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Analyst Blog

Shares of BioMarin Pharmaceutical Inc. (BMRN - Analyst Report) ended the trading session on Apr 10, 2013 by reaching its 52-week high of $64.27. The company is expected to report its first quarter 2013 results on Apr 25.

With more than 23% of year-to-date return and a long-term expected earnings growth rate of 36.0%, this biopharmaceutical company seems to be an attractive pick for long-term investors. Average volume of shares traded over the last three months stands at approximately 1,189K. The company had a market capitalization of $8.1 billion on Apr 10.

On Feb 21, 2013, BioMarin reported higher-than-expected revenues of $131.9 million on the back of higher product sales for the final quarter of 2012. BioMarin expects to generate total revenues in the range of $530–$555 million in 2013. The company generated revenues of $500.7 million in 2012.

BioMarin’s current approved products include Naglazyme (MPS-VI), Aldurazyme (enzyme replacement therapy), Kuvan (phenylketonuria) and Firdapse (LEMS). Naglazyme, the company’s highest contributor of revenues, is expected to generate around $265–$285 million as product sales in 2013.

Multiple Pipeline-Related Events Lined Up

Moreover, BioMarin has a robust pipeline with several data readouts expected this year. The company recently submitted a submitted a Biologics License Application (BLA) to the US Food and Drug Administration (FDA) for its lead candidate, Vimizim (BMN-110, elosulfase alfa).

The candidate is developed for the treatment of patients suffering from mucopolysaccharidosis Type IVA (MPS IVA) or morquio A syndrome. The company expects the candidate to be approved by the end of 2013. We believe investor focus to remain on the regulatory status of Vimizim.

BioMarin’s pipeline includes PEG-PAL (PEGylated recombinant phenylalanine ammonia lyase) for the treatment of phenylketonuria (PKU), BMN-673 - a poly polymerase inhibitor and BMN-701 for Pompe’s disease among others. On approval these candidates will also drive growth at BioMarin.

Premium Valuation Justified

On a price-to-sales basis BioMarin is trading at 16.0x, reflecting a huge premium of 363.8% compared with the peer group average of 3.45x. On a price-to-book basis, the stock is also trading at a premium to the peer group average. Given the company’s strong fundamentals, the premium valuation is justified.

Other Stocks to Consider

BioMarin, a biopharma company, currently carries a Zacks Rank #3 (Hold). However other biopharma stocks such as UCB (UCBJF), Athersys Inc. (ATHX - Snapshot Report) and Celgene Corporation (CELG - Analyst Report) currently look more attractive and are worth considering. While UCB and Athersys carry a Zacks Rank #1 (Strong Buy), Celgene carries a Zacks Rank #2 (Buy).

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