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BioMarin Widens Loss, Maintains View

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BioMarin Pharmaceutical Inc.’s (BMRN - Free Report) first quarter 2013 loss of 31 cents per share was wider than the Zacks Consensus Estimate of a loss of 28 cents per share and the year-ago loss of 21 cents per share. The wider loss was due to higher operating expenses.

The Quarter in Details

Total revenues climbed 9.7% to $127.9 million in the reported quarter but missed the Zacks Consensus Estimate of $131 million. The year-over-year increase in total revenues was attributable to higher net product revenues.

Net product revenues in the reported quarter climbed approximately 9.6% to $127.3 million. Naglazyme, approved for treating MPS-VI, a rare genetic enzyme deficiency disorder, accounted for a significant portion of product revenues recorded in the quarter. Revenues from the drug were up 1.2% to $69.4 million during the quarter.

Net product revenues from Kuvan tablets, indicated for treating mild-to-moderate forms of phenylketonuria, were up 17.5% to $37.6 million. BioMarin is conducting a randomized, placebo-controlled, 13-week outcomes study (PKU-016) in patients treated with Kuvan. In Feb 2013, the company announced positive results from the PKU-016 study. BioMarin now plans to submit data from the study to the US Food and Drug Administration (FDA) to include this in the Kuvan label.

BioMarin recorded revenues from another enzyme replacement therapy, Aldurazyme, co-marketed by Sanofi (SNY - Free Report) , of $16.7 million, up 39.2%.

Net revenues from Firdapse, currently marketed in the EU, remained flat at $3.6 million in the quarter. Firdapse was launched in Apr 2010, in the EU, for treating patients suffering from LEMS, a rare autoimmune disorder. The drug has performed disappointingly since launch.

Both research & development (R&D) expenses (up 13.4%) and selling, general & administrative (SG&A) expenses (up 12.8%) shot up in the quarter, leading to a 16.1% rise in total operating expenses.

Pipeline Update

In Mar 2013, BioMarin submitted a Biologics License Application (BLA) to the FDA for Vimizim (GALNS) for the treatment of patients suffering from mucopolysaccharidosis Type IVA (MPS IVA) or morquio A syndrome. The BLA submission was based on positive results from a phase III study on Vimizim. BioMarin expects Vimizim to be approved in the US by the end of the year.

BioMarin also submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for the candidate earlier this month. Vimizim has been granted accelerated review status in the EU.

The company has plans to initiate two more late stage studies this year for PEG-PAL (PKU) and BMN-673 (solid tumors). Management expects to initiate the PEG-PAL study by Jun 30, 2013. The company expects to commence the BMN-673 study by the end of this year. BioMarin also has several other pipeline related events lined up this year.

2013 Outlook

Apart from announcing financial results for the first quarter of 2013, the company also maintained its outlook for 2013. BioMarin still expects total revenues in the range of $530–$555 million. The Zacks Consensus Estimate of $549 million is well within the company’s guidance range.

The company also maintained total Naglazyme revenues in the range of $265–$285 million and Kuvan net product sales in the range of $155–$170 million for 2013.

SG&A expenses are still expected in the range of $220–$250 million. The company continues to expect 2013 R&D in the range of $340–$380 million.

Our Take

Though the company’s first quarter financial results were disappointing, we are impressed with the company’s progress with its pipeline. Vimizim, on approval, is expected to drive growth at BioMarin. We expect investor focus to stay on the candidate’s regulatory progress.

BioMarin currently carries a Zacks Rank #3 (Hold). However, other biopharma stocks such as Incyte Corporation (INCY - Free Report) and Alkermes (ALKS - Free Report) look better positioned. While, Incyte carries a Zacks Rank #1 (Strong Buy), Alkermes carries a Zacks Rank #2 (Buy).

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