Lowering Our BioMarin FVE to $96 to Account for Roctavian Commercialization Delays, Higher Expenses

BioMarin reported 2022 financial results that were in line with our expectations, with roughly $2.1 billion in revenue (14% growth) and what we see as a maintainable turn to GAAP profitability. However, hemophilia A gene therapy Roctavian is launching at a slow pace in Europe, and rising competition in the U.S. market (where Roctavian is poised to gain approval in the first half of 2023) could reduce the pool of patients who pursue gene therapy. In addition, R&D and SG&A expense guidance for 2023 were higher than we had modeled. Therefore, we’re lowering our fair value estimate to $96 from $105. We continue to see Roctavian and recently approved achondroplasia drug Voxzogo as strong growth drivers, although we think Roctavian’s trajectory could be a bit slower than Voxzogo’s. We think these products, in addition to BioMarin’s established enzyme replacement therapies, support BioMarin’s narrow moat, although we’re carefully watching the early-stage pipeline to confirm whether BioMarin continues to warrant a positive moat trend rating.