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BioMarin (BMRN) Up 2.5% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for BioMarin Pharmaceutical Inc. (BMRN - Free Report) . Shares have added about 2.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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 Second Quarter Earnings Rise Y/Y, Sales Surpass Estimates

Second-quarter earnings of 15 cents per share rose 50% year over year. The Zacks Consensus Estimate was pegged at a loss of 22 cents per share. Strong product sales and lower R&D costs pulled up profits in the quarter.

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.

Quarterly Details

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 growth as 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 Genzyme in the quarter.

Brineura received FDA approval in Apr 2017 and was launched in mid-June. Also, Brineura received marketing approval in the EU in Jun 2017. Brineura generated sales of $0.3 million from two countries in the second quarter - U.S. and Argentina. Following the second quarter, the company said it has already recorded first sales in France and Germany.

Adjusted research and development (R&D) expenses declined 16% to $122.2 million 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 primarily due to increased expenses related to the acquisition of international Kuvan rights, costs associated with the Brineura launch and higher legal costs.

At the end of the second quarter, BioMarin had $1.2 billion in cash, cash equivalents and investments.

2017 Outlook

The company raised its previously issued 2017 sales guidance apparently due to 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 $1.285 - $1.335 billion, up from $1.25 −$1.30 billion previously.  

Vimizim sales are expected in the range of $400–$430 million, representing a year over year growth rate of 13% to 21%. 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 adjusted net income in the second half compared to the first.

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.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

BioMarin Pharmaceutical Inc. Price and Consensus

VGM Scores

At this time, BioMarin's stock has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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.

Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.




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