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

Hello. Welcome to this fireside chat with BioMarin Pharmaceuticals. I'm Joe Schwartz, Senior Equity Research Analyst at SVB Securities. It's my pleasure to be joined by management, including JJ Bienaime, Jeff Ajer and Brian Mueller. Thank you so much for joining us. Maybe will start by having you, JJ, give us a quick rundown of the company's key initiatives and catalysts that we should look forward to over the balance of this year, and then we'll go to Q&A.

Sounds good. Thank you, Joe, and good morning, everyone. Thank you for joining us today. As you know, we are less than 2 weeks away from our Q4 full year financial results call. So we would like to avoid specifics of the fourth quarter. In January, we provided a high-level strategy and framework for growth of the company in the near term and by mid-decade and throughout the end of the decade, with the core components of growth in place, including our steady growing base enzyme business, our 2 recently approved larger opportunities with VOXZOGO and ROCTAVIAN in initial indications and beyond under a life cycle management plan and our proven early-stage development capabilities, our plans to deliver sustainable growth and value creations are in place. I would say that our track record, having developed a best-in-class and first-in-class genetic medicines that created markets where significant unmet needs existed, including achondroplasia, phenylketonuria, numerous enzyme repletion therapies and the world's first approved gene therapy for the treatment of severe hemophilia A, I would say this track record is unmatched for a company our size in the industry. I would say these product successes have brought BioMarin to a momentous inflection points where we have transitioned to a growth and profitability story. VOXZOGO, the only approved treatment for children with achondroplasia, is a prime example of the kind of opportunities that we will pursue on a going forward basis. We increased guidance of VOXZOGO 4x last year based on the tremendous unmet need for a medicine to treat the underlying cause of achondroplasia. And I'd say that ROCTAVIAN gene therapy for the treatment of severe hemophilia A is a truly disruptive therapeutic option for people, who currently have to rely on chronic medicines with injections every week or twice a week. So we remain true to our roots now with the benefit of over 20 years of drug development experience. We have a global infrastructure that's unmatched for a company of our size. We have a durable and growing base business that has enabled the successful pivot to the development of medicines for larger genetic conditions and that leverage our fully integrated and scaled biopharmaceutical capabilities. Our early-stage pipeline is now the richest in BioMarin's history, and we look forward to showcasing those assets at R&D Day in September in New York. So there is so much more to share, but the key takeaway is that our core business, our core capabilities, including drug discovery, clinical trial executions, global regulatory expertise, reimbursement, commercial and worldwide manufacturing, have positioned BioMarin to drive growth and value creation for the foreseeable future. So it's a very exciting time for the company. So I will turn it back to you, Joe, for questions.

Great. Thanks, JJ. So first, to follow on to what you were saying about the financial performance and guidance that you communicated recently, I noticed you reported preliminary total fiscal year '22 sales of $2.09 billion in VOXZOGO, fiscal '22 preliminary sales of $169 million in January, but you didn't provide fiscal '23 guidance like you did last year. Is there a reason why you didn't provide forward guidance for VOXZOGO?

We wanted to signal the significant momentum and uptake that continues through the end of 2022. And we did, in fact, state that we are basically at the end -- as of December of last year, we were on a run rate of $300 million a year. So there is no specific reason why we didn't provide 2023 guidance, except that we want to provide a more specific and as up to date as possible 2023 outlook on our upcoming Q4 call in a few days. . But things are doing very well. VOXZOGO is beating our own expectations, and it's going to be a very large product, the largest product that we have launched so far. We'll see it's going to be neck and neck with ROCTAVIAN hopefully.

Yes. And that leads in well to my next question, actually. So can you talk about what metrics or segments of that market were initially underappreciated, but became stronger driving factor than you expected last year in order to the forward guidance increases as a result?

Yes. So I will let Jeff Ajer, our Chief Commercial Officer, answer that question. Maybe I'll add a few things after he's done. Jeff?

Thanks, Joe, for the question and acknowledging the strength of that launch. I'd say there isn't a single factor that we misjudged. If you look at our history of launching drugs around the world, we grew a lot from that base of experience up to and including how long it takes to get reimbursement started in different markets. The pace of patient identification and then leading those patients on the therapy, and I would say, in general, those processes were moving faster for VOXZOGO than they had for the previous brands in our portfolio kind of across the board. It wasn't one thing. It was the speed of getting in the named patient sales markets, the speed of being able to get through reimbursement in key European markets that allowed us to start treating material numbers of patients. And what I think that does is it underscores what JJ said, the high unmet need that is recognized for treatment of kids with achondroplasia and the powerful clinical data package that we had behind the approval of VOXZOGO that really demonstrated the value proposition. The one other thing that I would call out is we got a launch in Japan in August of last year, approval in June, reimbursement approval in August and subsequent launch. Now we've long operated in Japan with our enzyme replacement therapies. They've been a small part of our business, but we invested in Japan to be able to have the infrastructure and team ready to go when we have the right product in Japan. And I think what we've discovered, the one upside surprise we've discovered that's worth calling out is VOXZOGO really is the right product for Japan. Epidemiology of achondroplasia in Japan is higher than it is for the enzyme replacement therapies, and the value proposition really resonated in Japan. So probably, we got substantially faster uptake in Japan than we were expecting. And that was the one specific surprise, happily.

It's also because, again, we have a well-oiled infrastructure and experience in launching rare disease drugs around the world. So it's starting to show. Also the fact that as compared to enzymes, our previous product launches, the challenge was to find the patients. And here, the patients are generally pretty well diagnosed and diagnosed before birth, most of them. So -- which also is helping and the fact that the product is very effective.

Yes. Right. Okay. And can you talk about the status of your label expansion strategy in younger children under 5 in the U.S. and 2 in Europe?

Yes. So I mean -- so we were very pleased to share in early January that the EMA had validated our application so -- for extension of VOXZOGO labeled to children under the age of 2. As you know, in Europe, the product is approved for 2 years of age and up. In U.S., 5 years of age. We expect actions from both the U.S. and European authorities in the second half of this year. And as you know, in Japan, VOXZOGO has no age restriction today.

And considering we only saw trends in improvement to growth velocity in younger children, how confident are you that we can get a label expansion there? And if you're able to do that -- there was a competitor that had some data that was confounded by the mix of younger children in their study. Does that imply that they may be able to handle the challenges in younger children as well?

I mean our confidence is based on the beliefs that starting treatment as early as possible is necessary to see the most benefit. We are hopeful that younger children will have the opportunity to access VOXZOGO. In Japan, again, the product is approved for all ages. We've treated a baby as young, I think, as 3 weeks of age. And then so far in Japan, the safety profile has been good and has been also in our clinical trials for patients under 5. And so it would be beneficial to patients if the age range in the EU and the U.S. was rolled. And also we understand that for products in general, the requirements from regulatory authorities for age expansions are not as stringent as they are for new indications, for instance. And it's mainly related to safety, and we believe that we have a pretty good safety profile of patients under 5 year.

Yes. Okay. That makes sense. And maybe switching gears to ROCTAVIAN. So to your knowledge, is there anything in particular that the FDA wanted to see what the 3-year Phase III data look?

Not -- I mean they haven't -- never told us that. I mean we kind of -- we were not surprised when they asked for it, because we knew that when we filed in late September of last year, when we refile, that this data will be available during their review process, which is a 6-month review process. So we assume that they would be interested given the fact that this data will be available before they have to make a final decision, but they haven't told us or given us any information as to what exactly they're looking at the data. I mean, to me, it's probably more related to the durability of effect beyond being on year 2. And having 3 years of data is definitely valuable here. And you saw the results we presented at an investor conference in early January, and we are very pleased with those results.

Yes. So when would you expect to know whether the FDA considers that data at 3 years, a major amendment? Given the PDUFAs next month, a lot of folks are wondering, is there any precedent for this sort of a situation or regulation that stipulates when they will give an announcement? Could it be as late as the PDUFA? Or would you expect it to -- if it was going to be considered major amendment, would you expect it could happen sooner than that?

I mean there is no specific regulations. I mean, generally, they do tell you within a month or so of your filing, but they actually can issue a major amendment up to the PDUFA action date though. But so far, they haven't told us that the data we submitted is a major amendment.

Yes. Okay. And turning to your study 270-303 prophy steroid regimen data that will become available in early this year. Any updates to that?

So there is no -- no. I think we'll have the top line data in Q2.

2Q now. Okay.

Sorry?

2Q now.

Yes. Second quarter -- early second quarter. There is no request from the FDA to review this data at this time. There hasn't been any in all our discussions with them. And we are in very active discussion with the FDA right now on the filing. So we don't believe that the FDA decision is related or dependent upon this 303 study. Remember that at 303, the Phase III ROCTAVIAN study met all primary and secondary endpoints with 92% of patients off prophylaxis at Tier 3. So we were very encouraged with the consistent clinical response at this time point and believe it is again supportive of the transformative potential of ROCTAVIAN. We have no reason today to believe that the steroid -- the 303 steroid study data is needed for approval, and it was not in the EU by the way, and we are going to approve with EU without the data.

Yes. And I guess why is 303 study design the way it is? Can you talk a little bit about what it will tell you and practitioners for the best way to use ROCTAVIAN without steroids?

I think the genesis and the history of it is the fact that, as you know, we had slightly different results in the Phase III study as compared to the Phase II study. We're in the high dose regimen. We had prophylactic steroids as opposed to. In the Phase III, we had on-demand steroids. So the hypothesis is that we try to read is chronic steroid better than on-demand steroid, okay? So that is what the study is supposed to answer, and this is why we implemented that study. But I would say, again, we have, as I just mentioned, very good data with the on-demand steroid that was used in the Phase III trial. Now if we can do even better by -- with using prophylactic steroid, why not? But -- and that's why we're going to -- we try to get an answer to that question. But if indeed, that study -- the 303 study does show that prophy steroid is better than on-demand steroid, we could push approval, amend the guidelines for steroid usage with ROCTAVIAN after approval.

Yes. Okay. That makes sense. So in terms of the launch, in January, you said that you feel confident about Street estimates, assuming ROCTAVIAN is approved in March. However, it's uncertain if it might get delayed. And so when you provide guidance very soon, how should we expect to see that structured or communicated when you announce it? Will you include European and U.S. sales or just Europe separately and then, say, plus or minus the U.S.? How are you thinking about...?

It's a great question, Joe. We know it's on everyone's mind. I'll jump in there. And just again, given we're 1.5 weeks away from the call, I'll just ask you to stay tuned for Monday, the 27th, and we'll look forward to talking about ROCTAVIAN and '23 then.

We will provide -- the only thing I can say, we won't provide ROCTAVIAN guidance on the call on the 27th.

Great. Understood. So Jeff, can we talk about the eligible market pool of patients? Given the eligibility criteria, you need to be AAV5 negative have no liver impairment, no inhibitors, et cetera. And in Europe, you said that there's like 3,200 patients or so that could be eligible. What is the eligible market in the U.S.? And is there like one of these factors that is more significant than the others in terms of limiting it? Can you help us envision what it looks like in the U.S.?

Definitely. Thanks for the question, Joe. And just a point to note, when we talk about eligibility, that's at the -- what we expect in the U.S. and what we know is the initial label indication in each of U.S. and Europe. And we will be working -- we have studies ongoing right now to try to open up that patient funnel through life cycle management initiatives over time. But as you stated, our previous estimate for Europe was 3,200 patients in the EMA markets that would be eligible with the label indication that we received. And approaching 3,000 in the United States is our expectation. . And when you look at the funnel -- you noted the different cuts for eligibility, but I'll just start kind of at the top of the funnel. The approvals are for adults. So if you do an age cut of 18 years and older, that gives you 60% of the population that remains eligible as adults, 40% that are off the table as pediatric patients and off the table for now because we'll be studying ROCTAVIAN in adolescent patients over time. And then the second big cut is the severity cut. So the numbers are variable by market. And even sometimes the numbers are variable over years when you look at the registries and the published data by the patient associations. But overall, about 50% of hemophilia patients are categorized as severe and would be eligible for ROCTAVIAN at launch. And 50% are something less than severe and are -- that's outside of the initial label indication. Those are the big cuts. AAV5 seronegativity. We've done work on that. That's been published, and that varies by country. But overall, you could say if you mix across Europe and the United States, you might say about 35% or about 1/3 of patients you would expect to be seropositive for AAV5, and thus, not eligible for the initial label indication. Those are the big ones.

Okay. Very helpful. And a question that we always get is, who is the prototypical patient that's going to want to reach for this first? This is a very informed patient community. Are you seeing any patterns according to the folks that have gone through screening in Germany, for example? Is there any common demographic thread throughout this? Or is it really just evenly distributed across age and other demographic features?

Well, in Europe -- and this is important -- data privacy regulations preclude us from having that kind of information about the patients that are going through the process to be treated. So we don't have the window that we might have had some years ago with our enzyme business. However, we've done a lot of market research to try to home in on what is a likely profile for early adoption? Is there, for example, a niche profile that ROCTAVIAN would fit over time that we need to be aware of? Or is that broader? And this is really important. The market research has indicated that in fact, patients across a broad spectrum of age, other phenotypical information, what product they're currently using to manage their hemophilia, so patients across the spectrum are eligible and interested in ROCTAVIAN treatment. What we think are early adopter profile could be a factor replacement therapy patients that are not performing very well on their current factor replacement therapy. And importantly, the market research tells us that those patients that have not yet gone to Hemlibra are likely to go straight to ROCTAVIAN and not step through a trial of Hemlibra, super important. And even Hemlibra patients that tend to be more satisfied with their therapy than the Factor VIII replacement therapy patients. This is a group of patients that have demonstrated a willingness to switch therapy in pursuit of better outcomes. And so the Hemlibra patients, again, they're more satisfied in general than Factor VIII patients, but we think there's a portion of those patients that would be willing to further switch to ROCTAVIAN in pursuit of additional favorable outcomes. So really broad, and that's really positive for ROCTAVIAN.

Okay. Super helpful. And Jeff, same with you for a moment and switching -- but switching to a discussion on the sites. This is often called a one-and-done therapy, but I think there's a lot of monitoring and a lot of visits and things, which may be considered cumbersome. So at least in the initial onboarding, tests and the like. So where are you in the communication and collaboration process with the sites we're going to administer the therapy in the United States? And how many sites do you expect that will be available to administer ROCTAVIAN at launch?

Well, first, Joe, in the United States, there's roughly 150 hemophilia treatment centers that are actively treating patients. That's a manageable group and the scope of our commercial and medical team to get to over time. But we need -- we're not focusing on getting to all 150 of those right away. We have identified a subset of those hemophilia treatment centers that include, for example, our clinical trial sites in the United States. So we've identified the largest, call them, comprehensive care centers, if you like, that we're focusing on initially at launch. And you're right, there's a -- while this is not a chronic therapy, there's an element of patient readiness and selection and patient monitoring following administration, which, by the way, is most regular 6 -- in the first 6 months following treatment. And then that monitoring tails off over time after 6 months. So we're targeting what we think are the biggest and the largest treatment centers in the United States. We aim to have those ready to treat at or shortly after launch, and then we'll be hitting a second wave of those with readiness. And we've really honed our technique starting in Germany where we're ahead of the game, obviously, with an approval last year, and we've been really diligently working on the site readiness. So it's a comprehensive effort, and we think we've got a method going here.

Yes. That's helpful. And do the sites in the United States feel like they're adequately resourced and reimbursed to do all this work?

Yes. The administration of ROCTAVIAN is not particularly complex. It's an outpatient administration procedure. Maybe not so unlike outpatient administration of our enzyme replacement therapies with the caveat that it's only done once. So the actual administration is not really the issue. And as for reimbursement, in United States for payer reimbursement, it's very diverse payer system in the U.S. But we've demonstrated with our high-value-added therapies and ability to get reimbursement approvals pretty quickly following launch. That's our expectation for ROCTAVIAN. And hemophilia treatment centers get -- derive a benefit from products that they dispensed. We think that would include ROCTAVIAN administration through the 340B discount, which could be significant on us at a highly priced product like we expect ROCTAVIAN will be.

And then to reinforce what Jeff said, I mean, the administration of our drug is pretty simple. I mean this is not cell therapy. There is no preconditioning regimen. No cell -- there is no cell treatment. It's not as [indiscernible]. This is a 3-hour IV infusion.

Follow-up tests and visits...

Yes. Monitoring in the first 6 months, as Jeff outlined, but very simple to administer.

Okay. And then can we touch on your pipeline real quick? What are you most excited about? And 2-part question. When is the next update on the HAE gene therapy?

So I mean we shared some data also again in early January on different things, including BMN 255 for kidney disease. We showed that BMN 255, which is a small molecule, geo-inhibitor demonstrated apparency superior efficacy profile as compared to approved therapy for hyperoxaluria, either Phase I/II trial. We are continuing to dose patients with BMN 331 for HAE. So we should have some updates on all of those at the R&D Day in September. Also, we will be providing some updates on our activities in expanding vosoritide, indications beyond achondroplasia also probably by mid-year. And also, I'm very excited about BMN 351 for Duchenne muscular dystrophy. We believe that we have a very pretty good chance based on preclinical data to achieve dystrophin expressions in the 20% to 30% range, not microdystrophin. Dystrophin is very close to the real dystrophin. So -- and we anticipate being treating our first patients in the second quarter of this year with BMN 351 for DMD.

Excellent. Thank you so much for the update, especially at such a busy time. We look forward to following all the continued progress.

Okay. Thanks for having us.

Thank you.