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

Great. Good afternoon, and welcome back to the 48th Annual JPMorgan Healthcare Conference. My name is Cory Kasimov. I'm a Senior Large-cap Biotech Analyst, and it's my pleasure to introduce BioMarin, and Chairman and CEO, J.J. Bienaimeé. [Operator Instructions] So with that, J.J., thanks, as always, for being here. Thanks as well for putting out some good data ahead of the conference. Let me turn things over to you for an update.

Okay. Thank you, Cory. And I'm on Slide 1 here because I cannot actually see the slides that are on the screen for you. So thank you for listening today. So I'm moving to Slide 2 of the presentation that has a safe harbor statements. I just wish to highlight that I and some of our other BioMarin's executives might be making some forward-looking statements during this Zoom call. So please refer to our filings with the SEC for more information. Next slide, please, Slide 3. So as you can see on this slide, over the last few years, we have successfully pivoted our pipeline, which has touched each core capability that defines BioMarin. So we are leveraging the underlying expertise that we have in genetics, that has enabled the therapeutic and commercial success that built the foundation of the company. Starting with Discovery on the top left, we can apply our scientific principles now to larger indications, larger , larger offers and potentially, [ beyond offers ], staying within genetics. In development, we have honed our fecal development expertise and the regulatory experience to drive greater efficiencies from discovery through approval, and we have had now 7 product approval waiting for H1 with [indiscernible], hopefully this year. On the commercial front, we have built a global infrastructure that is unmatched in the industry for a company our size, especially in the genetic-disease space, with a direct presence in over 75 countries now. And then finally, key to all these developments working effectively together, we believe we have built the best-in-class, fully-owned manufacturing capabilities. And I said that has served well throughout the development process with ROCTAVIAN and our other gene therapy products. So we have unparalleled capability in complex biologics manufacturing and gene therapy manufacturing. Next slide, Slide 4. See, here on this slide, is a framework for the pipeline pivot that has enabled our durable foundational business, which is in the first left circle here. This has been a foundation upon which we have built our expertise as a fully-integrated global organization. In the middle circle, the circle 2, we have our two blockbuster products, VOXZOGO for [indiscernible], which is -- was approved globally last year. ROCTAVIAN, potentially the first gene therapy treatment for severe hemophilia, but we expect VOXZOGO alone to drive us to sustainable profitability this year and with ROCTAVIAN potentially layered on it, when they would expect a significant top and bottom line improvement and trajectories in the coming years here. Another key component of our horizon value, is the earlier stage pipeline of next-generation therapies, many of which we highlighted recently at our R&D Day call. So with these components, we believe that we have created the virtuous circle of invention of BioMarin that is creating value for patients. We create a very significant shareholder value and employee fulfillment. This delivers more value for more patients and so on as we use the financial resources, created by our now 7 products in the market, to fund new discoveries and new product development. Next slide, Slide 5. Also, I just want to highlight -- again, this is a brief history of our revenues here. Obviously, this year -- 2021 was challenging, not only because of the pandemic, but also because this was the first full year that we were facing generic competition in the U.S. for Kuvan our largest product. But despite that, we're going to have revenues this -- in 2021, are going to be pretty similar to what we had in 2020, and we anticipate now pretty significant growth in the coming years. Also, I just want to highlight, on the right part of the slide, that the U.S. is "only 45% of our revenues", is obviously pretty important. But at the same time, it is somewhat different from other larger biopharma companies, where the U.S. is more than 50% of the revenues of the companies. For us, we are a true global company. And as you see on the green side of the slide, Europe, Middle East and Africa is actually a very important component of our business. So is Latin America and then the rest of the world, the rest of the world will be growing with the [indiscernible], which I think will have a significant presence in Asia Pacific. Next slide, please. Slide 6. So here also, our U.S. opportunities are addressing larger patient populations. As you can see on this slide, in purple are the number of patients for achondroplasia; in red boxes, in the different regions of the world, the hemophilia A, severe hemophilia A patients. You can see a much larger patient population than what we have addressed in the past, and I also want to highlight that this is just a severe hemophilia A, which is 60% of hemophilia A patients. If you look at the entire hemophilia A market, it's north of [ 130,000 ] patients in the world, excluding Asia, China, India and Africa. And the severe hemophilia A market will be our initial target with ROCTAVIAN. Next slide, Slide 7. So again, I want to -- as you probably know, we got approval last year with [indiscernible] in the U.S., Europe and Brazil for VOXZOGO already. The global launch is on its way, it's task A, across multiple regions, and it's, so far, pretty successful launch. Next slide, Slide 8. So again, we got approval first in Europe, in late August. Then the FDA approved the product in late November. Brazil also in November. So the significant launch this year, are going to be among many other ones, but Japan is going to be a very significant approval here, hopefully, in the middle of this year. This is second largest country, in terms of market size, potential for VOXZOGO, after the U.S. So far, Japan has not been a very large country for us, despite being th second largest pharmaceutical market in the world, but I think that's going to change with VOXZOGO, for the first time we have a product that has a substantial market in Japan, it's going to propel the Asia Pacific regions as a share of our overall business. Next slide, Slide 9. So VOXZOGO is our largest pediatric opportunity to date, as you can see on this slide. If you look at the patients -- achondroplasia patient population around the world, between the age of -- birth and 18 years of age, we're talking about 21,000 patients that will be eligible for therapy, for VOXZOGO. And again, there is no approved product, besides VOXZOGO, on the market. So there's 21,000 patients and [ 150,000 ] in Europe. So what equates to a $3 billion market, obviously, our largest opportunity to date, and then it excludes, again, India, China and most of Africa, which would more than double the number of patients here. So very exciting launch and opportunity for us. Next slide, Slide 10, please. So as you can see on this slide, VOXZOGO is our seventh product launch and is, so far, the strongest launch in the history of the BioMarin. We have already made [indiscernible] for VOXZOGO. The demand is very strong. We now have -- at the end of December, we had 7 active markets in the world with revenues -- total number of commercial patients at the end of -- this was our first quarter on the market in Europe, was about at least slightly over 100. And we started shipping the product in the U.S. around Christmas, and we'll provide 2022 VOXZOGO guidance in a few minutes. Next slide, Slide 11, please. Just want to highlight that this is just the beginning of a great adventure here with this product. So now, we approved for achondroplasia patients over 2 years of age in Europe, over 5 years of age in the U.S., but we have an ongoing study in patients from a randomized placebo-controlled trial. That is almost finished. We'll have the topline data by the end of this quarter. Here, we have -- we're going to have some data for achondroplasia patients from -- treated from -- basically from birth to 5 years of age, where it will allow us to expand the indication in the future. We'll be finding in the second half of this year to expanding the indications for about 5 years of age in the U.S. and 2 years in Europe, to like basically being indicated from [indiscernible]. It's very important because the clinical benefit is going to be more important, if you treat the patients early. Patients lose -- achondroplasia patients lose growth opportunity every month basically, every year. So -- and they will never get it back. So the early we treat them, the better. And that's even more important, considering that the patient's voice velocity is the highest at birth. It goes down every year, pretty quickly in the first 5 years of life, and then it goes back up right before puberty, but there's a lot of lost growth in the first 5 years of the patients. Also, I want to highlight that achondroplasia is just the beginning and the first indication for VOXZOGO. We have some studies going on, exploring the use of [ recroplasia] in other [ genetic ], short-stature indications, and this could dramatically expand the revenue opportunity for VOXZOGO beyond. I mean, I discussed with you earlier. So early clinical data is going to be presented on some of those indications, at a scientific meeting by Dr. Dauber, who is doing the trial in early next [indiscernible]. Next slide, Slide 12. So as you know, we announced yesterday, we shared with you the 2-year data from the largest Phase III gene therapy study in people with severe hemophilia A, with a total of 134 patients as well as data from a subset that goes beyond 3 years. So we're very excited about the results. The study met all primary and secondary efficacy endpoints and demonstrated superiority over standard of care, which is still treatment with recombinant Factor VIII injections, two to three times a week. We've shown durable, consistent bidding control in both our Phase III and our Phase II programs, and this confirms our long-term -- long-held belief that ROCTAVIAN gene therapy is a transformational treatment options for patients with hemophilia A. We are delighted that our perseverance and focus on bringing these innovation treatment to patients, has resulted in the update that we shared with you yesterday. Next slide, please, Slide 12 -- 13. And these are, again, some of the key highlights from the Phase III, 2-year update. ROCTAVIAN demonstrated superiority to Factor VIII prophylaxis, again, which is the current standard of care in the primary analysis of the primary endpoints, with the mean cumulative ABR of 0.8 from a baseline of 4.5, [ 0.83 episodes ] per year to a dramatic reductions -- again, not as compared to placebo, as compared to the standard of care. The timeframe of this result is the mean ABR through the entire 2-year evaluation period. So a very durable and highly, statistically, significant. We had 10 zeros after the decimal and one that is consistent with our [ Phase II ] results. The mean factor activity levels at Tier 2, were 23 international units per decilitre, using the chromogenic assay; 36 IU per deciliter, using the 1-stage assay for the 132 patients in our study. I would say, we couldn't ask for better results on the Factor VIII activity levels, especially given the consistent results and the alignment with factory activity observed across our Phase II program, with both the low 40 dose and the high 60 dose. The ABR for the [indiscernible] observed for 3 years. We have now data for 70 subjects that were treated over 3 years ago. At that time [indiscernible] 0.61, again from a baseline of 4.6, so a dramatic improvement and also an improvement over the [ 2 ] results. So I would say, given the unprecedented nature of these results, we have had held a lot of details for disclosure at upcoming medical meetings. The contribution from the hemophilia community has been key to the development of ROCTAVIAN, and we want to allow them to share in this brown grading and truly transformational scientific discovery in the appropriate forum. Next slide, Slide 14. So again, this is a summary of some of the key findings. So ROCTAVIAN significantly reduced the mean annualized Factor VIII infusion rate in the rollover populations, going from 130 infusions per year at baseline, when they were on [indiscernible] Factor VIII infusions, down to 3.4, so to say, 98% reduction in Factor VIII infusion with a p-value of 0.0001. So I can tell you that health insurers, the so-called payers [indiscernible] data because Factor VIII infusion is what costs them a lot of money. And also, if you look at , which, by the way, at 1 or 2 years, didn't have an ABR -- baseline with the same as us, it was a different study, but the ABR was not lower than ours, which is all over here. And [indiscernible] on $750,000 per year for nonadult, noninhibitor patients. So you can see the pharmacoeconomic value that ROCTAVIAN can provide here, and so we're looking forward to discuss in detail these results with payers in the coming months. Next slide, please, Slide 15. Also this one is a summary in one table of all, with the data that we've been providing over the past 5 years during the development of this program that shows all the data at different time points in the Phase III trial, the Phase II trial low dose, the Phase II trial that high dose, you can see consistent over the years, fully controlled and also consistent between the Phase II study and the Phase III study, the bidding control, the Factor VIII utilization and actually, the Factor VIII levels. So we are very excited about these results. We believe that these results answer the questions, the key questions that were raised by the regulators, especially the FDA, in terms of the [ durability ] of ROCTAVIAN, once [indiscernible] has been removed from the patient therapy after one year of treatment. In terms of safety, that is also consistent with what we observed with ROCTAVIAN in the previous analysis, in the previous studies. The drug continues to be well tolerated. Most patients had discontinued any corticosteroids using [indiscernible], and there was no core [ eco steroids-related ] SAE, severe adverse events, in the remaining patients being tapered off steroids in the year 2. Overall, the most common adverse events, what associated with therapy with Valrox, was transient infusion reactions and mild to [indiscernible] in new enzyme, with no long-lasting clinical sequelae. No participants developed as important inhibitive to Factor VIII. There was no malignancy highlighted or covered in the Phase III trial or not from the [indiscernible] event. The fact that patients don't develop inhibitors to Factor, is very important because in case in a few years, they need to go back to Factor VIII, If the efficacy [ weighs ], they can go back to what they're doing today and the efficacy of the Factor VIII injection will be the same as [indiscernible]. And -- So during the year 2, no new safety signals emerge, no treatment [indiscernible] were reported. Next slide, Slide 18. So the path forward, as you know, we had refile in Europe in [ December ] of last year. We -- when we refiled, it was clear and discussed with the EMA that we will be submitted this 2-year data before they make a decision. So this was planned, and there's no surprise here. So we still anticipate -- so we're going to submit this information to EMA in the coming weeks, and we anticipate a potential CHMP opinion in the first half of this year and a potential approval launch in Q3 of this year. Regarding the FDA, we are planning a pre-submission meeting with the FDA this quarter. We just got the data this weekend, so we haven't been able to talk to them much yet. We're kind of in mission with them for pre-resubmission date. And we're targeting that submission in the second of this year. Since this is a response to the CRL, the review time in that space is 6 months. So assuming we refiled by the end of June, we should be able to get an FDA decision and hopefully, approval by the very end of this year. Next slide, Slide 18. So I just want to say a few more words about our pipeline, which we highlighted last November, during R&D Day. We believe that the -- our pipeline of innovative product candidates, will drive meaningful profitability over the next two years. Next, Slide 19. This is a major, I mean, a snapshot of our pipeline, again from R&D day, that -- illustrating the process we've made, over the past years, in different potential indications in hemophilia and metabolic disorders, cardiovascular. You're moving into cardiovascular disorders now, so with gene therapy, CNS and musculoskeletal. The pipeline does demonstrate a richer balance of candidates, many of which remain unnamed, but they are real programs and projects. So in other words, in addition to our disclosed programs that we have talked about many times, we have 6 undisclosed cardiovascular programs, 10 undisclosed CNS programs, 3 undisclosing metabolic paper program and 5 musculoskeletal programs. Next slide, Slide 20, please. Here, this is the most advanced clinical and preclinical portfolio. I just want to highlight here that we have submitted a file to the FDA on [indiscernible] PKU gene therapy to -- for them to remove the clinical hold. We hope to have them remove the clinical hold sometime this quarter and to go back enrolling patients with our PKU gene therapy product because we are starting to see some pretty exciting efficacy signal. And also, I want to highlight that BMS 351, we anticipate being back in the clinic, back [indiscernible] with a very effective -- potentially very effective product, based off animal studies, before the end of this year. Next slide, Slide 21. So overall, we anticipate substantial revenue growth this year, compared to 2021. So this is where we're providing our preliminary guidance for [ 2020 ]. VOXZOGO, we anticipate [indiscernible] going better than we anticipated. So our guidance at this time -- and we will provide final guidance, when we report our fourth quarter in next month, our current guidance is $80 million to $110 million for VOXZOGO global net revenues this year. And also, thanks to VOXZOGO [indiscernible] growth of our other products, we anticipate now to be GAAP profitable for the full [ 2020 year, 2023 year ] and to be GAAP profitable in a sustainable way, over the next few years. And it is irrespective of the date of approval, will be [indiscernible]. Next slide, Slide 22, please. So always -- the current products on the market, the VOXZOGO launch and hopefully, the ROCTAVIAN launch, will provide the financial foundation to accelerate our growth. Again, substantial topline growth anticipated in '22. We will give you full guidance next month. We anticipate sustainable GAAP profitability in 2022. Margin improvement over the next few years, and sustainable positive operating cash flow. We already had operating -- positive operating cash flow last year, but now they're going to keep growing. So R&D and SG&A expenses, as a percent of revenues, are coming down and will continue to come down, and the revenue and the margins will improve -- will be improving continuously over the next 5 years to bring BioMarin's financials to a level similar to big biopharma contacts. Next slide, Slide 23. So I thank you for your attention, and I want to return the back -- the call back to you, Cory, for questions.

Great. Thank you, J.J. And I think...

[indiscernible] executive is supposed to join the call.

I think, in touch with Tracy, I think it might just be you and me for Q&A.

Is that so?

I still have to ask you all the tough questions that -- put on somebody else. I think, this will be pretty easy. I mean, I guess, let's start talking about ROCTAVIAN. And can you just kind of speak to what you think were the key takeaways from the 2-year update that you provided yesterday? And what this means, in your estimation, for the approvability of the product?

I mean, I think, based on this data -- again, we have clear -- I mean, so that you can see in terms of medical [indiscernible], the data is at least as good as the lower-dose Phase II data, which showed significant bidding control for 4 years or above. So the [indiscernible] of efficacy of canal endpoint, is incontrovertible here. I think, even if you do all sorts of subanalysis to try to figure out if something is wrong with the data, it is going to be very difficult with a p-value with 10 zeros after the decimal. So we believe that we have shown clear evidence, not only of efficacy, but [indiscernible] with standard of care. So we believe that this data is very likely to answer the questions that were remaining from regulators, in order to approve the product that we're going to be actively discussing those with them. We see the probability of approval of ROCTAVIAN has been going up dramatically with this data, at the end of the day. And also, if I may, I like to highlight. Also, the data provides substantial evidence of cost effectiveness of ROCTAVIAN, even beyond what was established before. You might remember that have done an analysis, back in 2020, right before we got to CRL. And at that time, we've had even the full 1-year Phase III data, and now we have 2 years, and with less historical data on the Phase II, they had to terminate in the U.S. ROCTAVIAN will be affect -- cost effective at $2.5 million of [ patients ]. So if anything, this data reinforces this analysis and significantly improve the commercial potential promotion value of the asset.

Okay. Feedback I got in the data, overall, has been promising. The only areas of pushback, not surprisingly, have been around Factor VIII levels. How comfortable are you with that segment of the results? And what do they suggest to you about the ultimate durability of the product?

Well, I mean, you see that the Factor VIII levels, again, at Tier 2 and actually, for the 17 patients [indiscernible] where -- I mean, year 2, for the full patients, we were actually a little bit better than the Factor VIII levels in the first 70 patients that 2, and we show that there is -- made this a [ Factor VIII ] level at year 3 that we show now that at year 2, the Factor VIII levels are between the high dose and the low dose of the 3-year of the Phase II trial, which has shown really for 5 years and above, and we're going to 6 years in the summer, actually. By the time we launched ROCTAVIAN even in Europe, we get approval in Q2, we will have 6 years of demonstrated control. So actually, there have been some models, there are some models that exist to project your [indiscernible] or efficacy, based on the existing data, and I've seen a model that project at least 7, 8 years of durability year. It could be even more. I think we're learning as we go here. We are the first company in history to establish the relationship between continuous transgenic Factor VIII expression and bidding control. But I would say that the data is pretty clear that the bidding control is pretty substantial. Even bidding control at 40 years in the low-dose Phase II trial, was pretty good. It was around [ one ] year, if I remember. So I think it's unlikely that ROCTAVIAN is going to be a lifetime cure. We're not making that claim. But I would say, it's very likely it's going to be effective for at least 6 or 7 years or maybe more, which is a substantial value for the patients, especially considering that they can still go back to what they're doing today, whether they are on the current Factor VIII injections, prophylactic therapy or [indiscernible] they can go back to what they are doing today after 7, 8, 9 years, whatever. It happens for them, if it does work.

Okay. And then on the regulatory front, I know we're expecting a CHMP opinion in the first half of this year. When you think about the U.S. dynamics, recognize you have to meet with the FDA this quarter. What are the key gating items to resubmit the BLA, especially considering you've already filed that once?

Yes. So it's basically -- this is a refining answer to the complete response letter. So it's a somewhat more focused filing, but we do need to put the data together. Obviously, we got the data this weekend, so we haven't that time to communicate with them much, to determine what are the next steps. We're planning to meeting with them this quarter, to have like a pre-resubmission meeting, which will determine what they need to see. But we believe that this data answers all -- if not most, if not all, the questions that I've been raising so far, remains to be determined. We're also going to have -- but I think one of the reviewers key concern was that -- she was concerned about the fact that maybe Factor VIII levels will collapse after one year, once patients steroids were withdrawn and the data we have -- and we're not disclosing everything of the year. We have clearly demonstrated that it is not the case. And I think there was one of our key issues, and the Factor VIII level, yes, they do decline, but they don't collapse between year 1, year 2, and they are pretty similar to what we saw in Phase II again. And I think that's going to go a long way to answer some of their questions.

Okay. And what does your market research suggest about the percentage of severe hemophilia patients that are potentially interested in a treatment like this gene therapy treatment?

The marketing research, we're doing marketing research regularly. We did it before in the CRL, and we've been doing some in the fall. The interest in the drug is still very high. The -- what's interesting is that even patients that are currently using [indiscernible], our marketing research, last fall, in U.S., Germany and France, found that 1/3 of eligible patients currently taking ], were considering switching with ROCTAVIAN in the first year of availability. So that's a large number of patients. And also, we found out something that was surprising, is that for the patients who are still on [indiscernible], which is the majority of them in U.S. Europe today. The one that I'm not trying [indiscernible], they're interested to go straight to ROCTAVIAN, without stepping through a . And that's always a surprise in finding for us. So we believe that the demand for ROCTAVIAN is going to be pretty high in the first few years of launch.

Okay. I want to move over to VOXZOGO and first ask about the launch and specifically, the guidance that you're providing for 2022? Numbers are kind of all over the place out there in the street, the consensus is like $120 million. Our estimate is way below that at $69 million. Your sort of -- your guidance is right in between it. How much confidence do you have in providing guidance for a product like this, this early in the launch?

I would say, this is based on what we're observing right now. So I mean, we're going to be reporting our 2021 sales, which were going to be like -- not even the whole quarter, first quarter, basically on the European sales. And you will see that they are indicative of the interest in the product. The fact that we have a lot of anecdotal evidence that even you have sort of -- kind of, pediatricians and patient families. They are reaching out to us to get their patients start on therapy. So it always points towards a pretty strong launch, and I think that we are pretty confident in the guidance that I've just given. Although we might change it a little bit. Next month, we'll be at more information on the U.S. launch that we say at this time. Based on everything we know, we've been working on this knowledge for several years, and we're pretty confident in this guidance.

And do you think there's anything there...

You're going to have to raise your numbers.

Yes. I have to raise. I'm more worried about consensus numbers than I am my own. Do you think that there's anything that others could be missing, in terms of whether it's a payer dynamic or some nuances in the market that would get people to go?

I mean, we don't know. This is a brand new launch in a brand new market. Again, we are creating the achondroplasia market. Like we created the BTU market. We created the MPS I, MPS VI market, MPS IV and CLN2 disease market. So it's why it's always a little difficult to figure out , but we are pretty close in this market. We have great relationships with a lot of pediatricians that you know, developing relationship with pediatric[ andrologists ], relationship with pediatric [ orthopedic surgeons ]. So we believe we're going to stand this market very well. And I mean, there's going to be the usual dynamics of in the U.S., which we are because we -- this is again our seventh product launch [indiscernible] in the U.S. So we know the drill here. And based on discussions with payers and feedback from payers, we don't anticipate any major issue here. We're going to have to go through the usual paper work for initial reimbursement, but we don't believe there's going to be a significant barrier to [indiscernible].

Okay. Another question from the portal is, what's the plan for vosoritide expansion beyond achondroplasia and next-generation products for CMP?

Yes. So in terms of expansion, as I told you, we -- so we have some emerging data from the study by Dr. Dauber, which I think he will present at the scientific meeting, sometime in early Q2, which is going to highlight quantitatively for the [indiscernible] patients the impact of VOXZOGO achondroplasia that are not -- [indiscernible] but have genetically defined and derive [indiscernible] disorder and short stature. And based on the qualitative statements, I think, you made on R&D Day, you said the results were very exciting. So I actually have seen some of the results, but I cannot communicate them to you, but we are pretty enthusiastic here. So let's talk about this one after we report these results and then we'll have to determine which specific indication we go after. We're already working on that plan, but I would say, this could dramatically expand the patient population that VOXZOGO will be serving. So that's for the indication expansion. Regarding second-generation, long-acting CMP, we have some early, where -- we don't believe there is any urgency, by the way. So far, the data is very good here with our product. I think it's going to be hard to [ beat ]. And two, the compliance and persistence of our patients. Now we have patients that have been on the drug for almost 6 years and has been very, very high. So however, yes, we have a [indiscernible] CMP product that could be potentially given every other week, we had early development for this. We'll keep you apprised of it. We believe we could have it on the market at about the same time or quickly after some of our competitors, if they are approved, will be approved. So -- but we believe we have at least 5 years of market exclusivity here with no other competitors.

Okay. Well, listen, JJ, we are out of time. But thanks, as always, for joining us today, and I really appreciate it.

You're welcome.