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

Okay. Great. Well, let's go ahead and get started with our next session. Thanks, everybody, for dialing in. My name is Chris Raymond. I'm one of Piper Sandler's biotech analysts. And very pleased to have with us our next presenter and company for our fireside chat format here, BioMarin. We're lucky to have with us the full complement of the management team here. We have CEO and Chairman, J.J. Bienaimé; President of Worldwide R&D, Hank Fuchs; and Brian Mueller, who is the CFO. So as is the format that we've done in the past, we'll be -- this will be a fireside chat format. But just to maybe level set the story for investors, maybe for the few who might not necessarily know the story. J.J., if you wouldn't mind giving us a 2- to 3-minute or so intro on BioMarin, that would be great, and then we'll dive into the Q&A.

Yes. Thank you, Chris. Thank you for joining us for the discussion today. So as you know, 2020 has been a quite eventful year for BioMarin. Developers this year have set us up for some significant updates in 2021. Our next full potential product approval will be vosoritide for the treatment of children with achondroplasia, which is the most common form of human dwarfism. Marketing applications in both the United States and Europe are currently under review by health authorities, setting the stage for potential approvals in the second half of 2021 on both sides of the Atlantic. Vosoritide represents a tremendous opportunity, as it will be the first potential pharmacologic therapy approved for achondroplasia, a condition that impacts roughly -- I mean, slightly over 20,000 children in the world within our current commercial footprint. Year 2 of our global Phase III study, which includes 110 children, was reached last month, and we intend to share those results with you in the near future. Large preparations for the U.S. and primary markets in Europe are well underway, with a prelaunch focus on disease awareness to clinicians, caregivers, payers and advocates. The 3 pillars of our North American launch within this plan include building the referral network of achondroplasia patients to appropriate key treatment providers; expanding the community of key treatment providers, who will provide the overall care plan for treatment with vosoritide; and work towards developing partners in advocacy. Briefly on ROCTAVIAN gene therapy for the treatment of hemophilia A, we look forward to sharing top line 1-year results from our 134-subject Phase III study in early 2021. This is the largest gene therapy trial ever done in any indication. Based on the dramatic bidding controls, as been observed to date with ROCTAVIAN, we are optimistic about the approvability path forward, but obviously, the Phase III results will be paramount to determine 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 in the first half of '21. Concurrence with next steps for vosoritide and ROCTAVIAN and the continued commercial expansion of Palynziq for PKU or phenylketonuria, our early-stage pipeline is also moving forward. Our BMN 307 gene therapy for PKU is in the clinic, with the efficacy goal of achieving normalized Phe levels as we did in preclinical trial in PKU mice. We are completing our preclinical studies with BMN 331, which is a gene therapy construct for hereditary angioedema and our third gene therapy product candidate, representing another large market opportunity. And we can talk about during the call here, we have also some late-stage preclinical candidates in other indications. Moving to financial updates. We shared our recent third quarter 2020 results call. We tightened our GAAP net income guidance for 2020, and we improved our non-GAAP income guidance for this year also. And slightly adjusted our total revenue guidance for the full year, mainly due to the delay in the potential approval of ROCTAVIAN. We do anticipate earnings -- earning meaningful non-GAAP income in 2021 as well as positive operating cash flow from our base business. Beyond that, based on the potential approval of vosoritide in the second half of 2021 and ROCTAVIAN thereafter, should longer-term Phase III data be supported, we believe that the growth in revenues and profitability will come back in 2022 and accelerate in 2023. This is a brief overview to bring everyone up to speed since our recent Q3 call. So I will return the call back to you, Chris, for questions.

Excellent. Thanks, J.J., for that. And yes, a lot going on, obviously, across the spectrum of pipeline and development status. So we've got about 2 hours' worth of questions, and unfortunately, I have to pack that into about 20 minutes here. So I'm going to try to give everything sort of equal time. But top of mind, obviously, is ROCTAVIAN, the Valrox situation. And if you don't mind, maybe we'll lead with that since I get questions from investors on that, first and foremost. So J.J., you mentioned the 1-year follow-up data with 134 patients expected early next year. There's been some discussion about potentially having that serve as the basis for a U.S. submission maybe in the second quarter or so of 2021. A couple of questions on that. So it sounded like FDA maybe took issue with differences in the Phase I/II and the interim Phase III, which sort of limited the ability to rely on the Phase I/II study to support the durability of effect. Presumably, that sort of referred to the left shift in Factor VIII levels in the Phase III. So when you guys announced the CRL, you talked about the FDA sort of making the new recommendations that you weighed on the 2-year ABR data before submitting. So based on your interactions with them since then, what -- sort of talk about the confidence that you have that 1-year data is now perhaps potentially appropriate. And Hank...

Yes. So since Hank, he spent a lot of time on this and interacting with the -- actually relatively regular basis with the head of CBER, Peter Marks, I will let him answer that question.

Well, the -- you have that fact pattern exactly right, Chris. And I don't think we've really understood much differently from that initial fact pattern other than the maybe more colloquial way of saying this is -- get launched lower. And there was -- in the Phase I/II data, when the steroids came off, the Factor VIII expression declined, and so the combination of those 2 uncertainties put FDA in a position of saying, we want to wait until there's more evidence of effectiveness. And that slight difference in steroid use has them asking the question, will Factor VIII expression be maintained in a stable and relevant zone after steroids are taken off, which is kind of why they pointed to the 2-year data. I would not -- I would be remiss if I didn't just keep reminding people that the agency has asked for 2-year data, and the underlying reason why is because of the trajectory of Factor VIII expression and the lower initial launch. We're obviously going to work with the agencies, both the United States and the Europeans, to try to evaluate the 1-year data. The Europeans have been a little bit more amenable to the 1-year data being sufficient for review and registration, and the FDA has been a little bit more reluctant, and we'll just have to see how the data look.

And maybe also just remind us or maybe walk through current thinking, I guess, with respect to the importance of Factor VIII versus ABR, Factor VIII levels as a marker and ABR. Remember, there seems to have been maybe perhaps some kind of shift, arguably, at the agency as to the prioritization of these. Any sort of review of that or maybe discussion, Hank, in terms of your updated discussions with the agency?

Well, I think they continue to rely on annualized bleed rate as a clinically relevant metric. And I think they are also informed though by Factor VIII trajectory. So as a trivial example, if you got an ABR of 1 at year 1, and you were statistically significant, but everybody's Factor VIII level had fallen from 50% to 2%, the FDA would say, well, that's maybe not as good-looking as a flat Factor VIII trajectory in that ABR. So the 2 do come together somehow, and that FDA has been quantitative about what their expectations on Factor VIII trajectories are. And that makes us want to be a little bit conservative in guiding towards the second year as opposed to the potential for upside at the first year. I mean, it clearly exists. It depends on what the 1-year data look like. And you could imagine scenarios in which the 1-year data look great. You can imagine scenarios where the conservative FDA says headed in the right direction but still equivocal, and we want to wait for another year.

Yes. And you've made up, Hank, some -- you've alluded to this, I think maybe your last earnings call, you mentioned that you've detected a discernible level of increased conservatism at the FDA, at the agency. So maybe a 2-part question. I guess from your view, is it really as it seems, I guess, to us who are more on the outside looking in, that this is maybe a temporary thing, given what's going on with the broader leadership, HHS and government in general? That's the 1 part. And the other part, and this might be harder to answer, but you also alluded to EMA being more comfortable with 1-year data perhaps, and the FDA being more conservative. What's your sense that's driving that difference?

So first of all, I kind of hope that the reversion to conservative is a transient thing. The FDA leadership under Scott Gottlieb was a little bit more open to innovation. And when an innovative leader leaves, usually the pendulum at the FDA swings back and say, we'll just have to see who the next leader at the FDA is and to whether they are more amenable to labeling products with still residual uncertainties in them. As they had been talking about as early as January -- as recently as January of this year, I think that the Europeans, they have their own forms of conservatism. They went through Brexit. They had a COVID outbreak. But I think some of those are -- well, COVID is still in the mirror or in the viewfinder, Brexit is done with, they relocated the EMA. So I think the EMA has been a little less conservative in regard to the review. But again, the whole thing is going to depend on how strong the data are initially at 1 year and then over a longer period of time.

All right. One more question on ROCTAVIAN. We've got a lot to get to, and so I'll just maybe go one more deep here on ROCTAVIAN. So you guys have talked about metrics, a couple of metrics ahead of launch. I think on your Q2 call, you framed the initial eligible U.S. population as being about 2,400 patients or so. And you also put some numbers out along the lines of, I think, 400 patients who sort of proactively requested information on the drug, on the therapy. Obviously, the U.S. launch is going to be later, but what gives you confidence, I guess, that these patients that you identified initially would be willing to be dosed in year 1 of a launch? Again, this is putting a cart before the horse in terms of this question, but assuming you're able to file on 1-year data.

You want to start, Hank, and I'll chip in?

Well, I mean, I think -- whatever their willingness to take the medicine was on the basis of 22 patients is probably only going to get better with comparable quality of data with an aim of 134. Obviously, people are -- they look at the FDA and they say, if it's not good enough for the FDA, it's probably not good enough for me. So I'll have to revisit this question after the FDA's next decision on product labeling. But there's a -- I think we got to not take our eye off the ball of -- there still is -- and there's a lot of confusion about this. So there still is a lot of unmet need in the hemophilia space, even with treatments like Hemlibra and recombinant Factor VIII replacement therapy. And the reason for that is, is that you have breakthrough bleeds on current standard of therapy. It requires a high degree of compliance. And when you talk to people who have gone through gene therapy and had any kind of reasonable outcome, which is the vast majority of patients, they don't describe like a convenience benefit. They talk about their lives being transformed. They talk about freedom concern and worry and not having breakthrough bleeds. They -- a profound thing that people talk about is just feeling better. And they talk about how their joints don't ache, their sense of energy and well-being is much higher. So I think there is still a lot of opportunity to provide choice to patients even if it doesn't work 100% of the time in 100% of people. And exactly how that all shakes out in terms of market adoption after the 1-year data or the 2 year-data, I think let's see what the 1-year data and the 2-year data are.

Yes. Also, I would add that in the Phase II, we provided some quality of life data when we showed some improvement, documented improvement in quality of life that has not been shown even with the most recent agents introducing the hemophilia A. That's one. So that illustrates what Hank was just saying. And also regarding the interest, it's still there. Actually, we're doing -- our commercial organization is doing a lot of educational program on gene therapy with caregivers and with patients, and there is a lot of interest still today in gene therapy and in ROCTAVIAN, where they're doing a lot of virtual meetings that we're doing right now. And we have no evidence that the interest in ROCTAVIAN has decreased. If anything, it has increased since we provided the update last summer on the Phase II and the Phase III.

Yes. Okay. All right. Well, let's shift to vosoritide. Obviously, that's the next value driver. And so -- and again, this is probably -- this first question is probably no shock to you since it's come up an awful lot. The juxtaposition, if you will, between the FDA's AdCom that suggested 2-year data and your description, Hank, about the FDA sort of waving you in to file with your existing data set. So I guess just a couple of questions on that point. So was the 2-year recommendation something that you discussed with the agency between the AdCom and the acceptance of the NDA? Maybe clarify that.

I think the trial was already up and running in 2018 in terms of enrollment. So we had gotten that feedback. The AdCom itself was a big surprise because who has AdComs before products are applied for? And you always have discussion with the agency. Their religion is whatever you bid, they raise the bar. And so we've had a lot of discussion with them about 1 versus 2 years, and they take a fairly pure high bar. Then sometimes their attitude gets expressed as it sure would be easier for us if this were a 2-year study. You can understand that. But I queue to a little bit more of the granular discussion that occurred at the advisory committee on the topic. The issue is durability. And the reason this is on people's mind is because growth hormone is not a very durably effective remedy for growth promotion, especially so in achondroplasia, where it's not even indicated in the United States. In spite of an initial spurt of growth, it doesn't sustain. And so the question is durability. I mean, people don't want to just get to a fast -- get to a short [ finally tall height ] faster. They want a meaningful improvement in their stature. And they want -- underneath that, they believe that the statural improvement really is just a signal for improved overall health from achondroplasia. So the framework that got laid out at the advisory and I thought was really helpful about thinking about durability. And I think it was [ Dave Cooke ] at Hopkins, who said, I would think about -- so you got this precedent over here, and longer is always better. But on the other side of the equation is the longer you go, the harder it is to retain patients in trial and harder to recruit people. And so go back to the other side of the ledger, he said, and I would think about how important 2 years in the context of the available preclinical biology, the available, so far, accumulated clinical data, biomarker data. And as we go through that with the agency, our comments were, you can't have a durable effect and affect the genetic -- you can't have a transient effect and have a genetic cure in a preclinical model. So when you mate an achondroplastic mouse to an NPRB overexpressing mouse, that mouse is of normal stature. And that must be because of durable contribution of the NPRB side of the equation. We documented in humans 9-centimeter gain in height over 5-year, 4.5 years of treatment. That supports the durability of effect. We went through that actually very carefully with the FDA at the pre-NDA meeting. And then finally, the biomarker data that says that every time you hit the receptor, the receptor has the same response, dose number one, dose number -- 2 years. So for all those reasons, we feel like we had a pretty strong package of durability. Now the agency also knew that, as J.J. mentioned in the opening comments, that the 2-year mark on that study was coming up anyway. Even though it's not a pure parallel 2-year study because of the way the run-in worked, we'll be comparing 24 months of treatment for 18 months or more of no treatment. And we can look at change in height and normalize that to come up with AGVs and look at whether there is any evidence of attenuation of benefit. So I think that given the biology, it stands to reason that it's likely that durability will be established to the agency satisfaction. But we wanted to make sure that, that was a known part of the review from the get-go because the agency had brought it up.

And so if you go back and you had checked the minutes of the AdCom recently just a few days ago, and actually, if you look at the way the whole thing was calculated, of course, the committee said, I mean, it would be better to have 2-year data. But also there was considerable discussion by the committee on the difficulty, close to impossibility of doing a prospective randomized specific control trial for 2 years in male kids with achondroplasia. So obviously, longer is always better, but I think there was an understanding by the clinicians that, that was not really realistic.

And just to remind us, if you will, you've alluded with the 2-year data that looks like it will be in the first half of next year. Walk us through, if you can, if you're prepared to do this, this sort of how you intend to sort of communicate that. And then just remind us the -- how you've sort of described the setup of having that before the review is complete and how the FDA has sort of communicated as to how they'll treat that once it's available in terms of the timing of the review.

Well, as far as our communication to the public about that, we are always balancing the interest of investors and the scientific interest of the community. And so I could imagine that there'll be a somewhat concise announcement from the company and to enable physicians to present this at scientific congress, just like we did with the 1-year data. So I think we'll try to give you at least a turn signal about whether it look great, okay or crappy. As far as the agency is going...

And that's going to happen by mid-January. That is going to happen soon.

Because it was a year -- the 1-year data was announced a year ago, so...

Yes. [ Quarter on quarter. ]

The agency situation is, you're not supposed to provide additional data during the review unless they ask for it. So -- and they're not supposed to accept an application if they don't think that they can come to a review conclusion. So I think the way to look at this is that the 2-year data is potentially gravy or icing on the cake rather than e-central for the review. That's how I look at it.

Okay. Good. All right. We've got 3 more minutes, so I'll try to hit as many questions as I can. So just getting on to -- J.J., you mentioned some of the earlier stage programs. So maybe we'll spend the rest of the time on that. So maybe BMN 307, the PKU gene therapy. Remind us just the news flow for that program now that you're in the clinic. And how are you guys thinking about the competitive landscape for the franchise as a whole, with Kuvan, Palynziq and then this program?

So you want to start, Hank? And I'll...

Yes, sure. I mean we just started dosing people. And we've said that we would announce -- the next meaningful data announcement will come when we decide to expand into the registration cohort. And the direct head-to-head competitor, Homology, had, in my view, a bit of a setback in the sense of their efficacy not being sterling. And in fact, they're in dose ranges, which they're talking about even potentially having less sterling effects. So I think on some level, the competition has put itself a little bit on ice. And so I think we're pressing ahead. In terms of -- J.J. can speak about this more. But from my point of view, Kuvan is a modestly effective drug that requires adjunct to diet, which is what makes Palynziq so powerful for people because you get a much more profound effect and you're liberated from the diet. And still even with Palynziq, while Palynziq will ultimately expand the PKU market, there's still a lot to be said for a much simpler presentation of therapy. And so I think that gene therapy is going to be a real important element to fully capture all the PKU gene -- PKU market.

Got it. Okay.

So I mean, if I may on this one, I mean, we see -- if you look at the market penetration of Kuvan and Palynziq in adult PKU patients in U.S. and Europe, it's actually still -- we're just treating just a fraction of the available patients for the [indiscernible]. Palynziq was just launched, and then there is slowdown because of the COVID-19. And it's -- the first 4 months, 3 to 4 months, it's not easy to use. You got this titration period, which, again, would be eliminated with gene therapy. The Palynziq efficacy is pretty good. I mean there's a normalized Phe levels in all patients, but it gets pretty close in many patients to normalization. But you were dealing with a cognitively impaired patient population, so having something as simple as 1 infusion that will last for many, many years is obviously very attractive for this patient. So -- and this patient population. So I think Palynziq is going to be a pretty large product. And when we limit the peak sales of Palynziq, which could be over $1 billion, will be the -- whenever we are able to launch our auto PKU gene therapy product and how effective it's going to be. But there is a lot of room to grow with the PKU market. So we see 307 as a market expansion more than a market cannibalization of Kuvan and Palynziq.

All right. Excellent. Well, I'm getting the high sign here that we have just run out of time, I apologize. I've got a ton more questions. But anyway, thanks for the...

We should have another call.

Yes, we should do that. Thank you very much, guys.

Thanks for having us.

Take care.