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

All right. Great, and good morning. And thanks to everyone for joining us at the Baird 2020 Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here at Baird, and it's my pleasure to introduce the team from BioMarin, including J.J. Bienaimé, Chairman and CEO. We also have Brian Mueller, CFO; and Hank Fuchs, President of Worldwide Research and Development. So just a quick reminder, the format for today is a fireside chat. So if you have a question, please feel free to submit one through the webcast portal, which is anonymous, and I'll be sure to ask a question on your behalf. But before we jump into the Q&A here, I'll just turn it over to J.J. to make some introductory comments. J.J.?

Yes. Thank you, Mike. We appreciate the opportunity to speak with you today. It has been a very active few weeks for us, as you know. And now that the dust has settled, we want to share our framework for the remainder of 2020 and early '21. So to start, BioMarin fundamentals remain solid, supported by our global base business of essential medicines, our strong cash position and robust pipeline of products moving through development. We expect to exit 2020 with approximately 1.5 -- sorry, $1.4 billion of cash after paying the outstanding convertible bond in October. And importantly, we expect positive operating cash flows going forward in 2021 and beyond. So this strong foundation allows us to simultaneously pursue approval of ROCTAVIAN and vosoritide, to develop the earlier-stage pipeline and to grow our existing commercial business. So before getting to our ROCTAVIAN update, I want to share our excitement over recent developments with vosoritide. Over the weekend, the full Phase III data from our global study with 119 children with achondroplasia was published in The Lancet. The Phase III results provide strong evidence of the clinical benefit of vosoritide, demonstrating a highly statistically significant improvement in annualized growth velocity in children treated with vosoritide that participated in the study. Our marketing applications have been submitted to both European and U.S. health authorities, with the EMA having recently validated the application. So we are encouraged, very encouraged by the results from our multiple studies with vosoritide, given the tremendous unmet medical need for children with achondroplasia. Turning now to ROCTAVIAN. The pursuit of the expedited approval with 26 weeks of data from 16 subjects was driven by our PRIME designation in Europe and Breakthrough Therapy designation in the United States. And while the controlled data that served as the basis of this expedited approval was dramatic for our patients, at the end of the day, health authorities want a larger data set, given the highly innovative nature of gene therapy treatment with hemophilia A. Given our track record as pioneers with scientific research and innovation, we designed and executed a robust development program with ROCTAVIAN. We are in a very fortunate position to be 2 months from completion of our global 1-year Phase III study with 134 subjects. So now we now plan to share top line 1-year Phase III data from this study in early 2021. And this is a potential new catalyst and this is new information. Given the depth and breadth of data expected from our Phase III results, EMA recently informed us that they would like to base the approval and labeling discussions on the upcoming 1-year data. Again, this is new information today. So as a result, we are now working with EMA to enable submission of the full 1-year Phase III data and anticipate being in a position to submit that data on 134 subjects that is set to design -- that is designed -- the trial is designed to demonstrate, as a reminder, superiority over standard of care. So we're set to submit the data at the end of the first quarter of 2021. While we are disappointed with this delay, we believe that the package at launch will be even stronger with the full data results from 134 subjects treated 1 year after treatment. And it will better position us commercially in Europe and allow us to obtain potentially better pricing and reimbursement, not if you were approved based on only 16 patients worth of data, 6 months after treatment. Importantly, European health authorities have inspected and accredited our ROCTAVIAN manufacturing facility, and there are no outstanding manufacturing issues to be addressed. So we remain confident in the commercial potential and approvability of ROCTAVIAN. Our confidence in the potential outcome of the full Phase III results are based on a few parameters, so I would like to invite Hank Fuchs, our head of R&D, to describe a few of them before we get to questions and answers. Hank?

Thanks, J.J. The potential for 1-year Phase III ROCTAVIAN results being supportive of approval are based on a number of factors. In addition to the robust Phase III study design -- and by robust, I want to call everyone's attention to the fact that there is a baseline run in to collect prospectively annualized bleed rate and that the primary end point of the study is itself annualized bleed rate, a well-recognized clinical outcome. So based on the robust Phase III study design and results observed so far, we have confidence that the statistical powering assumptions will demonstrate that the annualized bleed rate superiority versus standard of care Factor VIII prophylaxis versus -- so we're going to compare the ABR on standard of care prophylaxis versus the ABR after gene transfer. So further to what we presented at R&D Day, we now have more reliable information on baseline bleeding data, which gives us an opportunity to update the statistical powering of the study. Based on the results of the ABR from the Phase III's final analysis population in the non-interventional study 902, that's the run-in study, the observed bleeding rate or ABR in this Factor VIII prophylaxis population is 4.8. This baseline ABR is higher than what we had originally assumed and therefore gives us increased confidence that the 1-year Phase III study results will provide more than 90% power to demonstrate superiority and annualized bleed rate compared to the baseline ABR on standard of care. Based on these parameters, notably, the statistical power for ABR superiority, we're very encouraged that full Phase III results have the potential to support approval of ROCTAVIAN. As J.J. mentioned, we intend to share top line results from the Phase III study early in the first quarter of 2021. Our plan includes a Type A meeting with the FDA to discuss the contents of the complete response letter, which we have not conducted yet, and we'll delineate steps necessary for approval. In light of the EMA's request for 1-year data from the Phase III study and the FDA's recommendation for 2-year data from the study, further discussions with the FDA will be undertaken to assess if alignment on the data requirements between the EMA and the FDA can be harmonized, as has been done for all of our applications. We are very encouraged by our discussions with the EMA and believe we can align an efficient path forward for marketing authorization of ROCTAVIAN. And with that, now I'll turn the call back to you, Mike, for questions.

Great. So thanks for that introduction and all those updates, very positive and encouraging. So maybe just to start, if we can go back to the FDA and the initial CRL and maybe if you can just talk specifically about what the FDA wanted to see that they weren't seeing in the data. I think it was something to do with durability and some differences between what we're seeing in the Phase I/II versus the Phase III.

Yes. The kernel of the agency's feedback and the CRL was that they saw differences in 201 and 301, the Phase II study and the Phase III study. And that caused them to be challenged to project the durability after administration of the Phase III product based on the Phase I/II results. And essentially, that was really it. The fact that there were differences between Phase II and Phase III and the fact that the Phase III follow-up was relatively short and that they had -- they couldn't get there was their language around projecting the durability of Phase III.

And those specific differences, was it -- did they highlight what that was in particular? Like steroid use or something else or...

Well there is recognition of some potential for confounding of the underlying explanation of the differences, but the main issue of the CRL is that there were differences.

Got you. And then just curious, were there any other issues beyond just those differences raised by the FDA?

Well the complete response letter is complete, but it's kind of demarked into those that caused the complete response than everything else. And for the most part, the differences in the outcomes of Phase II/III and the underlying differences in the design of the study, namely the administration of corticosteroids prophylactically versus on demand, were what limited the agency's ability to get confident about the durability of the Phase III product.

Got you.

It's worth pointing out that all of this was known at the time of the pre-BLA meeting. So the review has not -- in our view, the review has not uncovered something that we haven't been very transparent with you, with the agency about. So I think we've commented in the press release about the CRL that it was a bit of a surprise. And in particular, there was very low to no communication from the agency from when they first ideated this conclusion to when we received the CRL. And the most compelling piece of surprise was the recommendation for 2 years. And we just don't -- that's never come up in any of our discussion, and we don't know what the root of that is. And we can speculate but we don't know what the root is.

Got you. And then just next steps from here. You mentioned a Type A meeting with the FDA, the next steps to get that schedule. Do you have that schedule? And then kind of what's the -- it sounds like there's opportunity. Maybe you're suggesting for approval based off 1 year instead of 2 years. Maybe just talk about what you plan to accomplish in that meeting and some of the potential scenarios around maybe outcomes.

Well I think it's to really understand with clarity why the issues that have been identified, for example, trajectory of durability under accelerated approval regulations, was a requirement. So kind of like scratch below the surface of these statements. They're relatively brief and very concise. And you know that there's paragraphs of thinking and discussion. And we talked about the relatively low communication from the FDA. And so this first Type A meeting really is what would ordinarily happen during usual review, which is back-and-forth discussion of issues to where you would get more insight. So the goal of the first meeting really is to get more insight into the thinking of the review, both in terms of their initial decision and how that might read on ultimate approvability. But also they're thinking about where did 2 years come from? What itch does that scratch? Is that the only way to scratch that itch, for example?

Got you. I guess does it -- it sounded like you thought maybe you could -- you might be able to suggest to the FDA that if the EMA is willing to accept 1-year data, that maybe they could be more flexible. Is that fair? Or -- I know it's a tough question, I apologize.

No, it's a very fair question. I mean I think it's worthwhile to raise the notion that availability of the product in Europe ahead of potential availability of the product in the U.S. might cause the U.S. regulators to think. On the other side of that, both sides, both regulators like to brag about how independent they are. Which one of those ends up being the dominant influence is a very difficult thing. I think the key thing is all of this should be guided by good science. We've designed a Phase III trial with a clinical end point, adequately powered for an important therapeutic outcome, which is superiority to current -- it's not just the standard of care, by the way, factor replacement therapy. It's the #1 recommendation of the recently released guidance document for the management of hemophilia. Point #1 is daily prophylactic -- or regular prophylactic therapy with Factor VIII concentrates. So it's a well-designed study. As I said, there wasn't anything in the review that was new or different relative to where we've been so far. So that's why we have a fairly high degree of conviction that the pivotal trial will, in fact, be pivotal in the footnote is and subject to further discussion with the agency about that.

Got you. And then just you talked about sort of the feedback from the EU, and you're going to file in Europe based off of 1-year data. When you had your -- that agreement with the EU, was that before you had gotten the CRL or had the CRL come after? And what impact could that have? Or maybe they're just independent and it has no impact?

Well Europe was aware of the FDA's action by the time they had written to us about this issue, about their time line. And so it was sort of a decision that was taken in isolation of, there's an awareness of. I think each of these processes has a little bit of nuance that's different from the other. So for example, in the U.S., the Center of Innovation left the FDA with Scott Gottlieb. And so this often leads to a pendulum swing in the other direction. In Europe, our rapporteur, the French were besieged by COVID right at the time that the review was supposed to be happening. So they got off the blocks like 2 months late. At the end of the European review is an EC Commission Decision. So the note of that is that the European approval would have come almost directly on top of the Phase III data. We had worked with both agencies to try to create -- to try to exemplify the importance of an accelerated approval by the distance and time between when the accelerated approval data are available and the final data are available. But in both places, to a large extent because of COVID, the time line for their actions started to slip into the same time frame in which the Phase III data were going to be available. I mean the self-congratulatory version of that is we did a pretty good job of enrolling the pivotal clinical trial such that it started to encroach on the airspace of the accelerated approval. The only other thing we could have done is slowed down the pivotal trial, but who would want to have done that, especially in retrospect?

Got you. And then I guess just timing the next update that you might provide from the U.S. regulatory process, is that something we could maybe see by the end of this year? Or is it hard to tell at this point?

It's a little hard to tell at this point simply because we had so little communication with the agency about the review. As recently as the mid-cycle meeting during the medical review, there were absolutely no issues. During the late-cycle meeting, they observed this trajectory, the difference between the Phase II and the Phase III material, which like I said, that was -- that meeting was in June. That was 13 months after our conversation with them about the data at the pre-BLA meeting. And they first identified the issue in writing, but there was no -- there were no senior people involved in that meeting with the FDA. It was just sort of, "Here's what we found." And we asked them, "Where are you going with this?" And they said, "Here's what we found." And then we had no further conversation with agencies essentially until the day before the CRL. So we really still have a lot to learn about how they've been thinking about things and where are there opportunities or challenges that need to be overcome.

Got you.