BioMarin Earnings: Maintaining Our $87 Fair Value Estimate After Firm Clarifies Roctavian Strategy

We’re maintaining our $87 fair value estimate for BioMarin after a strong second quarter and clarity surrounding the commercial strategy for hemophilia A gene therapy Roctavian. Overall, our increased expectations for margin improvement and slight increase to our revenue expectations for BioMarin’s portfolio were countered by our decision to further reduce our Roctavian sales assumption. BioMarin saw 20% revenue growth in the second quarter, driven by 62% growth of achondroplasia drug Voxzogo and 15% growth for BioMarin’s portfolio of enzyme therapies. We were most impressed with BioMarin’s nearly 10-percentage-point improvement in non-GAAP operating margin to 31%, driving an increase in management guidance for the full-year margin to a range of 26%-27% (roughly 7 percentage points higher than 2023). While much of the second-quarter margin was tied to Voxzogo stocking and government enzyme therapy orders pulled forward from the third quarter, non-GAAP operating margin was still an impressive 28% excluding these tailwinds, showing fundamental improvement. We think BioMarin’s solid Voxzogo prospects and clearer focus help support its narrow moat and that shares look fairly valued at recent prices.