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

Awesome. Thanks very much. It's my pleasure to be hosting the BioMarin management team here. We have Hank Fuchs and Brian Mueller. Good to see you guys. Thanks for taking the time away from I'm sure what is probably a busy week for you. Hank, do you want to kick things off and just sort of give a quick update on the company and then I can chime away.

Thanks, Paul. Brian and I appreciate the opportunity to join you today, and we're just a few weeks remaining in '21. We look forward to '22 with great excitement. As the head of R&D, I'm very pleased with the execution of our pipeline pivot from ultra-rare products to products that address more prevalently affected genetic conditions. Our mission to translate genetic discoveries and the transformative medicines has not changed but the ability to leverage our deep foundational knowledge is changing the breadth and depth of our next-generation pipeline, as you'll all hear at our R&D Day on November 30. We look forward to sharing in great detail the transformation in the R&D engine at BioMarin and the expansive earlier-stage pipeline that sets us up for significant growth beyond our roughly $2 billion base business and ROCTAVIAN and VOXZOGO near-term opportunities. Speaking of VOXZOGO, our U.S. PDUFA action date is less than a week away, and we are preparing for what may be the largest opportunity to date in a pediatric condition and another example of our pivot to addressing more prevalent genetic conditions. We've been very pleased with the prescription demand in Europe since receiving EMA approval for VOXZOGO in August. And if approved in the United States, VOXZOGO will also be the only approved treatment option for children with achondroplasia. So we would expect families here to be equally enthusiastic in accessing VOXZOGO as soon as possible. I don't have a lot more color to share until we have the PDUFA action in hand, so stay tuned. Soon after VOXZOGO PDUFA action, another significant catalyst will come to fruition. That is the 2-year Phase III data with ROCTAVIAN gene therapy for the treatment of hemophilia A. We continue to expect to resubmit the biologics license application for ROCTAVIAN in the second quarter of '22, assuming supportive 2-year data, followed by an expected 6-month procedure in the United States. Now in Europe, with the marketing authorization application already validated and under review, we continue to expect the CHMP opinion in the first half of next year, assuming supportive 2-year data, which will be shared with the EMA when available. We remain confident in ROCTAVIAN's potential to be an important treatment option for those with severe hemophilia A based on clinical evidence observed to date, demonstrating with dramatic reductions in bleeding rates, Factor VIII utilization and Factor VIII infusion rates. On the base business, which includes our 7 approved products, we improved top line guidance for the full year 2021 as part of our Q3 update. Despite that -- despite the U.S. loss of Kuvan and market exclusivity a year ago, the underlying business is strong and continues to grow steadily given the essential nature of our products. This base business is driving operating cash flows. VOXZOGO beginning in '22 is expected to contribute significantly to top line growth and potentially ROCTAVIAN soon after. A robust next-generation pipeline spanning numerous therapeutic areas using a variety of modalities, all combined to make an attractive opportunity for BioMarin. Very broad overview, Paul, and I'm sure Brian and I have been thrilled to take questions.

Okay. Thank you both very much. I'm going to try as hard as I can to get some interesting insights into [Indiscernible], although, I understand the position you're in. But I guess -- just take to say that with the potential action, I guess, even Friday, right, at the tone of business day that you are where you hope to be in terms of the depth and nuance of labeling discussions that you're in?

Yes. I think at this stage, we feel like they have the information that they need in order to make their decisions. Their internal approval process is a little bit opaque, but there are no surprises emanating from that process. So we remain confident that the information that we've provided them is adequate for them to make a positive decision.

Okay. And you made a really interesting comment on the earnings call related to this concept of growth velocity as either a surrogate for final adult height or something that could be if you have 1 to 2 years of data sufficient for full approval, how has that discussion evolved?

Well, I think its full evolution will only be evident at the actual finish line. They make a decision on the nature of the approval pathway at the tail end of their decision process. And they don't really share that with us. I think the context of that discussion started with where are we on the 2-year data request. And I want to put that question -- a larger question of context, which is the agency cares about ultimate effectiveness of products. And in the case of VOXZOGO, in particular, durability is an important question. And the reason for that is that you don't like all of a sudden, take any kind of place child that make them succeed in the year. It -- the beauty of vosoritide, is that it's an analog of a natural regulator of bone growth. And so it restores to a more normal level growth, which counts only when an amalgam, just like our child, if you stop growing in age 5, you would be not very happy, so -- as an adult. So the concept that the industry is very interested in is what is really the ultimate outcome for a child here, which is what could be, for example, as measured by final adult height. Now the -- I think everybody recognizes that to do a randomized placebo-controlled trial of final adult height would be impossible. So I think people are trying to probe for what's good enough to get the agency over the finish line. And what does the finish line really look like. And I was just putting in context there that -- and they talk a lot about final adult that came up at the advisory committee as well. So I think the concept is that -- I think of interest is the bridge between what you've shown in 30 patients over a 5- year period or which is not a very large sample size or 100 patients over a 2-year period is how does that pertain to final at all height. And that's where the agency has the flexibility to make their decisions like you're substantial evidence of effectiveness. So that warrants approval, but on an endpoint, which is not the ultimate endpoint in the context of the way it works. So that's been thinking that's sort of the context of the disgrace.

I guess I interpreted your comments on the earnings call is really encouraging. Because to me, it sounded like the evolution of this conversation was away from 1 year growth philosophy data being an approvability question to the type of approvability. Is that -- am I being overly optimistic in that interpretation?

Well, the -- as close as we are to the finish line, I think it's just very difficult to handicap because, as I said, they're kind of in their closed rooms speaking their decisions about what is good enough, good enough. I think the encouraging part is there's really sort of nothing new to it, but it's a reminder that the FDA has the flexibility to make different kinds of decisions in different kinds of context to the good and to the bed. And I think that for example, [Agham], we just learned this morning had an unfavorable CHMP opinion. I think that speaks to the FDA's ability to sort of connect the dots a little bit differently sometimes, which is probably not a favorable thing for our industry. And the fact that that's the kind of things that were coming from us, means that we're in active dialogue with health authorities around the world about the pertinence of these questions.

Okay. Okay. All right. Very good. You mentioned the demand that you're seeing in Europe so far. I was wondering if there's anything else you can say to that beyond what was said in the earnings call.

Well, maybe I'll just start, and then Brian will probably have something to say about it. I mean, I think for a family that's told their child has a contemplation then they go through the sort of here's what's in front of you. Medically, I think those families quickly get to, okay, what can be done about this? And I don't think there's a very long step of reasonings involved in asking that question. But Brian, do you want to offer some comments?

Yes. Thanks, Paul. Just directly to the question, not much more to report since just a couple of weeks since the earnings call. But just to reiterate some of our comments there at the end of October. So with the European approval, that allows us to access these European markets and actually, a number of other -- rest of world markets also leveraged the EMEA approval. But just a reminder, launching in Europe is at the country level, so country-by-country level, pricing and reimbursement negotiations. Some of those will take some time into next year and beyond because there's a complicated health, medical, pharmacoeconomic dossier that's required and review and negotiation. But we're pleased to be accessing some of the early markets that do have some early access programs, that's France, Italy, Germany. And that's where we're seeing some of the early prescriptions from clinics. And it has been exciting to see both the interest, but also just some of the early volumes. As Jeff noted on the call, when we were launching our enzyme replacement therapy products, establishing the marketplace diseases that are not well understood, not well diagnosed, we were literally seeking out commercial patients one by one globally. And so for the early days of the VOXZOGO launch in Europe to be receiving batches of prescriptions, a handful from this center in France, a handful from that center in Germany, is pretty exciting. So supply chain is running. We're shipping product, getting these prescriptions processed and patients on drug, and we'll look forward to telling you more in February.

Okay. Okay. Okay. Great. Maybe just before we move on to ROCTAVIAN, just another quick regulatory question or 2. I think on the 2018 AdCom, Hank, they talked about not having great natural history data in achondroplasia. How did you address this at BioMarin? And what data are you able to share with the FDA that tries to kind of offer a benchmark for long-term growth velocity and whether or not patients ever have variability in that trajectory with a growth [Indiscernible] not.

So we had assembled a variety of sources of patient natural history data. The FDA comment, I think they made that comment while they were showing a slide for Dr. Julie Huber Fang, who is sitting in the audience, and they were talking about the study. And for the FDA, I think what was missing for them was specific patient level data, so they could do their own sort of matching analyses and those sorts of things. So what we were able to do is to work with Dr. Huber Fang to turn that data set, which was in a publication state into an FDA ready submittable data set. But the thing that helped us really tremendously about that was we had all placebo data and run in data. So we're able to show the agency that the patients who were treated with vosoritide were actually comparable to the patients who were in the natural history data set in terms of matching by age, gender and untreated growth rates. And I think that, that combination of patient level sources as well as validating that data from our collective -- carefully collected data set, was really an important element of. And I think that's something that you can't really do with relatively small data sets of treatment on our side because we can do many to one matching in both directions. And I think it also shows you that you really do need to access untreated patients at the patient level to be important from a scientific point of view, let alone from a regulatory point of view. So there's really a combination of things that we've provided to the FDA that we think will stand up as strong evidence of long-term untreated natural history [Indiscernible].

Okay. Okay. Have you talked to the FDA about what post-marketing requirements could look like to verify adult height?

Yes.

Okay. Anything you can say about that?

We've talked to the agency about the post-marketing requirements. Again, this -- we're days in front of the PDUFA. You can imagine if that topic were coming up just for the first time. I probably wouldn't be on this call.

Yes. Yes. Yes. Okay. All right. Fair enough. And then last one I promised, and I realized that it's tough a couple of days before PDUFA. I'm happy that you joined. But would you be shocked if this drug was approved down to [T] years old in the U.S. right now?

Well, I think we think there's a case to be made for that. So no, we would not be shocked. And we wouldn't be shocked if otherwise, honestly. I mean, the study, the pivotal trial that we give is in 5 grade or 5-year-old patients. So for the most part, you get what you studied. And now our story is that we had some relevant data that we provided to the EMA that we thought enabled the -- enable to help start to make an extrapolation from the randomized trial at over 5 -- the children under 5. And you referenced the AdCom in 2018, that was a discussion topic. And they basically said, "We're going to be extrapolating no matter what you do FDA. And so -- but I wouldn't be surprised if the FDA doesn't extrapolate because that's -- they tend to be on the more conservative side. Now you saw again the Eddie Home journey where it started in 1 place and moved to another place. And I think these things have -- there's an opportunity for more unfolding of that portion of the story in the coming days.

Yes. Okay. Okay. Very good. So let's switch gears to ROCTAVIAN and the 2-year data. And you mentioned some of your prepared remarks that -- I noticed in your earnings press release, too, that look, this is normal, right, but that FDA filing and potential EMA approval contingent upon positive 2-year data. I guess what do you think is positive to your data for these regulators? And is it the same thing for each regulator?

Well, notwithstanding some statistical nuances each sort of wanted their own kind of version of the analysis. But I think mostly it centers around ABR, Factor VIII use and Factor VIII levels. I think that -- to really be in the conversation, you have to have significant improvements in annualized bleed rates, which -- given where we exited year 1 and 134 patients with Factor VIII levels and given what we know about the change in Factor VIII levels over time. We have every reason to believe that bleeding will remain under control during that second year. I think that's a minimum thing. I think people will be interested in, for example, the rate of decline of Factor VIII in that second year. If it's faster than it was with the 60 group in year 1 in the prior study, that could be problematic. But we don't see evidence that, at least in the first year that it's faster. So there's no reason to expect that it would pick up necessarily. Most of the patients were completely osteoids by the end of the first year anyway. So I think great would be -- good enough, clearly, as an ABR that's superior to Factor VIII prophylaxis and great would be no worrisome trend in Factor VIII decline relative to what we've seen already.

Yes. Okay. Okay. Now when you saw like many of us that the FDA as uniQure for 1 year of stable expression data, were you thinking, Oh, no? Like could they move this to Heme A and then the kinetics and Heme A look different and the agency just keeps kicking the can down the road here? Or is that not the right way to think about this?

Well, I do think some portion of one's brain must be devoted to thinking about the FDA kicking the cane down the road iteratively because -- so first of all, we've gotten kicked once. And that's a fairly conservative and typical agency response to uncertainty. Having said that, I think uniQure situation a little different. There's a little bit more precedent for flatter expression over time between the 060 data, the North [Indiscernible] Day, which was a -- which preceded that, which was substantially the same cassettes, as the S06 cassette. I think all that sort of puts Factor IX expression in a slightly different context. Factor VIII is not endogenous expressed in the hepatocyte. It's known to be a bit of a difficult protein for cells to make. And I don't think it's the biggest surprise in the world that there may be some liver turnover contributing to decline in Factor VIII expression. And so I think the situations are enough different that I don't know that I would totally read. Now the good news -- the good news is that they've essentially asked uniQure for 1.5 years data, and they've asked us for 2-year data. So even recognizing our declining pattern -- and again, a reminder, nobody knows where this is going to settle out. I mean it could settle out at 0, but it could settle out at 5%.

It's actually probably a good biology that it should settle out at something like 4% to 5% versus 0, right? I don't know, is that your view?

Well, not knowing precisely the mechanism of loss of expression. I mean that could be some degree of hepatocyte turnover. It could be some degree of ER stress. It could be some degree of vector catabolism, I mean for a lot for vector metabolism in the form of chromonization. So not knowing precisely what the mechanisms of evolution of vector expression are, it's a little hard to prognosticate, which I think gets to where the agency is. The FDA in line, they'll just show us longer clinical data. I think everybody has to make up their own mind about this sort of thing, but 2 years of complete freedom from Factor VIII or Hemlibra and no bleed -- breakthrough bleeding for the vast majority of patients, sounds pretty good from a benefit perspective.

Yes, I hear you. I totally. Okay. On this point, I wanted to mention this FDA gene therapy AdCom. Because I thought it was really interesting what we didn't learn, which is we didn't really learn anything tangible. It felt like it was just this sort of brainstorming session to kind of worry about the theoretical is in the unknown. And it's like someone who is so much more of an expert on this than me and is also managing this R&D organization and strategically thinking about indication selection. It seems like the pros in the [Indiscernible] pipeline right or that all your gene therapy programs are in huge markets. The comps theoretically are that each is pursuing a disease outside of DMD potentially that has some level of standard of care. Like does that panel make you worried about the FDA's kind of risk-averse nature, not just in Heme A but in PKU or in HAE? And how do you think about that strategically?

Well, I think this is where a good portfolio balance is relevant. And we do have some gene therapies that for which there are available therapies. But a reminder there -- and we have some gene therapy candidates that are for conditions for which there is no available or for which there's poorly available therapy. And I think the center line of that conversation has got to be compared to what -- so there may be an available therapies, for example, Factor VIII prophylaxis is an available therapy, but showing that you have a superior outcome relative to factor VIII prophylaxis, that there still is a separation in the distance there. Now the thing I think the FDA is trying to quantify in each of these cases is how big is that clinical benefit. And then they're asking what are the offsets to that benefit. Now -- For a lot of the topics that were discussed at the FDA roundtable, there's some more immediately recognizable sequela like clotting events or renal toxicity or cat toxicity that's more imminent associated with the therapy. We fortunately don't have that, maybe a lucky AAV5 thing. The bigger question I think the agency was wrestling with at that meeting was insertional oncogenesis, which was -- or the potential for insertional oncogenesis. Now is the first topic of the FDA discussion. Because there you're saying if there's an available therapy and the incremental benefit is on the smaller side versus something for which there is no incremental therapy in the conditions devastating, you can clearly tolerate more uncertainty in the dying baby camp that we can and the -- we already got good therapy for this camp. And I think that's what they're wrestling with. Now the wheels of these considerations turn relatively slowly. So I think it would be natural to interpret that as not really much new that came out of that. And I think their biggest hottest topic, I think, is this insertional oncogenesis topic. And to show you how slowly the kind of the wheels turn, I think the whole motivation for this in hindsight was the Sabatino finding of slight degree clonal expansion of canine livers that have been transduced with Factor VIII. And I think there was nothing else new particularly presented at the discussion of insertional oncogenesis. And a big question mark about, okay, so maybe it can cause cancer in mice, but that hasn't shown up in 1,400 gentlemen patients, 3,000 kind of treated patients, 3,000 clinical trial patients. It doesn't mean it won't ever happen. And so I think that they're looking for breakthrough interest intersections and biology that may initiate what elements of a transgene are more toxic to genotoxicity. And so this is part of how they process through new and emerging technologies. I think they're probably a little bit more careful in this context than in other innovation. People have said to me, well, you were at [Indiscernible] your old to have been around for the monoclonal antibody era. And I remind people that monoclonal antibodies, you could stop the treatment, and it didn't change your genome. So right away, you're in a different category of consideration. And I think the FDA is just sort of grinding its way through that and that's a normal part of the evolution of innovative -- innovation in medicines. Then going back to the big picture though, there was nothing really new presented at that meeting. And therefore, I don't think that you would expect to see sort of overnight revolutions in their thinking about this, like all of a sudden turn off the spigot on all gene therapies.

Right. Yes, yes. Okay. Fair enough. Appreciate all the in-depth thoughts. So with that said, you're going to have your R&D Day coming up, is there anything you can kind of say ahead of that beyond the gene therapy assets that we've talked about that is getting you more excited than your role [Indiscernible] in?

Absolutely. It's been a hard thing to kind of explain to people. Because when I started, if ever you want to sort of classify into categories, oh, you're a metabolic disease company, oh, you're an enzyme replacement therapy company, oh, you're an NPS company, you're now SD company. So none of those things really, really, really fit what we are really doing, which was leveraging genetic discoveries to identify potentially transformative medicines that could be assessed rapidly and that would change people's lives. And so we're just doing that. And vosoritide as an example of that. We know Valrox will be an example of that. [Indiscernible] has been an example of that. And what's different is the genomics revolution coming to fruition, and it's illustrates -- you can illustrate that in so many different ways. So for example, if you're 3 years old, you have a seizure and you have no findings on MRI scan. Today now increasingly reflex testing to a genetics panel to diagnose potential underlying conditions. Some of which are treatable, for example, CLN2 deficiency, bring Europe. But as we see these data emerging, we can start -- because we're the invite partner behind the scenes here, it's called behind the seizures, we can start to see different mutations starting to occur, and we can start to annotate conditions as [Indiscernible] insufficiency disorders, for example, that are associated with genetic epilepsies. People know about dravet and LGS, boyer, there are many, many, many anymore. And so there's a lot of now new targets emerging in the genetic epilepsy space. And many of these targets have the potential to be something where one intervention could actually address multiple different genetics or nongenetic etiologies even. For example, that's also exemplified in our vosoritide program, where there's a specific mutation, FGFR3 overexpression that causes achondroplastic dorphism, but there are many other mutations that cost actual impairment, which would be amenable of the vosoritide. So it's those kinds of convergences and a multimodal company that I think are the most exciting future opportunity that we'll really just be able to grind through now. Brian is doing a great job of figuring out how to make that a long-standing operating business that's sustainable so that we continue to have the economic fuel to be able to turn these things out while sustainably growing the profit of the company. It's a really great time. It's a really great exciting process. It's hard work, but it's an exciting proposition.

Yes. What -- for something like genetic epilepsy and this has been a big topic in sort of genetic CNS in general, what do you think is the right modality to access targets like that?

Well, I think there's [brain] about that. And I think there are 2 sort of schools of -- or 3 school if you can get a small molecule to do the job then that you deal with the blood brain barrier and host of other problems. Barring that, we took the really set rule of go where the money is. We went straight into the brain with [Indiscernible] enzyme delivery directly into the brain. And that worked pretty well. And I think people are trying to find that bridge, which is deliver a complex biomolecule IV and have it work in the brain. I think people have been talking about that for a long time. I think except in the cases where you're talking about very, very young children with open blood-brain barriers, that's going to be pretty difficult to do, although there's interesting science going on in that area. I think then whether the molecular modality as protein oligo or gene edition is going to depend very much on the biology. Now what we've done to address that is we have very deep collaborations going on in the oligo discovery space, and we have very deep scientific collaborations going on in the control of gene expression space in the CNS. We have an internal capsid specificity program. And I think putting all those things together, we want to be able to put the right key into the right lack to get the right effect. We have the flexibility to choose among the keys based on experimental results in terms of what's going to be best for the therapeutic outcome.

Yes. Okay. Very good. Maybe one last question for Brian. As you guys get ready for JPMorgan and then guidance, how does VOXZOGO fit in? Do you expect to guide for that early?

In terms of giving guidance at JPMorgan, we'll see. I mean, it -- we'll definitely talk about the commercial prospects and our typical timing for our Q4 earnings call where we would typically give full year guidance would be in February. So we'll consider it. We'll consider it. Again, we'll -- at a minimum, we'll be able to give an update an interim update on the launch dynamics. So that will be fine.

Okay. And when you do give guidance -- sorry, I actually didn't mean specifically, JPMorgan just in general to guide for product VOXZOGO then what metrics other metrics might you give?

Yes. No, it's great. So we typically have not given guidance in a launch year when we get an approval midyear, for example, Palynziq a couple of years ago. But with the European approval of VOXZOGO in hand, and hopefully, the U.S. approval coming, we would expect that VOXZOGO will be a significant contributor to revenue in 2022, and we would expect to give guidance on the product. So stay tuned. And then in terms of other dynamics, we'll look forward to talking about the number of markets where we're actively selling product, we -- with some of the privacy laws around the world these days, we don't have the same level of patient-by-patient specificity we had many years ago with the ERT launching. But we'll plan to give some approximate level of estimated patients on commercial therapy. And then other key drivers to the launch are forthcoming as well. So we'll look forward and be as transparent as possible on all that.

All right. Very good. Well, best of luck over the next 48 to 72 hours.

Thanks, Paul.

Any e-mails from the FDA while we were going on or no? Maybe, maybe. Okay. All right. Thanks, again. Appreciate it.