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

Okay. Welcome to the afternoon sessions of the third day of the BofA Virtual Napa Conference. I'm Geoff Meacham, I'm the senior biopharma analyst. And I have Aspen Mori from my team with me as well. And we're thrilled to have BioMarin with us. Obviously, we'd all rather be in Napa actually, but not virtually, but it is what it is. And speaking on behalf of BioMarin, we have Chairman and CEO, J.J. Bienaimé; and we also have Brian Mueller, EVP and CFO. Hey, guys. How's it going?

Pretty good. Thank you.

Yes, we've done a lot of these of late.

[indiscernible]

Yes, exactly. So thanks for doing the session here. I don't know, J.J., do you want to have anything to kick it off with just for a few minutes, and we've got lots of questions for you?

Yes. Yes. So thank you. And again, we look forward to hopefully seeing you next year in person in Napa. I'd say, hopefully, COVID-19 should be way behind us at that time. So as you know, over the last few years, we have built a global, fully integrated rare disease company that is currently delivering close to $2 billion in annual revenues. We have a durable and scalable pipeline of innovative products. We have regulatory manufacturing capabilities and global commercial capabilities for products for rare disorders. And we also have, as you know, 2 very significant near-term global opportunities in large indications. We have set the stage for significant growth over the coming quarters. So starting with VOXZOGO for the treatment of children with achondroplasia. There are roughly 14,000 eligible children in Europe. We assume patients will be treated. Initially, the indication will be 5 years of age to 18 years of age. So that's 14,000 patients in Europe, Middle East, Africa and the U.S. region. It represents our largest opportunity to date. We anticipate the CHMP opinion by the end of this month, hopefully, in a couple of weeks. And the European decision, roughly final decision, 60 days after that, it always occur when you get a CHMP positive opinion. It's just a question of time onto that. VOXZOGO represents the first potential therapy option for children with achondroplasia prior to the entry of VOXZOGO upon potential approval on the limb-lengthening surgery has been available for families seeking treatment for their children for very short stature and all sorts of skeletal problems. These features are more than 5 to 6 standard deviations from normal in terms of their stature. So the consistent clinical benefits and safety observed to date has further increased our conviction that starting treatment with VOXZOGO as early as possible may provide the most meaningful outcome for children with achondroplasia. This will be facilitated by the early diagnosis, which is typical in achondroplasia. Those patients are diagnosed before birth or at birth. This is a major contrast to our lysosomal storage disease product, or enzymes which requires significant efforts over several years to identify patients around the world. In the U.S., November 20, PDUFA action date is on track. A review is on track and assuming approvals and [ long terms ] in those 2 key regions of VOXZOGO represents well over $1 billion opportunity for us. So excitement is building as we approach these key regulatory readouts. So briefly on ROCTAVIAN gene therapy for the treatment of hemophilia A. Last month, we were pleased to have shared the news that the European Medicines Agency or EMA for medicinal products for human use, so-called CHMP, granted our request for accelerated assessments based on our plan to submit the European Marketing Authorization Application, or MAA, with the 52-week Phase III results also in the next couple of weeks. We anticipate the CHMP opinion to occur in the first half of 2022, less than a year from now. And we are pleased that European health authorities recognize a dramatic hemostatic efficacy and transformative nature of ROCTAVIAN for people with hemophilia A. In the U.S., we expect to submit the 2-year Phase III results in the marketing application to the FDA in the second quarter of 2022. Needless to say that we are encouraged by the durability of effect observed in the Phase II study at Tier 5 and 4, respectively, in the high dose and the low dose studies. We look forward to sharing more data during an oral presentation at the upcoming International Society of Thrombosis and Haemostasis at ICH at the 2021 Virtual Congress on July 17 to 21. So we also have many more programs and early-stage products advancing in the R&D organization, and we look forward to sharing a deep dive on this at our R&D Day later this year. So this is a very big snapshot of the pipeline. Then I will turn it back to you, Geoff, for questions.

Perfect. Thanks, J.J. Yes. I guess from a regulatory perspective, to the extent that you can comment, we've had some very unpredictable decisions going back to your original ROCTAVIAN decision last year to the surprise approval of Aduhelm. I just wanted to know, I mean, you feel comfortable with what the requirements are for the VOXZOGO filing and where we are with that?

Yes. I mean, obviously, with the approval of the Aduhelm, Alzheimer product from Biogen [indiscernible] showing a lot of flexibility here. So we've had -- and starting with EMA, we've had consistent communication with EMA, and we are very encouraged by the level of interaction and collaboration. Again, we anticipate a CHMP opinion very soon before the end of the month, followed by the European decision, again, roughly 60 days after that. With the FDA, I would say, based on the weight of the evidence that we have accumulated between the Phase II trial, the Phase III trial, preclinical data, radiographic evidence and of the impact of VOXZOGO on growth and the fact that the FDA has been actively reviewing the 2-year data that we submitted recently. We are encouraged that the FDA will make a supportive decision at the end of November. And I would say compared to the Alzheimer situation here, I mean, we have clear evidence of clinical efficacy with the [indiscernible] point, which is annualized growth velocity. So again, this points out for, hopefully, a positive review by the FDA, and we are very confident regarding a positive decision by the EMA at the end of the month.

Just with respect to EMA, I know as we're getting close to it, but are you comfortable with the level of engagement thus far with the EMA? And then we can talk a little bit about the commercial piece of it, too.

We've had multiple interactions with the EMA as recently as a couple of days ago. So things are going well, and we are in active final label discussions with the EMA at this time. We anticipate approval with our people data in patients older than 5 years of age, although actually approved in Europe in children 2 to 5 years of age is also a possibility, but our base case is 5 years and older.

Got you. Okay. That's helpful. When you think about the mechanics of the launch, I know that you guys are initially targeting pediatric endocrinologists. But is there -- as you gate sort of the launch -- I'm talking about the U.S. first. Is there a bias to targeting some of the bigger centers and those have experienced with clinical development? Or do you think that you may go deeper into the community, just compare to -- compare and contrast this to some of your other launches for your orphan products?

Yes. No, we're going to go pretty deep in the community, where we have had a lot of interactions with potential prescribers, with payers, patient organizations. We've been documenting the burden of the disease so that we can educate some physicians about how serious a disorder achondroplasia is compared to growth hormone insufficiency, for instance. I mean maybe, Brian, you want to -- maybe you've looked at that also, you want to give your response on this?

Yes, absolutely. Thanks. It's a great question. And hopefully, we're just a few weeks, a couple of months away from a European launch of VOXZOGO. So first, as a backdrop, just to reiterate something J.J. mentioned in his opening remarks, different from the ultra-rare MPS disease franchise that we grew up upon, where most of our initial marketing efforts, especially at launch, we're educating physicians on diagnosis and finding patients not only with achondroplasia where we believe there's roughly 14,000 patients in our EMEA region, so a much larger patient population, but much more broad diagnosis, either at birth, shortly after birth or even in utero. So with that patient identification with many patients already seeing physicians, that's where we're focusing our market track. We've been mapping clinics and patients as we prepare for the launch for several months now. And then most of the larger European markets, most patients do see an expert specialist and in most cases, that's a pediatric endocrinologist. However, there are other folks that are in smaller clinics perhaps closer to home. So our approach in Europe is to bridge that smaller network closer to home with those experts, both on understanding the full burden of disease and what VOXZOGO can help with from a therapeutic standpoint, to develop that expertise with physicians that may not be used to therapeutics in skeletal achondroplasia. But many are. So for example, some of these expert physicians are already high prescribers of growth hormone for other growth disorders. So establishing that treatment home, establishing that network, as J.J. mentioned, relying on the patient advisory groups, relying on the physicians who've been in our clinical trials, just a reminder that the VOXZOGO journey has been many years. So we've got many clinicians with experience with the product. So between the patient interest, that known diagnosis and then this level of market preparation with the physicians and clinicians, we're optimistic about the launch in Europe.

Also these patients determine -- again, an illustration of how severe the disorder is beyond just short stature. We had some marketing research we completed recently, U.S., Europe and Latin America, these patients see on average, we have a specialist visits with different specialties. We ask them how many specialists does your child see every year or so. And the average is about 3 to 4 [indiscernible] specialist a year.

Yes. That's [indiscernible]. Yes, when you think about the -- so the -- so to compare and contrast this with other launches that you guys have had, the finding patients and identifying sort of the patient journey has been key. And here, they're sort of pre-identified, does that put more pressure on you to manufacture a lot more material to start off with the launch and then to get reimbursement and to get the logistics of the rollout faster than you normally would expect?

Yes. At the same time, those things take a while, especially initially, the launch this summer, hopefully will be in Europe first and then in the U.S. at the beginning of the year. And in Europe, except for Germany and a couple of other countries. The launch is a little more attractive as compared to the U.S. because you need to have reimbursement negotiations with the different countries like -- you start with Germany and then in France, Italy, Spain, and then other countries. So there is a sequence of events as compared to the U.S. where you start right away with everybody. So at the same time in the U.S., you do have to connect the patients with, make sure the patients are connected with the right docs and also that they get some support with the -- or reimburse with the health insurance companies. So -- but at the same time, you're right, this is where a patient population that's identified. There is no question about it, at birth or around birth. And there is a huge unmet need in the sense that there is no approved therapy in North America and Europe for this condition. So we believe there will be a kind of demand. So we -- the good news is here is that the cost of goods of VOXZOGO is somewhat lower as compared to a product like Vimizim or Naglazyme. So our gross margin is going to be higher. But so we believe we have ample supply for a successful launch, and we can probably go pretty fast in case things are heating up faster than we anticipate to continue to supply the drug.

Yes, Geoff, you asked about why -- different from, say, a drug like ROCTAVIAN which is a complicated gene transfer therapy, a single dose, VOXZOGO is a daily injectable. So beyond the clinical trial, making sure that we've got not just adequate launch material but material to support a revenue ramp has been a key part of the strategy. So we've got plenty of material. And then you mentioned compare and contrast with some of our historical drugs as much as diagnosis is different here, one thing that's the same is VOXZOGO is the first -- like hopefully, the first approved therapeutic pharmaceutical therapy for a disease that's been the case for our historical products as well. So establishing the market for a new therapy in a new disease area is something we've done before. That's the establishing the full burden of illness, physician and patient education. So those are playbooks that we are leveraging from the past indeed.

Makes sense. Thank you.

It's Aspen. Thanks, J.J. and Brian for joining us. Good talking to you guys. Still sticking with the topic of the VOXZOGO launch, I just want to kind of get a better sense of how you're expecting the patient physician interactions to go. How often are these patients seeing the physicians that would be prescribing VOXZOGO? And is it going to be more of a patient kind of driven decision or physicians kind of recommending it? Just help us understand that.

Yes. As I said, these patients see 3 to 4 on average, 3 to 4 specialties in a year. So they do interact with physicians. Again, I'm not saying that they're seeing their pediatric endocrinologist, 3 to 4 patients a year, but they are seeing physicians. And we ask them -- actually, we ask some [indiscernible] how often do you -- so I want to make sure I'm not on mute here -- happen like we asked the parents. How often does your child have appointment with their primary physician a year? And about 40% of them say every 6 months. I mean one -- sorry, no, once per 3 months, sorry. And about 47%, 48% said 1 per 6 months. So they see their docs, every 3 to 6 months, roughly on average and some of them a little longer than that. So there are definitely regular interactions, but they don't see their doctor a month. So indeed, that's why you're not going to get all the patients treated right away so the doctors will not have the capacity to entertain all those patients in their practice. But there were some significant interactions happening on a regular basis between the patients and the docs.

Yes. And I would just add, again, similar to some of our prior launches, there's going to be certain leading treatment centers, certain leading key opinion leaders. Again, in the case of vosoritide, we've got folks, particularly in Germany, which could be one of the first countries that we launch in, that have significant experience with VOXZOGO. And we also believe that the patient advocacy groups generally have been watching VOXZOGO develop with -- based on the publicly available information, and there's lots of interest there. And in terms of where people are seeking treatment today, in certain regions like Italy, we understand that up to 90% of achondroplasia patients undergo the limb-lengthening surgery, which is a very complicated and risky procedure. But at that level of patients seeking that treatment sort of indicates what the patient interest would be in the therapeutic treatment.

Got it. That's helpful. And that actually is a good segue to the -- my second question. So I think it's kind of been described as there being two kind of different patient populations among the achondroplasia patients. The random mutation population, those that have inherited from their parents. I guess how do you think about the strategy for targeting both those two different populations? I know that maybe in the 20%, there may be a little more pushback. But maybe just help us understand how you -- how it differs in terms of your marketing and sales approach for those 2 populations?

Yes. I mean I don't think our marketing sales reporting [indiscernible] that substantially different here. As you said, 80% of the kids with achondroplasia are born from patients -- from parents that are unaffected by the disorder and around 20% which is affected by the disorder -- so parents affected by the disorder. So we know for sure that regarding the parents unaffected by the disorder, 99% of them, they will want their kids treated because you talk to geneticists and they tell you that when they have to, unfortunately tell the parents, they are going to have an achondroplastic child. The first question, the parents ask is, what can we do about it? Unfortunately, until VOXZOGO is approved, not much, except limb-extension surgery, which is painful, dangerous and obviously, not the solution to -- the real solution to the problem. Then there's a 20% born from parents that had achondroplasia themselves. And I would say some of them, yes, would probably going to -- might not want their kids to be treated. Although it's a pretty big decision to make for your child. But I would say, based on marketing research, I would say more than half of them would want their kids to be treated. So I would say the vast majority of the kids are going to be treated. Remember, again, the people who are going to make the treatment decision besides the physician, who's going to see the prescriber, actually -- are actually not the patients because these are kids. So it's unlikely that I mean, when the kids get to probably 10, 12 years of age, maybe the parents are going to ask them [indiscernible]. But I would say most of the time, they're going to be younger under 8, 10, where the parents are going to make the decision. And the parents, if they have achondroplasia, are not eligible for therapy. They have to visit themselves. So whether -- even if they are not really [indiscernible] in this respect for this patient population, the kids achondroplastic parents and I think some -- I think that parents even -- if they have achondroplasia themselves, they are realizing that there is some value to systemic treatment with VOXZOGO beyond just stature, which is something some of them don't believe needs to be fixed.

And J.J., just when you think about the pricing kind of durability assumptions, we're still thinking $100,000, $200,000 and maybe it's 5 to 7 years to just catch kids up to the growth velocity? Is that still the general parameters?

Well, no, so we are thinking $150,000 to $200,000 a year on average. Again, Europe will be closer to $150,000 and U.S. closer to $200,000. But -- and again, we're going to probably -- we're going to be launching in Germany and Europe first. In Germany that -- we had set the German price would be very close to the anticipated U.S. price. So stay tuned there. So not much difference there. And so the treatment duration, obviously, it depends. So at launch, it's likely we're going to get 5 years of age and beyond. So it will be the patients -- the limiting was not likely to read like patients have to be 5 years of age and until their growth plate closes. And the growth plate closures depends on the kids, depends whether boys or girls and that is generally between the age of 15 and 18. So the treatment duration will be at -- based on the original indication would be at least probably 8 to 10 years, maybe more for patients. And then we're going to get the results of our study for patients under 5 years of age in less than a year from now, and then we'll file for approval for that. So then eventually, once we get the indications for -- we treated patients as young as a month old. So potentially, the kids could be treated from almost from birth until their growth plate closes, which is from birth to 15, 16, 17 years of age.

Got you. But there are some other populations though that could be on longer than that, right? The CNP population?

Yes. So we have started a trial in -- it depends, short stature with a genetic origin. We still had several patients already that's too early to tell, but we are exploring potentially expanding VOXZOGO indication beyond achondroplasia.

Got you. Okay. And the last question just on VOXZOGO. I mean there's obviously a number of other companies that are targeting this indication. What are your thoughts about down the road, some defensibility to some newer entrants? It seems to me in rare disease that first is always best to market and you really have a tough time kind of displacing the leader. But down the road if someone has a faster growth velocity, what are your thoughts on that?

Well, I know -- I mean that's going to be tough because faster growth velocity you have to determine that the faster growth velocity doesn't result in premature closing of the growth plate and then that you create some other issues and does not result in the final adult height that's higher. Because here, what we've been showing with vosoritide, with VOXZOGO, is that we bring to patients basically back to or close to a normal growth curve. And that's what you want. You don't want to really generate overgrowth because -- it has been shown in other -- with other products like growth hormone, that it results in premature closure of the growth plate. So it's actually not a good thing if you go too fast, if you accelerate growth too fast. We have also shown that actually, we don't do that. We have a radiographic evidence that treatment with VOXZOGO does not result in premature closing of the growth plate, which is very important here, and it shows it's likely that the effect of VOXZOGO is going to be -- we showed you [ less than 5 years ] now already, but it's going to be probably going to be beyond 5 years, especially if we treat the patients very young, when they are 1 year old or less. So I mean it's hard to tell, there are 2 would-be competitors. One of them is a long-acting CNP agonist. They haven't reported any patient data so far. The only thing they have clinical data so far is 1 dose in healthy volunteer in about 10, 12 healthy volunteer. So it's very hard to tell what they can do. By the way, we also have intellectual property patents that I've issued regarding long-acting CNP that we treat some study for that competitor and because we, ourselves, potentially will look into potentially developing a long-acting CNP ourselves. The other one is using a -- [ a product that's used in oncology ], which has a narrow therapeutic index so -- and also -- and by the way, they are way behind us, the long-acting CNP is at least 5, 6 years behind us. So we have plenty of time to establish our business.

I have one more on VOXZOGO actually before we move on. What does it look like for a patient that is starting to leave VOXZOGO? They've gotten through their treatment course or maybe they're at a certain age where it just seems like they're not growing anymore. Is there specific -- do they just -- are you just waiting for a plateau in height? Or is there a specific way to check if the growth plates are closed? Maybe just help us understand the patients.

Yes, it will be -- yes, it is a good question. I think the acid test is the growth plate closure is just do a radiographic evidence. You do a radiographic [indiscernible] of your wrist -- of the wrist of the kid, that you can do that. Pretty simple.

Then last question I had, guys. It was just -- on the commercial, we talked about U.S. and Europe, but are there -- when you look in the longer term, is there any epidemiology or any data that suggests maybe Asian population or Latin America or something like that?

Yes. Absolutely. I mean we mainly [indiscernible] I think about the rest of Europe. U.S. because that's why generally U.S. individuals care about. And Europe because this is a larger -- 3x the size of the European market and because this is where we're going to get likely approval first. But we absolutely are planning on launching the product on a worldwide basis. We are -- we will be filing in Japan before the end of the year. And there is a significant patient population there, same with the rest of Asia and South America and of course, the Middle East and Northern Africa. So we -- and actually, we are also planning eventually to launch in China. We have very limited operations in China right now, but we are planning to file for approving China down the road. So when all the numbers I've given you exclude India and China in terms of the opportunity, if you add those 2 countries would more than double the size of the opportunity here.

Right. J.J., is that a strategy going forward because typically, China has not been a market that's been more or less open? Maybe the discounts are 50%, maybe they're 70%, but you don't have -- usually they're cash pay...

Yes, that's true. Yes, but that's changing. Definitely, in China, there is definitely -- on the regional level, there is the emergence of private health insurance and some city health insurance. And clearly, things are moving there. Actually, we just got in one province in China -- I forgot which one, we just got approval for reimbursement for Vimizim at a rate of around $240,000 a year. So things are definitely changing. It's been difficult for -- to orphan drugs so far because of the high price of those drugs compared to the -- what most Chinese people can afford, but things are changing and VOXZOGO we've done some only matching research. We know there is a market there, and we are planning on launching it there.

Okay. Perfect. Well, let's switch gears to ROCTAVIAN. I guess we'll start off with, to echo what you said, J.J., are we still on track to file the MAA this month? Just give us a sense for the regulatory path here in Europe.

I mean we're absolutely on track. This has to happen within the next 2 weeks, so we have to be very much on track. And we are basically dotting the i's and crossing the t's. We are what we were calling publishing here. We're -- so the MAA is very, very close to be ready to go.

Yes. Yes. And when you think about the data thus far, so you have 1 year data from Phase III and then you have a Phase III that you have multiyear data. Help us with kind of the Factor VIII levels in your initial Phase I/II going out 4 to 5 years. I know the main issue that we look at is the bleed rate. And as long as that's 0 or near to it and that's ultimately what matters, but more and more, do you think that docs are returning to looking at Factor VIII levels over the longer term?

Yes. I mean, as time goes by, we have 5 years of data. So we have already established that the durability is likely to be at least 5 years. But I think it's going to be 8 to 10 years or more. Hard to tell because the factor levels indeed have been going down, although nobody knows yet what is the clear relationship between transgenic recombinant factor VIII levels and bleeding control. But we know eventually that if indeed the Factor VIII expression disappears totally, it's unlikely, we're going to have some significant bleeding control. But so far, we are seeing very significant bleeding control, as you said, for the high -- or for the low dose, actually the lower dose at 4 years, the ABR, annualized bleeding rate was 1.7 when it was much, much higher than that in the baseline, that was a 92% reduction of bleeding rate and a 95% reduction of Factor VIII. And this is with a [ 40 to the 13th dose ], which is smaller than the -- lower than the Phase III dose at 60. So this is pretty encouraging, but I would say the value in the [indiscernible] financial or economic value of demonstrating efficacy in additional years of treatment is pretty limited, because already, so we've seen 4, 5 years, 4 years of Hemlibra is $2.8 million or more in the U.S. to $2.8 million to $3 million, 5 years at $3.5 million. I think it's unlikely even if we had today data demonstrating that ROCTAVIAN works for 10 years, I don't think we could charge $7 million, right? So I would say we are where we need to be in order to be able to charge where we think that be, can be charged with this product and also based on the [ ISR ] analysis demonstrating cost efficacy at $2.5 million of treatment. So -- but you will say, well, that is still interesting for the patient to know, how long it's going to last. I would say, yes, in some respect, but at the same time, the patients -- the worst thing that can happen to them is this -- if ROCTAVIAN stop being effective that they go back to what they are doing today, which is some Factor VIII injections from time to time or some Hemlibra injections. So -- and the value even of 7 -- 5, 7 or 8 years of no -- not having to carry Factor VIII with you or Hemlibra injections is extremely high for these patients, would be a dramatic improvement in their quality of life as based on the marketing research we've done. And by the way, Hemlibra is far from being the [indiscernible] that maybe some would be because we have also some -- we have some hard data based on health insurance claims of about 100 patients on Hemlibra in 2020 and around 60% of them are still taking recombinant Factor VIII injections.

Yes. Along those lines, is there a way to sort of audit what the Factor VIII or Hemlibra persistent rates or discontinuation or adverse event rates that you can further kind of add to the cost-benefit argument to payers?

Yes, that's something we are continuing to explore based on these data we've seen, because Hemlibra is about -- for adult, average adult patients in the U.S., about $700,000 a year. And then if you have to add some probably less than they used to be, but some Factor VIII injection on top of that, I mean these patients are probably $1 million or north of it every year. So that's something we are analyzing further. But payers are very well aware of this.

Yes, that makes sense. Would you say, though, J.J., that the -- I think if you go back to the -- before the CRL, there's a lot of enthusiasm for the -- tide had kind of turn from looking at Factor VIII levels over time to just bleed rates. And we had detected that in surveys and things of that nature. Does the FDA kind of newer requirement for 2 years? Does that have any impact on enthusiasm from docs? Or is that just sort of scratch their head and they say, why? Why did this [indiscernible]

[indiscernible] We all scratch our heads, but it's okay. Now you -- we decided we're going to supply the 2-year data to them and file with the [indiscernible]. [ 3 years ago ], we are filing with 1-year data in Europe. So at least hopefully even -- I mean, hopefully, by the time we start in the U.S. in Q2 of next year, we'll have European growth. So that will be very supportive. But our marketing research show that the interest in ROCTAVIAN is actually higher than before the CRL because now we have Phase III data. By the time we launch in Europe and also in the U.S., we're going to have 3 years -- we're going to have -- sorry, we're going to have 2 years on the Phase III, of course, available. By the time we launch, we're going to be close to 3 years, and we're going to have 7 years of the Phase II results. So we're going to have a lot of data to support the durability of the value of the product. I mean, Brian, anything you want to add there?

No, I think that covers it well, J.J. and the only point of emphasis was there was a lot of interest in ROCTAVIAN and the pharmacoeconomics were very clear before the CRL. While the complete response letter was a surprise and disappointing, we were ready to launch that week, and that included payer conversations. J.J. mentioned the [ ISO ] report, that was based on the [ 4-year peer data ] and the overall marketplace preparation. So while we've had to pause those efforts, more data is just going to increase the ROCTAVIAN value proposition over time.

I have one follow-up on the Phase II data. So I noticed in the full year, 5-year release that you guys put out about a month ago. So the Factor VIII activity level wasn't included. I just want to understand that decision. Is that more so just to leave a little bit something there for the ISTH presentation? And then I'll just add on top of that, I also realized the -- I think the percent of bleed rate -- bleed-free patients also wasn't included in that PR? Is that once again just something...

Yes, I forgot the details. So yes, we did not include the Factor VIII levels because we did the same last year because we want to keep that with the ISTH [indiscernible]. If you disclose to us and they don't let you present, they say there is no more new data. Plus, but we have given you the gist of what's happening. I mean we said that the Factor VIII levels continue to decline commensurate with the previous years. I don't -- what we said is that none of the patients are back. None of the Phase II patients are back on prophylaxis. And some of them have experienced bleeding. So we show all this at the ISTH because actually some of those bleeds are not spontaneous bleeds. They are related to trauma like kind of stuff. So you're going to have a great details in a few weeks.

Okay. And just one more question on that. I noticed that the -- for the [ 4e dose ], the annualized bleed rate, still pretty low, but it did jump a little bit from, I think, about half or 0.5 to maybe 1.7 or something like that. Is that just year-to-year? Or help us understand that.

Yes, I mean this could be -- some could be variability because I think it was 0.5 in year 3, but it was, I think, around 1 or close to 1 in year 2. It was better in year 3 than year 2. I mean they do jump around 1.7 is still a 95% -- 92% reduction in ABR, 92%. And again, I think people lose track of the fact that we're not comparing ourselves to placebo here. But if we were comparing ourselves with placebo, that will be a 99.5% reduction in bleed rate. We are competing ourselves in these patients were on standard of care before we switched them to ROCTAVIAN. They were receiving 2 to 3 intravenous infusions of recombinant Factor VIII going. And we still reduced -- we took them off prophylactic Factor VIII and we still reduce their ABR very significantly.

That's a good reminder that as more data matures, that's going to include -- or gathering more quality of life data as well because standard of care beyond the bleed control that J.J. mentioned also comes with anecdotally severe hemophilia A patients lives being working around their hemophilia and the anxiety in those -- in that overall burden of illness. So that data set will be emerging and maturing over time as well.

On the topic guys of the durability of effect, J.J., you mentioned you have 7 -- you could have up to 7 years of data [indiscernible]

I mean, we're projecting that. We don't know for sure, but [indiscernible]

Yes, of course. Yes. Yes.

[indiscernible] 7 to 10.

But would you say though that if you're closer to 10 versus 7, I mean you are giving quite the break to payers. Do you feel like you're shortchanging yourself at $2.5 million? Or is there -- I'm just trying to get a sense for what inputs go into that as the data materializes.

Good question. I think the final price for the U.S. will be determined once we have a 2-year data.

Got you. Okay.

At the end of the year. And actually, the price will also be determined after we have the 2-year data at the end of this year or the next.

Yes. Makes sense. Would you expect -- compared to your other launches where you have -- you mentioned, Brian, that oftentimes there's nothing approved, right? This is completely unmet, and here in hemophilia, you may have step edits. You may have a typical payer kind of the strategies that they pull, right, to sort of gate access. Was that -- is that something in your conversations previously that sort of came up? Or is it pretty easily patients that have broken through Factor VIII or maybe Hemlibra and now are looking for another option? Or how can you sort of leapfrog the paradigm, I guess, is my question?

I mean the paradigm of the payers trying to put some barriers to use here?

The treatment paradigm to try to get as many patients sort of as early as possible as opposed to stepping through years of Factor VIII.

Yes. I mean, again, I think what Hemlibra has shown is that actually before Hemlibra and all, it was believed that this patient population was what's called very sticky, that they wouldn't change therapy very easily. Well, Hemlibra has shown that they do where there is actually a significant improvement, which definitely Hemlibra is an improvement. This is for some patients versus recombinant Factor VIII injection. So that just show that some patients -- and patients have been waiting for gene therapy for decades. And some of them understand the value of it. The payers understand the value of it. Actually some payers understand they will save money by using ROCTAVIAN, even if you price it $3 million a patient. So I mean, again, not everybody is going to jump on it. That's for sure, like any breakthrough technology, there are the very early adopters, the early adopters and then people that [indiscernible] longer. But I think we live in a world of social media. These patients do communicate with them -- with each other. And I think the experience they will be adding [indiscernible] ROCTAVIAN will probably help disseminate the product around the patient population.

Got you. And then just one final one would just be on the potential for retreatment over time. Should a patient need it, are you guys still working on sort of next-gen vectors? And -- or is that something that needs [indiscernible] approval?

Yes, we are going to be have different options. Obviously, we are actually trying to understand, first, what is it happening exactly what's in these patients, in the cells, what's the biology behind the reduction in expression levels to actually better determine what is the best re-treatment strategy, because you don't want to re-treat and then the patients still don't respond. So -- but there are lots of interesting technologies around and we will discuss it at R&D Day in November. So hopefully, you will be attending. But we have a little time to figure this out, again, hopefully 7 to 10 years after launch.

Okay. That sounds good. Well, looks like a couple -- we'll do a couple on the base business. So for Palynziq, we just want to ask you, if vaccination rates have improved to where you're seeing better patient flow in some of the clinics and maybe more of a restoration of business on the back of COVID-19 sort of winding down in some -- in most regions.

So we are. So Brian, do you want to go over that?

Yes, absolutely. So we're just a few weeks away from reporting in the second quarter. So that will be a large part of the update is what we're observing in both the U.S. and Europe in terms of the PKU clinics opening. But of course, we're optimistic with the progress of vaccinations around the U.S. and Europe and seeing society more broadly open up. But what we said back in April was that 50% of U.S. PKU clinics were open and 85% of PKU clinics were doing telemedicine. So we're hopeful that we'll resume what we would call normal Palynziq new patient start rates here as things open up. Just a reminder that Palynziq has a unique dosing induction and titration phase that takes a few months to get to that therapeutic dose level. Palynziq patient starts for that reason, usually happen in the clinic. We did start a program that can start Palynziq outside of the clinic, but that we will be limited by some of that capacity as things open up. But we have heard anecdotally that the interest is there. So we're also hopeful that there'll be some backlog in patient starts to work back to. But just to note, with the COVID impact, Palynziq is still our fastest-growing drug in the base business, the midpoint of our 2021 guidance that we reaffirmed back in April, is about 40% growth over last year. So we are still adding patients just a bit more slowly during the pandemic.

Okay. That's helpful. Thanks for that, Brian. A bigger picture question, when you think about a lot of the gene therapy, cell therapy and even editing technologies that are out there today, are you guys comfortable with what you have today in terms of the tools for adding newer programs to the platform? Do you look at it as a technology? Or do you look at it as an individual sort of products? Because there's a lot to work with here that today in the market that it's pretty curative intent therapies that are going after genetic diseases. We just don't know which one is the best one.

No, you're right. So we are somewhat what we call modality agnostic, but we look at a lot of adjacency in terms of adjacency to like gene therapy versus gene editing. So we are looking at all that. We might get more there. We might do some partnerships there. As you know, we did a lot of preclinical partnership last year, 10 of them. Some of them we didn't announce because they were not financially material at the time. So we will continue to do some early-stage partnering and e-licensing. So -- but if you know what we really know how to do today, we can do gene therapy, development and manufacturing, which is major in gene therapy. We have been probably one of the largest, if not the largest gene therapy manufacturing facility in the world that's operational today to launch ROCTAVIAN and then to also make future gene therapy products like our PKU gene therapy, which is in clinic right now and other ones. We have -- of course, we have a heritage of enzymes and protein manufacturing and development. We do have some small molecules like Kuvan, and we have some other ones in early development. We -- and now we're going to go back to oligonucleotides. As you know, we announced that we're going to move forward and filing an IND for BMN 351 for the treatment of Duchenne muscular dystrophy. We had some great preclinical results in a DMD mouse model that we treated for 13 weeks. We showed a dystrophin expression levels of 30% to 50% of normal level, not going from 0.1% to 0.15%. 30% absolute expression levels of full rank dystrophin in the quadriceps of this mice. So that's very exciting is our unheard of results. And again, we're going to give you some more specifics on this at R&D Day in November.

I got you. And last question, just with the ROCTAVIAN launch looking to next year to maximize the impact, it's going to be quite transformational for you guys from a P&L and a cash perspective, all the stuff that you mentioned, J.J., would that give you more enthusiasm? Or would you invest that back into the business for manufacturing or optimization...

Yes. So I'll start and then -- I'll start and Brian can give his perspective. But I mean, I would say, yes, starting probably in '23 -- I mean, '22, but would be '22, we'll start generating some hopefully pretty significant cash flow here. Some of it, we will reinvest in the business. Some of it will increase profitability because we know we need to continue the growth in the long term of the company. But also we added up Q1 with $1.4 billion of cash and we were cash flow positive. So Brian, anything else you want to add here?

Yes. Just to emphasize that the strategy is sustainable, long-term value creation. And I think just quickly, there's 3 parts to it. There's the healthy base business today. We've got some headwinds, which are causing us to expect GAAP net losses, but expecting positive operating cash flow, positive non-GAAP income, close to $2 billion in revenue. So healthy base business. These 2 potential blockbusters with VOXZOGO and ROCTAVIAN on the near-term horizon that could double the company's revenues and with that's going to come substantial profitability and margin growth. And then the sustainability piece of building this early-stage pipeline, as VOXZOGO and ROCTAVIAN move out of the late-stage pipeline, having early-stage assets move in, those are hopefully our product launches the rest of the decade. So that's the strategy and key to it, as you noted, our ROCTAVIAN and VOXZOGO approvals and launches, but we're excited.

Awesome. Well, J.J. and Brian, thanks so much for your time, guys. It's really a very helpful conversation.

Thanks for inviting us.

Yes. Good talking to you.

Yes, you too.

Take care.