BioMarin (BMRN) Q4 Loss Wider Than Expected, Sales Beat

BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) reported wider-than-expected loss in the fourth quarter of 2017 but beat estimates for sales.

Fourth-quarter loss of 30 cents per share was wider than the Zacks Consensus Estimate of a loss of 24 cents. However, the loss included a gain of $125 million on sale of the Priority Review Voucher (PRV) in December 2017. BioMarin was awarded the PRV when it was granted FDA approval for Brineura.

Excluding this one-time gain, provision for income taxes of $106 million and a contingent consideration expense, adjusted loss per share was 37 cents in the fourth quarter.

Total revenues came in at $358.3 million, up 19% from the year-ago quarter driven by higher product revenues. Revenues also topped the Zacks Consensus Estimate of $346 million.

In the past year, BioMarin’s shares have underperformed the industry. While BioMarin’s shares are down 4%, the industry has witnessed a decrease of 2.5%.

Quarterly Details

Product revenues were $353.5 million in the quarter, up 19% year over year, supported by continued strong demand for BioMarin’s marketed products. Royalty and other revenues were $4.8 million in the fourth quarter, compared with $1.9 million in the year-ago quarter.

Kuvan revenues rose 19% to $107.4 million, reflecting patient growth in North America and solid uptake internationally. The number of patients on Kuvan therapy in the United States increased 7% in 2017.

Naglazyme sales rose 25% year over year to $93.8 million.

Vimizim contributed $114 million to total revenues, up 22% year over year and 26.2% sequentially. The drug continued to witness steady patient growth as the number of patients on Vimizim therapy increased 20% in 2017.

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

A slowdown in federal purchasing orders in Brazil had hurt Naglazyme and Vimizim product revenues in the third quarter. However, BioMarin witnessed an uptick in Brazilian orders in the fourth quarter for both Naglazyme and Vimzim, which drove sales higher.

BioMarin received Aldurazyme royalties – totaling $57.5 million (up 5%) – from Sanofi’s (NYSE:SNY) Genzyme in the quarter.

The newest drug in BioMarin’s portfolio, Brineura, generated sales of $5.2 million in the fourth quarter compared with $3.1 million in the third 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 the first half of 2017. Its commercial launch is underway in the United Statesand EU.

On the call, the company said the initial Brineura launch is rolling out as anticipated. However, the company mentioned that new site readiness can take longer than expected due to the complexity of planning for surgery and infusions within hospitals.

Research and development (R&D) expenses declined 3.2% while selling, general and administrative (SG&A) expenses increased 14.6% in the quarter.

At the end of the 2017, BioMarin had $1.8billion in cash, cash equivalents and investments versus $1.4 billion at the end of the third quarter.

2017 Results

Full-year 2017 sales of $1.31 slightly beat the Zacks Consensus Estimate of $1.30 billion. Revenues were within the guidance of $1.29 −$1.32 billion. Sales rose 18% year over year.

Total revenues included aone-time upfront payment of $31.5 million received from Sarepta Therapeutics, Inc. (NASDAQ:SRPT) . In July last year, BioMarin entered into a license and settlement agreement with Sarepta resolving the exon-skipping patent litigation.

Reported loss of 67 cents per share was wider than the Zacks Consensus Estimate of a loss of 63 cents.

Pipeline Update

Regarding pegvaliase, which has been developed to treat phenylketonuria (PKU), the company plans to submit a marketing application in Europe in the first quarter of 2018. In the United States, pegvaliase biologics license application (BLA) is currently under priority review with the FDA expected to give its decision May this year.

Meanwhile, BioMarin has launched two separate phase III studies on valoctocogene roxaparvovec, its investigational gene therapy for severe hemophilia A. While one of these (GENEr8–1 study) was initiated last December, the other one (GENEr8–2) will start early this year.

Meanwhile, the global phase III program on another candidate, vosoritide for the treatment of children (ages 5-14) with achondroplasia (the most common form of dwarfism) continues to enrol as planned with study completion expected by mid-year.

2018 Outlook

BioMarin expects total revenues in the range of $1.47 −$1.53 billion in 2018. This represents year-over-year growth of 15% to 19%, excluding the one-time Sarepta upfront payment. The Zacks Consensus Estimate is pegged at $1.48 billion.

The company mentioned on the call that though the guidance assumes the launch of pegvaliase in the United States in the second half of 2018, the range can still be achieved without pegvaliase.

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

Expenses related to R&D are expected within $645-$685 million while SG&A expenses are projected in the range of $575-$615 million.

The company expects adjusted net income in the range of $100 - $140 million.

BioMarin carries a Zacks Rank #3 (Hold). A better-ranked stock in the biotech sector is Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron’s earnings estimates have risen over 8.7% for 2018 and 5.4% for 2019 over the last 30 days. The company delivered an average four-quarter positive surprise of 9.15%.

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