Analyst Conference Summary

biotechnology

Biomarin Pharmaceuticals
BRMN

conference date: August 2, 2018 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2018 (second quarter, Q2 2018)


Forward-looking statements

Overview: Continued rapid y/y revenue growth plus a new product approval. But still not profitable.

Basic data (GAAP):

Revenue was $372.8 million, down slightly sequentially from $373.4 million, and up 17% from $317.4 million year-earlier.

Net income was negative $16.8 million, up sequentially from negative $44.1 million, and up from negative $36.8 million year-earlier.

Diluted EPS was negative $0.09, up sequentially from negative $0.26 and up from negative $0.21 year-earlier.

Guidance:

Reiterated except increased 2018 R and D expense to $680 to $710 million. Expects 2018 to show a GAAP loss but about $100 million in non-GAAP net income.

Conference Highlights:

Jean-Jacques Bienaimé, Chairman and CEO of BioMarin said, "On May 24 we received standard FDA approval of Palynziq, an important new therapy that helps address a significant unmet need in adults with phenylketonuria (PKU) who have been unable to control their blood Phe levels with current treatment options. We are very happy with the pace of the initial commercial launch of Palynziq and look forward to providing an update on launch metrics in the third quarter of this year. In clinical development, we provided two years of clinical data with the 6e13 vg/kg dose of valoctocogene roxaparvovec gene therapy for severe Hemophilia A from the ongoing Phase 1/2 study in at the World Federation of Hemophilia (WFH) 2018 World Congress. The updated data demonstrated the elimination of need for prophylaxis and no spontaneous bleeds in two years."

Palynziq launch reflects high interest from patients and doctors. Mainly study conversions, about 50 new to the drug so far. Most trial patients should be converted to commercial therapy by year-end. No revenue generated in Q2, first product became available in July.

therapy Q2 2018 revenue (millions) Q1 2018
revenue (millions)
Q2 2017
revenue (millions)
y/y change
Vimizim 127.6 117.1 103.2 24%
Naglazyme 91.1 75.0 85.7 6%
Kuvan 109.0 99.1 102.0 7%
Aldurazyme 24.0 66.1 19.9 21%
Brineura 10.9 6.9 0.3 na
other 5.1 4.3 1.5 240%
Total 372.8 373.4 317.4 17%

Non-GAAP net income was $ million, up sequentially from $21.3 million, and down from $ million year-earlier. Stock-based compensation excluded was $ million.

Cash and equivalents ended at $1.64 billion, down sequentially from $1.70 billion. Long term convertible debt was $822 million, short term convertible debt $370 million.

Total operating costs (GAAP) were $398.1 million, consisting of: cost of sales $79.0 million, research and development $175.6 million, selling, general and administrative $153.3 million, and intangible amortization & contingent consideration of $10.2 million. Operating income was negative $25.3 million. Other expense net $4.0 million. Income tax benefit $12.4 million.

R and D day will be November 7.

Brineura (Cerliponase alfa) for CLN2, late-infantile form of Batten disease was approved by the FDA in April 2018. Because children with CLN2 die quickly, there is not a relatively large pool of diagnosed patients waiting. Expanding sales in Europe.

Palyziq for phenylketonuria (PKU) (was Pegvaliase) received FDA approval on May 24, 2018. Believes could be a $1 billion product.

"A gene therapy product will be the next IND candidate for the treatment of PKU in 2019. PKU is an autosomal recessive disorder in which phenylalanine hydroxylase, the enzyme that metabolizes the amino acid phenylalanine (Phe), is deficient. PKU leads to high levels of neurotoxic phenylalanine, which would affect neurocognitive development, if left untreated. In preclinical models, BioMarin's PKU gene therapy product candidate demonstrated sustained, normalized Phe levels without hypophenylalanemia in an ongoing study and out to 53 weeks at the last observation. The product candidate will be an AAV vector containing the DNA sequence that codes for the phenylalanine hydroxylase enzyme that is deficient in people with PKU."

BMN 270 (Valoctocogene roxaparvovec, often "ValRox") gene therapy product for hemophilia A is in Phase 3. Further data released in May were positive. Has an accelerated approval endpoint strategy, working on result discrepancies, which have also been seen in non-gene therapy products.

BMN 250 (renamed tralesinidase alfa) for MPS IIIB (Sanfilippo Syndrome Type B) updated preliminary Phase 1/2 data released in February showed normalization of heparan sulfate biomarker. Newer patients are safely at 300 mg. Study will now move to the expansion phase.

Vosoritide for achondroplasia Phase 3 study continued, with complete enrollment anticipated in mid-2018. Primary endpoint is growth velocity in children. Demonstrated a sustained increase in annualized growth rate at 30 months of treatment in Phase 2. An infant (Age 0-5 years) study will begin next year. Top line data should be available in 2H 2019.

BMN 290 for Friedrich's Ataxia should have an IND submitted in the second half of 2018, followed by a Phase 1 trail initiation.

Anticipates a continuing flow of new drug candidates from the research organization.

Q&A:

[note this is a summary of answers important to me, not a transcript]

Free drug or discounting for Palyziq during transition? Unlike Kuvan we do not have or intend to have a starter program for Palyziq. Induction doses will all be reimbursed. Only clinical trial transition patients until end of their study will be free until reimbursement, which should complete by end of year. The 50 new naive patients so far are a mix of types, mainly naive to therapy, just a handful switching from Kuvan. Payer coverage so far has been consistent with our label.

Circular DNA hypothesis data for ValRox? Just what we provided at WFH. Expression seemed to near a plateau after week 91. It will take longer to determine individual patient variation. To get data on the DNA circulization we will need to do liver samples, which are not usually done on hemophilia patients. But the literature about the circular form being the stable form is abundant.

Vosoritide? We are encouraged by the data through month 30. There is no evidence of attenuation of treatment effect when we look at biomarkers.

ValRox FDA draft guidance on target factor, given for a couple of decades normal has not been considered with factor therapies? The context for normal factor activity levels is for accelerated approval. The regular approval is based on bleed rates.

 

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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is investment journalism, not financial advice.

Copyright 2018 William P. Meyers