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BioMarin Pharmaceutical (BMRN) Down 3.1% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for BioMarin Pharmaceutical Inc. BMRN. Shares have lost about 3.14 % in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is BMRN due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

BioMarin Fourth-Quarter Loss Wider, Sales Beat

BioMarin 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 36 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.

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.

The company mentioned on the call that it is cautiously optimistic that sales in Brazil will be steady in 2018 but uneven buying patterns may be observed quarter to quarter.

BioMarin received Aldurazyme royalties – totalling $28.3 million (down 19%) – from Sanofi’s Genzyme in the quarter.

Brineura generated sales of $5.2 million in the fourth quarter compared with $3.1 million in the third quarter.

On the call, the company said that at 2017 end, 40 patients across 22 sites and 7 countries were receiving Brineura. Management expects to increase the number of sites to 40 by mid-2018

Management noted that the focus on the initial stages of launch is on disease awareness and early diagnosis The company mentioned that new site readiness can take longer than expected, which suggests slower revenue ramp up.

Regarding pegvaliase launch, management suggested that the initial sales ramp-up would be slow due to education on disease awareness and lower doses per patient in the induction titration phase.  Also, the company mentioned that it expects to price pegvaliase at a modest premium to Kuvan (net annual treatment cost of about $150,000).

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 $1.8 billion in cash, cash equivalents and investments compared with $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 a one-time upfront payment of $31.5 million received from Sarepta Therapeutics.

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

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 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 met if pegvaliase launch is delayed.

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, a 62% year-over-year improvement from the midpoint.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower.

VGM Scores

At this time, BMRN has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. The stock was also allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, BMRN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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