BioMarin's (BMRN) Earnings & Revenues Beat Estimates in Q3

BioMarin Pharmaceutical Inc. BMRN reported third-quarter adjusted earnings of 43 cents per share, surpassing the Zacks Consensus Estimate of 34 cents as well as the year-ago quarterly earnings of 14 cents. Earnings increased on higher product revenues and gross profit.

Moreover, total revenues were $461.1 million in the reported quarter, up 18% from the year-ago period, driven by higher product revenues. Sales too beat the Zacks Consensus Estimate of $456 million.

Shares of BioMarin have decreased 20.4% so far this year compared with the industry’s decline of 2.8%.

Quarterly Details

Product revenues (including Aldurazyme) were $450.9 million in the third quarter, reflecting a 16.7% increase year over year, driven by higher sales of Vimizim and newest brands, Palyzniq and Brineura. Royalty and other revenues were $10.2 million in the quarter, higher than $5.4 million a year ago.

BioMarin’s two drugs — older drug Kuvan and new injection Palynziq — are approved to treat PKU, a rare genetic enzyme deficiency disorder. Its PKU franchise sales rose 23.3% year over year in the quarter to $144.7 million. Kuvan revenues rose 6% to $120.6 million.

Palynziq injection sales grossed $24.1 million in the third quarter compared with $18.8 million in the previous quarter, driven by new patients initiating therapy in the United States. On third-quarter conference call, management stated that as of Sep 30, 2019, there were 670 patients on Palyzniq commercial therapy in the United States.

Palynziq injection was approved by the FDA in May 2018 and launched last July. In the EU, a marketing application was approved in May 2019 with commercial sales expected to begin in the fourth quarter.

Naglazyme sales decreased 8% year over year to $94.4 million due to lower volumes induced by government ordering patterns from certain Latin American and European countries.

Vimizim contributed $163.5 million to total revenues, up 33% year over year owing to increased sales volume on the back of government orders in Brazil.

Naglazyme and Vimzim revenues vary on a quarterly basis, primarily because of the timing of central government orders from some countries, mainly Brazil.

BioMarin received Aldurazyme royalties (totaling $22.8 million) from Genzyme in the quarter, down 17% year over year due to changes in revenue recognition rules.

BioMarin has a collaboration agreement with Sanofi’s SNY subsidiary Genzyme, which is responsible for marketing and selling Aldurazyme to third parties. The company receives royalties on Aldurazyme sales from Genzyme.

Brineura generated sales of $19.8 million in the third quarter, higher than $9.9 million reported in the previous quarter.

In the third quarter, R&D expenses rose 8.7% year over year to $152.3 million due to preclinical activities for BMN 307 and late-stage pipeline development, partially offset by decreased expense related to Palynziq.

Expenses associated with pre-commercialization activities for valoctocogene roxaparvovec and supporting the EU commercial launch and the continued U.S. expansion of Palynziq besides increased general and administrative expense escalated SG&A expenses by 19.5% to $141.3 million.

2019 Guidance

BioMarin revised its total revenue view for 2019 in the range of $1.69-$1.72 billion compared with $1.68-$1.75 expected earlier. The company expects to generate revenues, touching the mid-point of this range. In 2020, management expects to generate $2 billion in commercial revenues.

Vimizim sales are expected in the range of $540-$570 million for the full year. Kuvan sales are projected within $455-$475 million compared with $420-$460 million expected earlier. Naglazyme sales are predicted in the band of $360-$380 million. Brineura sales are expected within $55-$75 million. Palynziq sales are forecast in the $80-$100 million band, mostly from the U.S. market.

R&D costs are expected to be within $710-$740 million compared with $740-$780. SG&A expenses are anticipated in the range of $670-$690 million.

The company expects adjusted net income in the range of $150-$170 million, tightened from the prior guidance of $130-$170 million.

Pipeline Update

BioMarin is developing valoctocogene roxaparvovec, a gene therapy for severe hemophilia A. It was conducting two separate phase III studies on GENEr8–1 (6e13 vg/kg dose) and GENEr8–2 (4e13 vg/kg dose) for the treatment of patients without the pre-existing AAV5 antibodies. In July, management stated that it will file regulatory applications for valrox in both the United States and the EU during the fourth quarter. The interim phase III data from the GENEr8-1 study and the updated three-year results from a long-term phase I/II study on valrox will form the basis of these regulatory submissions.

The GENEr8-1 study will, however, continue to enroll for achieving its planned completion target of 130 total patients with recruitment expected to be closedby BioMarin’s R&D Day, which will be held on Nov 14, 2019. Notably, 52-week results from the 130 subjects are expected at the end of next year.

The company stopped the development of 4e13 vg/kg dose (GENEr8–2 study) of valrox due to patient preference for the 6e13 vg/kg dose.

Another gene therapy program (BMN 307) for PKU is expected to move into clinical studies. Earlier this month, the FDA granted orphan drug designation to BMN 307 for the treatment of phenylketonuria (PKU). In September, BioMarinsubmitted the clinical trial application (CTA) for BMN 307.

The company plans to begin patient enrollment in a phase I/II study early next year.

Another important candidate in BioMarin’s pipeline is vosoritide, which is in a phase II study for children aged 5 to 14 years with achondroplasia. This is the most common form of dwarfism. A 52-week phase III study is also ongoing for the treatment of kids (aged 5-14) with achondroplasia. Top-line data from this study, which is fully enrolled, is expected by this year-end.

Along with the earnings release, the company announced that it has entered into a licensing agreement with Allievex Corp. for tralesinidase alfa (formerly BMN 250), an investigational enzyme replacement therapy (ERT) for MPS IIIB or Sanfilippo Syndrome Type B.

Per the agreement, BioMarin will be eligible to get a minority equity stake in Allievex and receive certain development, regulatory and sales-based milestone payments. Allievex will gain a worldwide, exclusive license to tralesinidase alfa.

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

BioMarin Pharmaceutical Inc. Price, Consensus and EPS Surprise

BioMarin Pharmaceutical Inc. price-consensus-eps-surprise-chart | BioMarin Pharmaceutical Inc. Quote

Zacks Rank & Stocks to Consider

BioMarin currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the biotech sector include Incyte Corporation INCY and ProQR Therapeutics N.V. PRQR, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Incyte’s earnings estimates have been revised 6.6% upward for 2019 and 9% for 2020 over the past 60 days. The stock has rallied 22.8% year to date.

ProQR Therapeutics’ loss per share estimates have been narrowed 6.3% for 2019 and 0.6% for 2020 over the past 60 days.

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