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

Hello. Welcome to this fireside chat with BioMarin Pharmaceutical. I'm Joe Schwartz from the SVB Leerink Equity Research team. It's my pleasure to host management. Today, we're very pleased to have J.J. Bienaime, Chairman and CEO; Hank Fuchs, CMO; Brian Mueller, CFO. Welcome, gentlemen. Thanks for joining us. Maybe we can start, J.J., by just having you give us a quick update on all of your activities and the news flow that investors should be on the lookout for this year.

So as you know, we reported our Q4 yesterday, and I would say that the essential nature of our medicine resulted in strong growth despite, as you know, the global pandemic and the delay in ROCTAVIAN approval. As you're excluding Kuvan, BioMarin revenues grew 13% in 2020 and generated $85 million of positive operating cash flow. The '20 -- we gave guidance for '21. Our revenues are expected to grow from 9% at the midpoint of the guidance, if we exclude Kuvan, which is going to be experiencing the first year of generic competition in the U.S., the first full year. And I would say, despite the ongoing challenges that were brought by the pandemic, we anticipate significant revenue growth starting next year driven by the potential approval of vosoritide and ROCTAVIAN in the U.S. and Europe. So the next 2 opportunities, obviously, have the potential to exceed current revenues with vosoritide expected to deliver 70% of our anticipated global revenues over the next 5 years. And it's likely -- vosoritide is likely to be the largest BioMarin product in history and ROCTAVIAN addressing 3x as many severe hemophilia in patients in Europe as compared to North America. I know the focus is very much on the FDA. But as you know, we're a very global company, and actually more than 50%, actually 60% of our revenues are ex U.S. So the ex U.S. market is very important for us. So we are planning a number of key events that we expect will drive substantial value over the coming quarters, beginning with our European regulatory updates. I would say with vosoritide for the treatment of children with achondroplasia, we are targeting a CHMP opinion this coming June -- by the end of June, followed likely by the European Commission decision in late summer leading to a potential commercial launch in Europe this fall. And I want to highlight again the significance of these key regulatory milestones because we anticipate that vosoritide ex U.S. revenues over the next 5 years would represent 60% or more of our anticipated global revenues and also with the European approval -- and again, we are planning on having U.S. approval, too. But with the European approval, we can basically launch the product about anywhere in the world, except the U.S. and Japan. Concurrently, significant progress is being made on the next generation of potential commercial products, 307 PKU gene therapy. Phase II is moving to a higher dose based on strong efficacy and safety signals at the low dose. And as you will hear from Hank later, preclinical products are advancing, representing multiple potential INDs in the next 6 to 24 months. So despite the challenges faced against the backdrop of the global pandemic, demand for BioMarin medicine drove strong results in 2020. So after vosoritide and ROCTAVIAN, we look forward to a very substantial growth in our pipeline in the coming years. So I just want to add also that we ended up 2020 with $1.3 billion of cash and investments, and we anticipate being operating cash flow positive this year. So in a world of rising interest rates, we have no need for financing. And I think that's a good position to be in as compared to many other biotech companies. That's what I got Joe, and now we are welcoming your questions.

Thank you, sir. Appreciate the introduction. Let's start with vosoritide. It sounds like you're expecting some pretty strong uptake based on your pre-commercialization work. And -- so I was wondering if you could just expand on that a little bit and give us your view of the treatment landscape that you'll be defining with this product? And how should we think about this? I heard you say expect it to be faster than Kuvan and...

Yes. We started -- basically, the market size. Again, they're -- yes, they are about -- yes, there are 120,000 achondroplasia patients in the world, about 25% or 20%, 25% of them are under age of 18. So that's our market target, around 24,000 patients in the BioMarin world. So it's pretty significant. Indeed, compared to our enzymes where the challenge was to find the patients, here, the patients are pretty well identified. They're actually identified at birth or before birth. So the challenge is not to find the patients here. However, the key for us is going to be to find a home for the medical treatment, especially because there is no approved therapy today for achondroplasia. And they are treated by different specialties, and we believe that based on the experience of pediatric endocrinologists with growth hormone -- ped endos are probably the most likely physicians to treat these patients with vosoritide and the one that will feel the most comfortable. So we're going to have to acquire the system to make sure that those patients end up being managed most of the time by pediatric endocrinologists. And so we are preparing for that. We have sales forces in place in the U.S. and Europe for the launch of the product. And the unmet need is very significant since there is no approved therapy. As you know, a lot of patients, especially in some European countries, they do limb lengthening surgery that gives you an idea of the unmet medical need. And in terms of pricing, I think as we said recently that this is not going to be a price like LSD, lysosomal storage disease enzyme product. It's more like Palynziq pricing $100,000 and $200,000 a year that we're anticipating here.

Okay. And it sounds like you're going to be -- you're just planning on submitting the 2-year data to supplement the 1-year data, given the delays -- have you received feedback from the FDA that that's necessary?

And maybe -- so Hank can answer that and maybe start with Europe though where we have submitted or we're about to submit in Europe. Hank, is that correct?

Yes. I mean, I think the big picture on both of our late-stage applications is that health authorities are well aware that we continue to follow patients and there's always another year. And so when we submitted the NDA in the -- well, let me start -- when we submitted the marketing authorization application in Europe, obviously, the European authorities knew that at some point in the review, the 2-year data was going to be imminent and they were aware of that. We were aware of that. There's actually from the European perspective hasn't been anywhere close to the amount of volume about durability as there has been in the United States. And so it comes across more like a checkbox exercise for Europe. And that gives us a lot of confidence about where we stand with the European authority. If you don't know Europe process, they sort of divide their considerations in the major objections and minor objections. And durability is not a major objection. In the United States, as you know, we mentioned that their -- at the filing decision, their preference for a 2-year study. And the -- we do -- we have essentially a randomized prospect of height as a primary endpoint to your study. And given that that's what they've expressed concerned about, we feel like there's no point in leaving any room -- sort of a no stone unturned approach, right? Make sure they have every piece of information. And they knew when we file that they were -- we were going to have this information.

It makes sense.

Their issue is durability. And I think we have a pretty comprehensive package about durability, which consists of 5 years of accumulated height data in the children who are started in the Phase I/II program as well as a lot of biological data, preclinical data. So we have a very strong case for durability as well. And we kind of feel like giving both the FDA for benefit/risk decision, but also for labeling purposes and given the community in the form of a label as much information as possible is always in your best interest. We're aware that, that could slow things down a little bit for the FDA, but that's -- it feels like a good trade-off to increase probability of them getting across the finish line and to improve our label.

Yes. Okay. That makes sense. Let's turn to ROCTAVIAN now. And can you talk about that latest data set that you released? And how do you think that the FDA is going to view that and the EMA based on your interactions? I know you -- they need an expert advisory council of folks that can opine on how regulators may do this. Can you talk about how you expect the regulators to feel about the data you've generated with and without steroids? And if they feel confident, do you think in terms of being able to guide people on how best to use the product?

Yes. I think -- so first of all, the composition of the group was top of the house, clinically Europe; top of the house, statistically Europe; top of the house, clinically, U.S.; top of the house, statistically Europe. A couple of review level, [indiscernible], Europe, United States, so you get the sense of both the sort of a strategic level of it as well as a practical dirty hands on part of it. And as well, we included some hemophilia treatment providers, some who had experience in gene therapy trials, some who had just read the data. So we try to kind of recreate the hard case ad board. We put in questions. I actually ran the questions by the FDA to assure that they were balanced questions because I wanted to be able to know what it was going to sound like if we ever went in front of an Adcom. I think that some of the conclusions that came out of that were impressive data package, meaningful improvements in clinical -- real organic clinical outcome variables, a recognition that because of this cycle thing -- the time you submit the 1-year data, the 2-year data is going to be imminent or around the corner. And so their comments were -- anticipate that. In both regions, the senior regulators talk about how the regulatory systems are built to accommodate the provision of data during review. Even if on the one hand, agencies tell you, your applications have to be completed at the time of the review, they also know that chronic data are rolling -- are available to the company. And so they said, just expect that just because of the novelty of the condition. And so we came away from that feeling like there isn't sort of a got you in there. It really is just building confidence with higher sample size and longer duration of follow-up, given the newness of the condition and considerations of the hemophilia patients. They're a fairly conservative group for historical reasons. And so they really want to bring a solid package of information in hemophilia community, and we do too. So that's where we stand.

Yes. That's helpful. So how did they all view or what were the [indiscernible] and how much did they vary around the emphasis on ABR improvement, which is very striking and the expression data, which isn't as consistent across [indiscernible] the same time?

Well, they didn't quite say it this way, but it's a heck of a lot better than the other way around. The unequivocalness of the clinical data really is really, really incredibly impressive. I've been asking my team to come up with examples of pivotal trials where there's an ABR and a treatment group of less than 1, and I think they think there's one out there. But by and large, you don't see pivotal clinical trials with ABR of 1. Not only we have an ABR of 1 in our pivotal trial, we had an ABR of less than 1 in the extension phase, the 2 years and a 17. And also through 2, 3 and 4 years of the 40 -- 60-dose group in the 40, I think there's one exception, and I think there was 1 year where we had a 1.3. But by and large, they're like -- it's like, wow, this is incredibly effective. And then when you look at the factor utilization, that ABR occurred -- these guys were getting an ABR of 4.8 in spite of taking 136 infusions per year and withdrawing those 136 per -- infusions per year did not -- not only did it increase the ABR, the gene therapy knocked their ABR further 80% down to under 1. So they went from 136 infusions per year on average to 2 infusion per year. So the clinical data could not be more spectacular than possible now. The rhetorical or the theoretical or the sort of the abstract concept of gene transfer and the worry the agency has is, there is a decline, and we pointed it out when we released the data, we pointed it out yesterday in the call to acknowledge that there's a decline in year 2. Interestingly, the decline in year 2 in the present study is almost exactly what would have been predicted given that we didn't launch as high in year 1 in the Phase III trials as we did a previous trial. So the higher you go, the more there's an initial decline. And the longer out in time you go, the slower the rate of decline. It looks like we're sort of in that trajectory zone. And I think, like I said, the FDA and the EMA, we'll appreciate the confidence that comes from seeing N of 134 at the 2-year mark. It's just a question at this point of how much dwell time they need with those data relative to all the other things in an application that they review and get through. But I think the prognosis is awesome because we're entering -- well, so first of all, the N of 17 bodes well for the remaining N of 117, who are just sort of right behind them as a wave. And so there's no reason to expect the remaining 100 next patients to be different from an ABR perspective. And then those 17 patients will be a leading edge into a third year. And as we saw from the prior trial, that third year, even at these factor levels, is also a bleed-free year. So there's every reason to believe that the third year will also be great following this as well. And I think we'll get to a tipping point in confidence, and I said this from the CRL on, the resolution of these kinds of questions of uncertainty are always contained in more time and more data. I have to say, going back to big picture impression of the Expert Advisory Council was that none of it from their perspective, the [indiscernible] was, the remaining uncertainties are small relative to the size of the clinical benefit that we're talking about. This is not a particularly close call. And so to them, it felt like this is more of the procedure and the confidence building that gets a regulator in a position to say, "Okay."

Yes. Okay. I just said...

I mean -- just to summarize it, I mean all the advisers, U.S. or Europe, with the current data and assuming the year 2 data is not too dissimilar to what we've seen with the first 17 patients, they don't think the product is approvable.

Yes. So it doesn't sound like the works that you think are representative of the agencies are really focused on low responders or any other outstanding questions as far as...

Extent to which -- I had a conversation with leadership about this. I mean, the extent to which there were all these ancillary questions, his comment was, you really not the fuzz off of all of that. That [indiscernible] is clear. So it really boils down to the issue of this decline in year 2. And is that going to be -- these are the 17 luckiest patients and everybody else is going to fall off the cliff. And like I said, that's just the confidence level that they need in addition.

Okay. Makes sense. So then how much patient profiling have you done in order to understand which patients are more or less likely to adopt ROCTAVIAN? I mean, people seem to need to make an assumption about durability. So how many patients do you think just want a treatment like this now? How many people do you think are going to try to [indiscernible] such that certain years of their life, they can benefit from it? How many people do you think -- it just sort of overlaps with that last bucket perhaps, but just might want to wait and see more data, more experience. Are these common patterns? Are these -- are there other patterns that you've detected in your market that you think are more common?

So yes, our story -- yes...