BioMarin Loss Widens, Sales Climb

BioMarin Pharmaceutical Inc.’s ( BMRN - Analyst Report ) second quarter 2012 loss of 27 cents per share was wider than the Zacks Consensus loss estimate of 20 cents per share and the year-ago loss of 5 cents per share. The wider loss was due to an increase in operating expenses, which offset the increase in revenues.

Total revenues climbed 12.1% to $124.0 million in the reported quarter, beating the Zacks Consensus Estimate of $122 million. The increase in total revenues was attributable to higher net product revenues.

The Quarter in Details

Net product revenues in the reported quarter climbed approximately 12.2% to $123.0 million. Naglazyme, approved for treating MPS-VI, a rare genetic enzyme deficiency disorder, accounted for the bulk of the net product revenues recorded in the quarter. Revenues from the drug increased 4.3% to $62.9 million.

Net product revenues from Kuvan tablets, indicated for treating mild-to-moderate forms of phenylketonuria, grew 20.5% to $34.7 million. BioMarin is working on expanding Kuvan’s label and is conducting a randomized, placebo-controlled, 13-week outcomes study. Top-line results from the study are expected in the second quarter of 2013.

Revenues from another enzyme replacement therapy, Aldurazyme, co-marketed with Sanofi ( SNY - Analyst Report ) , shot up 26.0% to $21.8 million. BioMarin recorded an increase of 8% in the number of Aldurazyme patients.

Net revenues from Firdapse, currently marketed in EU, were $3.6 million in the quarter, up 12.5% year over year. Firdapse was launched in April 2010, in the EU, for treating patients suffering from LEMS -- a rare autoimmune disorder. The drug has performed disappointingly since launch.

Both research & development (R&D) expenses (up 47.1%) and selling, general &administrative expenses (SG&A) expenses (up 25.7%) shot up in the quarter, leading to a 41.1% rise in total operating expenses.

We are encouraged by BioMarin’s efforts to develop its pipeline. With multiple pipeline events lined up, R&D costs are expected to increase further in the coming quarters.

2012 Outlook

BioMarin continues to expect total revenues in the range of $475–$510 million, total product revenue in the range of $470–$505 million, Naglazyme net product revenues in the range of $250–$265 million, Aldurazyme at $81–$87 million and Firdapse at $13–$17 million. However, BioMarin increased its guidance for net product revenues from Kuvan to $130–$140 million from $126–$136 million.

While the SG&A guidance remained unchanged at $195–$205 million, the R&D guidance was raised to $285–$295 million, from the previous range of $265–$275 million.

Our Recommendation

We have a long-term Neutral recommendation on BioMarin, which carries a Zacks #3 Rank (Hold) in the short run. While we are pleased to see the company working on its pipeline, we prefer to remain on the sidelines pending further pipeline development.