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

Great. Thanks very much, everybody. Happy to be here on this panel for the next 30 minutes with the BioMarin management team. With me is Brian Mueller, who's the Executive Vice President and CFO; and also Hank Fuchs, who is the President of Worldwide R&D. I'm sure most people listening here know the team quite well. I think we're just going to start and have Brian make some introductory remarks on the recent BioMarin quarter and a few pipelines updates and than we will get into Q&A. So, Brian, thank you, again, and please take it away.

Hi, everybody. Thank you, Paul, really appreciate the opportunity to participate today. As you know, we recently shared our third quarter 2020 results where we provided a number of updates. On the financials, we tightened our GAAP net income guidance and improved our non-GAAP income guidance for 2020 and we slightly adjusted our total revenue guidance for the full year, mainly due to the delay in the potential approval of ROCTAVIAN. We're optimistic that longer-term data with ROCTAVIAN will ultimately lead to a potential approval, should the data be supportive and that the growth in revenues and profitability would, therefore, come back in 2022 and accelerate in 2023. Despite the headwinds encountered this year, we do anticipate earning meaningful non-GAAP income in 2021 as well as positive operating cash flows from our base business. On the regulatory front, we anticipate some exciting updates beginning in early '21. With ROCTAVIAN gene therapy for the treatment of hemophilia A, we look forward to sharing top line 1-year results from our Phase III data from all 134 patients in early 2021. Based on the dramatic bleeding control observed to date with ROCTAVIAN, we are optimistic about the approvability path forward, but obviously, the Phase III results will be paramount to determining time lines. We plan to submit the marketing application in Europe, in the second quarter of 2021 and share the 1-year Phase III results with the FDA as well. With vosoritide for the treatment of achondroplasia, applications in the U.S. and Europe are under review by health authorities and are in process for the potential approvals in 2021. With the CHMP opinion expected in the second half of 2021 and the U.S. PDUFA action date planned for August 20, 2021. Based on the highly statistically significant results observed in children with achondroplasia treated with vosoritide, we're optimistic that vosoritide will be the first pharmacologic therapy approved in this indication. On the heels of ROCTAVIAN and vosoritide reviews and the potential approvals and the continued commercial expansion of Palynziq for phenylketonuria, which present large global revenue opportunities for the company. Our earlier-stage pipeline is also moving forward. BMN 307 gene therapy for PKU is in the clinic with a total of -- with a goal of achieving normalized fee. We're also completing preclinical studies with BMN 331 gene therapy for hereditary angioedema, our third gene therapy product candidate in another large market opportunity. And finally, earlier today, we announced a preclinical collaboration with Deep Genomics in their artificial intelligence drug discovery platform to identify oligonucleotide drug candidates in 4 disease indications, rare disease indications, with high unmet need. Under the collaboration, we hope to identify and validate target mechanisms and lead candidates that BioMarin can advance into preclinical and clinical development. That's a brief snapshot to bring everybody up-to-date since our Q3 results update just a couple of weeks ago. So Paul, I'll turn it back to you for Q&A.

Awesome. Thank you very much, Brian. So let's start with vosoritide. And I think it'd be helpful to set the stage to understand some of the context behind the recent FDA update. So NDA was accepted with this 2-year data caveat. I would guess it would be helpful if you guys could kind of clarify the back history of that? I know there is this AdCom, did they ask for your placebo-controlled data just come from a few clinicians? Or was there also some FDA buy-in on this at the time as well?

Well, there's maybe a little FDA buy-in. The question got proposed to the advisory committee about the duration of controlled clinical trials. This actually followed, I think, a presentation by the FDA to the pediatric advisory community that was mentioning that one of the key considerations for the enrollment of children in clinical trials as prospect for benefit. And so when the discussion turned to the advisers, on the one hand, some is good, more is better, was one piece. And on the other hand, the denial of children at second year of placebo in the interest of corroborating something. I don't think led to a unanimous belief by the advisory committee that wisdom said it must be 2 years. And in fact, there was quite a lot of discussion about how you think about that scientifically and biologically. And I thought Dave Cooke, from Hopkins, did the nicest job of sort of thumbnailing the issue of consideration. The issue of consideration of length of the clinical trial has to do with the durability of effect, and that's informed by the fact that an unrelated treatment for unrelated conditions growth hormone for nongrowth hormone deficiencies, you get a growth spurt at the beginning but it then tails off as duration goes on. And the biology of that, while maybe not precisely understood is clearly different than the biology of vosoritide. And so he -- so Dr. Cooke pointed out that the considerations to make are, what is the clinical evidence of obtaining that speaks to durability? What's the biomarker evidence that speaks durability? What's the preclinical evidence that speaks to durability? And what we put in the application to address these considerations are the clinical evidence of durable effect of CNP, which are -- come from 2 different places. One is the study that we have where we've treated patients for 4.5 years, and they've gained an additional 9 centimeters of growth compared to a really well described natural history database, showing no attenuation of benefit. This is actually reviewed fairly carefully with the FDA at the pre-NDA meeting. A second piece of human clinical data comes from the natural experience, genetic experiences in which patients who have overexpression of CNP are unusually tall, like 7.5 feet tall. So you can't -- CNP doesn't wear off. You can get to 7 feet tall and it's obviously keep working. The third -- another line of evidence comes -- so that's the human clinical evidence. The biomarker evidence, the cGMP response after 2 years is similar to the cGMP response after the first dose. And then finally, preclinical data, same story, you can take an achondroplastic mouse, mate it with an overexpressing CNP tall mouse and the genetic -- the result of that crossmatch is normalization, which you, again, can't get if there's a nondurable effect of vosoritide. So we think that in the amalgam when the FDA finishes reviewing all those pieces, they'll see the need -- they'll see the lag -- the need for the second year of data is much less. Now as an insurance policy, we have that second year of treatment data for 110 patients, actually, 55 of the patients, those who were in as placebo, right around the corner. We unblinded the 1-year version of the study a year ago, so you can imagine the 2-year data are available imminently. And so we have it in our hip pocket if they want it. We don't really think that they're going to need or want it. Why they chose to mention it in the filing letter? They usually complain about something, and that was...

Is that normal? Usually, there's some sort of review issue outlined in the acceptance letter with that?

There can be. It doesn't always -- I mean with Valrox, there wasn't anything. But we -- like with Vimizim, they said, we disagree with the sponsors choice of endpoint. We wanted a responder analysis. They went to the advisory committee, wanting a responder analysis. They pointed out to the advisory committee, we required a responder analysis and then it completely disappeared after they said -- so I don't know which -- it feels more like the Vimizim one than anything else.

Yes. No, that's really interesting. So just to clarify, Hank, the issue or the theoretical concerns around in tachyphylaxis doesn't stem from growth hormone off-label use in achondroplasia, it comes from growth hormone's used elsewhere in short stature populations, is that right?

Growth hormone everywhere other than in growth hormone deficiency.

Okay. Okay. Okay. Got it. Got it. And so for the 2 data, coming up next year, right? Can you just kind of walk through what that readout might look like? I guess, I would have -- I would guess you'd map it out or kind of superimpose it next to some published natural history studies?

Well, I mean, let's understand what the data -- what the population is, and therefore, what it could tell us and how we use it. Now the Phase III trial that we're calling the 1-year trial actually had at least a 6-month run-in, not on placebo or vosoritide. Some patients were run-in for 12 months, 9 months, 6 months. So you have a group of people who are untreated. So you have -- the understanding height for 6 months, 7 months, 8 months before they even get randomized. Then you have their height when they're randomized and then you have their height 1 year after placebo. So some of these people will have had no treatment for -- well, everyone will have had no treatment for 18 months, and some of those people will have had no treatment for 19, 20, 21 months. So you have a control arm. And then you have the people who are treated with vosoritide for 24 months now, 2 years later, they were randomized originally. And so you have their 24-month data. And what we should be able to do is to compare like what's the last 6 months of growth compared to the first 6 months of growth when you cross over or the first 6 months of observation when you're on placebo. And I think what that's going to show is that the bang that you get initially, both in the people originally randomized to vosoritide as well as those people who are delayed randomized to vosoritide, that initial bang is going to look similar to the bang that you get in the month 18 to 24. I think that will knock this issue out of the consideration.

Yes, very good. Do you -- would you be surprised if the FDA changed course and had another AdCom?

The odds of me ever being surprised by the FDA ever again is...

I know you were going to do that. Yes, but they said they're not planning on having an AdCom. Isn't that kind of weird, right? I mean, again, with Vimizim, right, it was about 14 to 2, like the AdCom was great, right, it gave you a forum to make your case?

Two? I thought I was one, but I'll defer to you. And the funny thing about the one, also a different guy from Hopkins, and he said, I'd have voted forward if they had, had a biomarker with biopsy data from the growth plate. We're like what are you talking about?

Yes. Yes. Yes.

So I regard that one as unanimous anyway.

Okay. Okay. Fair enough. And just to clarify, has the -- has this durability existential question come up at all with EMA? Or do they just not really seem concerned?

It's come up. It's not in the existential category. It's more in the -- geez, you've got a lot of data. It would be nice to see that.

Right, right, right. Okay, okay, great. Maybe one more vosoritide question for Brian, and that is really just -- can you talk a little bit about your launch prep? And are you already talking to a lot of physicians that treat these patients? How much overlap is there with the existing sales force focused on another genetic medicine?

Yes, that's great. Thanks, Paul. Great question. So yes, we've been assessing and engaging with the achondroplasia market for some time in our vosoritide preparations. Similar to ROCTAVIAN, although we can't market or talk to patients before an approval, there's some safe harbors that do allow us to talk to payers. And then, of course, physician and disease education. So a couple of things of note, when we think about the potential launch of vosoritide. So first of all, larger patient population than the ultra-orphan diseases that we grew up upon, right? We're talking about over 20,000 potential treatable patients within BioMarin territories versus the MPS disorders where it's low single-digit thousands of total patients in the world. So still a larger market opportunity. Also, earlier diagnosis, which is, I think, a key dynamic to think about when we think about achondroplasia and vosoritide as a potential treatment. Again, different from our base business that we grew over the last 20 years. Much of the marketing -- sales and marketing efforts to launch Naglazyme and Vimizim were in the areas of patient identification, helping physicians and the healthcare system understand mucopolysaccharidosis, look for symptoms, do the diagnostic test and try to get through diagnosis. Achondroplasia is typically diagnosed much earlier, often in utero. So to have that earlier diagnosis in the marketplace is different for us in terms of how we grew. And then I think the last thing I'd say, which is going to take a bit more work that we're going to work on this year in advance of the PDUFA date, is establishing a medical home, helping to establish a medical home for Achondroplasia patients, they are treated in different areas and Hank might be able to elaborate, but ped endocrinologists, some just pediatricians, geneticists, so using our BioMarin network that we've built over the years of establishing that medical home will be important. And yes, we'll get leverage in a couple of ways out of our existing commercial infrastructure. First of all, just the operations. We've built this global business. We sell our products in over 70 countries. It's that same commercial and G&A infrastructure that we'll use to lodge, hopefully, both ROCTAVIAN and vosoritide because these are all different diseases, very specialty and because of our high-touch business model, there will be incremental investments for each of these products, but we'll get some leverage out of just the rare disease infrastructure that we've built as well.

Okay. Okay. Great. Very good. Let's switch gears to ROCTAVIAN and maybe just getting ahead of the 1-year data in the beginning of next year. Hank, from your engagement with regulators, what do you think the EMA is hoping to see? How would you describe a good output? Factor VIII levels that are in the kind of standard error of 6 months and a curve that qualitatively looks like durability, like I feel like it's so arbitrary. We'd be curious what your view is.

I think it's just really just bigger sample size in all the things that come from bigger sample size. So like more knowledge about what the proportion of patients who are going to have an initial favorable response, more knowledge about what the distribution of the responses is at 26 to 52 weeks so that there can be more interrogation of whether there are discernible patient factors that contribute to outcome. I don't get the sense from the EMA that they're troubled by uncertainties or in precisions, but more that they are comforted by 134 patients is a bigger number on which to make a confident decision for something as novel as this. So I don't know that there's a specific single parameter to point to other than 134. That's going to be an interesting...

Can you tell us more about just an update data set rather than say, again, the whole durability component of this necessary?