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

Welcome to the BioMarin Conference Call to discuss European Approval of ROCTAVIAN. Hosting the conference call today from BioMarin is Traci McCarty, Head of Investor Relations. Please go ahead. Traci.

Thank you very much operator, and thank you all for joining U.S. today to talk about ROCTAVIAN approval in Europe. On the call from BioMarin's management team are J.J. Bienaime, Chairman and Chief Executive Officer; Jeff Ajer, Chief Commercial Officer; Hank Fuchs, President of Worldwide R&D; and Brian Mueller, our Chief Financial Officer. To remind you, this non-confidential presentation contains forward-looking statements about ROCTAVIAN and the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin's financial performance and the clinical development and potential regulatory approval of ROCTAVIAN and other commercial products and products and development. Results may differ materially depending on the timing and nature of decisions by regulatory authorities, the progress of BioMarin's development programs, BioMarin's ability to successfully commercialize ROCTAVIAN and other product developments in the pharmaceutical industry, actions by competitors and those factors detailed in the press release we issued today, as well as BioMarin's filings with the SEC Commission such as 10-Q, 10-K and 8-K reports. Now I'd like to turn the call over to our Chairman and CEO, J.J. Bienaime.

Thank you, Traci, and good afternoon or evening and thank you all for joining U.S. to discuss today's European approval of ROCTAVIAN. ROCTAVIAN is the first approved gene therapy product for the treatment of adults with severe hemophilia A. I want to thank all the people who participated in our clinical programs, our investigators and advocates and our BioMarin colleagues who worked to bring this groundbreaking new treatment to people with hemophilia A. Today's news marks a significant milestone for the scientific community, many of whom have contributed over the last 3 decades to this momentous approval. For BioMarin, the perseverance demonstrated by our R&D organization over the last 7 years is emblematic of how we get things done on behalf of the patients we serve. And while BioMarin is known as a pioneering innovator, we now have 8 novel commercial products, which -- on the market, and to the achievements is a high watermark for our organization and for scientific innovation across our industry. For our shareholders, we share today's accomplishment and we thank you for your support throughout our journey to bring the next generation of innovative therapies to the hemophilia A community. This approval from the European Commission unlocks ROCTAVIAN access to thousands of people with severe hemophilia A in 24 European countries within BioMarin's commercial footprint and is a first step to facilitating access to named patient sales markets in the Middle East. We were also very pleased to have maintained orphan drug designation in the EU providing 10 years of market exclusivity, underscoring the significant benefit our ROCTAVIAN has over existing therapies for patients with severe hemophilia A as assessed by the European community. We extend our appreciation to the EMA for their acknowledgment of the groundbreaking nature of ROCTAVIAN gene therapy for the benefit of the hemophilia community. Thank you for your commitment to BioMarin as we have persevered through our global clinical development programs and regulatory procedures as well as invested in our world-class gene therapy manufacturing facilities in preparation for this day. We are pleased to have ample supply of our ROCTAVIAN ready for labeling and distribution to our key treatment centers in Germany, as we anticipated, today's news when we received this positive CHMP opinion in late June. We are ready to launch. I will now turn the call over to Jeff who joins U.S. from Japan where we are celebrating the launch of VOXZOGO to describe now our ROCTAVIAN launch plans and our product readiness and the reimbursement outlook and market opportunity for VOXZOGO in Europe and the Middle East. Jeff?

Thank you, J.J., and good evening everyone. Suffice it to say, we have been preparing for this day for a few years and the commercial team is ready to launch ROCTAVIAN in Europe. Before I begin, I would also like to extend our gratitude to the families, colleagues, investigators and European health authorities who have all contributed to this first approval of any gene therapy for treatment of severe hemophilia A, a significant achievement on behalf of the hemophilia community. Turning briefly to some label highlights. ROCTAVIAN is indicated for the treatment of severe hemophilia A in adult patients without a history of Factor VIII inhibitors and without detectable antibodies to adeno virus -- adeno-associated virus serotype 5 or AAV5. ROCTAVIAN is contraindicated in patients with active infections either acute or uncontrolled chronic or patients with known significant hepatic fibrosis or cirrhosis. The recommended dose of ROCTAVIAN is 6 times 10 to the 13 vector genomes per kilogram bodyweight administered as a single intravenous infusion. Prior to the administration of ROCTAVIAN, recipients will provide baseline measurements of liver health. In the first year after ROCTAVIAN administration, liver function and Factor VIII monitoring will be conducted to determine the need to initiate a course of corticosteroids on an on-demand basis should ALP levels rise above the upper limit of normal or 1.5 times baseline and consistent with the protocol outlined in our Phase 3 program. Other safety items included in the label reflect our clinical trial experience and as expected, includes information related to managing liver health, guidelines regarding the use of corticosteroids, infusion-related reactions, the risk of thrombotic events and the risk of malignancy as a result of vector integration. Additional safety information is described in the Product Information, which will be posted to the EMA website in the coming days. Additionally, as part of our commitment to substantiate the long-term efficacy and safety of this gene therapy, patients are expected to be enrolled in the registry designed to follow patients for 15 years as agreed with EMA and in line with EMA guidelines. Now on to European launch plans. Today's approval unlocks access to ROCTAVIAN to thousands of people in the 24 countries within BioMarin's European footprint. We anticipate additional access to ROCTAVIAN for patients outside of the EU through named patient sales based on the EMA approval in countries in the Middle East, Africa and Latin America, and expect additional market registrations to be facilitated by the EMA license. Turning to pricing and reimbursement anticipated in Europe. As we have said previously, we anticipate the price of ROCTAVIAN to reflect the improved clinical outcomes demonstrated across our studies as compared to standard of care. Payers already understand what it costs to provide chronic care to people with severe hemophilia A, so the value proposition demonstrated by ROCTAVIAN offers the potential for significant cost savings to healthcare systems. Only 6 of 134 participants in our Phase 3 study resumed treatment on standard of care prophylaxis and so we are very enthusiastic about the prospect of a one-time treatment option with such higher responder rates. Acknowledging that a one-time durable treatment like ROCTAVIAN will come with a substantial cost upfront, we have been working with payers for years in preparation for this day. We have taken the approach that different payer systems have different needs, so we plan to customize outcomes-based agreements market by market. We expect these outcomes-based agreements or OBAs will cover the risk of a non-response over a period of many years and are targeting 5 to 8-year agreements in Europe. As we have said previously, we have been in discussions with health authorities and health insurance organizations in our initial market, Germany. Our discussions have resulted in a framework for outcomes-based payment models. We are in the process of finalizing those agreements, which we expect will facilitate commercial treatment with first patients of ROCTAVIAN in the fourth quarter. In France, we submitted for early access for ROCTAVIAN and expect that review to begin imminently. Turning to the launch cascade in Europe. We plan to launch ROCTAVIAN immediately in Germany, where we will have first-year free pricing and Germany is the largest European market for severe hemophilia A. We anticipate the one-time price in Europe to be around [ EUR 1.5 million ] for a one-time treatment with ROCTAVIAN net of all discounts and reserves. We expect to share the European list price with you in October and we anticipate that this price will be in line with, but lower than the comparable U.S. net price. Our next market will be France, which is also significant in size and has an early access program, which we plan to leverage while we go in parallel through the full price and reimbursement process, which can take about a year in France. Then we expect to pursue pricing and reimbursement in Italy and Spain, the latter also having a named patient sales channel that may be available to U.S. while we pursue full pricing and reimbursement in Spain. Beyond these initial markets across the EU4, we anticipate other named patient sales opportunities in Europe, the Middle East, the [ key off ] of today's approval. We do anticipate some pent-up demand will drive initial sales in the fourth quarter of this year and expect an increasing uptake of volume beginning in the first quarter of next year. In summary, the commercial team has been preparing for this day for years. We are so pleased to have the breadth of data on which today's approval was based and the transformational impact of ROCTAVIAN demonstrating a reduction in annualized bleeding rates and factor use unmatched by any available therapy today is an important breakthrough for patients. We've been very pleased with the growing body of market research, eliminating both awareness and interest in treatment with ROCTAVIAN. Recent market research indicates that -- with healthcare professionals indicates that ROCTAVIAN could capture approximately 35% of eligible patients and in line with our expectations. We were pleased to see that approximately 80% of healthcare professionals surveyed expect to treat at least 1 patient with ROCTAVIAN within 12 months of approval. Based on the strength of ROCTAVIAN data and the encouraging market feedback and interest in treating, the commercial organization is excited to get started on European launch today. On our next quarterly call, we expect to share metrics that will help you follow the cadence of ROCTAVIAN uptake in Europe. So thank you for your attention and we will now open the call to your questions. Operator?

[Operator Instructions] Our first question comes from Chris Raymond from Piper Sandler.

Hey, thanks, and congrats guys again for all the perseverance and the success here. Really great to see. Just a couple of questions if I could. Jeff, just on the net price with discounts and reserves, can you maybe verify what that assumed sort of non-responder rate is? I think you mentioned 6 of 134 patients in your trials. But is that what's baked into that? Is that the ratio that we should be thinking about? And maybe can you tell U.S. what the gross price is? What's the list on that? And I got a follow-up.

Thanks, Chris. I might defer to Brian Mueller on the question of the discounts and reserves piece.

Yes. Thanks, Jeff. Thanks, Chris, for the question. This is Brian. You're not far off. As you can imagine, we're planning to use the totality of our clinical data both the 2 years, soon to be 3 years Phase 3 data of 134 patients, and now 6 years of data from the Phase 1/2 study. And while we've reported the key clinical outcomes from that data, that is the same data we'll be looking at as we form these estimates. But when you think about responder rates, that 6 out of 134 is a good place to anchor to.

And the gross price?

On the subject of gross price, we don't have a gross price listed yet, Chris. We will be submitting that first in Germany. So it needs to be submitted on a twice-a-month cadence and then it takes about 0.5 month for that price to be listed. So we'll be finalizing that, and that will be listing in the next month or so but we normally guide to expectations of net revenue per patient, so that you don't get dripped up on a gross to net -- having to come up with the gross to net assumptions. So I would guide to home in on that estimated EUR 1.5 million per patient net.

Great. Thanks. And then maybe just a quick follow-up. Some of our checks uncovered recently a number of centers had active patient registries. And I know you probably don't want to give a number of your patients, but maybe can you just put some brackets around especially in Germany and France maybe the sort of range of -- or ratio of target centers that actually have active registries that are in place for ROCTAVIAN?

When you say registries, I think you mean some kind of waiting list of patients that are interested at a particular center. Did I get that right?

Yes. That's right. Yes. That's right. Yes.

Well, we have seen signals of that since the CHMP positive opinion at the end of June. I don't have a full accounting center by center, country by country. But what I would say is it's a very encouraging signal of demand that these, with early adopters, are starting to form what are probably early adopter centers. So those are important great signal of demand, we'll be targeting those first. I will note that a signal of demand like that is really important. It is subject to first having a reimbursement approval for those patients to get treated under and second, the mechanics of doing the workup of the patient like I described, checking for liver health, making sure that they are AAV5 seronegative, making sure the center has gone through an on-boarding process and they're ready to treat patients. So there are some important mechanics early on, especially that will gate those patient registries as you're calling them.

Our next question comes from Salveen Richter from Goldman Sachs.

Maybe 2 questions for me. One is on, could you just remind U.S. on the cadence of the launch across Europe and when these countries -- these various countries -- on board and then help U.S. understand who the early adopters are in each of these countries?

Jeff?

All right. The cadence of launch, I've described on a number of occasions, and in this script. The first market is going to be Germany where we have the ability to -- Germany is both the largest market in Europe for severe hemophilia A and it's the one place in Europe where we have a free pricing period. So we'll be targeting Germany first. And then the second most important market in Europe is France and as I've described, there is an early access program that we've already submitted to in France and for which the review will begin imminently with this approval, France will be second. The balance of the so-called EU4, those are the 4 most important markets in Europe are Italy and Spain. So we'll be targeting Italy and Spain to follow Germany and France. Beyond that, we'll be taking advantage of early access and named patient sales opportunities in markets where they present themselves. And to that end, you can think about some of the small numbers of patients we've reported being treated with VOXZOGO in some of those markets. We'll be pursuing similar opportunities. And also in key markets in the Middle East and Africa, these would be markets such as Saudi Arabia, Kuwait, UAE and even Argentina in Latin America, where we've had success with early access sales following a major market approval like we've just received today. So that would be the initial cadence. Like we have with other launches, we will likely be reporting new active markets each quarter so that you can follow along with that cadence of launch.

Our next question comes from Geoff Meacham from Bank of America.

This is [ Charlie ] on for Geoff. Our congrats on the approval. Maybe I've kind of 2 questions. The first question is can you just -- I think you mentioned about the -- you're going through the [ assets peer ] with France, and that may take about a year or so. I guess following the launch sequence against when can we -- how should we think about the actual count -- revenue kind of recognition standpoint? And then I guess the second question is in terms of the FDA, I think kind of where people are focusing right now in terms of the resubmission study. I'm just wondering if there are any more granularity that you could provide beyond the end of the September submission timeframe in terms of account discussion behind the doors. Thank you.

Jeff, why don't you answer the first question? And Hank, maybe you can answer the second one.

Okay. So I think your -- the question was how to think about recognition of revenue. I'll ask Brian to keep me honest if I miss anything here, but in general, we expect the revenue to be recognized at the time of treatment. So we're selling actual vials of product and like with our other products, when we transfer those vials to the end user that's when we will be recognizing the revenue and that will be essentially a revenue upfront and that revenue upfront that we're recording will be net of actual and anticipated discounts and reserves under an outcomes-based agreement.

Yes. Thanks, Jeff. This is Brian. Maybe just to elaborate a little bit because I heard in the question of an aspect about the pricing in negotiation period in process in France, and then the early access program. So the question may have been about clawbacks or rebates once final price is determined. That's done at the country-by-country level. In certain countries, there is repricing where while the final price might be different or lower, there would not be a rebate. But in countries where there might be a clawback of revenue or reimbursements during the negotiation phase, we actually have experience with this in our other products and we're usually able to estimate what that amount may be and we would reserve that as part of our gross to net, and you wouldn't see it in that revenue. Again, we've got experience with other products doing that. What we would not expect to be in the situation with perhaps we've seen elsewhere where you're required to defer revenue during that period, waiting for that final [ true-up ]. So we wouldn't be in that scenario.

Hank, do you want to comment on the U.S. filing?

Yes. Yes, if there's any additional granularity and sort of not really I mean, the main news since the last time we've spoken to you about U.S. plans is the EC's Commission [ release ] -- the European Commission's authorization of the marketing application for Europe. So while that may not directly read through on the FDA, it's certainly better than the alternative. And as regards the other activities of the FDA, we had this interaction with them, fairly detailed and we're on track for delivering everything they've asked for and we believe that the information that we have will address the questions that they've raised.

Our next question comes from Gena Wang from Barclays.

Thank you for taking our question. This is Sheldon on for Gena. Congratulations on the approval. My first question is about your outcome-based payment. So what are some of the criteria that determine the payback? So how do you define the failure of any specific quantitative metrics we can follow, like how many events -- bleeding events reported? Or is it based on patient or based on physician determined? And how much do you need to pay back? Will it be a binary like 100% once the event happens or a percentage based on the number of events that happened to a patient?

I feel that question...

I think we have covered some of that but Jeff, do you want to reiterate?

Yes. And we have covered that on multiple occasions, but in terms of the criteria for the outcomes-based agreement, essentially we're guaranteeing that patients will respond initially and then be not bleeding and free from prophylaxis therapy for the period of time of the agreement. And so in very simple terms, and I don't think you need to be more complicated than this. Think about it as first initial response and then continued durability as measured by not having to return to prophylaxis during the guarantee period. And as we've discussed previously, how that would work in practice in most anticipated agreements would be something like if you had a 5-year agreement period and you had a patient that return to prophylaxis after 4 of those 5 years, then we would -- then the payer would have captured 80% of the value 4 of 5 years, 80% of the value of the term of the agreement and we would rebate back 20% in that simple example.

And again, I think, Brian explained, however, based on the clinical data we have so far, we can pretty clearly establish the percentage of the patients that are anticipated to go back to prophylactic therapy at this time. And then again, this will be part of a reserve that will be taken upfront from the gross price of ROCTAVIAN as we explained. Again, the anticipated initial price in Germany will be around EUR 1.5 million net of all discount and net of all outcome-based agreements reserves. So -- but if the patient sales [indiscernible] example, the patient returns to prophylactic therapy at year 4 in a 5-year agreement, we will pay 100% of the cost of the therapy in the fifth year from year 4 to 5 for that patient. So I think maybe you're referring to another company that has a recent approval of ex-vivo gene therapy where I think they said it would cover 80% of the costs we are covering 100%.

Okay. And also you mentioned, there [ will be the ] agreement in different new countries, countries would be between like 5 year to 8 years. So this current payback will be also based on that period, is that correct?

Yes, I mean, Jeff or Brian, do you want to answer that?

Yes. We're targeting -- go ahead.

Yes. As you can see, they're targeting 5, 8, these agreements are still being negotiated and as we enter the country-by-country launches but you could model or envision a proportionate value arrangement. So whether it's 5 or 8 that the value of the financial protection that our outcomes-based agreement would provide would be proportional to the timeframe of durability in the outcomes-based agreement.

But if I may add also all this is going to be based on the fact that we have now 6 years. As you can see data on bleeding control available with our Phase 2 trial, we're going to have 7 years in May, June of next year. So I think we're using that data to guide the reserve we're going to be taking upfront from the upfront cost.

Okay. Thank you. And also may I follow up with 1 more question about the price? So based on your interaction with the German payers about your EUR 1.5 million net price, have they -- is this price they have agreed upon or have they commented or have any feedback on your price?

Jeff?

Guys, as I've noted, I said we are working to finalize those agreements. They haven't been finalized yet. But that's our target for where we think we're going to wind up.

Our next question comes from Robyn Karnauskas from Truist Securities.

I do want to say congratulations to not just the senior members, but I mean a lot of people worked on this and I've told you all for a while and I think manufacturing all the way up. Congrats, it's a big deal for hemophilia patients. I have 2 questions. So I guess J.J., you've talked a lot about the value proposition being more than EUR 1.5 million. I know that's the net price. And can you help U.S. understand how you think -- how payers think when you chose the EUR 1.5 million or talking about the EUR 1.5 million net, and you're obviously saving a lot more of the system than that, talk to me about how your thought process and the negotiations or your thought process about that price point. And the second question is with conditional -- it's the wrong CMA. So you're having an approval, which requires you to submit more information in other indications that are a lot more broad, not orphan drug. Sometimes European nations push back on reimbursing those. So explain to U.S. with conditional approvals like that, how confident you are that upfront reimbursement will occur in Europe?

Actually, these 2 questions -- thanks, Robyn. These 2 questions are linked, because the fact that we have an outcome-based agreement, where we guarantee success here, kind of reduce the risk of reimbursement for conditional approval, although Jeff can -- has looked at that in detail and he's going to provide his comments. So the EUR 1.5 million again anticipated is net -- not only of the usual discount, but net of our outcome-based agreements, anticipated reserve and this is the European price we're talking about here, not the U.S. price. So we have talked about in the past and we are firm on this about a higher U.S. price but not going to be double the European price, but it's the fact that we have to take into account in Europe, the fact that the cost of hemophilia therapy with existing product is lower than in the U.S. and consequently, we need to adjust for the -- so the cost offset in Europe, that's going to be lower than in the US. So this is why we end up with around EUR 1.5 million net of reserves and -- of discounts and reserves for the outcome-based agreement. Jeff, you want to talk about the conditional approval and reimbursement where -- why we think it's not going to be an issue?