BioMarin (BMRN) Q2 Earnings Miss Estimates, Revenues Beat

BioMarin Pharmaceutical Inc.BMRN reported lower-than-expected earnings for the second quarter of 2018 but beat estimates for sales.

Second-quarter adjusted earnings of 12 cents per share missed the Zacks Consensus Estimate of 17 cents and came below the year-ago earnings of 16 cents. Earnings decreased year over year due to higher operating costs.

However, including a gain on sales of intangible assets received from Pfizer PFE , amortization, depreciation, stock-based compensation and other expenses, the company reported a loss of 9 cents per share.

In June, BioMarin received a milestone payment of $20 million from Pfizer, triggered by the FDA and EMA's acceptance of the latter's new drug application (NDA) submission for pipeline candidate, talazoparib. The milestone payment was committed to BioMarin by Medivation, which bought global rights to talazoparib from BioMarin in August 2015. Medivation was later acquired by Pfizer.

Total revenues came in at $372.8 million, up 17% from the year-ago quarter driven by higher product revenues. Revenues also topped the Zacks Consensus Estimate of $361.5 million.

So far this year, BioMarin's shares have risen 14.4% while the industry has witnessed a decrease of 2.8%.

Quarterly Details

Product revenues were $367.8 million in the quarter, up 16.7% year over year, supported by continued strong demand for BioMarin's marketed products. Royalty and other revenues were $5.1 million in the second quarter, compared with $1.5 million in the year-ago quarter.

Kuvan revenues rose 7% to $109.0 million, reflecting patient growth in North America and continued uptake internationally. The number of patients on Kuvan therapy in the United States increased 10% year over year.

Naglazyme sales rose 6% year over year to $91.1 million due to the favorable timing of government orders in certain countries in Latin America, EU and an increase in the number of commercial patients.

Vimizim contributed $127.6 million to total revenues, up 24% year over year, primarily attributed to new patients initiating therapy.

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 $24.0 million - from Sanofi's SNY subsidiary, Genzyme in the quarter, up 21% year over year due to higher volume of product sales to Genzyme.

The newest drug in BioMarin's portfolio, Brineura, generated sales of $10.9 million in the second quarter compared with $6.9 million in the previous quarter.

Brineura received approval for the treatment of children with CLN2 disease - a form of Batten disease - both in the United States and the EU in 2017.

In May, BioMarin gained FDA approval for pegvaliase injection to be marketed by the trade name of Palynziq for the treatment of adults with phenylketonuria (PKU), a rare genetic disease. In the EU, a marketing application is under review. The company said it is encouraged by the initial commercial launch of the product.

Research and development (R&D) expenses were 24.5% higher year over year while selling, general and administrative (SG&A) expenses increased 11.1% in the quarter.

At the end of the second quarter of 2018, BioMarin had $1.6 billion in cash, cash equivalents and investments compared with $1.7 billion at the end of the first quarter.

Pipeline Update

BioMarin is a developing valoctocogene roxaparvovec, a gene therapy for severe hemophilia A. Following encouraging safety and efficacy data presented from the phase I/II study, BioMarin launched 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.

In May, BioMarin announced that it will be updating the protocol for the GENEr8-1 study (6e13 vg/kg dose) and will now evaluate superiority over current standard of care (SoC) prophylaxis treatment. The study will now include 130 participants, an increase of 90 from the original 40.Enrolment in the GENEr8-1 study is expected to be completed in the first quarter of 2019.

In May, BioMarin also initiated 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. Top-line data from this study is expected in the second half of 2019.This will be followed by an open-label extension study with a lower dose (15 µg/kg/day). In addition, BioMarin initiated a separate phase II study to evaluate the effect of vosoritide in infants and toddlers (ages 0-5 years) in June.

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). Also, another gene therapy program for PKU is expected to move into clinical studies in 2019.

2018 Outlook Maintained

BioMarin continues to expect total revenues in the range of $1.47 −$1.53 billion in 2018. This represents year-over-year growth of approximately 15%.

Vimizim sales are expected in the range of $460-$500 million. Kuvan sales are projected in the range of $440-$480 million, an increase of about 13% from 2017. Naglazyme sales are projected in the range of $325−$355 million. Brineura sales are expected in the range of $35-$55 million.

BioMarin raised its full-year guidance for R&D costs. Expenses related to R&D are expected within $680-$710 million compared with $645-$685 million expected previously. SG&A expenses are still projected in the range of $575-$615 million.

The company expects adjusted net income in the range of $100 - $140 million, a 62% year-over-year improvement from the midpoint.

Zacks Rank & Stocks to Consider

BioMarin currently carries a Zacks Rank #3 (Hold).

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

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

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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.

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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