BioMarin Pharmaceutical Inc. (BMRN - Free Report) reported a narrower-than-expected loss in the second quarter of 2017 and also beat estimates for sales. The biotech also raised its previously issued full year sales outlook. The company also announced that it will take both evaluated doses of its hemophilia A gene therapy BMN 270 to phase III development.
Shares of BioMarin were up around 1% in after-market hours on Wednesday. However, so far this year, BioMarin’s shares have underperformed the industry. While BioMarin’s shares are up 5.8%, the industry has witnessed an increase of 9%.
Loss Narrower than Expected
Second-quarter loss of 5 cents per share (including after-tax impact of stock-based compensation expense) was flat year over year. However, the loss was narrower than the Zacks Consensus Estimate of a loss of 22 cents per share.
Total revenue came in at $317.4 million in the quarter, up 6% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $309.0 million. The top line was aided by strong net product sales.
Product revenues were $315.9 million in the quarter, up 6% year over year.
Kuvan revenues rose 13% to $102 million, reflecting patient growth in North America and continued growth in the ex-North American territories acquired in 2016. The number of patients on Kuvan therapy in the U.S. increased 11% in the second quarter.
Naglazyme sales rose 9% year over year to $85.7 million. The drug continued to witness steady patient growth with the number of commercial patients increasing 7% in the quarter.
Vimizim contributed $103.2 million to total revenue, down 3% year over year and 2.8% sequentially due to unfavorable timing of government orders. However, the drug continued to witness steady patient growthas the number of patients on Vimizim therapy increased 24% year over year in the quarter.
Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries.
BioMarin received Aldurazyme royalties – totaling $19.9 million (up 6%) – from Sanofi’s (SNY - Free Report) Genzyme in the quarter.
Brineura received approval from the FDA for the treatment of children with CLN2 disease – a form of Batten disease – in the U.S. in Apr 2017 and the drug was launched in mid-June. Also, Brineura received marketing approval in the EU in Jun 2017. The newest drug in BioMarin’s portfolio generated sales of $0.3 million in the U.S. and Argentina in the second quarter.
Research and development (R&D) expenses declined 16% to $122.2 million (excluding stock-based compensation expense) owning to lower spending on the Brineura program and the discontinuance of the Kyndrisa program last year. Selling, general and administrative (SG&A) expenses increased 32.5% to $115.1 million (excluding stock-based compensation expense), primarily due to increased expenses related to the acquisition of international Kuvan rights, costs associated with the Brineura launch and higher legal costs.
Update on BMN 270
BioMarin announced updated data from the 4e13 vg/kg dose arm of an open-label phase 1/2 study of BMN 270 in patients with severe hemophilia A.
For the cohort of three patients who were given the 4e13 vg/kg dose in December, at week 32, the company said that all were in or near the normal range of Factor VIII activity levels with both median and mean Factor VIII levels at about 51% with a range between 48% and 54%. For the three patients who were given the 4e13 vg/kg dose in Mar/Apr this year, at week 20, their Factor VIII activity levels had moved into the mild range The company also said that two of the three patients were continuing to trend upward.
For all six patients in the 4e13 vg/kg dose cohort, median Factor VIII levels were 34% and mean was 31% at week 20.
Last month, the company announced updated data from the study for the 6e13 vg/kg dose, which demonstrated clinical benefit of steady-state Factor VIII levels in a normal range.
Based on the robust data, BioMarin plans to initiate two separate phase III studies for the 4e13 vg/kg and the 6e13 vg/kg doses as soon as possible. The company plans to invest more resources and manufacturing capabilities to maximize the BMN 270 development program.
Last month, BioMarin announced a settlement of its ongoing global patent litigation with Sarepta Therapeutics, Inc. (SRPT - Free Report) regarding the exclusive license on a patent pertaining to exon skipping technology used in Duchenne muscular dystrophy (DMD therapies). Per the deal, BioMarin has licensed the global exclusive rights to its DMD patent estate for Exondys 51 and all future exon-skipping products to Sarepta Therapeutics. Sarepta will make a one-time payment of $35 million to BioMarin in relation to license and settlement agreements. Sarepta will also be entitled to pay potential commercial milestone payments and sales royalties (on exons 51, 45, 53 and possibly on future exon-skipping products) to BioMarin, per the agreement.
Meanwhile, BioMarin has a robust pipeline with several data readouts lined up for the coming quarters. The most important candidate in its pipeline is vosoritide, which is currently in a phase III study for the treatment of children with achondroplasia, the most common form of dwarfism.
In June, BioMarin filed a biologics license application (BLA) with the FDA for its pipeline candidate, pegvaliase for phenylketonuria (PKU). A decision from the FDA is expected in early September. An application in the EU is expected to be filed by the end of the year.
The company raised its previously issued 2017 sales guidance only to include the $35 million in milestone payment from Sarepta. The earnings guidance was kept intact. While it raised the previous expectations for selling, general and administrative (SG&A) costs, it lowered the guidance for research and development (R&D).
BioMarin expects total revenue in the range of $1.29 - $1.36 billion, up from $1.25 −$1.30 billion previously.
Vimizim sales are expected in the range of $400–$430 million while Kuvan sales are projected in the range of $380−$410 million, representing an increase of about 14% over 2016 at the mid-point. Naglazyme sales are projected in the range of $300−$330 million.
Expenses related to R&D are expected within $610-$640 million, down from $620–$650 million while SG&A expenses are projected in the range of $530-$560 million, up from $520–$550 million previously.
Due to the ramp up of BMN 270 and vosoritide programs, the company expects R&D spending to increase in the second half of the year, which will result in lower profits.
Adjusted earnings are expected to turn positive in 2017. The company continues to expect adjusted net income of $30 - $70 million in 2017. Meanwhile, management is committed to continued profitability improvements over the longer term.
BioMarin carries a Zacks Rank #3 (Hold). A better-ranked stock in the biotech sector is Arena Pharmaceuticals, Inc. (ARNA - Free Report) with a Zacks Rank#2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Arena Pharma’ loss estimates for 2017 have narrowed 2.7% over the last 30 days. The company delivered an average four-quarter positive surprise of 73.46%. Shares have risen 70.1% so far this year.
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