BioMarin Turns a Profit (on an Adjusted Basis)

BioMarin Pharmaceuticals (BMRN -9.90%) continues its double-digit growth in revenue while turning a profit -- at least on an adjusted basis -- in the fourth quarter and reaching its goal of being profitable on an adjusted basis for the full year as the company celebrated its 20th anniversary. No one ever said drug development was quick.

BioMarin Pharmaceutical results: The raw numbers

Data source: BioMarin Pharmaceutical.

What happened with BioMarin Pharmaceutical this quarter?

• Revenue was boosted by sales of Kuvan, Naglazyme, and Vimizim, which increased 19%, 25%, and 22%, respectively. Sales of Aldurazyme dragged down the overall growth -- down 19% year over year -- but it produces the lowest revenue of the four by far, and revenue can be lumpy with countries making large orders that vary from quarter to quarter; the double-digit decline isn't likely a trend since Aldurazyme sales were only down 4% for the year.
• Sales of Brineura are off to a slow start with revenue of just $5.2 million, but management warned that the launch would be slow as it takes awhile to get treatment sites up and running. There are 22 sites currently treating patients, with a plan to have about 40 sites up and running by the middle of this year, which will help BioMarin reach its goal of Brineura revenue between $35 million and $55 million this year.
• In December, the company sold the rare pediatric disease priority review voucher that it got for the approval of Brineura for late infantile neuronal ceroid lipofuscinosis type 2 (CLN2) for $125 million.
• At the American Society of Hemophilia meeting in December, BioMarin reported solid data for its gene therapy valoctocogene roxaparvovec to treat hemophilia A. The first of two phase 3 trials to get the treatment approved by regulators is under way, with the second trial expected to start in early 2018.
• In the fourth quarter, the company also presented updated data from the phase 2 trial testing vosoritide in children with achondroplasia, a form of dwarfism, suggesting the drug continues to help patients out to 30 months. A phase 3 trial is under way with top-line data expected in the second half of 2019.
• Like many companies, the earnings line was hurt by changes in U.S. tax law in 2017. On an adjusted basis, BioMarin turned a profit of $5.2 million in the fourth quarter.

Image source: Getty Images.

What management had to say

Jean-Jacques Bienaime, BioMarin's chairman and CEO, highlighted the benefits of working in the orphan drug space:

We received U.S. and EU approval for Brineura for the treatment of CLN2 in less than four years from the first patient being treated with our product. As a result of that approval, we received a pediatric priority review voucher, which we sold for more than half of Brineura's development costs.

Bienaime also gave some thoughts on potential acquisitions:

I would say our appetite for a large transformational deal is relatively low at this time. But however, we are always interested in earlier stage opportunities that would be strategically coherent with our overall strategy of continuing to develop first-in-class or best-in-class products for rare genetic disorders.

Looking forward

Management is looking for 2018 revenue growth of 15% to 19%, excluding last year's $35 million one-time payment from Sarepta Therapeutics related to the settlement over the companies' exon-skipping patent litigation. Some of that growth will come from pegvaliase, which is under review by the FDA, with a decision expected in late May, although management noted that it should be able to hit its goal even if pegvaliase isn't approved.

On the bottom line, management is looking for a GAAP loss of $115 million to $165 million, but on an adjusted basis, the company will be profitable again in 2018 with income falling between $100 million and $140 million.