BioMarin Pharmaceutical Inc. (BMRN) Earnings Call Transcript & Summary

Okay. Welcome, everyone. I'm Geoff Meacham. I'm the senior biopharma analyst here at BofA. And welcome to our Virtual Vegas Conference -- Healthcare Conference. We are thrilled this afternoon to have BioMarin. And speaking off of BioMarin we have J.J. Bienaimé, who is Chairman and CEO; and Hank Fuchs, who is President, Worldwide Research & Development. Guys, are you on?

Yes.

We are.

Okay. Great. So the format for today is that we'll have some questions with the team here. And of course, there are -- there's technology on the Veracast system to log in and e-mailing question as well. And Aspen from my team and I will be leading the Q&A.

Let me just kick it off, though, J.J., with some discussion after a pretty solid 1Q. I wanted to kind of ask you about the -- maybe the -- perhaps the potential long-term implications of COVID. I know you mentioned on the most recent quarter about some nuances with respect to new patient starts. But do you feel like in a lot of different that the rare diseases that you're currently in that were set up to roll out telemedicine more broadly should this COVID uncertainty continue a little bit longer?

Yes. So thank you, Geoff, good morning, everybody, or afternoon. Yes. So actually, for BioMarin, we expect that the long-term implication of the COVID-19 will be a greater number of patients being home-infused where this is possible. This was already happening -- has been happening in most of Western Europe and North America. But we are seeing an acceleration towards home infusion, which is good long term because it will improve actually compliance with the drug, not that we have poor compliance, but I mean, we're going to make it easier. It's going to improve the quality of life of the patients. And clearly, since the lockdown got in place in most of the world, our teams have quickly mobilized resources in countries around the world to help patients transition from hospital settings to homes or alternative treatment sites that are closer to the patients' home. So not only this is supporting treatment continuity during the COVID-19 crisis but it will help patients now and for future events that makes access to infusion centers challenging and correlates with the improved duration as well. So the other thing is that our commercial team has been moving quickly towards digital interactions, and those are likely to persist even beyond the epidemic. And this would be also advantageous, we believe, as clinicians, advocacy groups, patients become more comfortable with this new method of interaction. And we believe it will be complementary and additive to the face-to-face interactions whenever they resume. And finally, I would say the clinicians are adopting and leveraging telemedicine as a way to stay connected with their patients and finding this as a tool that should allow them to be innovative and efficient in treating their patients, which may help patients, especially who is in rural areas, overcome barriers to treatment. And one last point. We're about to, hopefully, introduce to offer a gene therapy product in a not-too-distant future. And I would say in a COVID and post COVID world, any product concept that long term reduces interactions between patients and health care professional should be well received.

Okay. That's helpful as a backdrop to the overall business. Let's switch gears. I'm sure the topic du jour in a lot of your discussions has been valrox. And I just wanted to ask you how you're thinking about the launch in the context of social distancing, of telemedicine? What work can you do in advance to help raise awareness, and theoretically, accelerate adoption?

Yes. So I mean, we -- the sales force has been recruited in the U.S. -- entirely recruited in the U.S. a few weeks ago. The European sales managers have been recruited. All of them have significant hemophilia experience and relationships with hematologists, the hemophilia treatment centers and patient organizations. So that's going to be helpful. So what happened is that, obviously, we've been moving -- a lot of the activities that we were planning on doing face-to-face, we moved them towards digital and virtual interactions, which are -- people have to get used to, and it's not always as good as personal interactions. But even with payers, we've done a lot of meetings with, of course, regulatory authorities. We're doing a lot of interactions, and Hank can talk about that. But I would say, overall, we don't believe this is going to have a significant impact on the launch. Actually, we've done a survey -- we did a survey a year ago of about 100 health care professionals in the U.S. and 100 in Europe. And we've redone that survey a couple of weeks ago, so post COVID-19, and actually the number of hematologists that have said that they are planning on prescribing ROCTAVIAN to their patients actually have -- going up a little bit from 76% to 81% in the U.S., and that's 100 -- it's a sample of 100 hematologists, and 125 hematologists in Europe, stayed stable at about 75%. So despite the COVID-19, it looks like the interest in the product is still there. And we're not overly concerned about launching it in this situation. At the same time, we're not launching the drug today. PDUFA date is late August, so we'll likely be launching in early September in the U.S. And as I said -- and later actually in Europe. Hopefully, it will be past the peak of the COVID-19 impact. So, we don't know, we're looking pretty good about it overall. I mean, Hank, do you have anything else you want to add here in preparing for launch?

No. Just again, as you -- just to emphasize, as you say, I think there's a lens through which to look at this that ROCTAVIAN is going to reduce your dependency on the health care system, and therefore, reduce, say, vulnerable population's exposure, which is a good thing to do. So I think -- in the right context, I think -- there certainly are barriers. But in the right context, those are going to be overcome.

Okay. That's helpful, guys. Just in the context this week of the RTF for Bristol on 2121, there's an emphasis on manufacturing. Maybe just remind us where you are with respect to CMC? And from a manufacturing perspective, what gives you the confidence in the ultimate outcome here with respect to an inspection? Maybe just help us with the inspection and the manufacturing facility.

I mean, I'll start, then -- Hank is a big fan of our manufacturing organization, so he'll give you his perspective. First of all, we already have been inspected and certified by the European Authorities. So the facility -- the gene therapy facility in Novato, California, has been inspected by the European Authorities and been certified for making commercial product for future launch in Europe. So that's done, check that box. The inspection by the EA, so that's a good sign because they do a pretty thorough review. And the inspection by the FDA is scheduled significantly before the PDUFA date. So we're on track in this respect. I would say what makes us confident in -- well, the European approval is already a good one. I mean, manufacturing approval is already a good box to check. And second one is based on all our interactions we've had over the past 3 years or so, interacting with the FDA as we were building the plant, validating the plants, makes us already be confident that we're going to be in a good position with the FDA inspection. Hank, do you want to add your perspective on this?

Well, I think going back to the context of the bluebird, I think, first of all, remember that AAV has got to be, in order of magnitude, simpler than lentiviral cell ex vivo therapy. So we got that going first. But I think also, we've taken a pretty high-bar approach to data quality, data integrity process development, facility development. And we've talked about that with Wall Street a lot at every step of the process. So I think the fact that we aimed really high should serve us well, has so far during the review, and as J.J. said, we're pretty close to the finish line at this point.

Okay. That's helpful, guys. I think I have some from the team and a couple on valrox as well. Aspen?

Thanks, Geoff. Yes, I wanted to talk a little bit about the commercial landscape for valrox. Maybe to start with, how you guys are thinking about the initial launch? What prescriber base you're targeting? Maybe how many patients they cover? Yes, let's start there.

I mean we are targeting the entire spectrum of hemophilia treatment centers in the U.S. and Europe initially. We know where they are. Our sales reps have experience dealing with them. So there is no specific treatment centers we're not going to be going and commercialize the product after. So we get a question a lot about the profile of the patients that are more likely to adopt our products. I would say, for competitive reasons, I don't want to disclose exactly what that profile is, but we have some ideas. We've done a lot of marketing research. Maybe I could just say that these patients are -- generally, the patients are the ones that are going to be adopting the product faster. It looks like about 1/3 of the patients based on marketing research will be early adopters, and these are patients that are actively involved in the community to learn about new treatments and hear from peers, but who do not rely on the community to -- for advice on disease management. And they are generally well informed and optimistic about new treatments and open to switch shortly after approval. And this is based on our own marketing research and other people marketing research. So overall, there is very significant interest in the product.

Okay. And then one more. Maybe how are you guys thinking about -- maybe this is a little bit longer-term for valrox, but how are you thinking about the potential competitive landscape for including gene therapy and non-gene therapies that are also in development?

I mean, Hank do you want to talk about the gene therapy competition?

Sure. Well, I think the thing to start with is we've completed the Phase III clinical trial, both the data readout from an interim analysis that supports application globally, but also the enrollment in the confirmatory clinical trial, the largest gene therapy trial of hemophilia ever conducted. And the competitors haven't started that. So the first thing to say is the current set of competitors are way behind. And second thing to say is technologically, they don't particularly bring anything that off the -- in the start of it, you'd say, was designed to address any potential issues or vulnerabilities with what's going to be ROCTAVIAN. For example, you could say, well, we're not going to be, in the first instance, amenable to the seropositive population, the AAV5-positive patients. But in fact, as we've talked about, it's not like the AAV5-positive, AAV6-negative population is a very large population. So there's not very much service to be done there. As far as the other product attributes, we'll see where we are when we report the 4-year data mid-year, but it's going to take a long time to understand how to beat. If we were 100% off prophylaxis at year 3, that's a hard number to beat. And if you don't have a particular scientific insight about what you're chasing after because you don't have really a lot of data and you're years behind that, that later going to become really difficult. So I don't know that there is an obvious generation ahead skipping strategy for competitors. So I think our focus has, therefore, been principally on getting the most benefit for patients from valrox that we can possibly do.

And also another side effect of the COVID-19 epidemic is that the lead that we have over our competitors is increasing. Because in a sense, we were a little lucky on the timing of the virus because we were fully enrolled in our Phase III trial at the end of last November. So we don't have to treat patients anymore. Yes, they are full of visits, but we don't have to start patients or treat new patients. And our competitors are delaying now the start of the Phase III trials. Roche announced like a year delay. So if anything, we're not overly concerned about the impact of the virus from the competitive situation. If anything, it's going to help us.

Guys, this is Geoff again. Yes. Just as a follow-up to that, J.J., obviously, we're going to have soon the 3- and 4-year data. But if you look longer term for valrox, when do you think we'll have visibility on the potential to retreat? Obviously, that's not going to be an acute concern or question for the first few years of the launch, but down the road, though, having that as an option, I don't know, in 5 to 10 years' time would be helpful.

Yes. So I'll start and then I'll let Hank jump in. I just want to emphasize something that some people haven't understood or don't know before talking about a retreatment is that if a patient is treated with ROCTAVIAN, worst-case scenario, if they don't respond or they don't respond after several years, they can go back to what they are doing today. The fact that they're being treated with ROCTAVIAN doesn't preclude them from going back to what they are being treated with today. Now it might preclude them being retreated with other AAV-based gene therapy compound -- constructs, yes. And this is why potential retreatment strategy becomes important. So with this introduction, Hank?

Well, I think, J.J., you just sort of articulated 3 different kind of contexts to the question. So the patients that have AAV5 initially positive, and therefore, they can't be treated; patients who didn't have a great initial response, but had a very strong antibody response to AAV5 as a consequence of receiving ROCTAVIAN; and then patients who over time have lost expression. Each of those biological problems is probably addressable slightly differently. And we're trying to leverage the data to highlight for us where the best next level of investment is going to be as regards long-term future of the hemophilia patients. And at this point, we've got research underway in all -- in sort of all 3 work streams, if you will. We've talked about, for example, a capsid, which doesn't appear to cross-react with AAV5. So maybe that's good for patients to get retreatment. We've talked about nearer-term strategies to dose through preexisting lower-grade immunity. And we're -- we've been doing a lot of laboratory work to try to understand why there's some initial transduction to prevent the need for retreatment in the first place. So with all that said, we're fully aware of where the places to go next conceivably are. But let's not take our eye off the sort of first things first, which is let's make sure people really do understand the value proposition of ROCTAVIAN and how to safely and appropriately use it, that we're gathering additional data in a longer-term fashion to really understand in a bigger way where we really are with ROCTAVIAN's impact in the hemophilia population and where there's opportunity to further innovate.

That's helpful, again. And just a follow-up for both of you guys. When you think about the initial launch, and obviously, you'll have to continue to have payer discussions, but what other external factors could help with the launch vis-à-vis patient visibility or even physician visibility? Do you think something like treatment guidelines may help or broader communication of the clinical data thus far?

Hank, do you want to answer that?

All of the above. I mean, let's start with, it's a relatively small dataset. And that the interim analysis is going to trigger the launch on the basis of it. And I think for the sort of more front-end of adoption-curve types academic clinicians or patients who either have more urgent health care problems or maybe a little bit more mobile and more educated, they may be faster adopters. And then there'll be another tranche of data when the full Study 301 reads out. And then those data, together with the longer experience that people are having from the earlier studies, I think we'll start to recreate a next set of physicians, and I think there's going to be an iterative process of education awareness raising. And all of those things that you said are going to be relevant, guideline committees, medical education discussions, and CMEs. I think this is going to be -- we're at the very beginning. I would not spend so much time talking about durability that we -- let's track that we're at the very beginning of a big revolution and that there are going to be a lot of patients benefited for many years. And like I said before, first and foremost, it's getting sort of that part of it, especially in these times. So for those patients who feel like they're better served by managing COVID vulnerability by physical distancing, get your ROCTAVIAN and be done with it as opposed to continue to live the dependency on the health care system. So we're really looking forward to the moment here where the thing goes from being investigational over commercial, and that's going to start a big transformation. And then the little streams that you're talking about will follow.

Okay. That's helpful. Let's switch gears to vosoritide. And so just give us an update here with respect to the regulatory piece. You guys have talked about the filing in the back half of this year. Maybe just with the package, what are the items that have yet to mature? Are there anything vis-à-vis CMC or preclinical that has to be done, clearly the clinicals are done, but I wanted to maybe get a little bit more perspective on the overall package in the U.S. and Europe?

Yes. We're really in good shape. I mean, the Phase III clinical trial that's going to be statistically robust evidence of effectiveness with a p-value of 10 and a minus 13, that study had completed and read out in the fourth quarter of last year. So we're really in the write-up phase. We were also fortunate to have basically done a data snapshot on our largest natural history database for evaluation of long-term efficacy outcomes, and we'd also snapped that database as well before the end of last year. So those 3 key pillars of our program were already in good shape. The fourth key pillar of our program is safety and efficacy in children under 5, and we had agreed during the meeting with the FDA that the application would start -- the application we filed without the completed study of patients under 5, that had been discussed extensively with their advisory committee, and we'd been in discussions with them, the FDA extensively about that. So there was agreement around that. At this point, we're really in the ticking and tying and putting a bow on everything. There's some final reports to write-up, probably some last-minute types of housekeeping studies to do, but everything is on track. Obviously, with COVID out there, it does make some things little less predictable in this space, but we feel pretty good about the Q3 time line. The Europe process, similarly, all basically ticked and tied, nothing really to feature there that's different. And I think we've taken a pretty -- Europe is very procedurally oriented and there are lot of process validation checks that happen sort of behind the scenes along the way. And we're feeling pretty good about all that. So the years are turning, we've had a lot of experience with us in the last few years, so starting to feel like old familiar territory around BioMarin. Now you're in -- we're in submission, we're in review.

And we're planning -- so it's really a question of finalizing, putting the filing together, and we're on track to file in Q3, next quarter.

Okay. Yes. That's helpful. And when we think about the launch for this product, maybe what are the -- what some of the similarities and differences with respect to your existing portfolio? I know for valrox, obviously, you're talking about the gene therapy and a vastly disruptive treatment, but vosoritide looks a little bit more like the rest of your portfolio. But are there nuances with respect to the patient population or the commercial uptick of vosoritide versus other agents?

No. Yes. Vosoritide versus our earlier products. The big differences are, first of all, this is a larger patient population than any MPS disorders, significantly larger. It's 120,000 patients in the world. About 24,000, 25,000 of them will be eligible for therapy because they're under 18 and that does include India and China and North Africa. So actually, you would more than double those numbers if you could do this. So larger patient population. Two, most of the challenges in the early days of BioMarin was to -- with our MPS products, the challenge was to find the patients. Most of them, we didn't know where they were. They were -- many of them misdiagnosed, and that is not the case here. All the patients diagnosed before birth. So the patients are easy to find in this respect. And then not a huge difference, but an important point is the fact that there's going to be a need for urgent treatment here in a sense that the parents of those kids who are going to be making the treatment decision, I think that most of them understand or will understand it very quickly that treating the kids the earlier is the better and not to wait because every year of growth that is lost is probably lost forever. Consequently, there is going to be a need to get on treatment fast, which should generate some pretty significant early demand here. So all this combined, we believe this is going to be a faster ramp-up than the other products that we've been launching in the past.

Okay. That's helpful. And J.J., in the context of the competitive landscape, you feel pretty well positioned there. And then I guess, in the other context of COVID-19 and telemedicine, do you feel like achondroplasia, is there anything -- reason to believe that it's any different with respect to the ability to do -- to practice and to identify patients vis-à-vis telemedicine?

Yes. So I really don't think -- this was already identified. And those are the products that are relatively easy to use, 1 subcu injection per day. And we're going to make it easier for the parents to inject the drug with improvement in the presentation of the drug and pen device, all that kind of stuff already -- and Hank can give you more detail. But the compliance in our clinical trials has been amazing. And there is no safety issue to speak of. So all of this combined, I think, would lead this product to be started and monitored very relatively easily through telemedicine. Regarding our competitors, I mean, in terms of the clinical data, it's very hard to make any comparisons because they don't have -- they haven't treated any patients yet. And I would say another side effect, again, of the COVID-19 epidemic is that they are falling further and further behind in starting their first human patients trial. They are over 5 years behind us. And it's not clear to us as to what is going to be their key selling proposition and what are they really bringing to the party considering that compliance is very good with our drug already and we have pretty well-demonstrated efficacy. And Hank can give perspective on the once-a-day versus once-a-week. Do you want to talk about that, Hank, in the context of the treatment?

Yes. When you talk about the impact of COVID and treatment and whatnot, I mean, you do have to appreciate how simple versus on a grand scheme of things is the once-a-day subcu injection. It's not like insulin. It's not like you have to monitor something or you have to adjust the way you live your life. It's like a blink, and it's over. And what you hear from patients about that is that it's actually not the skin prick that hurts, that bothers them. If they have any concerns at all, injection site reactions, for example, that more -- has more to do with the fluid going into them, that feels a little unnatural. Patients get used to it. But what I guess that means is that solving for fewer injections doesn't really solve a problem because that's not what the patients' problems are. It is the injection, blink and it's over. It's more like what happens after the injection. You have to increase the volume, increase the excipients, you have to worry and work on those things. So this -- the value proposition, which as J.J. just said, is not crystal clear. In the meantime, we're working very closely with our patients to improve the forms -- form of delivery, patient education materials, anything that we can do to make life better for them during their journey, we can be doing. And I think we don't hear a whole lot about injection. This is not kind of where people's concerns are.

Okay. That's helpful. And I'll just wrap up with a question more on capital allocation, J.J., obviously, you have a growing pipeline with 270. And I think when you look across the landscape, there's quite a bit in the rare disease space, but does the uncertainty from COVID kind of change your view on the pace of BD or the magnitude of the type of deals? Or do you just look at it as before?

Yes. I would say we have a pretty good track record of in-licensing potential products at early stage, preclinical stage, making them our own and developing them into potential blockbusters. ROCTAVIAN is a great example of that. Since we in-licensed the technology from UCL, but very early stage, and then we used that to produce our own gene construct that became ROCTAVIAN. And we are now going to use the tremendous experience we have had developing ROCTAVIAN to leverage this for other gene therapy candidates. And we have been highly productive. We announced the DiNAQOR deal a couple of weeks ago. I think also our gene therapy manufacturing experience is coming in very handy and attracting a lot of potential partners here. So the other thing is that, obviously, assuming ROCTAVIAN is approved and assuming ROCTAVIAN starts generating some significant revenues a little bit this year, but maybe starting next year, that's going to create some, hopefully, free cash flow that we can use and deploy for internal R&D, but also for being a bit more aggressive on the BD front because we'll have more resources in the next 2 years.

Perfect. Well, with that, we're out of time. So J.J. and Hank, thank you very much for the discussion. Really very, very helpful. Great conversation.

Okay. Thanks for having us.

Perfect, thanks.

All right. Take care. Bye.

Bye.