Promising Results from BioMarin Keeps Stock Investors Happy

Biotech giant BioMarin (NASDAQ: BMRN) gave investors something to be happy about on Wednesday when fresh data from an open-label Phase 1/2 clinical trial yielded promising results. The $20 billion California based company is developing a gene therapy treatment for patients with severe hemophilia A and the update was promising. Things had already been going well for BioMarin in recent weeks but the news was enough to send shares up over 4% in yesterday’s session.

Since falling 50% from the lofty days of 2015 during the biotech bubble, shares had been trading mostly sideways, finding buyers in the $70-75 range and sellers in the $100-105 range. Many investors will be thinking it’s about time they’re finally breaking through.

Almost at Profitability

Yesterday’s close at $111 put shares at five-year highs, post coronavirus highs and firmly above the trading range they’d been bouncing around in since 2015. The company is certainly itching for road as shown in its Q1 earnings report from the end of April. Aside from beating analyst expectations on the top line and bottom-line numbers, revenues grew 25% year on year.

Wall Street was particularly pleased with the revenue growth from two of BioMarin’s younger treatments. Revenues from their Palynziq jumped 181% while revenues from their Brineura treatment almost doubled year over year. While these are among the smaller components of the overall revenue engine, this is the kind of performance needed now to give bulls reason to believe in the future.

Although full-year guidance was reduced by 5% in the face of adverse coronavirus related market conditions, that didn’t and hasn’t stopped the bulls from piling in. Shares are now up over 40% from April’s report.

Strong Pipeline

From a pipeline perspective, there’s plenty for investors to be excited about. A European Marketing Application for their Valoctocogene Roxaparvovec treatment has already been accepted by the EMA and an opinion from their CHMP committee is due as early as Q4 of this year. They plan to submit regulatory submissions for their Vosoritide treatment in both the US and Europe over the summer and for the first time ever, the company expects to be profitable on a GAAP basis for the full year 2020 with no guidance change.

As their CEO, Jean-Jacques Bienaimé, summed it up with the release, “2020 is expected to be a transformational year for BioMarin, despite impact from COVID-19 in the near-term. The agility demonstrated by BioMarin employees in the face of this global pandemic has enabled the continued supply of our essential medicines to the patients who need them. And while we expect minor financial impact in the near-term, our business is well-positioned to weather such challenges. Our first quarter revenue growth and improvement in profitability support our belief that 2020 continues to look poised to be one of our most significant value-creating years to date."

Getting Involved

The next big catalyst is August 21 FDA decision date for the potential approval of Roctavian. JP Morgan analyst Cory Kasimov recently polled 25 US hematologists to get their thoughts on the drug and its chances with the FDA. He ended up even more bullish based on the informal study’s results. Based on promising comments and a decent degree of optimism among the experts, in tandem with the company’s increasing profitability, he issued a Buy rating on BioMarin and gave them a $140 price target. Even with Wednesday’s jump, that still suggests a 30% move higher is coming.

Shares are now up close to 70% from the lows of March and are breaking out above long term resistance. It feels like a new dawn is coming for BioMarin and for their investors who have been part of the ups and downs of recent years, it can’t get here fast enough.

For investors thinking about getting involved, you could do worse then pick up shares in a $20 billion company that’s seeing double-digit revenue growth and has strong fundamentals helping to drive the share price higher.