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

All right. Great. So welcome, everyone, to Credit Suisse's 30th Annual Healthcare Conference. I'm Tiago Fauth. I'm a biotech analyst here at Credit Suisse. We're joined today by BioMarin. I have JJ on the line, Jeff and Brian. So I appreciate you guys participating. Feel free to e-mail me any questions that you might have, and I'll try to work those into the fireside chat. The e-mail is [email protected]. And as usual, we can probably get started with some broad remarks, a recap of the year, key focus areas, and we'll start to go into a little bit more detail after that. But J.J., I don't know if you want to take it away.

Okay. Thank you. Thank you, Tiago. We appreciate the opportunity to join you today. So with just a few weeks left in 2021, we look forward to 2022 with great excitement as we consider the growth opportunity ahead, with potential U.S. approval of VOXZOGO next week. Based on the prescription demand for patients seeking VOXZOGO treatment in Europe since the approval, we are very optimistic that families in the U.S. who have children with achondroplasia will also be interested in accessing the only approved treatment for this disorder. So as you know, our PDUFA action date is November 20, which happens to be on a Saturday. So Jeff's experienced commercial team is in place and prepared for the potential approval in the U.S. So I think the U.S. VOXZOGO approval would pave the way for our largest global product launch to date and set the stage for significant revenue growth starting in 2022. So soon after the VOXZOGO PDUFA action date, another significant catalyst will come to fruition. That's the 2-year Phase III data with ROCTAVIAN gene therapy for the treatment of hemophilia A. We continue to expect resubmitting the Biologics License Application for ROCTAVIAN in the second quarter of next year, assuming supportive 3-year data, followed by an expected 6-month review procedure in the U.S., as is always the case in a resubmission. In Europe, with the Marketing Authorization Application validated and under review, we continue to expect a CHMP opinion in the first half of next year, and assuming a supportive 2-year data, which will be shared with the EMA when available in early 2022. We remain confident in ROCTAVIAN's potential to be an important treatment option for those with severe hemophilia A, and based on the clinical evidence observed to date, demonstrating dramatic reductions in bleeding rates in Factor VIII utilizations and, in fact, infusion rates following treatment. On the base business, which includes our 7 approved products, we improved the top line guidance for the full year 2021 as a part of our third quarter update. Despite -- and this despite the U.S. loss of Kuvan market exclusivity a year ago. Actually, our revenues in the U.S. is that -- I mean, our worldwide revenues for BioMarin this year will be pretty similar to what we achieved in 2020 despite a full year of generic erosion of Kuvan business in the U.S. So the underlying business is strong and continues to grow steadily given the essential nature of our products. Our R&D Day is coming up on November 30, and we look forward to sharing our earlier-stage assets and pipeline, which we expect will drive the introduction of our next generations of innovative and transformational products for patients over the coming years. So we hope you will all tune in as it is a virtual meeting. And so that's the very brief update on the company's situation today. So I will turn it back to you, Tiago, for questions.

Perfect. Yes. No, that works. And again, you kind of addressed all the key highlights. And again, all focus has been on both ROCTAVIAN and VOXZOGO, VOXZOGO a little bit more, just given the proximity of the potential approval, right? But it's interesting because, for both products, for a subsegment of investor, there are some pushbacks, right? And it's most -- it's a little bit of regulatory, and it's a little bit on the commercial side. So perhaps we can kind of break those down and see where there might be some misunderstandings and where folks might be overlooking some opportunities there. So with VOXZOGO, more specifically, the U.S. approval, right, so can you recap what data has been provided to FDA? And very recently, you alluded to some constructive dialogue with the agency. You've even went as far as saying there was some initial labeling discussions. So I understand we're pretty close to the potential approval next, next week, basically, but can you just kind of recap where you stand and how those more recent interactions have been?

Yes. I mean, we are 9 days from the PDUFA date. So as you can imagine, we are pretty advanced in our discussions with the FDA. We're in the final labeling discussions here. We believe that the dossier of data across our global program is supportive of approval for many reasons, including, first, the life of an approved treatment in this rare pediatric condition; the breadth of our program and our efficacy data in over 5 years of Phase II; the fact that we have an ongoing randomized, specific-controlled studies in patients from 0 to 5 years of age, which we'll readout in early '22. We have demonstrated a statistically significant placebo-controlled Phase III in 110 children as well as the fact that we have a very large, well-documented natural history study. So we were encouraged that, at 1 year, all placebo participants also, they -- when they were crossed over the placebo patients, half the patients were on placebo, you're crossed over after 1 year into the treatment arm of the study. And then again, for these patients, well, while on placebo, their growth velocity increased while -- while they received the treatment after 1 year, their growth velocity increased to a level similar to what was observed in the treated patients. So that's very encouraging, too. So we do acknowledge that FDA, in previous years, after our Phase III study, discussed interest in 2 years of consecutive study, but more data is always better. But we think our package is robust and addresses many, if not all, of the items that were requested by the FDA. And by the way, our investigators and others in the community felt that asking parents to enroll their children in a 2-year placebo study, where the patient receives a placebo, they would receive once-a-day subcutaneous injections of placebo, would have been extremely challenging, somewhat unethical and difficult to implement. So at 1 year, all placebo patients, again, were crossed over to treatment arm, and that was motivating for the families to participate in the trial.

Got it. No, that's perfect. And again, I understand EMA definitely has a different take on the data set and then how to interpret that given the mechanism, given the genetic basis of the disease. It might be a stretch, but is it a potentially relatively broader label in the U.S., say, possibly similarly to what you've -- have been granted in Europe? Or is that perhaps a little too much to ask at this moment?

Well, FDA was provided with the same safety data from our 225-day-old cohorts, from the ongoing newborn to 5-year old study to a [ full 6 ] study. So we'll have to see, I would say, the pivotal data is from children under ages 5 and up. So that is the base case scenario in the U.S., and we know differently. We were very happy to get the under 5 label in Europe. European's regulators are really pragmatic. They understand the need to treat these patients early because most of the growth lost in those patients, a lot of is lost in the first 5 years of age.

No, that makes sense. And I mean that kind of segues into potentially the commercial upside discussion and competition. You do currently have your 0 to 5 placebo-controlled trial ongoing. But this is an interesting product in a sense that you actually see investors concerned about the long-term competition and the drug hasn't even launched, right? So they kind of ignore, at least, substantial cash flows that can be generated for a few years relative to the competition. So perhaps, just to kind of frame that, like what do you think is your current lead, I mean, in different subsegments of the population? And mechanistically, do you think anything in the pipeline currently for achondroplasia may actually stand out versus vosoritide?

So I would say, we are years ahead of any competitors. I would say, at least, 5 to 6 years ahead. The one that's been making the most noise still hasn't communicated any patient data, so it's kind of hard to know where they stand. We have extensive patient data demonstrating clinical benefit. And so it's very difficult to comment on any of our competitors' data and mechanisms of action because there isn't any, except in a handful of healthy volunteers with one dose. So what we know is that the earlier the treatments with VOXZOGO, the better the potential outcome. I can tell you, the clinicians and the peers understand that very well. So it is very hard to imagine patients waiting for a treatment from a product for which there is no [ takeaway data ], and that may or may not come to fruition, when there's a highly effective and safe treatment available, which will be VOXZOGO. So also -- so the -- one of the would-be competitors, they are touting the fact that it's sort of a once-a-day subcutaneous injection, they're going to be once-a-week. I would say, our compliance so far with the patients in the study and the study potential is [ 98% ], so it doesn't seem to be a big issue. But at the same time, we do pay attention, and we'll talk about it more on R&D Day. But we have in early development a once-ever- other-week, which is even better than once-a-week, a long-acting formulation of VOXZOGO. And I think it will allow us enough time to get it approved before or about the same time of our competitors. And also, we have some intellectual property that -- on long-acting CNP that is an asset of BioMarin, and that could also offer us a competitive advantage. And finally, as you will hear at R&D Day, we have 2 things. So we're also developing a pen device with the current formulation, the ones that they have, to make it easier for patients to use VOXZOGO. And also, we are looking -- and you will see some early data at the end of November. We're looking at extending VOXZOGO indications beyond achondroplasia in other forms of genetic disorder structures. And we are super excited about the data we've seen so far and the expansion of the VOXZOGO marketing opportunity.

Got it. So it sounds like you have a plan for the life cycle expansion there. No, that's great. So I think that kind of takes care of part of the question. But the other one is, we do have some difficulties in trying to understand the commercial opportunity, right? And I want to talk a little bit about the Europe launch and how it's been going. But relative to other indications that you've pursued in the past, this is a slightly larger addressable -- I guess, potentially substantially larger addressable population. And patients there are actually fairly well-diagnosed, right, relative to some of the earlier products, where patient identification was challenging and the physician education was also pretty interesting. So how much does that actually support a -- the strong launch that you've kind of been framing as the potentially biggest opportunity you ever had across your portfolio? How could it look like relative to your previous launches, given all those positive factors that they're going to obtain?

Yes. So I would just say a very few words, then I'll have Jeff Ajer, who is our Chief Commercial Officer, comment on the launch and the launch bans in the U.S. But I would say, yes, I mean, indeed, all the patients are identified, most of them, before birth. It's a larger indication than the one we've been addressing so far, except for PKU. PKU is actually a large indication. That's important because it supports the fact that we can launch and access thousands of patients around the world. But with that introduction, I'm going to let Jeff Ajer give you his perspective. Jeff?

Yes. Thanks, JJ and Tiago for the question. I mean, as I sit here today, I'm super enthused about the early signals of demand from our launch in Europe. And I think some of that could be expected to read through to the United States. And normally, in Europe, what you have is a set of major markets that require a certain amount of time to navigate price and reimbursement approvals following registration approval and before you can actually sell drug. In the case of VOXZOGO, we have the opportunity right away to market in our largest market in Europe, that's Germany. And also, we applied for, and was granted, an early access program for VOXZOGO in France, which would be our second largest market in Europe, through a so-called ATU program. That ATU program was being reviewed before we got a registration approval. So the ATU is applicable to patients aged 5 years and up, and that's relevant, as I'll get to in a second. So in Europe, in the major markets, what we see is a very organized model for the care of pediatric patients with achondroplasia, which is really great because it allows us kind of immediate access to patients that are under the care of skilled positions that can handle the treatment of VOXZOGO. And so what we've seen so far that's been so gratifying is something that is unique compared to our previous launches of our base business, and that is we're seeing clinics referring patients in batches. We're seeing batches of prescriptions for 4, 5, 6 patients come through at once. We've never experienced that before. We've seen patients come through one at a time, sometimes a second or a third patient from an existing clinic, but usually one by one by one. So this experience of having 4 or 5, 6 patients coming through at once is new. It's not totally unexpected, and it's a great indicator of the prescription demand in those markets where access is open. And a second indicator of prescription demand that is really positive, that will generally take a little time to convert into revenue, is from so-called named patient sales markets, or markets where we don't actually have a registration approval, but where there are mechanisms for getting supply and reimbursement access for individual patients. And we've seen a broad range of markets outside of Europe, in the Middle East, in Asia, in Latin America that are sending in one to several patients and indicating that they want to work through these named patient sales channels. And of course, BioMarin has many years of experience with many brands working through those channels. So we know how to do that. It will take a little time to turn into revenue, but it all starts with that demand signal, which has been phenomenal.

Got it. And I understand the reimbursement is -- process is incredibly different relative to the U.S. But given that you are so close to the launch, how do you expect that to play out in the U.S. given some of the factors we discussed, higher awareness, but a more dispersed payer base and the necessity potentially to have some of those individual negotiations? How much of that is going to be a true bottleneck versus something you've navigated before and potentially can manage fairly easily?

Well, the U.S. market is highly atomized. And so in a situation like a new product launch, that really works to our advantage, even though it takes a little time and takes some resources; and expertise, which we have in droves at BioMarin in the United States, by the way, to work through. So there are many, many payers in the United States. And at approval, every payer will put in place a so-called new market block while we navigate submitting a dossier for their medical and payer reviews and until we see coverage policies published. However, there is a medical exception process available to most patients in the United States, and we're very adept at working through those medical exception processes. So our expectation is the initial demand signals or prescription demand in the United States is likely to come from those genetics and skeletal dysplasia clinics that have patients under their care. There are some in the United States. And I wouldn't be surprised to see prescriptions come through from those clinics, initially, in maybe multiples of patients like we're seeing in Europe. Beyond that, we know that there's achondroplasia, pediatric patients being seen all over the United States. In a pattern that kind of mirrors population centers, honestly, we've got claims data that tell us where those patients are being seen. A lot of patients are being seen by individual pediatricians or other specialties like ear, nose, throat or pediatric orthopedists. Probably those aren't going to be the specialties that are going to be prescribing VOXZOGO and managing these patients over time. So our plan is to drive those patients to pediatric orthopedists. Pediatric orthopedists are the pediatric growth disorder specialists in the United States and in most markets, so they'll be completely equipped to manage achondroplasia and prescribe VOXZOGO. It happens that, in the absence of therapeutic options for achondroplasia until this moment, most pediatric endocrinologists don't have experience and -- with achondroplasia and don't have a base of patients already in their practice. So a trick for us at launch, which is completely doable but will take a little time, is to drive those patients from their pediatric or other specialists to a pediatric neurologist that can serve as a treatment home for VOXZOGO. That's our plan.

No, that's interesting.

Pediatric endocrinologists. So to answer your question on Europe, we already have some revenues in Europe. It's not like we have to wait for a long time for so many a reason. We are setting the product in France, and we were setting the product in Germany. We started setting the product in Germany on October 1. So there will be revenue in Q4 in Europe. I mean, obviously, this is chronic therapy. So most patients are going to have a few weeks of therapy in 2021, but that's new primes to account for 2022. And also, just want to emphasize that with the European approval, we can get approval anywhere around the world, except in the U.S., Japan and China. In Japan, we have filed already. Japan will be a substantial market for us. We know the regulatory bar is pretty low there, and we're looking forward to taking advantage of the Japanese opportunity here.

Perfect. No, that's really helpful background. So I appreciate all the extra details there on the commercial strategy and the context. But I do -- I feel like I do need to cover ROCTAVIAN and some of the other topics. But for now, I appreciate the discussion on VOXZOGO. So perhaps, giving a little bigger picture on ROCTAVIAN because I think, again, well, similarly to VOXZOGO, you have some regulatory concerns and some commercial concerns. I think the regulatory concerns following the complete response -- I know you guys have addressed that fairly explicitly multiple times. I don't know if we necessarily need to discuss that very -- into a lot of detail. But with recent negative headlines across AAV gene therapies more broadly, are there -- is there any expected read-through to ROCTAVIAN? And is there any translatability from preclinical models and new findings to what you've seen in clinics so far with a completely different product, which is ROCTAVIAN?

Yes, I would say, no, we don't believe so. We believe the findings that we over observed with the 307 PKU gene therapy were inherent to the mouse model that was used . They were double knockout, mice that have no immune system. Actually, we've done the experiment with also high dose of ROCTAVIAN with the -- or a construct that is extremely similar to ROCTAVIAN in terms of the vector and the promoter. And at 1 year, we had no issue here with the mice. At the same time, what was observed with the PKU of mice here is not something that is new. And the issue of carcinogenicity, rodents has been documented and talked about for many, many years in the AAV field. And actually, this was evidenced when the FDA had their Advisory Committee, where, I think, the consensus was that any of the findings in mice have no translatability to humans. Actually, even, I think, one of the experts say that if you let the mice live long enough, they all will develop cancer because they have longer telomeres than the humans, so I'm getting into the technical details. But at the end of the day, again, we are -- ROCTAVIAN is not on clinical hold. Our HAE gene therapy is about to enroll the first patient, not on clinical hold. The only product that has no clinical hold is one of our competitors', not for safety reasons, but apparently for efficacy reasons or generally in terms of potency of the product.

Got it. No, that makes sense. And perhaps talking a little bit about the competition because, surprisingly, that's also an overhang for ROCTAVIAN, to some extent. You have, by far, generated the largest amount of data, the longest follow-up. And there were a lot of questions on durability factor, level of expression, so on and so forth. So without necessarily getting to the nitty-gritty, but from what you've seen from your competitors, so far, is it reasonable to expect that any of them could differentiate from ROCTAVIAN in durability or even just average factor levels or how that can track over time? And how much does your safety database and potentially clinical and commercial experience if you launch a few years ahead in ROCTAVIAN? How much of that is a factor relative to the uncertain product profiles of your competitors, at least, longer term?

Yes. I would say, again, I mean, the new information to -- when we last talked is, again, that our the leading competitor who -- Pfizer and Sangamo is on clinical hold. So I would say, our lead or returning competitors is increasing every week here, which is good news. Because being first, as you can imagine, in those kind of markets like when you treat the patient, the patient is off the market is very, very important. And also based on the Phase II data, again, our competitors have not communicated a new Phase III data yet. Actually, one of them, we studied with in Phase III. And if anything, it looks like the Phase III data is being postponed. But the Phase II data, if anything, it looks like the Factor VIII levels in the Sangamo product. In fact, the Sangamo product are declining faster than ours based on their most Phase II information. So I would say it is hard to imagine that any other company that's currently in clinical development with Factor VIII gene therapy can claim better results than what we've seen with ROCTAVIAN. There is no data whatsoever that demonstrates this. And if we ever see again, the clinical hold shows that there might be an issue with the commercial scale manufacturing of the Pfizer-Sangamo product. That will be great if we flex some patients who are in digital art. We will, in response, who claims some patients within high -- we have a super high Factor VIII levels that are requiring anti-coagulant therapy, which is kind of strange for a hemophilia patient.

Got it. That's fair. And I guess, you have discussed a lot relative to pricing value. There are several different reports, different sources. We don't necessary need to cover that, but we still get some questions relative to Hemlibra and how well-established and efficacious standard of care is. What is the value proposition relative to Hemlibra's population that would take ROCTAVIAN? Just...

Yes. Tiago, can you hear me? I mean, Jeff can comment. We've done some marketing research recently about that, that show that the reasons are willing to switch to ROCTAVIAN. I would say Hemlibra is still not the standard of care. It's a leading brand, but it's not a standard of care. Recombinant factor VIII therapy in still the standard of care in U.S. and, therefore, in Europe. And also, as I think was very expensive therapy. So Jeff, do you want to comment on Hemlibra and the dynamics of the market based on market research?

Yes. It's fair to observe that Hemlibra has been a disruptor. One of the first things that we would observe is this notion that patients will not change their hemophilia treatment, has been totally upended by the introduction of Hemlibra. So we either put the light of that notion or Hemlibra has changed the stickiness in the market. Either way, we see that as a positive. Another factor we note is that most Hemlibra patients are still consuming a certain amount of factor replacement therapy. So one must understand that many Hemlibra patients are actually on some degree of dual therapy. That's a cost and a complication of care. And finally, the value proposition for ROCTAVIAN, which is, to say, a onetime durable administration that yields in the Phase II study many years of bleed-free living without having to take infusions. That's a very powerful value proposition, whether you line it up against standard half-life, extended half-life factor replacement therapy or Hemlibra.

Also, Jeff, you might want to add that. The marketing research we did recently was there was an interesting point that we were not expecting, is that we asked patients that are currently on recombinant Factor VIII, whether they would first try Hemlibra before moving to gene therapy. And the majority of them said they would go directly from recombinant Factor VIII to gene therapy and skip Hemlibra.

That's right. So if there has been a concern that Hemlibra is going to become a step therapy on the road, from factor to ROCTAVIAN, what we've discovered through market research is, in fact, the patients that are currently on factor replacement are interested in ROCTAVIAN and would consider going directly to ROCTAVIAN without a step through Hemlibra. And the patients that are currently on Hemlibra, many of them are also interested in the consideration of a further step towards ROCTAVIAN from Hemlibra. So there will be different dynamics switching Hemlibra in factor replacement therapy patients. But I would not at all conclude that the Hemlibra patients are kind of walled off and won't consider and switch to ROCTAVIAN. The evidence does not support that.

No, perfect. We are getting to the end of our allotted time. But since you do have an upcoming R&D day, or perhaps I'll skip on the pipeline and leave that to be disclosed in the future date. But just for final thoughts on your base business, right? So you've continued to add patients even with COVID and near-term choppiness, but surprisingly, that business still seems to perform. We do always get questions on what's the base value of the base business. So can you talk about the sustainability of those cash flows, growth opportunities? I understand Palynziq is still potentially a growth -- important growth driver in the near term. But how do you feel right now about the sustainability and the value of the base business? Can you cover that, JJ?

I mean, I think, just going to dive -- I mean, as you know, our products, some of them -- I don't know -- Aldurazyme leg might have been on the market for 16 and close to 20 years. And they still work. We're still finding patients, which is pretty unusual for a biopharmaceutical product. Generally, any biopharma product peak sales are around 9.2 years after launch. So our business is extremely sustainable. We basically know all our patients in terms of the -- our enzyme business. We don't see any near-term to medium-term threat to this business. I know some gene therapy has been tried between MPS VI. Our Naglazyme patients have been tried, and it's not -- that doesn't appear to be really effective. And we will communicate about this in due time. So we believe there is a very, very long tail for our base business. And as you said -- and Vimizim is still -- and the most recent enzyme we launched is growing very fast. And Palynziq is still in launch -- launch mode. Anything you want to add, Brian or Jeff?

Yes. No, thanks. I would only add, first of all, the resiliency and sustainability of the base business, as indicated in the revenue and patient growth over time, as JJ had mentioned, some of these products have been on the market for 10 and 20 years, and we're still finding new patients. And because of these patients, without treatment, traditionally do not have very good outcomes. The fact that compliance rates and the resiliency of the business, including through COVID, has been as strong as it has been, is a testament to the health of that base business. I'd encourage you to look at the midpoints of our revenue guidance for 2021 compared to last year: Vimizim growing 12%; Palynziq, 43%; Brineura, 18%, just year-over-year. And we announced in our third quarter call recently that Aldurazyme, which is marketed by Sanofi, but a BioMarin product, been on the market for 20 years, they added 10 patients, 10% more patients year-over-year. So we're really pleased with the health and sustainability of the base business and its continued growth.

Great. No, that's awesome. I think we can probably stop there. Feels like a good point. But no, again, I just want to thank you, again, for the time and for the participation in our healthcare conference. Congrats on all the progress you've made throughout 2021, and look forward to hearing the updates over the following weeks.

Thank you, Tiago, for having us.

Of course.

Thanks, Tiago.

Take care.

Thanks, everybody. Bye.

Bye.