BioMarin Reports 2022 Results In Line With Expectations

BioMarin BMRN 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.

Overall, we still think BioMarin is capable of achieving management’s long-term guidance for $4 billion-$5 billion in annual sales by the middle of the decade, although this looks increasingly dependent on Voxzogo’s continued strong launch given delays in Roctavian’s launch and uncertainty surrounding its unique outcomes-based reimbursement. We’re maintaining our $412 million forecast for Voxzogo sales in 2023, slightly ahead of management’s $330 million-$380 million guidance, given the strong demand for the product across multiple markets. BioMarin filed for an expanded label in younger children in the U.S. and Europe in late 2022, and we see long-term potential in other genetic statural conditions (phase 2 data is expected in 2023), driving our peak sales estimate north of $1.5 billion.