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

Hello, everyone. My name is Gena Wang, and I'm the midcap biotech Analyst at the Barclays. Welcome to our second virtual global healthcare conference. And first, I wish everyone stay healthy, and I would like to thank all the participants, investors, companies and especially our events team and corporate access team, who made this virtual healthcare conference possible. With that, I would like to introduce our next presenting company, BioMarin. With us, we have J.J. Bienaimé, Chairman and Chief Executive Officer; Hank Fuchs, President, Worldwide Research and Development; Brian Mueller, Chief Financial Officer. With that, I will hand over to you, J.J. to give opening remarks.

Thank you, Gena, and thank you for all of us for joining us on today's call. So last week, we announced strong results in the fourth quarter and the full year 2020, demonstrating our continued operational excellence despite the challenges brought about by the global COVID-19 pandemic. Excluding Kuvan contributions, BioMarin revenues grew 13% in 2020 as compared to the full year 2019 revenues, and the company generated $85 million of positive operating cash flow for the full year 2020, underscoring our resilience in a challenging environment and the significant unmet needs our medicines address around the world. So looking ahead, we are planning for a number of key events that we expect will drive substantial value over the coming quarters, beginning with our European Regulatory Updates with vosoritide for the treatment of children with achondroplasia. We are targeting a CHMP opinion by the end of June, followed by the European Commission decision in late summer, leading to a potential commercial launch this fall. To highlight the significance of this key regulatory milestone, we anticipate that vosoritide revenues ex-U.S. over the next 5 years represents 2/3 of our anticipated global vosoritide revenues. Vosoritide continues to advance this plan, and we are optimistic that investors will share the same degree of enthusiasm, the first pharmacological treatment to address the underlying genetic cause of achondroplasia that we are experienced -- that we have experienced from the patient community. Turning to ROCTAVIAN gene therapy for the treatment of severe hemophilia A. We are pleased to announce yesterday that the FDA has granted regenerative medicine advanced therapy, or RMAT designation for ROCTAVIAN. The FDA granted RMAT designation based on the strength of our clinical data and the unmet medical need within this population. The RMAT designation is complementary to breakthrough therapy designations, which we received in 2017, allowing early, close and frequent interactions with the FDA. For additional feature with the designation is that under RMAT, FDA has more options for how to leverage data post approval. This could be important for early generation gene therapy products such as ROCTAVIAN, in which a learning is still ongoing at the time of initial approval. We are very encouraged to have received RMAT designation as it confirms our impression and ROCTAVIAN has the potential to address unmet needs in hemophilia in the current context. Next step in the U.S. includes meeting with the FDA to explore the potential submission of a BLA based on the available 1-year results that could be supplemented with 2-year results during the review, and we are hopeful that the RMAT designation may facilitate the path forward. In Europe, we're also tracking according to plan, as we prepare for the resubmission of the MAA with ROCTAVIAN in the second quarter of this year, so next quarter. Assuming we remain on anticipated timelines in Europe, this could potentially lead to a ROCTAVIAN CHMP opinion in the first half of 2020 with a potential European launch in December of 2022. As a reminder, we believe there are 3x as many hemophilia patients -- hemophilia A patients in Europe, as compared to North America, so this is a very important approval for us. Finally, in our earlier stage pipeline, we have 5 programs moving forward, including BMN 307 gene therapy for PKU and based on encouraging Phe lowering and safety observed in the Phase I/II study with BMN 307 with a low dose, the 2e13 dose, we are pleased to be moving to the next higher dose of to the 16e13 vector genome per kilogram dose, which is equivalent dose to the ROCTAVIAN dose for the Phase III. So we would share the next updates on BMN 307 once we have selected the dose or registration-enabling states sometime but before the end of the year. In summary, demand for BioMarin medicine drove strong results in 2020 and are expected to grow 9% in 2021, excluding contribution from Kuvan. We are well positioned for substantial growth in 2021 and beyond, a significant growth in beginning of 2022, with potential contributions from vosoritide and ROCTAVIAN assuming approvals of those 2 products. So I will turn it back to you, Gena, for questions.

Thank you, J.J. So regarding the RMAT designation, like giving the timing, should we not over interpret? Like, for example, could that be suggesting possible accelerated approval?

It is certainly one of the mechanisms for the agency. I don't think the approval pathway today really is the focus, nearly as much by the way I think about the significance of the RMAT designation is: one, we have it. And it confirms in today's context, the fact that there's still an unmet need in hemophilia A. They've talked about the agency that regulating gene therapy products in spaces where there are already approved products would invoke different considerations that have them now today confirm or yesterday confirm that there's still an unmet medical need for hemophilia gene therapy, I think, is a focuser for them. And it's good to be reassured that they still see the unmet need. I think the RMAT designation like breakthrough, but on top of breakthrough, increases their ability and our ability to interact prior to the review submission so that to the extent possible issues that we can lay to rest prior to the review don't clutter the review. I think it's starting to get clear that the agency views kind of the challenge of regulating gene therapies is that, in any case, the full durability of the product is not going to be known at the time of an initial registration. So it's a way for them to say that we can also use the subsequent longer-term follow-up data to address uncertainties at the time of the initial review. And I think it, therefore, provides a statutory basis by which the FDA can make that judgment up sooner than later. And finally, it enables a strategic use post-approval of the same patients from the pivotal program to satisfy ongoing regulatory considerations and concerns. So all in all, I think this is a big upside for the company in terms of just recapitulating that Valrox has the potential to make a transformative benefit in patients with unmet needs.

Okay. Very helpful. So any -- maybe together with the expert advisory council, any particular data or effect data that most important that you think based on the feedback of this advisory council that -- what kind of data do you think will be most important to convince the FDA? And in addition to the data, what you share with us, the 1-year data, whatever the available, what additional data you will be also providing and the supporting data when you submit to the FDA?

Yes. The expert council, just to step back just a little bit, we convened a group of ex-regulators and physicians and the regulators were at several different regulatory levels, both at the review level, branch chief level, but also supervisory levels, both in the United States and Europe. This is a group that has convened to tell the point where the holes are. And I was pretty gratified that considerations like new trials or vastly different analyses didn't come up. I think their general view is that we're not -- the clinical data are quite impressive, and it's now about building their confidence in the future trajectory through continued observation. And while I think they would advise that on the one hand, there are arguments to be made that what we've demonstrated so far is good enough. Senior regulators also recognize that processes are such that it's unlikely they would be in a position to say, yes, prior to seeing the 2-year data. So basically, the feedback that we've gotten is keep doing what you're doing, keep the conversation with them, try to knock down as many issues. And in advance of submitting for formal review, it's not irrational to ask that the review begin before the 2-year data, but they also would say that that's really a logistics consideration. So I feel gratified no major holes. It's a little -- I know, frustrating to hear sometimes outside that sort of patience is required. I'm reassured that that's all that's required patience because as I pointed out, the year -- the NF17 Factor VIII expression level at the end of 2 years is actually better than what we observed in the 4e dose cohort at the same time point. And that we have the third year of bleeding control data from that cohort treated earlier, and we know their bleeding control is really quite acceptable, quite impressive. So we have every reason to believe that the NF17 through 3 years will look good, out of 134 is going to look great, when the FDA sees it. And hopefully, we can eliminate -- we can facilitate the action pathway as much as we can, given logistics constraints with the agency. And same plan with the EMA, who had a little bit less hang up about proving their ability as opposed to just giving us more initial in. So we're in contact with them as well and moving that part of the process along.

Okay. Okay. So 2 questions. For the FDA, in addition to the clinical data, do you think that they will also ask additional, say, CMC package or any other things that you think they will ask?

Well, they hadn't finished the inspection prior to the COVID. So there's always the possibility that inspection will raise additional CMC issues. But we, in general we feel like we have the CMC issues well in hand through to the end of the complete response letter other than inspection. As far as additional data, there are additional pages of biological data that could enter into the submission, which around the edges, I think, are marginally positively informed. For example, more liver biopsy data describe the state of the vector, more peripheral blood mononuclear cell data. We actually have other ancillary activities that are going on with the agency are interested in as well to characterize the unmet need in hemophilia. So all of that will go in the text. But I think the main thing is going to be, if the patients aren't bleeding in their second year, I think that that's going to augur very well.

Okay. So any updated thoughts regarding Phase I/II profile look different from Phase III?

The mechanistic kinds of things and the utility of using the Phase II, the prognosticate for the Phase III, I feel like they're all the same issues. The middle of this year, like I said, we'll have the fourth year of 4e, and I think that will be very helpful to interpret the third year and beyond of the -- to be commercialized material. When you even just look where we are, only 2 of 134 patients who are transduced went back to prophylactic factor replacement therapy in the Phase III study. And none of the patients in the Phase II population had to go back to prophylactic therapy. So what that's teaching us, I think is low -- that even at low -- relatively low factor expression levels out a number of years, there's excellent hemostatic efficacy. I think the highest post-gene transfer annualized bleeding rate that we've seen is like 1.3. Just to put that in perspective, I think Hemlibra is around 1.5, 1.7, something like that. So we have -- our worst number post-gene transfer is actually a pretty good number. Most of the years that we've been post-gene transfer, we've actually been under an ADR of under 1. So I think the longer and more we accumulate data, the more confidence we'll build about the durability of the product.

Okay. Sorry.

The updated mid-year data will probably go in the submission as well.

I see. Okay. Okay. Would that be also be part of the EMA package or will you submit later to the EMA the 5-year data?

That's going to be an issue of discussion with the [ regulators ] as we turn into -- as we move into full submission mode with the EMA. So we haven't -- we have our belief about -- based on where we left the review, we had pretty clear conversations with the EMA about what was going to be required because they -- towards the end of the review, it became clear to them that the 52-week data on 134 patients was really going to be available. And they said, why say yes on 8%, when we're going to have 100% of the data in just a few months. And unfortunately, the way their mechanism works, that means start over, but they were giving us advice about how to make the startover happen as expeditiously as possible. So the next step is, okay, now that we have the 1-year data, and it looks really good, let's have a clear conversation about the strategy for submitting in terms of -- the thing that's most important to us, obviously, is when we finish. And so when you start does influence when you finish, but it's not the only consideration, especially for these bureaucratic agencies that have a lot of workload, especially in the time of COVID. They've got to sequence their work. So I don't -- I know people want to read everything they can and to win submit, but I think the real issue is going to be how good is the 1-year data check? How good is the midyear data, every reason to believe it's going to be good? What's the regulatory timing? Are there non-logistical issues or just logistical issues? And if there are just logistical issues, how do this logistics play out over time. And then there'll be the 2-year data reveal next January, but if 2 years in event of 134 looks like the 2 years in event of 17, we should just be fine.

Okay. For the EMA approval, would they also need to do site inspection?

We have the GCP authorization free, if you're talking about manufacturing. So Europe signed off on the facility.

Yes, the facility was accredited by the EMA right before the shelter-in-place in -- actually less than a year from now. Sorry, slightly over a year ago. And so far, they are not telling us that they need to come back. It's already approved in Europe.

Okay. That's good. So now switching gear to vosoritide. I think J.J. you also commented on the earnings call possible postponing PDUFA date by 3 months because of submitting 2-year data, I mean, that's a possibility. But any -- did the FDA asked or like, was that based on the FDA feedback and you think it will strengthen the total data package or was that just purely from your end, do you think that will be beneficial for the final label?

I'll let Hank comment on that.

Yes, both. I think how much projection of durability will the FDA allow in, for example, labeling, given the 1-year data. And when we have 2-year data available and as strong as it is about durability of effect, we think that, that could be an important positive from a communication to patients and providers, also important for defensive reasons as well. So increase the value of the product, increase the probability of regulatory success, you know that they had mentioned the 2 years. So I mean, it's a little bit ambiguous in the sense that at the time of the filing, they said basically -- well, probably at the time of the pre-NDA meeting, they said basically an application has to be considered completed at the time of its acceptance. And so they obviously considered the application that we had complete. And then when they filed it, they noted that they had an interest in the 2-year data. So in recent interactions, we said, would you like to see the data? And they said, "Well, that's up to you. And they haven't told us that it's going to be a major amendment. They haven't told us it's going to be a delay in the PDUFA, but we're advising that this is the sort of thing that could result in a delay in the PDUFA. And when we evaluated the risk of that happening, the probability of that happening, we said on balance, we're better off increasing their understanding of the application than risking than we're in about 3 months.

Okay. Yes. That makes sense. And then the -- like when will you know that there could be a delay? When is the early sign?

There's no finite. They can make -- they can do it anytime they want, and it doesn't really necessarily even need to get attached to a specific activity. So I'd say stay tuned. The other thing -- it's interesting regarding about the delay, but the other thing that happened that was very interesting with them is that after they filed the review, the submission and a designated standard review, August 20th PDUFA date, we then pointed out that we had actually met all the criteria for priority review. So the bad news is we don't ever change our dates once we've inked our dates just because it sets up a system. But the good news is you actually you're right BioMarin, this is a priority review. And so what that does is that it qualifies us for priority review voucher if and when the sorties approved for patients so they contribute, that's nice bonus for the drop in the ball on the review classification.

Okay. Okay. That's very helpful. And then, Henry, do you think it's possible after that FDA will have AdCom, like would that be possibility at all?

Well, so far, they've said no. And I think a large part of that was driven by the fact that they had an AdCom in 2018, although there weren't products in the public session of the AdCom. They were able to have a view of the data that were emerging from the vosoritide program in the private session of the AdCom. And what we got -- I think we've been completely transparent about all of those discussions. Essentially, they said there was a [ 2 in the fray ] , and the discussion was, well, how long do you need to study patients to give yourself satisfaction that the treatment benefit is durable enough because the issue that they grapple with is in restoring to normal bone growth, you increased bone growth by 1.7, 1.8 centimeters per year. By itself, it's hard to assign clinical meaningfulness to just 1.8 centimeters. It becomes meaningful, as you know, as it adds up over time. And after treating patients for 4.5 years, for example, it adds up to about 9 centimeters. And so I think the agency was recognizing that durability is important, and they put to the advisory committee the question of how much data do you need to say, yes. And sort of there was a procon on that and the pro of shorter was easier to conduct clinical trials, more in line with sort of the ethics of prospect for benefit for children to be included in clinical trials and not having to wait because the growth loses are irreversible. But also, you have long-term efficacy data with a natural history control. You have excellent biomarker data. You have excellent preclinical data. There's excellent genetic data. So I think the advisory committee would have felt we've got -- based on that discussion, we would have gotten there. And the FDA just sort of leaving out there for now and 2 years would have been cool to see as well. Now it turns out, we have that, too. So as well put the cherry on the cake and leave no stone unturned. So will they have an advisory committee, therefore, given that they have one, hopefully, they can get there without the need for one. But if an advisory -- if they need to hear from an advisory committee to help them make their decision then we're pretty confident we know what they're going to hear.

Okay. And then quickly one question or 2 questions for Brian. You comment that you will refer to GAAP net loss in 2021 because of the Kuvan erosion and loss of the ROCTAVIAN revenue? And so how should we think about the pipeline for amortization and R&D spending to maintain profitability in 2022 and beyond?

Yes. Thanks, Gena. Thanks for the question. Just a reminder, the other headwind in 2021 that is a significant contributing factor to the GAAP net loss expected for this year is also the continued COVID-19 impact on the commercial business. We managed through 2020 with just about a 5%, roughly $100 million impact due to COVID and where we've modeled, and this is in the guidance, a similar, if not slightly larger impact in 2021. So that's also falling to the bottom line. But back to your question on R&D expense, so by all means, and this is a driver for why we are reverting to a net loss this year is maintaining the R&D investments, both in the late-stage pipeline, both ROCTAVIAN and vosoritide approvals now on the horizon. But until then, we're continuing to invest in the active clinical trials and the regulatory pathways that you were just discussing with Hank. So that -- those investments are going to be significant this year into next year. And then the early-stage pipeline and early-stage research, we've talked about PKU gene therapy and a number of other IND candidates coming on the horizon. So maintaining that level of R&D investment in order to generate value and retain that innovation value is very important. And then long term, with revenues hopefully from ROCTAVIAN and vosoritide, we still expect to invest significantly in R&D and have R&D increase on an absolute dollar basis. But with revenue growth, again, we'll expect margins to improve and see R&D expense as a percentage of revenue come down from its current level and then have plans for operating leverage as well. So maintaining significant R&D investment to build and sustain the pipeline, but also having an eye on margin improvement over time with revenue growth.

Okay. One last question, I just remember. For solid type 2-year data, did you also submit to the EMA? Would there be any impact there and then the launch track also in the year?

The EMA never had the same intensity of question about durability. The new data were coming, we provide it to them and it has its routine time line. We're still pretty confident in targeting CHMP decision at the end of June.

Okay. Okay. Great. Well, thank you very much. Thank you for participating, and we'll keep our fingers crossed.

Thank you.

Thank you.

Bye. See you.

Thank you. Bye-bye.