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

Good afternoon, and welcome once again to Cowen and Company's 42nd Annual Healthcare Conference. I'm Phil Nadeau, one of the biotech analyst here at Cowen. And it's my pleasure to moderate a fireside chat with J.J. Bienaime, Chairman and CEO of BioMarin. J.J., I'll hand it to you to begin with some opening remarks.

Thank you. Thank you, Phil, for joining us and all of you for joining us today. I would say the financial, commercial and regulatory momentum at BioMarin has never been stronger as we described on our last quarter call with the addition of what is likely to be our largest market opportunity to date, VOXZOGO, for the treatment of achondroplasia. We expect to transition to sustainable GAAP profitability this year. I would say the combination of VOXZOGO, and our foundational base business is expected to drive double-digit growth this year and beyond. And despite 2020 being a ramp year for VOXZOGO, is our first year on the market, our early indicators suggest a very high degree of interest, resulting in a recent increase in full year VOXZOGO guidance already this year. I think we'll get into the details in a moment, but timelines for the next steps with ROCTAVIAN remain on track. This year, we look forward to a CHMP opinion next quarter, the second quarter of this year followed hopefully by a European decision in the third quarter of this year and the launch in the late third quarter, early fourth quarter of ROCTAVIAN in Europe. In the U.S., we plan to resubmit the BLA in June to the FDA. And it's generally, when you resubmit, it generally results in a 6-month's review procedure. So if everything goes well, we could have a FDA decision in the U.S. on ROCTAVIAN at the very end of this year. I would say that at this stage, our biggest strengths has been the successful transition into our long-term growth strategy. We have built the enterprise that can support both continued product approvals and launches as well as innovative pipeline growth, while at the same time, generating sustainably increasing profit and positive cash flow. We actually had positive cash flows last year in 2021 and we're going to increase that this year. So challenges are the things we can't control such as regulatory outcomes, scientific results, awards in Eastern Europe and so on. But in respect of these challenges, BioMarin remains agile and focused on our long-term growth. Our persistence and commitment to visions has served us well especially during some of the challenges faced over the last few quarters. This has positioned us well to drive performance far beyond the next 12 months. And as I said, 2022 is a ramp year for VOXZOGO. So we expect further penetration next year and beyond. And similar to ROCTAVIAN, VOXZOGO is likely to be our largest product within ROCTAVIAN launches. I would say the potential contribution of ROCTAVIAN, the steady growth of our base business and the increasing number of opportunities in our early-stage pipeline is expected to fuel our growth further into these decades and taken together, the outlook for BioMarin, I would say, has never been stronger, and we are very excited about the future. And so this is a brief overview of the state of BioMarin. So I will turn it back to you, Phil, for questions.

J.J., maybe diving into ROCTAVIAN in a bit more detail. You recently announced a 2-year Phase III data. For those less familiar, can you provide a brief update on that data? How you and BioMarin characterize the benefit risk of ROCTAVIAN overall?

Phil, we believe that ROCTAVIAN with a 2-year data of our Phase III trial has demonstrated transformational results for the patients in our Phase II and our Phase III programs. The study again met all primary and secondary endpoints in the 2-year data. The 2-year data sets demonstrated superiority of cure -- standard of care, which is still a Factor VIII inject infusions prophylaxis. This was not a study comparing ROCTAVIAN to Hemlibra. But when you compare our Phase III data to the Hemlibra payroll data with the same baseline of annualized bidding rates at 2-year after treatment, Hemlibra at 68% bit control. That means 68% of the patients that apparently were on therapy were free or beating episodes, we had 85% control with ROCTAVIAN, 2 years after treatment. So the outcomes observed to date have far exceeded our expectations. The vast majority of our Phase III participants have experienced improvement in being outcomes at time. And as some has gone by, this is very encouraging. Only 6 of the 134 participants had return to Factor VIII prophylactic at year 2, which is a remarkable outcome. So based on this data and the safety profile observed to date in the Phase III of the Phase III trial, the benefit risk profile of ROCTAVIAN is extremely attractive. This is supported actually by our own marketing research stating that 30% to 50% of eligible severe hemophilia patients are interested in being treated with ROCTAVIAN once it is potentially approved. So that is very encouraging. And the sentiment only improved as sales goes by and more durability is demonstrated.

How confident are you that BioMarin will be able to refile ROCTAVIAN's BLA based on a 2-year data? Could you provide more...

Yes. So we are very encouraged by, again, the strong results of the 2-year Phase III program, and we are confident that this data will be responsive to FDA's request. We believe the totality of the data provided to the EMA when we refiled in Europe in the summer of last year. And so this data provides EMA and soon to be submitted to the FDA. They provide the information that they need for their assessment of the benefit-risk profile of ROCTAVIAN. So we are looking forward to continue to work with the health authorities, the regulatory authorities to bring the therapy to patients with hemophilia A, and we look forward to -- once we have the opportunity to share this data in full detail. We've done that already with EMA. We are about to do that with the FDA. And so the EMA has had the 2-year Phase III already. We are preparing our resubmission of the BLA to the FDA since in the -- we are doing a resubmission in the U.S., and we did the resubmission in Europe last summer. The U.S. resubmission of the 2-year data is somewhat more involved because they want a full study report, that's why it takes more time than just where we are with EMA, and that's why it's going to take until about June for us to finalize the dossier and be able to submit the detailed information. So again, we anticipate European decision next quarter in Q2 of this year.

Investors have been concerned that the FDA's questions about vector integration and carcinogenicity that resulted in 307 is going to hold, could prevent FDA approval of ROCTAVIAN. Is that a logical concern? Do you think there's any possibility that the FDA may require additional preclinical work for ROCTAVIAN specifically?

Yes. I mean anything is possible with the regulators, especially when considering a new platform. But I would say based on the FDA's advisory committee last year on vector integration with AAV gene therapy, there seems to be an understanding that vector integration resulting in cancer has not been observed so far in humans. And there was a publication last year doing a review of all AAV gene therapy trials ever done, and there were over 2 or 3 decades, close to 3 decades, 3,000 patients now have been treated with AAV gene therapy. So some of them over 20 years ago and none of them has developed cancer that was demonstrably related to treatment with AAV gene therapy. So we have not been told by the FDA at this time that additional critical work with ROCTAVIAN is needed. But we will be running additional study with 307, our BMN 307 our PKU gene therapy program as we work to get the clinical hold lifted potentially.

Investors have also been concerned about the disclosure of acellular gland tumor during the long-term follow-up of patients on ROCTAVIAN's Phase I/II trial. Can you discuss that case and the work BioMarin did to assess where the cancer was related to ROCTAVIAN?

Yes. So we learned late November of last year, but 1 of our participants in the Phase II study treated over 5 years ago, with ROCTAVIAN was diagnosed with a salivary gland tumor and he had the tumor successfully removed in December. When we learn of the diagnosis late last year, again, we immediately informed the European and the U.S. regulatory authorities. We had our clinical team investigated this event and promptly reviewed it with an independent data monitoring committee of the study, which is a committee composed of experts in hemophilia, in statistics and in clinical trials, and they were asked to make recommendations to ensure the safe ethical conduct of the trial. So the event was deemed by the investigator as well as the external experts to be unrelated to ROCTAVIAN given the available information and the fact that AAV gene therapy target the liver cells not cellular glands. And in order to inform -- to further confirm that the cancer was not related to ROCTAVIAN, we are planning to conduct a genetic analysis of the tumor from a tissue sample. Importantly, none of our ongoing ROCTAVIAN studies were impacted. The FDA and the EMA latest continue to enroll patients in 2 active ROCTAVIAN study beyond the follow-up of the Phase II and the Phase III trials. So this provides further assurance that the event was, I guess, deemed unrelated by the regulatory authorities, unrelated treatment with ROCTAVIAN. So that's all we have at this time. I would say, obviously, generally, when the regulatory authorities have a problem with 1 of your safety findings they react in 1 week or 2, not 3 months. We informed that over 3 months ago now.

Talked a bit about the clinical benefit of ROCTAVIAN. What about the economic value? What are your most recent thoughts on the value of ROCTAVIAN in pricing strategies?

Yes. So the price of ROCTAVIAN is stated to value the value it brings to patients in the health system. With our clinical study participants alone, over the past 5 years, we have calculated that we have saved health care systems around the world, tens of millions of dollars in Factor VIII replacement therapy already. And because that's -- so we save them the cost of Factor VIII infusion therapy, 2 infusions per week. Hospital visits still have that. They still have bleeding episodes 5x or 4.6x per year, and bleeding episodes are very expensive and very painful. Expensive to treat, estimated to cost about $100,000 in U.S. per episode. No breakthrough bleedings, improvement in quality of life. So there is no, I would say, stronger evidence of value for patients and payers than that. We have a very strong cost offset data here, in story. So the Phase III data, again, as discussed gives us considerable confidence in the efficacy, safety and durability of ROCTAVIAN. So again, given the cost of current therapies, between $500,000, $700,000 a year in the U.S., just on the Factor VIII or Hemlibra and that doesn't add the cost of the infusions, cost of treating bleeding episodes. So we believe we have a very, very strong pharmacoeconomic story. So in December of 2020, with only 3 years of data of Phase III data -- the Phase III data -- even the 1 year that was not available there. ICER suggested that a onetime price of $2 million to $3 million in the U.S. would represent a significant value and we concur, so this is -- and ICER is not trying to make prescription direct expense. As we will be offering in Europe outcome-based agreements. In the U.S. and Europe, and actually, we have already a major interest in outcome-based agreements in most European countries and just saw some information about Germany, where we are really in great terms to put some outcome-based agreement in place. So very -- we got a very strong reimbursement of pharmacoeconomic position at this time.

There's a fair amount of debate about the trajectory of ROCTAVIAN's launch, particularly because we just haven't seen the many gene therapy launches thus far. How quickly do you think it will be taken up in the U.S. pending approval? How big of a population of early adopters are there? And is there anything that defines the members of that group?

Our marketing research suggests that 30% to 50% of eligible patients with severe hemophilia will be interested in ROCTAVIAN treatment. Some key opinion leaders have recently suggested that 30% of their current patients will be great candidates for ROCTAVIAN. These are U.S. key opinion leaders. They would be good candidates -- great candidates for ROCTAVIAN treatment once available, including younger people going off to college, for instance, who don't have their parents reminding them to take Factor VIII every day, every other day or 2x to 3x a week. So that is a margin of obvious patient population who would benefit tremendously from a onetime treatment option.

Great. Maybe switching to VOXZOGO. Congratulations on the approval in the U.S. and EU. Can you give us an update on the launch in both territories?

Yes. So this is our launch here. So we are very encouraged by the uptake of VOXZOGO in the U.S. and Europe and other countries. So we just increased our full year guidance on our last quarterly call because of the prescription numbers through the middle of the first quarter were supported by a increase. So obviously the only approved treatment options for children with achondroplasia. Families are seeking VOXZOGO, where it's available as well as trying to gain early access. So the importance of again, on therapy as soon as possible is understood by the families with the awareness of VOXZOGO.

You've seen a number of orphan disorder launches. Can you describe the awareness of VOXZOGO in the context of what you've seen for those prior launches? You mentioned families are seeking VOXZOGO prescribers. How does this compare to what you've seen historically?

It's very high. I mean actually, recently, there is an interview of an orthopedic surgeon in the U.S. Pretty well known who specializes in lengthening surgeries we see a lot -- see a lot of achondroplasia patients. And he said last week that about 65% of the families in his practice in the U.S. were aware of VOXZOGO without any help. So we think this is a -- that it's pretty high. I mean this is -- as compared to the difference between VOXZOGO and in this respect and our enzymes replacement therapy that BioMarin was built out is that enzyme replacement therapies we are difficult to finding the patients because many patients run -- first of all, they were scarred around the world and many patients they didn't even know, they were misdiagnosed. They didn't know they had the disease. So finding the patient was very complex and difficult that took several years. But I would say this is a much, much different -- first of all, all the patients and the families know that the child has a disorder. Most of the time in the developed world that the patients are diagnosed before birth with ultrasound. So again, that top leader so that VOXZOGO was a great tool for families interested in optimizing growth for the children affected by achondroplasia.

Can you discuss the payer dynamics in the U.S.? How widely reimbursed? Is it to payers understand the medical need? And when could you have full formulary coverage for VOXZOGO?

I think so. I mean, as doctors have more and more experience with -- working with payers, the time to receiving coverage for VOXZOGO treatment is being reduced. We haven't seen any pushback from payers in Europe or in the U.S., especially considering where the only approved treatment for these pediatric indications. So we've been pretty consistent with what we experienced with our -- all our commercial products. The majority of patients are successfully obtaining coverage, either by VOXZOGO coverage policy or through the medical exception process until the utilization management criteria are set. We anticipate most payers in the U.S. who cover VOXZOGO under the pharmacy benefit. However, individual coverage an exact coverage criteria and time to criteria are set as independent -- they are independent from -- sorry, they are dependent on each payer and vary from patient to patient. But overall, things are going well, again, otherwise, we would not have been raising the guidance.

In Europe, can you remind us which markets are currently reimbursing VOXZOGO and which would cover...

Yes. So in Europe, the active markets include Germany, France, Switzerland, Austria, we also have Luxembourg. Actually, Russia and actually Ukraine. But now we also have Israel, Singapore, Argentina and Chile. And we are pursuing reimbursement in other mature European markets such as Italy and Spain. We expect that we will take time to mix price and reimburse the approval in those markets that we'll get there. And we also anticipate approval in Japan, which is a target the second largest commercial market in the world this summer. So a lot of room for growth there.

Recently disclosed that results from VOXZOGO's Phase II in children 0 to 5 years, demonstrated a trend in favor of treatment over placebo, but that the effect didn't reach statistical significance. What's BioMarin's most recent thoughts on the ability of those results to support a label expansion down to H2 in the U.S.? And when could you release detailed data from the study?

So I mean the 206 -- #2 stands for Phase II. The 206 Phase II study was designed as a safety study, the first time we're trying to [indiscernible] patients under 5 years of age. So it was not powered to demonstrate statistical significance on annualized velocity, we were hoping that we had a chance because it was a 3-cohort study with patients from 0 to 2-year of age -- sorry, 0 to 6 months from 6 months to 2 and then 2 to 5. So it was 3x 20 patients placebo control. So although we saw a clear trend in favor of VOXZOGO, again, we were not able to pretty close, you will see in some cases, but not able to reach statistical significance. So we'll see -- we haven't discussed the results with the FDA yet. As you know, we already have a 2 to 5-year-old on our label ex U.S. We don't know yet in Japan, but we hope to get it also in Japan. And also -- so there is obviously more variability in the 2 to 5 that's what we observed in the first trial. But -- and also it's important to remember that in very young children, growth measurements are difficult and are really no easy endpoints, which also made it more difficult for us to reach statistical significance. So we hope to share the results with the FDA in the coming weeks to understand next steps towards expanding the label in the U.S. So again, we have the label to defy already outside the U.S. at periodical change. And we also expect to share the detailed data midyear at a medical meeting.

There are some competitors coming to VOXZOGO that investors are focused on. How do you perceive the potential for competition from either Ascendis for Therachon Pfizer? And what do you think these companies only to do in order to get approval? Or they have to show superiority to VOXZOGO?

So I mean so far, we -- the issue is that we are asked to comment on this. But so far, there is 0 patient efficacy data from any of our potential competitor. None, nothing. The only thing Ascendis has communicated so far in this single dose, data in a healthy volunteer like a handful of 10, 12 healthy volunteer people. So there is absolutely no information beyond critical data began in single-dosage healthy volunteer data. So it's hard to know if there will be any impact on the VOXZOGO market share at this time. So they're somewhat behind us still at least. So -- and also, it's hard to -- given the finite window of treatment, patients that on the [indiscernible] growth plate closes, which is between the age, probably of 15 to 18. It's hard to imagine families who are benefiting from treatment with VOXZOGO, switching to a product that isn't significantly superior. At the same time, we have heard that our competitors are planning on implementing there's clearly not doing so far any study preparing their products side by side to ours, to VOXZOGO. And also, if we get full -- our intent is to get full approval. So we only have accelerated approval based on annualized gross velocity where we demonstrated superiority over placebo. But our intent is to get full approval using final adult type as the endpoint. And we haven't determined exactly when we're going to file the final for competitive reasons, but I just want to say that if our competitors are especially have send this, it's the same product basically longer acting. If we get full approval with final type before Ascendis obtains approval, they get an approval, they cannot get accelerated approval. They're going to have to do the trial and file with final adult type, which is going to take many, many years as compared to where we are today. So important variable here.

Moving to the PKU franchise. You briefly alluded to 307 and the clinical hold on that program. Has the FDA given any clarity on the types of experiments needed to remove the clinical hold, and I think you've suggested it's going to take several quarters compared to...

No. I mean the -- so again, the whole is specific to the pre-clinical filing with [indiscernible]. We satisfied some of their concerns gearing with our answers and we actually believe we should have satisfied all our concerns based on the genomic analysis of these mice tumors. They appear to be looking for more direct evidence of the mechanism of scarce imageries and of cancer in those mice. And therefore, they ask for additional preclinical studies, although we don't know exactly -- we have discussed with them exactly which 1 we need to do. So this is under discussion and when we have carried, we will provide an update on the path to the clinic.

Maybe turning to the base business before we dive more deeply into the pipeline. Your 2022 revenue guidance projects 14% year-over-year growth. What are the key drivers of that revenue growth this year? What could make it better than what is reflecting guidance and what are the risks?

Yes. So contribution is from VOXZOGO, I'll say, combined with our base business, which is pretty solid, will drive the top line revenue 14% despite the continuation of slower role in our Kuvan business because of generics in the U.S. So as you know, we reported total revenues grew 11% year-over-year in 2021 excluding Kuvan. So the essential nature of our medicine has with still a significant impact from the [indiscernible]. They grew 11% last year, separate from Kuvan, which is facing generic competition. So still pretty solid healthy growth there for our base business. So I would say, given the breadth of our commercial footprint for the strength of the VOXZOGO launch and the essential nature of our products for all the patients around the world, we feel pretty comfortable with our outlook based on what we know today.

On the early pipeline, there are a number of candidates moving into development. Which ones would you care to highlight? Which ones are you most enthusiastic about?

I mean we say, I mean, AAV gene therapy, we're about to enroll the first patient. And we did an investigative meeting a couple of weeks ago and I would say, you'll be surprised despite the availability of a lot of therapies there, patients still have a huge unmet need because they're still afraid how that being attacked nature you attack, which is life reckoning. So all the drugs available today when it's treatment, probably they reduce the number of attacks, but they don't eliminate them. And there's still a need for a product that will eliminate the attacks. So that's one of them. The other 1 I'm very excited about is the BMN 351 for our second-generation mononucleotide or Duchenne muscular dystrophy, we are -- we should be filing the IND next quarter and we should be in or back by the middle of the year, and we should be enrolling our first patient in the Q4 of this year. So the Duchenne muscular dystrophy patient, we have shown preclinically very strong efficacy, very, very good safety profile as compared to products that we had ourselves have developed -- try to get approved in the past and also what's available in the market. And also we have evidence that we have superior efficacy in terms of dystrophin production as compared to any product on the market or on development at this time. Stay tuned for that.

In the last couple of minutes, maybe a few corporate questions. I guess, first on financials. You mentioned that BioMarin's growth strategy is beginning kind of projects a 19% revenue CAGR through 2026 as ROCTAVIAN, VOXZOGO launch. Does that seem reasonable to you? What could make revenue exceed fall short of those investments?

Exceed? I mean I hope they will exceed. I mean, I would say if you had to raise that I mean we're going to grow pretty substantially just with VOXZOGO and the base business. Just with these 2 by '25, we should be easily a $3 billion company in terms of revenues, and then ROCTAVIAN will be on top of that. So it will depend on when the ROCTAVIAN is approved in Europe and in the U.S. And think of ROCTAVIAN, I'm pretty optimistic basically on market research with patients and with payers and with obviously clinicians that ROCTAVIAN once launched will be very, very successful.

Last, can you discuss your business development strategy? What type of partnerships or acquisitions would you be interested in? How much of the financial and management capacity is there to do a deal?

So as you know, we've done a lot of early-stage deals in the past 3 years, 10 or 12, like critical most of the deals. And we believe in these kind of deals because that's how you create a lot of value generally. So we will continue to do that. They are generally not very expensive upfront, although you do buy right to spend money and develop the product. So eventually, if you move them into ROCTAVIAN and have these 2 that they will obviously use company resources. So we -- based on -- again, on our pipeline, based on the launch of VOXZOGO, the hopefully near-term launch of ROCTAVIAN, we don't believe there is a need for a major product acquisition. But a chance because we are going to start generating some significant cash flow this year. Again, we generated about $150 million, $200 million cash last year. It's going to keep growing this year and next year and beyond just with VOXZOGO launch. So that will give us more capacity to do bigger deals, potentially. We have no urgent need to do that at this time. We don't need to bet the form on anything because we have growing revenues and growing pipeline. We anticipate starting next year to file 2 INDs per year, moving towards 3 INDs per year by 2025. And we actually -- we just started a review of our early-stage pipeline a couple of weeks ago, and right, it looks like if everything was small, we're going to have too many INDs in days in 2025, which is a good problem to have. But I assume a lot of them move forward, we have to prioritize, I would say, just to instate that we have no urgent need to make a major product or company acquisition that how is your company acquisition in short it's not for that.

Great. With that, I think we're out of time. J.J., thank you for very interesting session, as always. It's good to see you.

Thank you. Thanks for having me, Phil. Bye.