BioMarin Pharmaceutical (BMRN - Free Report) reported second-quarter adjusted earnings of 9 cents per share, which missed the Zacks Consensus Estimate of 17 cents as well as the year-ago quarter’s earnings of 11 cents per share. Earnings decreased due to higher research and development (R&D) and selling, general and administrative (SG&A) expenses.
Total revenues were $387.8 million in the reported quarter, up 4% from the year-ago period as growth in the phenylketonuria (PKU) franchise offset lower Aldurazyme royalties and erratic order patterns in Brazil. However, sales missed the Zacks Consensus Estimate of $411.0 million.
BioMarin’s shares were down 2% in after-hours trading following the earnings release. In fact, this year so far, the company’s stock has declined 4.8%, underperforming the industry’s increase of 0.3%.
Product revenues (including Aldurazyme) were $373.3 million in the second quarter, reflecting a 9% increase year over year driven by higher sales of Kuvan and Naglazyme. Product revenues from BioMarin's marketed brands (excludes Aldurazyme) grew 9% year over year. Royalty and other revenues were $8.7 million in the quarter, higher than $5.1 million in the year-ago period.
BioMarin’s two drugs — older drug Kuvan and new injection Palynziq — are approved to treat PKU, a rare genetic enzyme deficiency disorder. Its PKU franchise sales rose 21% year over year in the quarter to $132.1 million. Kuvan revenues rose 4% to $113.3 million.
Palynziq injection sales grossed $18.8 million in the second quarter compared with $12.3 million in the previous quarter driven by new patients initiating therapy in the United States.
Palynziq injection was approved by the FDA in May 2018 and launched in July last year. In the EU, a marketing application was approved in May 2019 with a potential launch in the third quarter of this year. The company said that as of Jun 30, 2019, 551 U.S. commercial patients received treatment with Palynziq
Naglazyme sales increased 8% year over year to $98.2 million on the back of expanded sales volume, driven by favorable government ordering patterns in certain Latin American and European countries. Net patient growth was 8% year over year.
Vimizim contributed $122.7 million to total revenues, down 4% year over year due to limited ordering from Brazil. Net patient growth was 10% year over year.
Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries, mainly Brazil.
BioMarin received Aldurazyme royalties — totaling $5.8 million — from Genzyme in the quarter, down 76% year over year due to changes in revenue recognition rules.
BioMarin has a collaboration agreement with Sanofi’s (SNY - Free Report) subsidiary, Genzyme, which is responsible for marketing and selling Aldurazyme to third parties. BioMarin receives royalties on Aldurazyme sales from Genzyme
Brineura generated sales of $14.8 million in the second quarter, higher than $12.2 million reported in the previous quarter.
In the second quarter, R&D expenses rose 7.4% year over year to $163.4 million due to late-stage pipeline development. Marketing expenses associated with Palynziq commercial efforts and launch preparations for its pipeline candidate, valoctocogeneroxaparvovec or valrox resulted in 5% increase in SG&A expenses to $134.0 million.
BioMarin maintained its total revenue guidance for 2019 in the range of $1.68-$1.75 billion. The company expects to generate revenues in the middle of the range. In 2020, management expects to generate $2 billion in commercial revenues.
Vimizim sales are expected in the range of $530-$570 million in 2019. Kuvan sales are projected in the range of $420-$460 million. Naglazyme sales are projected in the range of $350-$380 million. Brineura sales are expected in the range of $55-$75 million. Palynziq sales are expected in the range of $70-$100 million, mostly from U.S. market.
R&D costs are expected to be within $740-$780 million. SG&A expenses are projected in the range of $650-$690 million.
The company expects adjusted net income in the range of $130 million to $170 million, indicating year-over-year improvement of 65% from the mid-point.
BioMarin is developing valrox, a gene therapy for severe hemophilia A. It was conducting two separate phase III studies on GENEr8–1 (6e13 vg/kg dose) and GENEr8–2 (4e13 vg/kg dose) for the treatment of patients without the pre-existing AAV5 antibodies. In July, BioMarin said it will file regulatory applications for valrox in both the United States and EU in the fourth quarter of 2019 with potential approval and launch next year. The interim phase III data from the GENEr8-1 study and updated three-year data from a long-term phase I/II study on valrox will form the basis of these regulatory submissions. The GENEr8-1 study will however continue to enroll to achieve its planned completion target of 130 total patients with enrolment expected to be completed by early fourth quarter.
The company also said that it is stopping the development of 4e13 vg/kg dose (GENEr8–2 study) of valrox due to progress of the 6e13 vg/kg dose.
Sangamo Therapeutics (SGMO - Free Report) and its partner Pfizer (PFE - Free Report) are also evaluating their gene therapy candidate, SB-525, in patients with severe hemophilia A. Last month, the companies presented promising new results from the phase I/II Alta study.
Another important candidate in BioMarin’s pipeline is vosoritide, which is in a phase II study in children aged 5 to 14 with achondroplasia, the most common form of dwarfism. Meanwhile a 52-week phase III study (n~110) is also ongoing for the treatment of children (ages 5-14) with achondroplasia. Top-line data from this study, which is fully enrolled, is expected by end of 2019. In addition, BioMarin is enrolling patients in a separate phase II study, which was initiated in 2018 to evaluate the effect of vosoritide in infants and young children (less than 60 months old).
Moreover, another gene therapy program (BMN 307) for PKU is expected to move into clinical studies in 2019 with an Investigational New Drug (IND) filing planned for the second half of 2019.
The company announced that it is ceasing development of BMN 290, which was in pre-clinical studies for Friedriech's ataxia, a rare neurologic disorder.
BioMarin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.