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

Welcome to the second day of the BofA Healthcare Conference. My name is Geoff Meacham the senior biopharma analyst, and we're thrilled today to have BioMarin on stage and with me is Brian Mueller, CFO. Brian, welcome.

Thank you, Geoff. Hi, everybody.

So a tick to you just to say a couple of things like post the quarter, high level, and then we're getting some questions.

Yes, I appreciate it. Thanks. Everyone. Thanks again for having us. Great to participate in the conference. We at BioMarin are pleased to be executing on our strategy here in the early parts of 2023, which include leveraging our profitable and growing base business of mostly enzyme-based products with close to $2 billion in revenue, launching or hopefully close to launching 2 potential blockbuster products in VOXZOGO and Roctavian. I'm sure we'll talk more about those. And then continuing to develop and progress our early-stage pipeline of innovative research assets. We recently reported record revenues for the first quarter of 2023 of almost $600 million. That's a 15% growth over the prior year as well as $51 million of GAAP net income. Last year was a key element of our transformation over the last year was a transition to sustainable GAAP profitability. So we're happy to be delivering on that early in 2023. VOXZOGO was a huge contributor to that growth. We raised our guidance to a level of 140% growth over last year at the midpoint of the revised guidance. Large source of that growth has been VOXZOGO revenue in Japan, where we've experienced rapid uptake. VOXZOGO is approved for Japan for children of any age, which has been a key contributor to that uptake. And I bring that up because we're under review in both the U.S. and Europe to potentially expand the label for VOXZOGO to younger children. In Europe, VOXZOGO is approved for children over the age of 2, and in the U.S. over the age of 5 today. So those potential label expansions could significantly increase the number of patients eligible for VOXZOGO. Briefly on Roctavian. We continue to observe increasing interest from physicians and patients in Europe. We continue to navigate the complicated reimbursement process there. We recently announced a pivot in our strategy to move from bespoke outcomes-based agreements to working with the federal payer on our final German price, which we think will give more broad access to all of the markets there in Germany for Roctavian. Likewise, we continue to progress the market access, pricing and reimbursement efforts in France and Italy in Europe. We expect those processes to be complete by the end of the year. And lastly, in the U.S., we're approaching our PDUFA date for the U.S. target action date on our Roctavian BLA submission, that's June 30 of this year. So we're looking forward to that potential milestone and poised for a potential launch should the product be approved. So those are some of the highlights. I know you've got some questions. I'll turn it back to you.

Yes. Perfect. Well, let's start where you finished the U.S. Roctavian sort of review process. I know there are some limitations on what you can say, but maybe just at a high level, Brian, walk us through the cadence going back to earlier this year when you had the 3-year data, how do you think about that in the context of the product profile and what was really new information that kind of prompted the PDUFA push?

Yes, of course. Thanks. So yes, first of all, being just a few weeks away from the PDUFA action date. We're trying to avoid talking about all of the play-by-play in the review over these last few weeks. What Henk shared on our Q1 call a couple of weeks ago was that the activities and the aspects of the process that you'd expect to be happening are happening, and the review continues. But to your question about the change in the PDUFA date and the data. First of all, when you go back to the first BLA review back in 2020, while we had filed for accelerated approval, we recognized that back then, compared to now, was a really limited set of data. We had an interim cut on a subset, a small subset of patients in the Phase III study after just a few months, and then a limited amount of data on a small Phase II study with 7 patients or so. Here in this BLA submission, we already had 2 years of data from our 134-patient Phase III study that was in the original or in the resubmission of the BLA last fall. And because durability has been one of the questions about gene therapy in severe hemophilia A, knowing that the third year of data from our Phase III study was going to become available to us and for the agency to review during this review cycle, the data was announced back in January. It was reasonable that the FDA would want to see that data during the review cycle. And because it was during an existing review, again, a pretty high volume of data, 134 patients. When we shared with them after packaging the data in the format that they would want to see it. It was not a surprise in the FDA issued a major amendment, which extended the PDUFA date by 3 months, but their messaging to us was consistent with what we'd expected that it was because of that volume of data.

Got you. Okay. That's helpful. And just on the U.S. kind of the pre-commercial activities, you guys have launched a ton of indications, drugs. What's different about this? How can you make some of those conversations happen with providers, payers, et cetera? What can you do in advance and what is sort of left to do, obviously, beyond the formal approval?

Yes, thanks. Great question, Geoff. Appreciate it. So of note there is while the delay in Roctavian ultimate review and FDA decision here over the last couple of years was unfortunate and took a lot of extra time, 2 things that come to mind and that could be positive for the Hope launch are: number one, the significant volume of additional data, both safety and efficacy that we've generated over the last couple of years that I mentioned that drove the current filing in PDUFA date change. But that data, if you could picture that being packaged and shared with payers as well as, again, after approval, the patient community, given Roctavian's consistent durability and safety profile, should be helpful for the launch. And then on the payer side, likewise, again, while the delay has been unfortunate, we've been able to make the most of this additional time we've had. There are some safe harbor regulations in the U.S. that permit manufacturers to engage with payers before an actual approval. So that's been an active part of our prelaunch activities. Because the existing standard of care, whether it be prophylactic Factor VIII or HEMLIBRA, is very expensive to the U.S. healthcare system today. And many of these payers in the U.S. are keenly aware of how expensive their severe hemophilia A patients are to their system. And as we saw in our own study, are still experiencing bleeding rates or a certain level of bleeding rates on the standard of care. So that's a pretty big motivator, we believe, for these payers to engage with BioMarin on Roctavian, which has the potential to offer years of freedom from their standard of care and better bleeding control as we've seen in the Phase III study. So we've been engaged in those discussions. We've been doing our best to understand the landscape of the payer mechanics in the U.S. We've had several large payers in the U.S. approach us for that same reason I just mentioned. So it's been a key part of the efforts. And as you know, Geoff, we need to wait for the actual approval itself, but we are ready to go.

Got you. And then the last question on the U.S. With respect to patient sort of inquiries and physician inquiries. How is that kind of -- what's the cadence of that over the course of this year?

In the U.S.?

Yes.

Yes. So limited availability or limited ability, of course, in the U.S. to engage with patients before an approval. We did share previously that we did offer some mechanisms for severe hemophilia A patients interested to learn about gene therapy to opt into a program. We shared that approximately 300 patients, not just people looking for information but actual hemophilia, severe hemophilia A patients, had explored that information. So that was a good signal of interest. Again, we're engaging with the patient communities as well, patient associations. That's a very robust network in the severe hemophilia A space. And likewise, with physicians, we've had a number of U.S. physicians that have been part of our clinical studies. They've had patients that have done very well in the studies. So we think that they understand Roctavian and what it has to offer and will also be a big key part of the Hope launch.

Perfect. Okay. In Europe, let's talk a little bit about kind of the initial strategy. But one of the things I want to ask you though, first is going into the negotiation with Germany and across Europe. I guess you guys you're not -- you have a standard of care already and so you're talking about a benefit as an alternative. And I think that's the way payers were thinking about it. It's not like there is no options, right? So why the time frame to sort of negotiate in Germany, I guess, the question is, what was -- initially, I think you guys were pretty bullish on getting this done, given your experience last fall. What would you say is the couple of things that ultimately prompted delay and more red tape?

Yes. Thanks for the question. So first, as you know, and this is different from other BioMarin launches where in our ultra-orphan disease passed, we were launching products that had no prior approved therapies. So in those instances, you could envision how payer engagement, when there's no therapy versus a standard of care like there is in severe hemophilia A to be different. So we did recognize we are launching into an area where there's an existing standard of care. However, we, again, have seen in our clinical studies that Roctavian has the opportunity to both reduce lead rates as well as reduce the number of infusions on that standard of care and have a chance to actually return value to the system over time. So we feel like the value proposition for Roctavian is still there and hence the plan to engage during the usual longer pricing and reimbursement negotiation periods for when there is a standard of care, which, by the way, can typically take a year or more in Europe and so the fact that it ends up for Roctavian that it is taking us longer than we expected. It's not very different from other product launches where there is a standard of care. And so the strategy initially knowing that we would ultimately engage with the single national payer in Germany, GKV, our strategy was to engage with the statutory health insurers or sub-insurers and provide access to Roctavian through unique individually negotiated arrangements that would include both price as well as this an outcomes-based agreement. When we say outcomes-based agreement, part of the value of Roctavian which is a single infusion of gene transfer therapy, but has the potential to deliver effectiveness over a number of years. And if that's the value proposition, if patients are not using their prior standard of care for a longer period of time, at a minimum, that cost to offset if that's recognized in the upfront single price for that single infusion of Roctavian, it's important to be able to stand behind as the manufacturer and provider of Roctavian that value proposition. And we plan to do that through these outcomes-based agreements, which basically would say that if the patient were to experience their Roctavian to stop being effective to where they had to resume their prior standard of care that BioMarin would take on the financial obligation and basically reimburse sort of proportional value of that upfront Roctavian price that that particular payer never realized. And so while we engaged with these sub-insurers in Germany in good faith and have made lots of progress and had been close to executing several of these agreements and in fact, have executed a couple. It just became clear over time that this is very novel. These are complicated material agreements, and that being the primary strategy, especially now that we're getting closer to actually negotiating and finalizing a price with a single national payer in Germany by this September, it became clear that that was the better long-term strategy to enable access to this market rather than these bespoke outcomes-based agreements. But it did take us several months. And again, we were making progress along the way. We did prove the concept by executing a couple of these arrangements, which remain active and have the opportunity to treat patients up until the point where we have a final price. There's also a mechanism for patients in Germany to get individual access through a named patient sort of exception approval process until we have that final price. We're now outside of the free pricing window in Germany. That was also a factor along the way in the early months of these negotiations. The prepricing period in Germany used to be 12 months, whereby there was no claw back mechanism if the final price ended up being lower than the price that a launch product was selling within the first year. In January of this year, they have free pricing period in Germany changed the 6 months. And so for Roctavian, that was March 15. So after March 15, whatever the final price is in Germany, any payers will be protected. So through these couple of mechanisms, whether it be the OBAs in place or named patient sales based on the patient interest we've seen, the patients are beginning the diagnostic testing and our interest in treatment. We believe physicians are interested in treatment. So we think it's this pool of patients that should provide our first commercial patients here in the near future.