BioMarin (BMRN) to Report Q2 Earnings: What’s in the Cards?

BioMarin Pharmaceutical Inc. BMRN will report second-quarter 2018 earnings on Aug 2 after market close. In the last reported quarter, the company delivered a negative earnings surprise of 15.38%.

This biotech company’s shares have risen 12.1% this year so far against the industry’s decline of 4.8%.

BioMarin’s earnings surpassed expectations in two of the last four quarters and missed expectations in the remaining two, resulting in an average positive surprise of 42.37%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Key orphan disease drugs, Vimizim and Kuvan, which drove BioMarin’s top line in the past few quarters, are likely to maintain the strong momentum this quarter too. Robust patient growth and penetration should propel the drugs’ sales.

Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries, mainly Brazil. However, on the first-quarter call, management once again stressed that Brazilian revenues, as a percentage of total revenues, will continue to decline as BioMarin launches products.

Nevertheless, the drugs continue to witness steady patient growth and we expect the trend to continue this quarter.

Brineura, for the treatment of children with CLN2 disease – a form of Batten disease – was approved in both the United States and EU last year. Brineura generated sales of around $9 million in 2017 and $6.9 million in the first quarter. Sales are expected to be higher in the second quarter.

In June, BioMarin received a milestone payment of $20 million from Pfizer PFE triggered by the FDA and EMA acceptance of the latter’s new drug application (NDA) submission for pipeline candidate, talazoparib. The milestone payment was committed to BioMarin by Medivation, which bought global rights to talazoparib from BioMarin in August 2015. Medivation was later acquired by Pfizer. The milestone payment should boost BioMarin’s sales in the soon-to-be reported quarter.

On the second-quarter investor call, we also expect management to comment on the launch preparation for pegvaliase injection. Pegvaliase was approved by the FDA in May to be marketed by the trade name of Palynziq for the treatment of adults with PKU, a rare genetic disease.

We also expect management to discuss how the pipeline is progressing on the conference call. Important pipeline candidate are valoctocogene roxaparvovec, a gene therapy for severe hemophilia A, vosoritide for the treatment of children (ages 5-14) with achondroplasia and BMN 250 for Sanfilippo B syndrome or MPS IIIB.

Earnings Whispers

Our proven model does not conclusively show that BioMarin is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Earnings ESP: Its Earnings ESP is -6.67% as the Most Accurate Estimate stands at 15 cents per share while the Zacks Consensus Estimate is pegged higher at 17 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BioMarin’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat

We caution against stocks with a Zacks Rank #4 or #5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

Aduro BioTech , Inc. ADRO has an Earnings ESP of +4.55% and a Zacks Rank #3. The company is expected to release results on Aug 1.

BioDelivery Sciences BDSI has an Earnings ESP of +3.23% and a Zacks Rank #2. The company is scheduled to release results on Aug 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research