Company Reports

BioMarin Pharmaceutical's nearly $650 million in first-quarter revenue (9% growth) puts the company on track to reach management’s $2.7 billion-$2.8 billion revenue guidance for the full year, with achondroplasia drug Voxzogo continuing to see impressive growth as more children initiate therapy. However, the launch of hemophilia gene therapy Roctavian is still stalled due to reimbursement issues in the US and Europe. We’ve reduced our Roctavian forecast to less than $500 million in peak annual sales, although we recognize that BioMarin could opt to divest the program; management will outline its long-term strategy at the investor day in September. BioMarin is also culling its pipeline in an effort to focus on the most impactful programs, leading management to reduce guidance for research and development expenses this year and increase guidance for operating margins and earnings per share. All of the programs that were discontinued were too early to be explicitly included in our valuation model. After these adjustments, we’re reducing our fair value estimate to $87 per share from $96 and think the shares look fairly valued. We think BioMarin’s current rare-disease portfolio already warrants a narrow moat, but we’re watching for advancement of Voxzogo in new indications and data from earlier-stage pipeline drugs as potential catalysts for raising our fair value estimate.

BioMarin is amassing a portfolio of genetic-disease therapeutics, making historical comparisons with Genzyme (acquired by Sanofi) difficult to avoid. Commercialization and research and development expenses kept BioMarin in the red for years despite multiple approved products, but we're confident in the durable, profit-generating power of its current portfolio. With a deep in-house pipeline and the ability to supplement growth with strategic acquisitions, BioMarin is in a strong position.

BioMarin is amassing a portfolio of genetic-disease therapeutics, making historical comparisons with Genzyme (acquired by Sanofi) difficult to avoid. Commercialization and research and development expenses kept BioMarin in the red for years despite multiple approved products, but we're confident in the sustainable, profit-generating power of its current portfolio. With a deep in-house pipeline and the ability to supplement growth with strategic acquisitions, BioMarin is in a strong position.

BioMarin saw 20% year-over-year revenue growth in the fourth quarter as achondroplasia drug Voxzogo continued its strong trajectory, and we're maintaining our $96 fair value estimate. We think BioMarin shares are fairly valued at recent prices, incorporating both Voxzogo's strong potential and BioMarin's improving overall operating margins, but also a disappointing launch for hemophilia A gene therapy Roctavian and unclear potential for the firm's pipeline. We continue to see BioMarin's portfolio and pipeline of rare disease drugs supporting a narrow moat.

BioMarin Pharmaceutical reported solid third-quarter top-line growth of 15%, relatively in line with our estimates, and we’re not changing our $96 fair value estimate. We think this puts the firm in a good position to meet our revenue forecast of roughly $2.4 billion for the full year, as ongoing launches of achondroplasia drug Voxzogo and hemophilia A gene therapy Roctavian provide support to the firm's narrow moat. BioMarin also announced that 18-year CEO Jean-Jacques Bienaimé will step down at the start of December, but we’re confident that his replacement, Alexander Hardy (current CEO of Genentech), has the qualifications to lead the firm’s future growth.

BioMarin is amassing a portfolio of genetic-disease therapeutics, making historical comparisons with Genzyme (acquired by Sanofi) difficult to avoid. Commercialization and research and development expenses have kept BioMarin in the red, but we're confident in the profit-generating power of its rare-disease treatments, and BioMarin's turn to profitability looks maintainable. With a deep in-house pipeline and the ability to supplement growth with strategic acquisitions, BioMarin is in a strong position.

BioMarin’s second-quarter revenue increased 12% to nearly $600 million, consistent with sales in the first quarter, and we think this puts the firm in a good position to meet our forecast of roughly $2.4 billion for the full year, as ongoing launches of achondroplasia drug Voxzogo and hemophilia A gene therapy support the firm's narrow moat rating. We’re maintaining our $96 fair value estimate.

BioMarin’s hemophilia A gene therapy Roctavian has received U.S. Food and Drug Administration approval, and management expects the first patients could begin to receive treatment in September, with patients able to begin navigating eligibility requirements starting today. We’ve removed the probability weighting on our sales forecast for the drug, although we’ve slightly reduced our assumed peak patients treated annually to less than 900 per year, leading us to maintain our $96 fair value estimate.

BioMarin’s first-quarter revenue grew 15% to nearly $600 million, and we think this puts the firm in a good position to meet our forecast of roughly $2.4 billion for the full year, factoring in continued Kuvan generic headwinds, but also strong uptake of new achondroplasia drug Voxzogo. We’re maintaining our $96 fair value estimate.

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.

BioMarin is amassing a portfolio of genetic-disease therapeutics, making historical comparisons with Genzyme (acquired by Sanofi) difficult to avoid. Commercialization and research and development expenses have kept BioMarin in the red, but we're confident in the profit-generating power of its rare-disease treatments, and BioMarin's turn to profitability looks maintainable. With a deep in-house pipeline and the ability to supplement growth with strategic acquisitions, BioMarin is in a strong position.

BioMarin reported solid 24% revenue growth in the third quarter, with very strong sales of new achondroplasia drug Voxzogo ($48 million) but lower sales of established rare disease therapies like Vimizim and Naglazyme, as expected, due to the timing government orders. The launch of phenylketonuria drug Palynziq continues to disappoint, with sales of the drug expected to be at the low end of guidance for the year. We’ve lowered our long-term peak sales estimate to less than $500 million, with sales for 2022 on track to reach roughly $250 million. However, this did not have a significant impact on our fair value estimate, which stands at $105 per share. We continue to see BioMarin’s diversified rare disease portfolio and new product launches, particularly Voxzogo and hemophilia A gene therapy Roctavian, supporting a narrow moat.

After taking a closer look at what we consider the three key elements of the Inflation Reduction Act that will affect the biopharma industry over the next decade, we're reducing our fair value estimates for 17 of the biggest biopharma names in Morningstar's coverage by an average of 2%. We think the step-down in U.S. branded drug sales from capping Medicare price increases to inflation (fully rolled out in 2023), redesigning Medicare Part D (beginning in 2025), and Medicare negotiation (beginning in 2026 for small molecules) will result in a 3% reduction in total sales for these firms by 2031, with firm-level reductions depending on the firm's reliance on the U.S. market, proportion of the portfolio targeting seniors, history of price increases, and relative size of its small molecule and biologics portfolios (as biologics are immune from Medicare negotiation for 13 years instead of nine). Our estimates factor in some ability for the industry to either benefit from certain changes (like potential increased prescription fill rates in Part D with lower out-of-pocket costs) or compensate for headwinds (like responding to inflation caps on price increases with higher launch prices). Overall, we think the effect of the Inflation Reduction Act is manageable for the industry, and we see the competitive advantages and economic moats of these firms remaining intact.

BioMarin is amassing a portfolio of genetic-disease therapeutics, making historical comparisons with Genzyme (acquired by Sanofi) difficult to avoid. Commercialization and research and development expenses have kept BioMarin in the red, but we're confident in the profit-generating power of its rare-disease treatments, and BioMarin's turn to profitability looks maintainable. With a deep in-house pipeline and the ability to supplement growth with strategic acquisitions, BioMarin is in a strong position.

We're maintaining our $105 fair value estimate for BioMarin following solid second-quarter results, with 6% top-line growth despite a headwind from generic competition to oral PKU drug Kuvan. Sales of newly-approved achondroplasia drug Voxzogo reached $34 million ($54 million year to date), and management has significantly raised full-year sales guidance for the drug to $130 million-$160 million (now encompassing our prior $135 million forecast). Voxzogo is poised to launch in Japan and Australia in the third quarter, building on the ongoing launches in the United States and Europe. BioMarin is also studying the drug in short stature (52-week data in 2023), which could further expand sales of the drug beyond our assumed roughly $1.5 billion in peak sales. Recent data in children under the age of 5 could help expand the U.S. label for Voxzogo, and we’re encouraged by BioMarin’s efforts to improve the product with a pen device (potentially launching in 2024) and long-acting formulations that could keep it competitive with future new treatment options.

BioMarin is amassing a portfolio of genetic-disease therapeutics, making historical comparisons with Genzyme (acquired by Sanofi) difficult to avoid. Commercialization and research and development expenses have kept BioMarin in the red, but we're confident in the profit-generating power of its rare-disease treatments, and BioMarin's turn to profitability looks maintainable. With a deep in-house pipeline and the ability to supplement growth with strategic acquisitions, BioMarin is in a strong position.

The likelihood of drug-pricing policy changes in the United States changed dramatically over the course of July, and we are now assessing the impact of the various measures included in the Inflation Reduction Act of 2022 in our Big Biopharma valuation models. Assuming the bill is eligible to pass via reconciliation (the Senate parliamentarian is reviewing the bill), we think Democrats will be able to pass the Senate bill, paving the way for it to be signed into law. Overall, we don’t expect major changes to our fair value estimates or moat ratings, as the changes net out to a moderate negative that we believe is manageable, likely through a combination of cost-cutting, agreements with generic firms for limited authorized generic launches (to avoid the list for negotiated drugs), and higher launch prices (to counter pressure on price increases and earlier declines due to negotiation).

Morningstar now directly incorporates cost-effectiveness analysis into our biopharmaceutical ratings through what we're calling our capsule system. Given the lack of regulatory oversight on whether U.S. drug launch prices or price increases are justified, an independent, private organization—the Institute for Clinical and Economic Review, or ICER—has gained prominence and authority assessing cost-effectiveness. Drugs that are priced above ICER's cost-effectiveness thresholds or that record high unsupported price increases contribute to Morningstar's ESG Risk Rating Assessment and equity research methodology for incorporating environmental, social, and governance risk into our fair value estimates and moat and uncertainty ratings.

We're maintaining our $105 fair value estimate for BioMarin following solid first-quarter results, with 7% top-line growth despite a headwind from generic competition to oral PKU drug Kuvan. Sales of newly approved achondroplasia drug Voxzogo reached $20 million, and management has raised full-year sales guidance for the drug to $100 million-$125 million (still below our $135 million forecast). BioMarin should also have data for the drug in short stature imminently, which could further expand sales of the drug beyond our assumed roughly $1.5 billion in peak sales. We think the firm is on track to reach $2.16 billion in sales in 2022, just above the $2.05 billion-$2.15 billion guidance provided by management, based on this strong Voxzogo launch and continuing growth for the firm's other rare-disease therapies, including Vimizim and Naglazyme. BioMarin's diversified rare-disease lineup supports a narrow moat.

We're maintaining our $105 per share fair value estimate for BioMarin following steady 2021 financial results and management guidance for double-digit growth and sustainable profitability in 2022. Total revenue was essentially flat in 2021 as declines in PKU drug Kuvan (a mature drug facing generic pressure) countered growth for the rest of BioMarin's portfolio. However, we model 17% top-line growth in 2022, ahead of the 14% implied growth at the midpoint of BioMarin's guidance, thanks to the launch of achondroplasia drug Voxzogo, slower declines for Kuvan, and the potential start for a European launch of hemophilia A gene therapy Roctavian. Overall, we continue to see BioMarin's rare disease portfolio and pipeline supporting a narrow moat, and shares remain undervalued.