 15.1%.

Net revenues from Firdapse, currently marketed in the EU, came in at $4.6 million in the quarter compared with $4.1 million a year ago. Firdapse was launched in Apr 2010 in the EU for treating patients suffering from LEMS, a rare autoimmune disorder. The drug has performed disappointingly since launch.

The latest entrant in BioMarin's product portfolio is Vimizim. The drug was cleared in the EU last month for treating patients suffering from MPS IVA. Approval of the drug in the U.S. came in Feb 2014. Approvals in the EU and Canada came in Apr 2014 and Jul 2014 respectively. The drug contributed $14.3 million in the second quarter of 2014 to total revenues. Following the U.S. approval of Vimizim, BioMarin was awarded a voucher under an FDA program to encourage the development of drugs to treat rare pediatric diseases. The company sold the rare pediatric disease priority review voucher (PRV) for $67.5 million to Regeneron Ireland, an indirect, wholly owned subsidiary of Regeneron Pharmaceuticals ( REGN ).

Both research & development (R&D) expenses (25.7%) and selling, general & administrative (SG&A) expenses (34.4%) were steeper during the quarter. BioMarin's efforts to develop its pipeline led to the increase in R&D expenses. Costs associated with the marketing of Vimizim pushed up SG&A expenses.

2014 Revenue Outlook Upped

Encouraged by the strong sales of its primary products in the second quarter, BioMarin raised its top-line outlook for 2014. BioMarin now expects total revenues in the range of $745 million to $765 million (old guidance: $650 million to $680 million). The sale of the PRV voucher also contributed to the raised revenue outlook. The Zacks Consensus Estimate for 2014 (prior to the release) was $673 million. We expect it to be revised upwards following the fresh outlook issued by the company.

We also expect the shares of the company to react positively to the narrower-than-expected loss, higher-than-expected revenues and improved guidance.

The company now expects total Naglazyme revenues in the range of $305 million to $320 million (old guidance: $290 million to $310 million). Kuvan net product sales are still expected in the range of $180 million to $200 million. The company still projects 2014 Vimizim sales of $60 million to $70 million. The company expects Vimizim sales at the high end of the projected range.

Selling, general & administrative expenses are now expected in the range of $280 million to $295 million (old guidance: $265 million to $285 million). Though the company expects R&D expenses to rise in the remainder of the year, it lowered its R&D guidance primarily because it has spent less than anticipated in development programs. Based on its spending dynamics, BioMarin now expects R&D expenses in the range of $460 million to $480 million (old guidance: $500 million to $530 million).

BioMarin carries a Zacks Rank #3 (Hold). A better ranked stock in the health care space is Celgene Corporation ( CELG ) sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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