BioMarin Pharmaceuticals (NASDAQ:BMRN) reported earnings Thursday, and while the numbers were interesting, it was a change in language about the future that has investors excited.

BioMarin Pharmaceuticals results: The raw numbers


Q4 2015 Actuals

Q4 2014 Actuals

Growth (Decline) YOY


$228 million

$230 million


Adjusted (Loss) From Operations

$(70 million)



What happened with BioMarin Pharmaceuticals this quarter?

  • Clearly, the biggest news since the last earnings call was the Food and Drug Administration's rejection of Kyndrisa for Duchenne muscular dystrophy.
  • This time last year, management guided that "near-term approval of [Kyndrisa] in either the U.S. or Europe will drive us to profitability on a non-GAAP basis in 2017," so it seemed that it was up to an approval in Europe -- which is probably a long-shot -- to get to profitability in 2017.
  • But now BioMarin "anticipates non-GAAP breakeven or better in 2017 under all EU outcomes with Kyndrisa." Planned breakeven or better sounds a lot better than potential profitability.

    While revenue was flat year over year in the fourth quarter, it was mostly due to lumpy sales of Naglazyme to countries that buy in bulk. Revenue was up 19% for the year thanks to the launch of Vimizim.
  • BioMarin actually showed a profit in the fourth quarter, but that was just an accounting issue because it looks like BioMarin won't have to pay the contingent value right due to the former owners of Kyndrisa, so it was taken off the books. Taking off a liability results in an addition to earnings, but the cause was obviously bad for the business. That's GAAP for you.
  • On an adjusted basis, the company lost more this quarter than in the year-ago quarter because of an increase in research and development expenses as well as selling, general, and administrative expenses, both of which should be considered investments in future growth of revenue.

What management had to say 
To establish the new 2017 guidance, EVP and CFO Dan Spiegelman said that the company had come up with multiple scenarios for how sales and expenses could play out: "Some of the cases, if the product approvals aren't there, will be more at the breakeven end than at the profitable end."

Hank Fuchs, BioMarin's EVP and chief medical officer, highlighted that the pivotal trial for pegvaliase treating phenylketonuria (PKU) that will read out later this quarter and could be up for review with the FDA later this year: "Pegvaliase has the potential to have an enormous impact on patients with PKU who are either not amenable to treatment with Kuvan or who want a more potent therapeutic."

Looking forward
In addition to the aforementioned readout for pegvaliase, BioMarin expects a decision on EU approval for Kyndrisa in the second quarter. While the probability of approval is low given the showing stateside, the binary event has probably been discounted enough by investors that it offers more upside than downside.

Even without Kyndrisa, management is guiding for revenue between $1.05 billion and $1.1 billion this year, which is 19% higher than last year, thanks to a continued launch of Vimizim. As you might imagine from the focus on 2017, BioMarin will still run a loss of $75 million to $100 million on an adjusted basis this year, although that's substantially lower than the $142 million it lost last year on an adjusted basis.

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