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

Great. Well, let's go ahead and get started with our next session. Thanks, everybody, for dialing in. This is the last day, I believe, of the Piper Sandler 33rd Annual Healthcare Conference. I appreciate everybody dialing in. We have with us our next presenter, which is BioMarin. We have with us Chairman and CEO, J.J. Bienaime; CFO, Brian Mueller; and Chief Commercial Officer, Jeff Ajer. So this is meant to be a participative session. So folks, I think there's an option for you in your Zoom window to ask a question, if you want to raise your hand and ask a question, that way you can do it or if you don't want to do it that way, there's always the old school option. You can just e-mail me. Hit me an e-mail, and I'll make sure your question gets answered. So J.J., I think you had a couple of minutes of intro commentary that you wanted to make. So I'll let you do that. Please take it away, and then we'll jump into questions.

There is some background conversation going on but maybe because I opened -- yes, yes, sorry. I can't hear what you just say, but that's okay. So thanks, Chris. So this is our last investor conference of the year, so we appreciate the opportunity to update you today. As you know, we held our annual R&D Day on Tuesday, where we provided a deep dive into our strategy for pipeline renewal and the sustainability of the BioMarin growth beyond ROCTAVIAN and VOXZOGO. The key theme was our focus will be pivoting the pipeline on products that address more prevalently affected genetic conditions. So this will be enabled by our proven track record and established capabilities that have been built over the last 15 years. We think that we are well positioned to drive accelerated growth beyond contributions from VOXZOGO and ROCTAVIAN. And this is supported by our goal to average 2 INDs per year by 2023. At R&D Day, we discussed a number of new programs, including BMN 255 for [ PH1 ], BMN 331 for hereditary angioedema, BMN 351 for DMD as well introducing BMN 349 for alpha-1 antitrypsin deficiency, which again, we disclosed in the first half. So we also shared some insights into the areas of pipeline focus, including CNS and cardiovascular indications. We touched on BMN 307 to align with the FDA to potentially get the clinical hold lifted in the next quarter of next year -- in the first part of next year. And as we believe, the cancer signals in our preclinical model was likely not caused by BMN 307. The full presentation is available on our IR website, should investors want to hear the many updated shares -- shared on Tuesday. So Jeff can talk in a minute about the enthusiasm we are seeing from VOXZOGO. As you are aware, we just have the VOXZOGO launched in the U.S., launched a meeting in the U.S. a few minutes ago, again, the first and only approved therapy for children with achondroplasia. We are very encouraged by the number of prescriptions being written, and we continue to believe that VOXZOGO will be our largest pediatric opportunity to date. With ROCTAVIAN, we anticipate a CHMP opinion in the first half of next year under the accelerated assessment time frame. We are very encouraged to be able to pass towards potential approval next year in Europe given the breadth of clinical evidence demonstrating dramatic reductions in bleeding rates, Factor VIII utilization and Factor VIII infusion rates following treatment with ROCTAVIAN. So in the United States, we continue to expect to resubmit our biologics license application for ROCTAVIAN in the second quarter of 2022 and assuming supported 2-year data, which is around the corner and followed by an expected 6-month review procedure in the U.S. So that's a brief update of the business today. I will turn it back to Chris for questions.

Great. Thanks, J.J., for those comments. I have a ton of questions on the R&D Day. We've got about 25 minutes or so here. But I do want to ask since the focus was not on your R&D Day on VOXZOGO. We have Jeff here. Maybe we'll spend some time on VOXZOGO. Maybe, Jeff, I wanted to dig in maybe on the differences between the U.S. and the European market. So the obvious difference, the one that sort of comes to mind to everybody is the label. Obviously, you've got the age difference between Europe and the U.S. But I've also heard you talk at length, Jeff, about the difference between the 2 markets. You've got more of a concentration of patients in Europe. And on the approval call, you really emphasized that patients are more dispersed in the U.S. Referral connections need to be made. I know that you're going to guide later, but just how should we expect the ramp? I know you're guiding, I think, about the first of the year. But should we expect the ramp in Europe to be meaningfully faster than the U.S.? Or just kind of give us a sense here of how you're expecting this to play out.

Well, Chris, thanks for the question. I can tell by the way you frame that, that you've paid a lot of attention. So very appreciative of that. And I want to start off by echoing J.J.'s comments, I could not be more enthused about the commercial opportunities for VOXZOGO. And the demand signal that we're seeing so far in terms of inquiries and prescription demand following, first, our approval in Europe in August and now with the U.S. approval is super encouraging. And of course, we have to translate those demand signals into treated patients and product shipping and generating revenue. And as you said, we'll provide guidance -- revenue guidance early next year for 2022. So relative to the ramp, the EU situation is a very different business dynamic than the U.S. So the main gating factor in the European markets is gaining reimbursement approvals. And as you know, in the major markets, we have approval to treat for reimbursement patients in Germany and in France under an ATU that's been opened up. We've also had some activity going on in smaller markets in Europe. But really, France and Germany is where the early action is here. Other major markets that we would expect to come online starting early-ish next year next might be Italy, and other markets will cascade throughout 2022 once we have availability to treat patients through a reimbursement approval in those European markets. The care model is more concentrated in Europe. So there's a smaller number of centers of excellence, I might call them, where pediatric patients are really concentrated. And so that kind of care model allows us to turn on patient treatment relatively rapidly in Europe once we have the reimbursement approvals. And remember, that happens market-by-market. So we turn on one market, we start treating patients. We turn on a second market, we start treating patients. That's Europe. In the U.S., and you may recall in our approval call, I showed a heat map that was generated from claims data showing where pediatric achondroplasia patients are located around kind of the vast and diverse United States. And it's a different model here. I would say a minority of those patients have an achondroplasia treatment home today and a majority of those patients do not have an achondroplasia treatment home. So in the United States, the big effort is connecting with patients and caregivers, driving them to a treatment home for VOXZOGO. A treatment home for VOXZOGO could be a genetics clinic, a skeletal dysplasia clinic where we have existing BioMarin relationships. And we think that will probably be where the early demand comes from. But what we also know is that genetics clinics, in particular, chronically don't have capacity for treating more patients. We're experiencing those kind of ceilings and capacity with our Palynziq business today, for example. So we think that pediatric endocrinologists, those that are interested in treating growth disorders -- and they're really the growth disorder specialists. They're interested in achondroplasia. They're interested in VOXZOGO. Most of those physicians don't see achondroplasia patients today because there hasn't been a therapy for those patients, but they're really interested. And we think that should be a really productive treatment home for VOXZOGO. And we've been working all year to establish pediatric endocrinologists as the treatment home. Now we need to drive those patients to those ped endos and get the prescriptions started, work through the reimbursement approvals patient by patient initially in the United States. And remember, Chris, we've got a lot of experience doing that through multiple product launches in the United States.

Yes. And I think you kind of gave some macro numbers, right? You said the label allows access to 2,000 to 3,000 patients based on age. And I know you said the minority of patients are in a clinic. I guess maybe just sort of a question that might be unfair, you might not know, but as you think about once you hit your stride on the launch, what kind of cycle time are you anticipating from identification to actually having the patient in a chair getting drug if they're not currently in a treatment home in the U.S.?

Right. That's the big question, Chris. It's really not so much about identification. All of these patients have a diagnosis of achondroplasia peri-birth. So all of these patients have caregivers that know that they have a child with achondroplasia. It's really about driving those patients to a place where they can be treated with VOXZOGO. I think there's going to be a lot of variability around the time for that to happen. Once we've got them into a treatment home, the process of getting a prescription, working that through reimbursement approvals, there's a lot of variability there, too. And we're guided by our experience most recently in the Palynziq launch, before that, the Brineura launch and the Vimizim launch. So we know that we can navigate those reimbursement approvals sometimes in a matter of a couple of weeks. Sometimes, it takes a couple of months to get those approvals. But we're really effective at getting those approvals. We've got a great reimbursement and national accounts team that's accustomed to doing that. It's really about getting them to a treatment home.

Okay. Let me -- I want to make sure we've touched on all this stuff. So let me maybe move one more question on VOXZOGO then we'll move on. So kind of intrigued about the gross to net commentary you had also, Jeff. I know you guys talk about $240,000 to $250,000 net pricing. Obviously, if you were to look at the list price and 100% compliance, you're well north of $300,000. I guess on that gross to net spread, just from our seat, looking at the therapy, it's administered, I'm assuming compliance may factor more greatly into this discount calculation. Maybe sort of confirm or deny that. And also, how does this compare, this estimate, to your existing in-line therapies that you have right now?

Yes. There's really 2 big forces driving the gross to net. And consistent, for example, with our PKU business and Palynziq or Kuvan before it loses exclusivity. The first is government price rebate. So what we know is from our payer mix analysis, roughly half of pediatric achondroplasia patients in the United States are covered by a Medicaid plan. And we know there is a mandatory discount that goes along with Medicaid, right? That's a known quantity. So if 50% or so in the long run of our patients are covered by Medicaid, we can model in the impact of that Medicaid discount on our gross to net calculation. And I will point out on that. Usually, our uptake in Medicaid plans is slower than it is in commercial plans. So those Medicaid discounts will probably kick in bigger in like year 2 and year 3 than in year 1. And we also know from our experience treating PKU, for example, that there will be something less than 100% compliance with the daily injected treatment. We also can triangulate against other daily injected brands and what kind of compliance rates are experienced there. So we have a highly evolved patient support model, including field-based and phone-based patient support people whose mission it is to keep patients as compliant and persistent as possible so they can receive the full benefits of drugs. But we have modeled in something less than 100%. We'll find out together what that compliance rate is exactly, but it won't be 100%.

Sure. Sure. Okay. Let me maybe ask one more related question. It's more of a finance, I guess, question or maybe one that you may not even want to answer, but I'm just kind of curious on the PRV. This would be the third PRV, I think, that you guys would have monetized. And just looking back, obviously, the price, the market, if you will -- I know it's not exactly an efficient market since there's not too many of these that come up for sale. But in 2014, I think you sold the first one for $67.5 million, and the Brineura PRV was a little bit more -- like around double that. Pretty wide disparity. We've seen these, as I said, jump around a bit. Do you guys have any sense of where the market is trending for these PRVs?

Yes. As you say, we're the very first company to sell a PRV. In retrospect, we still need for -- not enough money. But I think the market is around $100 million relative to this. I mean it fluctuates, it depends on the -- our other biopharmaceutical company to get a PRV and how much of the competitive situation they are in terms of 2 products being developed very close to each other, and that has increased the value of the PRV.

Got it. Okay. Well, let me switch then. Obviously...

Actually, one other thing you didn't ask about VOXZOGO, which is kind of important. So our plan is to get full approval. And we are -- the studies that are needed to get full approval have already been started. It's the extension of our Phase III trial and the extension of a Phase II trial. So we don't want to give that time line as to when we believe we can get to approval. But I would say that our goal is to get full approval so that -- as soon as possible before our competitors file or can file so that the competitor will be forced to file for a full approval, which will further delay their ability to enter the market in the future. Because as you know, once full approval is obtained for a molecule or a family of molecules, accelerated approval is no longer an option. And that's an important point that maybe has been missed by some investors.

Yes, absolutely. That's a good point. All right. Let's switch maybe to ROCTAVIAN. So the $64,000 question right now, anyway, that I hear from investors is the buyer for success when the 2-year data -- when you have that in a few -- in several weeks, I guess. And I know you guys have got this question probably every which way possible. And I've heard you discuss how the most important focuses are ABRs, Factor VIII usage and, of course, Factor VIII levels. I guess Hank said, I think, on your -- on that last issue, the Factor VIII levels that it may be problematic if you see faster declines than you've seen before in year 1. Maybe provide your latest thinking on when you present the data and what -- how you're teeing it up when the investors ask what success look like.

Yes. So I mean we've said consistently, I think, in the past that we have no reason to believe that the efficacy will drop off a cliff in year 2, actually. As you know, when we reported year 1 almost a year ago, we had the first -- we had 17 patients that had already reached 2 years. And if you look at the 17 patients there, their ABR was very much under control, the bleeding rate, like 96%-plus. And their Factor VIII levels were between the 40 and the 60 of the Phase II trial. So I think this is probably where we're going to end up. I mean I haven't seen the data obviously, but I would be very surprised if it was significantly different from that. It probably will be different because more patients benefit, significantly different. But I would say we have no specific hurdle from the FDA to meet here. It's just they want to see the data to make sure that the confounding impact of short-term steroids or steroids in the first 6 months to a year on Factor VIII levels is eliminated basically. That's what we need. But we have no details, we have to meet this criteria to get approval. Although at the same time, when we filed originally for accelerated approval, we actually met the criteria that they gave us and they didn't give us approval. So we have to be careful with the hurdle they give you anyway. So that's kind of basically the answer -- my answer to your question.

Yes. And so maybe a related question, and I know -- I think you surprised us time-wise with respect to getting back in the clinic with 307. We had speculated it could take a year or more just given the timing that it took to show up in the preclinical models. So that's upside. But I guess we also get this question from investors a lot, so maybe I'll just ask it straight up, is whether FDA or EMA will ask you for data you have on vector integration with the ROCTAVIAN construct. And I think I've heard you say EMA has not asked for this...

No, EMA and FDA have not asked for it. But at the same time, we now have -- and we actually -- we are preparing to file by the end of the year our response to the ROCTAVIAN hold, so that hopefully, we're going to get it removed in Q1 of next year. But it's based on some additional analysis that we've done, qualitative, genetic and genomic homogeneous analysis that makes it pretty clear that the insertional mutagenesis observed is not responsible for the cancer and that basically the gene construct, the vector was more a bystander and a passenger into the cancer formation, which we don't know for sure what is related to but maybe could be related to a very, very high dose of PH into mice that were double that mice. And so we believe we had a pretty good strategy. We also share the data with expert advisory council composed of leading geneticists, and they agree with our comments. So this is what we're going to file for and assess what we have observed here with 331. It's why the FDA already knew before they -- before we file and before we approve -- before they approve several gene therapy products. So we have no worries. And actually, our ROCTAVIAN gene therapy trials, our steroid trial, our other trials with patients is ongoing right now. Our 307 trial is ongoing right now. There is no clinical hold that is impacting anything else we're doing or anything else our competitors are doing in the field of a gene therapy.

Yes. Got it. Okay. Let's -- another surprise, I guess, from your R&D day is that you're moving forward with an ASO that's exon 51 skipping with a splicing enhancer. The preclinical data, so far, impressive. And you're moving into the clinic with this approach this year. I guess maybe one of the questions that I've gotten from folks is, clearly, this molecule in and of itself looks interesting and certainly understand it. But BioMarin has a big investment, right, in gene therapy. You guys are leaders in manufacturing, and you have a lot of clinical experience. Why not use that modality rather than ASOs, which have certain known limitations as a platform?

Actually, we believe the limitations were really efficacy limitations so far, other than that -- and because in terms of safety here, this new compound has no safety issues, no [indiscernible] therapeutic dose. So we believe actually it's going to be potentially a very successful product. And we do believe that gene therapy actually will be a solution in this field, and we are actually doing some early work looking into that. And we probably will be involved eventually. It's a tougher nut to crack because, as you know, the gene for Duchenne muscular dystrophy is very big. And consequently, that's why our competitors have -- use the tricks of microdystrophin. But we've done some experiments with microdystrophin in animal models and it's not effective. So I mean you do get the microdystrophy into the muscle, but there is no significant functional improvement. So that's why we need -- there is a need for an approach that will allow us trying to include a gene. So we need a vector that could carry a gene that maybe not the gene for the full dystrophin molecule but have got an attractive one, but not -- more like a minidystrophin, a microdystrophin, something that's close to muscular dystrophy, where the patients have a much milder phenotype than Duchenne patient. And that's the approach we're going to take. But we believe it's going to take many years. So in the meantime, we have this molecule that's available to get into the clinic next year. And the preclinical data is phenomenal, I would say, regarding oligonucleotide therapy. The approach we take is that all the oligos in the past, including ours, was acting as the original exon 51 site. But here, we have another way to really increase the dystrophin expression more than 100-fold over molecules like eteplirsen and -- in the short-term treatment paradigm. So we've shown in preclinical data, we have 40% full length dystrophin expression in the MDX and the DMD mice. And our goal in the clinic in humans would be to get to at least 20% dystrophin expression, which would basically make these patients even better than [ vector ] patients which will be dramatic [indiscernible].

Excellent. All right. I've got about 3 pages worth of questions but we're almost out of time. I want to ask one more question, if I could sneak it in. So J.J., you reminded me of the nuance maybe that people are missing with respect to running -- going for full approval with VOXZOGO and the competitive reasons. I guess maybe I would ask you, we've covered a lot of ground here, you did with your pipeline in the R&D Day. Is there some pipeline program or some aspect of BioMarin that we haven't discussed that you think maybe investors are missing or underappreciated?

Yes. I think following the R&D Day on Tuesday, we hope that investors now have a better understanding of the strategic changes we have implemented in our research and development strategy to enable the development of more prevalently affected genetic conditions, moving from pure orphan conditions to a very large orphan and then potentially no orphan while staying within genetics as the root cause of the disorder. So we can apply the scientific principle and the current development experience, our manufacturing experience, commercial experience to continue to bring to the market transformative medicines that address larger population. So I think we have a road map. So hopefully, investors will begin to understand the breadth of our R&D pipeline, what is our growth strategy. And of course, VOXZOGO and ROCTAVIAN are the very near term growth drivers and will be the focus. But we just hope that investors are starting to be convinced that there is growth beyond the initial 5 years, beyond VOXZOGO and ROCTAVIAN. And then we have everything in place for sustainable growth as we have generated over $300 million of cash this year. And it's going to grow. We're going to be profitable next year. So there's no risk of financing in the future, which is not the case for 95% of other biotech companies.

Yes, absolutely. Well, great. Thanks for this, guys, and thanks, everybody, for dialing in.

Okay. Thanks for having us.

Thanks, Chris.

Bye.