BioMarin Reports Narrower Loss

BioMarin Pharmaceutical Inc.’s ( BMRN - Analyst Report ) third quarter 2012 loss of 4 cents per share was narrower than the Zacks Consensus loss estimate of 21 cents per share and the year-ago loss of 16 cents per share. The narrower loss was due to an increase in total revenues.

Total revenues climbed 13% to $128.1 million in the reported quarter, beating the Zacks Consensus Estimate of $127 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 11.9% to $126.3 million. Naglazyme, approved for treating MPS-VI, a rare genetic enzyme deficiency disorder, accounted for a significant portion of the net product revenues recorded in the quarter. Revenues from the drug increased 11.8% to $62.5 million.

Net product revenues from Kuvan tablets, indicated for treating mild-to-moderate forms of phenylketonuria, shot up 19.3% to $36.4 million. BioMarin is conducting a randomized, placebo-controlled, 13-week outcomes study (PKU-016) in patients treated with Kuvan. Top-line results from the study are expected in the second quarter of 2013.

BioMarin recorded revenues from another enzyme replacement therapy, Aldurazyme, co-marketed with Sanofi ( SNY - Analyst Report ) , of $23.8 million, up 3.5%.

Net revenues from Firdapse, currently marketed in EU, were $3.6 million in the quarter, up 2.9% 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 13%) and selling, general & administrative expenses (SG&A) expenses (up 3.2%) shot up in the quarter, leading to a 7.5% rise in total operating expenses.

We remind investors that the company is set to report results from its much awaited GALNS phase III trial in mucopolysaccharidosis Type IVA (MPS IVA) patients later this year. BioMarin expects that the US Food and Drug Administration (FDA) will approve GALNS in the fourth quarter of 2013.

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 Unchanged

BioMarin continues to expect total revenues in the range of $475–$510 million and total product revenue in the range of $470–$505 million. The company also maintained Naglazyme net product revenues in the range of $250–$265 million, Kuvan in the range of $130–$140 million, Aldurazyme in the range of $81–$87 million and Firdapse in the range of $13–$17 million.

BioMarin also reaffirmed its SG&A ($195–$205 million) and R&D ($285–$295 million) expenses guidance.

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.