Analyst Conference Summary

biotechnology

conference date: May 4, 2017 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2017 (first quarter, Q1 2017)

Forward-looking statements

Overview: Rapid revenue ramp continues. Most revenue ploughed back into R&D. Approval of Brineura should add to future revenue.

Basic data (GAAP):

Revenue was $304 million, up 1% sequentially from $300 million, and up 28% from $237 million year-earlier.

Net income was negative $16 million, up sequentially from negative $91 million, and up from negative $83 million year-earlier.

Diluted EPS was negative $0.09, up sequentially from negative $0.53 and up from negative $0.51 year-earlier.

Guidance:

2017 guidance is unchanged, including resulting non-GAAP net income of $30 to $70 million.

Conference Highlights:

Jean-Jacques Bienaimé, Chairman and CEO of BioMarin said, "The recent FDA approval and positive CHMP opinion of Brineura marks a significant regulatory accomplishment for the Company and more importantly, a turning point for families living with CLN2 disease who now have an approved treatment option. Following the recent CHMP positive opinion, we look forward to a potential approval in Europe later in the second quarter. With the recent FDA approval, we are now executing on our commercial launch of Brineura in the U.S. BioMarin's robust commercial business continues to support our investment in research and development programs and the next generation of potential products.  All of the commercial products we market delivered double-digit growth year over year, and while we expect to incur a GAAP net loss for 2017, we are  on a path toward achieving non-GAAP income for the full-year 2017, as planned." 

Non-GAAP net income was $35 million, up sequentially from $27 million, and up from negative $29 million year-earlier. Stock-based compensation excluded was $37 million.

Cash and equivalents ended at $1.21 billion, down sequentially from $1.40 billion. Long term convertible debt was $668 million.

Total operating costs (GAAP) were $ 324 million, consisting of: cost of sales $50 million, research and development $145 million, selling, general and administrative $120 million, and intangible amortization & contingent benefit of $9 million. Loss from operations was $20 million. Other expense net $4 million. Income tax benefit $8 million.

Brineura (Cerliponase alfa) for CLN2, late-infantile form of Batten disease BLA was approved by the FDA in April 27. Prepared for the commercial launch, but because children with CLN2 die quickly, there is not a relatively large pool of diagnosed patients waiting. Also recommended for approval by the CHMP in Europe. The U.S. launch has begun.

Pegvaliase for phenylketonuria (PKU) Phase 3 results met the primary endpoint. Biogen plans to submit a Biologics License Application (BLA) to U.S. FDA in Q2.

BMN 270 gene therapy product for hemophilia A: interim results established proof of concept. Further data released in January were positive. Biomarin plans a Phase 2b study designed to be registration enabling, possibly in Q3. 6 patients have been dosed so far. Began building the manufacturing facility for this.

BMN 250 for MPS IIIB (Sanfilippo Syndrome Type B) preliminary Phase 1/2 data released in January showed reduced heparan sulfage biomarker at 30 mg. Newer patients are safely at 300 mg. Study will now move to the expansion phase.

Vosoritide for achondroplasia Phase 3 study was initiated in December. Primary endpoint is growth velocity in children.

Q&A:

[note this is a summary, not a transcript. And very selective, given the length of this particular Q&A session]

Heparin sulfate is not metabolized in the absense of the enzyme, and accumulates in brain cells. So the reduction from BMN 250 will translate into normal cognative development. The 30mg/week dose will now be escalated to the 300mg/week dose, partly to learn the tolerability, and to see the quantitative relationships to outcomes.

We did see some evidence in forward buying, it happens in the Middle East and similar markets. It is estimated at $5 to $10 million in the quarter.

BMN 270 need for steroid use? The last update was everyone was off steroids. Will give a full update later in the year. For the Phase 3 trial, the benefits are potentially great. We want to document that in a pivotal trial. Factor XIII levels have to be viewed as a proxy for clinical outcomes and also enables access for treatment faster.

MPS IIIB (BMN 250) next update? We are completing analysis of the dose escalation phase. We are admitting patients to the natural history study, who should roll over to the next phase.

Patients were escalated from 30 to 100 to 300 mg in the BMN 250 study. Two out of three patients moved their levels into the normal range at the lower doses. Neurocognitive benefit is not the primary endpoint, but development, so we don't have a timeline for it. We don't believe low reductions of CSF gags are likely to show overt clinical neurocognitive benefits, which would require much lower gag levels.

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