BioMarin (BMRN) Q3 Earnings & Revenues Surpass Estimates

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BioMarin Pharmaceutical Inc.BMRN delivered better-than-expected earnings and revenues in the third quarter of 2018.

Third-quarter adjusted earnings of 34 cents per share beat the Zacks Consensus Estimate of 13 cents. The bottom line also came ahead of the year-ago earnings of 7 cents. Earnings increased on the back of higher revenues, offset by escalated R&D and SG&A expenses.

However, excluding interest expense, amortization, depreciation, stock-based compensation and other expenses, the company incurred a loss of 7 cents per share, narrower than the previous quarter's figure of 9 cents.

Total revenues logged $391.7 million in the reported quarter, up 17% from the year-ago period, driven by strong sales of Vimizim and other key products. Moreover, the top line topped the Zacks Consensus Estimate of $369 million.

Notably, earlier this month, BioMarin received a milestone payment of $15 million from Pfizer PFE , triggered by the FDA approval of the latter's pipeline candidate, Talzenna (talazoparib). The drug has been developed for the treatment of adult patients with deleterious or suspected deleterious germline BRCA (gBRCA)-mutated, HER2-negative locally advanced or metastatic breast cancer.

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.

So far this year, shares of BioMarin have risen 8.1% versus the industry 's decrease of 20.7%.

Quarterly Details

Product revenues were $386.3 million in the third quarter, up 29.3% year over year, supported by continued strong demand for BioMarin's marketed products. Royalty and other revenues were $5.4 million in the quarter under review compared with $35.4 million in the year-ago period.

Vimizim contributed $123.3 million to total revenues, up 36.5% year over year, primarily attributable to an increased patient base and the favorable government ordering patterns in certain countries.

Naglazyme sales surged 43% year over year to $103.1 million owing to a favorable timing of government orders across certain countries in Latin America and higher new patient starts in the EU.

The receipt of a large government order in Brazil bettered sales of Vimizim and Naglazyme in the third quarter. However, this benefit can reverse in the fourth quarter, weakening revenues during the same.

Notably, Naglazyme and Vimzin revenues vary on a quarterly basis, primarily due to infrequent ordering patterns from some countries, mainly Brazil.

Kuvan revenues rose 7.1% to $113.3 million, reflecting rise in patient strength in North America.

Brineura generated sales of $9.9 million in the third quarter compared with $10.9 million in the previously reported quarter, indicating a sequential decline of 9.2%.

BioMarin received Aldurazyme royalties - totaling $27.6 million - from Sanofi's SNY subsidiary, Genzyme, in the quarter, up 23% year over year owing to higher volume of product sales to Genzyme.

BioMarin's newest drug, Palynziq (pegvaliase) injection, grossed sales of $4.1 million in the third quarter of 2018. Palynziq was approved in May this year and was later launched in July. As a result, the drug could not record any sales in the second quarter since supply was first made available during the first week of the month it was unveiled.

In the United States (n=124), patients were treated with Palynziq at the end of the third quarter. BioMarin expects the number of patients to reach 250-300 by this year-end.

In the EU, a marketing application for Palynziq is under review with a decision awaited in the first half of 2019.

Research and development (R&D) expenses were 5.6% higher year over year while selling, general and administrative (SG&A) expenses increased 11.8% in the quarter under review.

At the end of the third quarter of 2018, BioMarin had $1.6 billion in cash, cash equivalents and investments, same as its earlier reported quarter.

Pipeline Update

BioMarin is a developing valoctocogene roxaparvovec, a gene therapy for severe hemophilia. Following encouraging safety and efficacy data presented from the phase I/II study, BioMarin s launched two separate phase III studies on the candidate - GENEr8-1 (6e13 vg/kg dose) and GENEr8-2 (4e13 vg/kg dose) - to treat patients without pre-existing AAV5 antibodies. Enrollment in both studies is estimated to be completed in 2019. BioMarin is also conducting a separate phase I/II program to evaluate the 6e13 vg/kg dose in severe hemophilia A to address patients with pre-existing AAV5 antibodies.

BioMarin plans to initiate an accelerated approval path forward for Valoctocogene roxaparvovec gene therapy, based on the recently drafted guidelines published by the FDA. The company will inform investors about its decision on this project during the second half of 2019.

Another important candidate in its pipeline is vosoritide, currently in a phase III analysis (n=110) for the treatment of children (aged 5-14 years) with achondroplasia, the most common form of dwarfism. Top-line data from this study is anticipated during the second half of 2019.This will be followed by an open-label extension study with lower dose (15 µg/kg/day). Additionally, BioMarin commenced a separate phase II study to assess the effect of vosoritide on infants and toddlers (aged 0-5 years) in June. Vosoritide is granted an Orphan Drug status in both the United States as well as the EU.

BioMarin will present a 42-month update on the study at the company's R&D Day on Nov 7 in the New York City.

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 its clinical studies' stage in the first half of 2019.

2018 Outlook Maintained

BioMarin continues to envision total revenues in the range of $1.47-$1.53 billion in 2018.

Kuvan sales are projected in the band of $440-$480 million. Vimizim sales are projected within $460-$500 million. Naglazyme sales are likely to be within $325-$355 million. Brineura sales are predicted in the range of $35-$55 million.

BioMarin reiterated its full-year guidance for R&D costs. Expenses related to R&D are expected within $680-$710 million compared with SG&A expenses, forecast in the band of $575-$615 million.

The company expects adjusted net income within $100-$140 million.

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

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

Zacks Rank & Stock to Consider

BioMarin currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Genmab A/S GNMSF , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Genmab' earnings estimates have been moved 1.8% north for 2018 and 11.8% for 2019 over the past 60 days.

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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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