BioMarin Pharmaceutical Inc.

BMRN Details

BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is a global biotechnology business that develops and commercializes innovative medications for rare and potentially fatal genetic diseases. Its pharmaceutical portfolio includes seven commercially available drugs (Vimizim, Naglazyme, Kuvan, Palynziq, Brineura, Voxzogo, and Aldurazyme) and other clinical and pre-clinical prospects.

Latest News:

• Contract with Entos: On November 15, 2021, BMRN announced a deal in which Entos, a clinical-stage biotechnology firm, under which Entos would apply its Fusogenix nucleic acid delivery technology to potential gene therapy candidates in the BMRN pipeline. Entos will also develop specifically formulated product candidates for BMRN under the terms of the contract.
• Appointing New R&D and Technical Heads: On October 04, 2021, BMRN announced the appointment of two industry veterans, Mr. Harold S. Bernstein as Senior Vice President, Chief Medical Officer, and Head of Clinical Development, and Mr. Ganesh Vedantham as Senior Vice President, Technical Development, to fill two critical strategic roles.

Q3FY21 Results:

• Fall in Revenues: Due to reduced Kuvan, Aldurazyme, Vimizim, and Naglazyme product revenues, BMRN reported a 14.27% reduction in revenues to USD 408.74 million in Q3FY21 (ended September 30, 2021) compared to USD 476.78 million in Q3FY20.
• Recorded Net Losses: The company witnessed a net loss of USD 36.49 million in Q3FY21 vs. a net profit of USD 784. 80 million in Q3FY20.
• Decent Balance Sheet: BMRN ended the quarter with a cash balance of USD 1.08 billion (including short-term investments) and total debt of USD 1.08 billion.

Key Risks:

• Pricing Control: The government primarily controls pricing in the pharmaceutical business. Therefore, any limitation on the amount BMRN may charge for its products can harm its revenue and results of operations.
• Regulatory Scrutiny: Prior approvals may be suspended or withdrawn from BMRN if its products fail to meet regulatory criteria, which might negatively impact its financial position.

Outlook:

• Revenues & Net Income Estimates: BMRN indicated in its Q3FY21 earnings release that its FY21 revenues would range between USD 1.82 and 1.88 billion, with a GAAP net loss of USD 45 to 85 million. Non-GAAP net income is expected to range between USD 215 and 255 million.
• Operating Expenses: Its R&D and selling, general, and administrative (SG&A) costs are expected to range from USD 635 to 675 million and USD 735 to 775 million, respectively.

 Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BMRN Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

BMRN's stock price has surged 12.07% in the past month and is currently trading close to the mid-band of the 52-week range of USD 71.59 to USD 92.57. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 61.45. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 78.62.

Considering the decline in financials, current valuation, and other technical indicators, we believe the decent business fundamentals are sufficiently reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 83.12, up 2.95% as of November 18, 2021, at 2:40 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.