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

Hello, everyone. Good afternoon, and thank you for joining us today. My name is Michelle Gilson. I'm one of the biotech analysts here at Canaccord Genuity. I'm super excited to welcome Hank Fuchs, the President of Worldwide Research and Development; and Brian Mueller, Chief Financial Officer, here from BioMarin, today for a fireside chat. To start us off, I am going to pass it off to Brian for some opening remarks.

Thanks, Michelle. We appreciate the opportunity to participate in your virtual conference. 2020 is truly a transformational year for BioMarin. For the first time in our history, we expect for the profitable for the full year of a GAAP basis despite the challenges brought about by COVID-19. We've positioned ourselves well to drive significant growth beyond our established base business with the potential additions of both ROCTAVIAN gene therapy for hemophilia A and vosoritide for achondroplasia. With the addition of these 2 large opportunities, we've set a goal of achieving $5 billion in revenue in 2025. Beyond these financial and commercial goals, we've built a development pipeline that we expect will significantly broaden our current portfolio. These earlier-stage programs include BMN 307 PKU gene therapy, which we expect to start enrolling this quarter following a slight delay due to COVID-19. BMN 307 is expected to be a key addition to our PKU franchise, which currently includes 2 commercial products, Palynziq and Kuvan, the only approved products for phenylketonuria. Concurrently, we recently began IND-enabling studies with BMN 331 gene therapy for hereditary angioedema to be followed by our opportunity in rare genetic cardiomyopathies through a recent collaboration with DiNAQOR. These are some of our next development program that we expect will benefit from our growing expertise in gene therapy development and manufacturing. Concurrent with increasing pipeline development plans, we will continue to achieve leverage across our global commercial organize to drive profitability. That's a brief overview of some of our exciting near-term events on the horizon. So I'll turn it back to you for questions.

Great. Thank you, Brian. So I'd like to start off by talking a little bit about ROCTAVIAN. Your hemophilia A gene therapy. You have a PDUFA date coming up later this month. And maybe we can just start here and talk about overall the data you've generated for this program in hemophilia A. And really try to also dig into the 4-year results you presented very recently. Why are these data important to patients, physicians and payers when you start to think about the value that ROCTAVIAN brings to this community?

So let's start with the 4-year data update and then we can talk about the -- round out the rest of the information that what we have. At WFH this year, we presented data for patients who have been treated for at least 4 years ago with the dose of 6e13 and at least 3 years ago with 4e13. Both populations have fantastic bleed reductions. I think both of them were less than 1 -- ABRs of less than 1, 3 and 4-years after a 4 and 6e13 doses. So that's just fantastic hemostatic efficacy, particularly impressive was the fast that even the lowest responding patients, even 3 and 4 years later, remain off of prophylaxis and very matched at reduced bleeding levels. In fact, the only bleeding that's occurring recently really is our bleeds in target joints, which have been previously damaged. And of course, the long-term vision for FAA gene therapy is to be giving it well before during damages and sued so that -- even that won't be very much of a stressor in the hemostatic system. So we're very happy about the bleed reduction that's been sustained out now to over 4 years, and very happy about the pattern of bleed reduction, meaning that the bleeding -- the hemostatic efficacy is observed in even the lowest responding patients. We do observe Factor VIII declines that have been commensurate with the most recently reported years. We don't have our finger on the pulse of exactly why that happens. But the fact that it is occurring in both groups, as noticed, it's interesting to note that the slope declines in the 4e and the 6e group are more similar to each other than different, suggesting that we're now in the later years in a place of vector metabolism that appears to be on a slower and steady decline. It's reassuring that after -- the where you get to in subsequent years is determined in some measure by how high you guide. And it's very reassuring that in spite of the fact that the factor levels are almost half in the 4e group at 3 years what they are in the 6e group at 4 years, suggests we still have quite a bit more hemostatic efficacy years -- prophylaxis-free years to go. And so that was pretty exciting, I think, for the hemophilia community, for us, and it's actually just 1 small part of the overall package of information we've generated for the submission. We also have the interim analysis of our ongoing Phase III clinical trial, in which we met the agreed upon factor level criteria and durability for submission to the FDA. In addition, we have, as you know, a complete CMC package and a dedicated facility that was used to supply the material in the Phase III clinical trial. We've done a ton of laboratory work to characterize the transgene product by chemically and physiologically. And so that robust data package is really a foundational piece of this phase of presumed launch of ROCTAVIAN and its use in patients. Very exciting time, very exciting data package.

Great. And maybe we can dive in a little bit. You've mentioned or previously spoken about an expected eligible U.S. population of about 2,400 or 2,500 patients at launch. Can you help us understand which patients this number includes? Which patients it may not include? And who do you think, out of this eligible patient population -- what kind of patient might be an early adopter when you think about the launch?

Yes. So 2,004 -- 2,400 is the exact eligibility criteria match. So it's hemophilia A, severe prophylactic therapy, AAV still negative, no history of inhibitors, no ongoing liver disease. So each of those chunk down to 2,400 in the United States. So it's just -- the number in Europe is a bigger number. I don't know it off the top of my head, but eventually, that will be part of our target opportunity as well. And within that group, we've heard kind of both sides of the scene. So there's -- we hear young people who want to get on board. And then you hear stories about old people who are like, " I've lived with hemophilia my whole life, and if probably got -- I only have 5 years left to live. I would rather live it free of hemophilia." And I think what I hear from clinicians are, there's just sort of a -- no other way to say it than sort of [ I should say ] about the rapid adopter. A person who is willing and eager to make decisions in the absence of complete certainty. Clearly, there are people at the other end of the spectrum who are nervous, and they want to see 10 years of data before they make a 10-year decision. But there are also people at the other end of the spectrum, and it is quite a bit of a spectrum. I'd also say the spectrum is evolving a little bit. You're going to ask me about HEMLIBRA. And I think HEMLIBRA has shown the hemophilia community that there are, in fact, other options out there. And so the kinds of things you hear about are people who are tired of chronic injections, people who are having problems of breakthrough bleeding, people who are having difficulties dealing with sort of ups and downs of factor and don't have the confidence in HEMLIBRA yet. There's people who are comfortable with HEMLIBRA, there are people who are not comfortable with the biomimetic nature of HEMLIBRA. It's not a regulated natural protein or side effects that have been described for HEMLIBRA. So there isn't really a one-size-fits-all descriptor, it's really more the sort of the phenotype of the rapid adopter.

Got it. And just digging into some of your comments around HEMLIBRA. Able to be dosed as infrequently as monthly, and Roche has really announced a pretty high U.S. patient share. Maybe you could talk a little bit about what some of the advantages, on the safety and efficacy side, for a Factor VIII gene therapy might be in your view, producing the protein itself?

We're in a little bit of a space that's a little hard to talk about comparative effectiveness for simple reasons that are there in comparative trials. And so you're kind of abstracting for 1 population to other populations. So what I know more fundamentally is what I've just spoken to clinicians about through how they think about these things. Let's start with HEMLIBRA, who's got a great glow around it because it works in inhibitor patients. And it's almost as transforming to inhibitor patients as we think gene therapy would be to overall hemophilia. So it's got quite a bit of glow. Having said all that, you talk about every 4 weeks. It doesn't work in -- for every 4 weeks for everybody. Some people will have breakthrough bleeding at that degree of frequency. People's PK is different. And I think if we start to look at some of the real-world evidence that comes out, you start to see as compliance intervals lengthen, you have people who are -- as people aren't bleeding every day and their activity can control things. So they kind of experiment with how reduced can I get from my medications. And so that's another aspect of HEMLIBRA. HEMLIBRA is a little bit complicated to use because if you have to have dental surgery or you get an accident or -- you got to figure out where you are in your HEMLIBRA curve, and it's not really straightforward. There's some concerns about HEMLIBRA about recruit essence of inhibitors. It comes up every once a while. It came up at last year's ISTH, it was kind of unanswered. That is to say, "I don't have an inhibitor now. Maybe I had one in the past, but I don't have an inhibitor now. And I've been off factor because HEMLIBRA's wonderful success for 3, 4, 5, 6 months. But now I just had a breakthrough bleed. And I get factor, is that going to cause an inhibitor to come back?" So we'll need a lot more data about that. I don't -- you don't really want to induce inhibitors even if you have a treatment for it. So that, I think, weighs on some people. There's a myriad of issues that are -- you enter a space where it's not one-size-fits-all. And our competitive advantages are quite large, the activity data -- the factor activity data is quite clear. The bleeding reduction is quite clear. The issues of compliance are quite clear. The impact on quality of life is reasonably clear. So gene therapy has much less -- has different kinds of questions, but they're in the therapeutic effectiveness category, they seem to be a little bit less.

All right. So do you expect the, I guess, early adopter population for HEMLIBRA to be different than the early adopter population for Factor VIII gene therapy?

Well, I mean, it's a big pool of early adopters. And there may be some splitting of -- I'm an early adopter for this and I'm an early adopter for that, gene therapy is got its own sort of stuff around it. Monoclonal antibodies have been around longer, so people get that. They are very well maybe people who -- they adopted HEMLIBRA and they're doing fine with it. There may be some people who say, "I don't want to go in. I want to try to give this a try first." So we hear more or less all of these things. The net of it, I have to say, I've spoken to a lot of clinicians since WFH, and they're pretty attentive to the gene therapy. Their patients are very attentive to gene. They didn't grow up thinking to themselves, "Hey, maybe somebody will come up with this bispecific antibody." They grew up thinking maybe somebody is going to fix my hemophilia. So we got that going for us.

Great. And just digging in a little bit more to some of those competitive dynamics that you might face at launch. If approved, ROCTAVIAN might be competing for patients against other gene therapy trials as well. I guess how would you see being a commercial-approved therapeutic as -- versus entering into another AAV gene therapy trial? I guess how do you see that dynamic playing out? And what advantage does, I guess, the ROCTAVIAN complete data package provide for when you're going out and marketing this drug?

Yes. I mean there is an extent to which the field is going to move past generation 1 gene therapy. So I think ROCTAVIAN is generation 1 gene therapy. So Spark and Sangamo are generation 0.6 and 0.3, maybe even a higher degree of discount just because they're so far behind. And so I'm a little hard-pressed to figure out exactly how they're going to do clinical trials. Half of the people that are eligible for ROCTAVIAN are going to be ineligible for a Sangamo trial, and there's going to be some fraction that are also ineligible for a Spark trial because the capsids, they overlap in that direction. So it could be tough going for them for clinical trials. I think until there's sort of generation-skipping technologies. For example, we've done some work on redosing. We've done some work on preexisting immunity. I think if you're going to be competitive in this space, you're probably going to have to attack different angles of patient populations than the low-hanging fruit population that we identified in the first instance.

That makes sense. And you mentioned earlier that you're talking to clinicians, most of them seem very aware of AAV gene therapy, and ROCTAVIAN and implications as well. How -- when you think about preparing for launch, I guess, especially in this COVID-19 era, what are some of the goals you have around getting sites ready, educating them? And how much work do you think you need to do on that awareness side? Or right now, are clinicians primarily coming to you asking for you to educate them and prepare them for a potential launch?

Maybe I'll start and then Brian can kick in because there's a lot of launch readiness that's nonclinical, nonmedical and nonscientific. But on the medical side, we've had -- we're at ready in terms of our whole team's preparedness. We have been conducting site readiness campaigns. Sites have been actually more available in a lot of cases because of COVID in the sense that their work is shifted, and it's been made easier in some cases. We haven't been able to get teams together physically on-site as well as we'd like. But we believe that we have a sufficient number of sites ready to go in terms of education awareness and training. And so all the -- I think all the initial medical education and whatnot has been pretty effective even in spite of COVID. Maybe the last thing to say is people asked a question about how is COVID going to influence a decision. And that's another one of these that could go both ways. COVID is, itself, preventable. And even if you got it, and you needed steroids, there's evidence that steroids do help COVID. So there shouldn't be some overlap between the steroids needed for ROCTAVIAN and steroids needs if you, God forbid, got COVID. Having said that, there are people at the other end of that spectrum as well. So kind of a toss-up there. But maybe, Brian, do you want to say a little bit more about readiness on the nonmedical sites?

Yes, sure. Thanks, Hank. And thinking about the commercial preparation in a COVID world, obviously, more digital. But there was already a very large digital component to our launch preparations as it was with digital and social media being the way that people communicate and the information is exchanged more so in this era to begin with. So just doubling down on that in the COVID world. And then the other thing to keep in mind is, from a field standpoint, there is a certain efficiency from doing these types of electronic exchanges. If you could picture a field rep that may have to be in a clinic in Dallas in 1 day and then travel to the airport, fly and be in Oklahoma City to have a meeting the next day, those are 2 Zoom meetings within a few hours on the same day. So I'd say as much as it's less personal, just like we're not in a ballroom together right now, there is a certain increased volume of information being exchanged. And the other important component, I think, when we think about launching a product in the pandemic is that the sales force was already in place. We've been preparing for this launch for over a year, being highly selective of commercial folks with robust hemophilia experience. So to have those folks trained ready at BioMarin has been helpful because that -- we're just -- we're not having to do as much staffing and hiring. So we're ready. And then I guess the last piece I'd mentioned on launch prep is the payer outreach. We're not able to market to patients right now. Hank touched on some of the disease and gene therapy education that we've been able to do. But under some regulatory safe harbors, we are able to communicate with payers pre-launch. And so those discussions have also been occurring for over a year, and have been productive. And many of those were in-person pre-COVID, and many of those have been via Zoom and like -- applications during the pandemic and they're thrilled. It's -- we've had great discussions with payers. They're looking forward to ROCTAVIAN. They're keenly aware of how expensive their existing severe hemophilia A patients are in their system today. And they're optimistic about potential for ROCTAVIAN cost offset in value.

And just 1 on pricing to follow that up. You've talked a bit about how an outcomes-based pricing model might be -- there might be an opportunity to implement 1 in the U.S. How would that affect, I guess, your launch, especially given your commentary about payers being a potential bottleneck if there's an outcomes-based model versus not outcomes-based model?

Yes, sure. It's a great question. And of course, we'll share more details when we actually launch. But we feel an outcomes-based agreement model is important. BioMarin wants to stand behind our product, it's going to be important to payers. And so we look forward to offering an outcomes-based agreement. We believe that in that circumstance, just from a revenue standpoint, that we are still going to be able to recognize most of the revenue upfront. We envision our outcomes-based agreement, any estimated liabilities, if you will, to be part of our gross to net revenue recognition. So still recognizing the sale. And then funding any liabilities from that outcomes-based agreement through traditional sort of revenue reserves. And then the other element that comes up when we talk about pay models is pay over time. When Zolgensma was launched, that was part of -- part of their launch press release was a partnership with a specialty pharmacy to offer pay over time for these expensive therapies. And we're understanding that there has not been significant uptake in that. And like I said, we've been speaking to payers. Based on our discussions, there doesn't seem to be a significant amount of interest in pay over time. But there could be instances for some, say, smaller regional plans that they may not have the same financials as a larger payer where a pay over time is interest -- of interest to them. So we do plan to have the ability to refer those folks to an ability to finance the ROCTAVIAN as well.

Great. I want to talk about all the other stuff you guys have going on, too. But maybe we can start with BMN 307. You're anticipated to dose patients this quarter. Can you just talk a little bit about the trial design, some of the endpoints you've chosen? And what do you view as a bar for success to be competitive in this market? You've been long-established in the PKU market. What is the...

The trial that we're implementing has potential be a Phase I/II/III trial. We're using material from the commercialized facility. So if we are able to demonstrate effectiveness to a conclusive degree, we will have all of the bells and whistles of a registration trial. It's a Phase I/II in the sense that there's a dose escalation and expansion phase. So the first goal is find the dose. We're starting at a dose that we think has got a reasonably good shot at being effective. It's been effective preclinically, but we may have to go to a higher dose as well. And you can only find that out when you go into humans. The primary endpoint of the study is going to be blood phenylalanine levels. The target of effectiveness is to basically get everybody in a normal range. There is no concern really about overshoot. And we've demonstrated with our Palynziq that you can cause hypophenylalaninemia without significant symptoms. So the ideas is, load them up as much as you can get the fee down to as normal as you can and allow diet to be normal. And that should be the registration package.

You got muted.

And then you also announced that 331 is an IND-enabling study. And you just announced this deal with DiNAQOR around rare genetic cardiomyopathies. How should we think about kind of the platform beyond ROCTAVIAN and vosoritide and 307 that you anticipate will begin to drive long-term value.

Yes. I think -- so 3 key points, I think, one is, you will see us do a lot of gene addition where we're offsetting expensive therapies, whether that's factory replacement therapy, HEMLIBRA, or that's Palynziq or that's a C1 esterase inhibitor replacement or [ TAC0 ], that will be one thrust. Another thrust will be gene edition in context where there is no therapy. DiNAQOR exemplifies that in the sense that this is devastating -- hypertrophic cardiomyopathies are devastating or symptom onset in the 20s and they're lethal in the 30s, and they're fairly common. In fact, when -- the lead one that we're working on is bigger than hemophilia A, in fact. So we'll do some additional gene therapies as well. And then finally, to say, it's not necessarily the case that everything is going to be gene therapy all the time for BioMarin. We have a platform around, which we can use antisense oligos or use proteins or use small molecules. We have some of each, both in development and in some cases, commercial. So we're a pretty diverse toolset company. And so I think you'll see a lot of good gene therapy stuff that's targeting replacement, that's going into new areas, and then you'll see non-gene therapy stuff going forward.

All right. Great. Thank you so much for all of your insights today. I think we're out of time here. But I really appreciate you guys coming here and telling us more about BioMarin and all of the exciting developments you guys have going on this year.

Thanks, Michelle. It's great talking to you.

Yes. Thanks, Michelle.