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BioMarin (BMRN) Down 34.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for BioMarin Pharmaceutical (BMRN - Free Report) . Shares have lost about 34.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is BioMarin 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 Q2 Earnings Top, Sales Show Coronavirus Impact

BioMarin’s adjusted earnings of 32 cents per share beat the Zacks Consensus Estimate of 16 cents. Earnings were significantly better than the year-ago earnings of 10 cents per share due to higher revenues and lower R&D expense.

Total revenues were $429.5 million in the reported quarter, up 11.5% from the year-ago period, driven by higher product revenues. Sales beat the Zacks Consensus Estimate of $418 million.

As expected, in the quarter, the company experienced significant impact due to disruptions of day-to-day operations of clinics and hospitals due to COVID-19. The pandemic caused demand interruptions such as missed patient infusions and disruption in new patient starts for some of its products.

Quarterly Details

Product revenues (including Aldurazyme) were $419.0 million in the quarter, reflecting a 10.5% increase year over year. Product revenues from BioMarin's marketed brands (excluding Aldurazyme) grew 4% year over year to $386.8 million. Royalty and other revenues were $10.5 million in the quarter, higher than $8.7 million a year ago.

Kuvan revenues rose 8% to $122.6 million driven by U.S. price increase.

Palynziq injection sales grossed $40.7 million in the quarter compared with $34.6 million in the previous quarter, driven by new patients initiating therapy as well as the growing number of U.S. patients who have now achieved maintenance dosing. The majority of Palynziq sales came from the United States from patients who started Palynziq therapy before COVID-19 environment set in. However, COVID-19 had a material impact on new patient starts for Palynziq, especially in the months of March and April, with some improvement in May and June. In Europe, patient starts in Germany were slow due to COVID-19.

Naglazyme sales declined 18% to $81.0 million. Vimizim contributed $116.7 million to total revenues, down 5% year over year. Sales of both Naglazyme and Vimizim were hurt by unfavorable timing of orders. Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries, mainly Brazil. Meanwhile, missed patient infusions due to COVID-19 also hurt sales of the drugs in the second quarter.

Brineura generated sales of $25.8 million in the quarter, compared with $24.0 million in the previous quarter.

Product revenues from Aldurazyme totaled $32.3 million, up 457% year over year due to higher sales volume to Sanofi’s subsidiary, Genzyme. Genzyme is BioMarin's sole customer for Aldurazyme and is responsible for marketing and selling Aldurazyme to third parties.

R&D expenses declined 17.3% year over year to $135.2 million due to lower costs for development of Roctavian. Marketing expenses associated with Palynziq commercial efforts and launch preparations for Roctavian resulted in a 9% increase in SG&A expenses to $146.1 million.

As of Jun 30, 2020, BioMarin had $1.7 billion in cash, cash equivalents and investments, compared with $1.15 billion at the end of Mar 31, 2020.

2020 Guidance

BioMarin anticipates the COVID-19 pandemic will hurt its near-term revenues as many of its products are
administered via infusions in a clinic or hospital setting

BioMarin maintained its financial guidance for the year on the assumption that the demand patterns will return to normal levels in late 2020.

Total revenues are expected in the range of $1.85-$1.95 billion.

Vimizim sales are expected in the range of $530-$570 million. Kuvan sales guidance was maintained in the range of $430-$480 million. Naglazyme sales are predicted in the band of $360-$400 million. Brineura sales are expected within $85-$115 million. Palynziq sales are forecast in the $160-$190 million range.

The guidance for costs was maintained. R&D costs are expected to be within $675-$725 million. SG&A expenses are anticipated in the range of $780-$830 million.

The company still expects adjusted net income in the range of $260-$310 million, the midpoint of which indicates growth of more than 70%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -206.94% due to these changes.

VGM Scores

Currently, BioMarin has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BioMarin has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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