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

Good afternoon, ladies and gentlemen, and welcome to the BioMarin Pharmaceutical, U.S. Food and Drug Administration approves BioMarin's Roctavian, the first and only gene therapy for adults with severe hemophilia A webcast. [Operator Instructions] And please be advised that this call is being recorded. [Operator Instructions]. And now at this time, I'll turn things over to Ms. Traci McCarty, Head of Investor Relations at BioMarin. Traci, please go ahead.

Thank you, Bill, and thank you all for joining us this afternoon. On the call from BioMarin today, we have JJ Bienaime, Chairman and CEO; Hank Fuchs, President, Worldwide Research and Development; Jeff Ajer, EVP, Chief Commercial Officer; Brian Mueller, EVP, Chief Financial Officer; and Greg Guyer, EVP, Chief Technical Officer, Manufacturing and Tech Operations. To remind you, this nonconfidential 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 in 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 such as 10-Q, 10-K and 8-K report. I'd like to hand the call over to our Chairman and CEO, JJ Bienaimé.

Thank you, Traci, and good afternoon or evening depending on where you are, and thank you all for joining us. So today's historic approval of Roctavian marks a new era of scientific advancements as well as the potential to transform the lives of people living with hemophilia A who are eligible for treatment. Roctavian is the world's first gene therapy for the treatment of severe hemophilia A, is a onetime, single-dose infusion instead of those chronic infusions that they have to take for several years and also unlock the potential of daily life. I want to thank everyone whose years of dedication and support contributed to this breakthrough, especially the patients and clinicians who participated in our clinical trials and our employees whose dedication and commitment has made today possible. Over the past 8 years, BioMarin's R&D organizations has harnessed decades of gene therapy research and scientific innovation to make this breakthrough possible for patients. While BioMarin is known as the pioneering innovator and a best-in-class genetic disease company, today's achievement is our high-water mark for our...

Ms. McCarty, it looks like we did lose Mr. Bienaimé. Just give me one moment, and I'll get him back on the call.

Thank you so much. We're going to go ahead and have Hank speak while we find JJ, and we'll move on from here. Thank you, Bill. Hank, Please go ahead.

Thank you, Traci, Thank you, JJ. Apologies for the technical difficulties, and good afternoon and evening, everyone. The R&D organization has been working unwaveringly towards this outcome over the last 8 years. And we've been at the forefront of developing life-changing medicines to address genetic disease for these 25 years. This approval is especially gratifying, given the innovation it represents for those people living with severe hemophilia A. So today, we extend our gratitude to the many people who contributed to this achievement, to the patients and families who participated in the cycle of innovation to explore the possibility of improving health outcomes not only for themselves, but also for those who now stand benefit from Roctavian, to the clinicians and patient advocates who commit their careers to making medical breakthroughs like Roctavian, to our colleagues who persevered through unchartered scientific and regulatory territory to make history on behalf of people living with severe hemophilia A. And finally, to our shareholders who believed in our R&D capabilities, thank you all from the bottom of our hearts for your support over the course of Roctavian's development journey. Turning now to some label highlights. Roctavian is recommended to be administered at a dose of 6 x 10^13 vector genomes per kilogram of body weight. It's indicated for the treatment of adults with severe hemophilia A who do not have antibodies to the adeno-associated virus serotype 5 detected by an FDA-approved test. Prior to receiving Roctavian treatment, patient selection is determined by testing for preexisting antibodies to AAV5, to Factor VIII inhibitor testing and to assessments of baseline liver health as measured by liver function tests, ultrasound and elastography or laboratory assessments to assess for liver fibrosis. Turning to some key efficacy results as reported in the FDA-approved labeling for Roctavian. Bleeding data was reported for all bleeding types, whether treated or untreated and was collected prospectively for a median duration of 0.6 years in 112 patients. And these 112 patients were then treated with Roctavian and followed for a median duration of 3 years. Roctavian reduced bleeding from a mean of 5-point bleeds per year to a mean of 2.6 bleeds per year according to the label. So just to put a little more context around this, based on emerging statistical evaluation and product-labeling standards, FDA is labeling the product with an intention to describe the sole contribution of Roctavian to bleeding outcomes independent of confounding effects such as factor use. As such, the package insert reflects an imputation of 35 bleeds per year for 13 patients that used -- who used Factor VIII replacement products or emicizumab during the efficacy evaluation period for prophylaxis. Additionally, it's important to highlight that the label also reports median ABR, which is not impacted by this imputation. Median ABR post-Roctavian is 0.3 bleeds per year compared to a pretreatment baseline median ABR of 3.3 bleeds per year, which is more than a 90% reduction in the median ABR. Patients also reported substantial reduction in the rate of spontaneous bleeds and joint bleeds following treatment with Roctavian, based on bleed counts as labeled in the package insert. Spontaneous bleeds were reduced from 2.3 bleeds per year to 0.5 bleeds per year, and joint bleeds were reduced from 3.1 bleeds per year to 0.6 bleeds per year. Spontaneous bleeds and joint bleeds are medically important events that define severe hemophilia A as a bad condition. And the fact that those are dramatically affected by Roctavian is Roctavian's super power. Finally, turning to safety highlights. The label includes safety results for all 134 patients in the intention-to-treat analysis reported through 3 years, demonstrating that Roctavian was well tolerated. There are no black box -- hopefully, I'm not talking to myself. There are no black box warnings, and there is no requirement for a risk evaluation and mitigation strategy, or REMS, as part of the Roctavian approval today. The prescribing information includes warnings and precautions for infusion-related reactions, hepatotoxicity, thromboembolic events and the theoretical risk of hepatocellular carcinoma. Patients with detectable preexisting antibodies to AAV5, active infections and a history of thrombosis or immunosuppressive disorders and liver dysfunction were excluded from clinical studies. The most common adverse reactions occurring more than 5% to Roctavian were nausea, fatigue, headache, infusion-related reactions, vomiting and abdominal pain. Roctavian is contraindicated for patients with active infections, either acute or uncontrolled chronic nonsignificant hepatic fibrosis stage 3 or 4 or cirrhosis and a known hypersensitivity to mannitol. The most common laboratory abnormalities noted in the package insert were elevation in liver function tests, and the majority of patients in the clinical trial required corticosteroid treatment for ALT elevation. For additional safety information, please refer to the approved prescribing information. Post-administration monitoring includes regular ALT testing to monitor for elevations. And if the ALT is greater than/equal to 1.5x the baseline or above the upper limit of normal, corticosteroid treatment should be considered. Patients will also be monitored for infusion-related reactions, thromboembolic events Factor VIII activity and Factor VIII inhibitors. Patients with risk factors for hepatocellular carcinoma should be monitored regularly for 5 years, with regular ultrasound and blood tests, consistent with the FDA requirements for recently approved products in this gene therapy category. Further, we do not have formal post-marketing commitments or post-marketing requirements as part of today's U.S. approval. However, patients are expected to be enrolled in a 15-year registry designed to evaluate long-term efficacy and safety of Roctavian. In summary, we're delighted with today's approval of Roctavian, pushing the bounds of scientific innovation for the benefit of patients is what we do at BioMarin. I'm extremely proud of our team and very pleased that people living with severe hemophilia A now have access to a truly innovative treatment option in Roctavian gene therapy. Thank you for your attention. Thank you for your support. And I'll turn the call over to my colleague, Jeff Ajer, who will describe our launch plan. Over to you, Jeff.

Thank you, Hank, and thank you all for joining us today. I want to add my thanks to the many people who contributed to today's U.S. approval of Roctavian here at BioMarin as well as those in the hemophilia community. The product profile of Roctavian presents tremendous value to patients, including bleed control, good safety profile and freedom from the burden of chronic therapy. Improvement in quality of life, as highlighted in data presented earlier this week at the ISTH meeting, underscores another significant benefit to patients as observed following treatment with Roctavian. Turning now to the first phase of the U.S. commercial launch, which begins today. We are well prepared for this day and will focus initially on the largest qualified hemophilia treatment centers, or HTCs. We have the scale and reach to activate all U.S. HTCs over time and will do so in a phased approach. During our initial phase of launch, we will build on the significant work already completed to prepare key hemophilia treatment centers to infuse Roctavian. More generally, we will continue educating all stakeholders, including patients, HTCs and payers on the value of Roctavian. We will reach out to the people living with hemophilia directly using direct-to-consumer marketing to increase awareness. We will begin treating patients with Roctavian as soon as possible, noting that commercially available Roctavian will be available in 2 months. That is the earliest that it is possible that we can treat the first patient in the U.S. Completing the steps required from the time a patient expresses interest until treatment with Roctavian will vary by patient depending on location, insurer, cadence of regularly scheduled visits with the HTCs and completion of eligibility testing. We expect it could take from 2 to 5 months to complete these steps. In advance of coverage policies being issued by payers, which takes time, in the U.S., we have the ability to get approval for individual patients through the medical exception process. Based on these considerations, we reaffirm full year 2023 Roctavian revenue guidance of between $50 million and $150 million. And though Roctavian revenue has the same contribution whether received in June or December based on Roctavian's unique onetime treatment and payment profile. We estimate that there are approximately 2,500 people living with severe hemophilia A in the United States who are eligible for treatment and receiving care at approximately 140 hemophilia treatment centers. Turning now to the value we believe Roctavian will deliver to patients and the health care system. As noted, value to patients includes bleed control, good safety profile, freedom from the burden of chronic therapy and demonstrated improvement in quality of life. In addition, the potential savings to the health care system are significant. The current cost of chronic prophylaxis with existing therapies is about $800,000 per patient per year for the typical patient. Based on recent Factor VIII usage data presented at ISTH this week, patients receiving Roctavian in the Phase III trial experienced a 96.8% reduction in Factor VIII usage compared to baseline. Roctavian is priced at a wholesale acquisition cost, or WAC, that equates to $2.9 million for the typical patient for this onetime, single-dose treatment. This WAC price translates to estimated net revenue to BioMarin of approximately $1.9 million. Gross to net adjustments, including 340B discounts, Medicaid rebates, reserves for warranty obligations and other small items are estimated to total approximately 35%, with the largest contributor being the 340B component. Building in on JJ's earlier comments on our warranty, it is being offered to all private and public U.S. payers and enables patient access and uptake by absorbing payer risk of Roctavian performance and durability. The warranty period is 4 years. So responses that are durable beyond 4 years will offer additional cost savings to the health care system. In operationalizing the warranty, we are taking advantage of the recently adopted CMS guidance on outcomes-based agreements. We have been actively engaged with CMS on the mechanics and we believe that Roctavian will be the first product to enroll in the so-called multiple best price regime. We are also pleased to share that we have an executed group purchasing organization contract in place that will facilitate access and uptake of Roctavian and hemophilia treatment centers across the United States. In summary, we are ready to rock and excited to start the U.S. commercial launch. We will begin promoting to the hemophilia community immediately. The sales force is activated in all key regions of the United States. We expect labeled commercial Roctavian to be able to ship to pharmacies in approximately 8 weeks. As we have previously communicated, over the coming quarters, we look forward to updating you on progress and plan to provide quarterly net revenue results, metrics on patients treated and other color to help you evaluate progress of the launch. Thank you for your attention. We will now open the call to your questions. Operator?

So actually, can you guys hear me now? It's JJ. Sorry, I got -- my line was interrupted. Sorry about this. I just want to say a few words about our gene therapy manufacturing facility, which was inspected by the FDA last year, and I would say with today's approval, it is now authorized to supply Roctavian. And I would say our California manufacturing site for gene therapy is one of the largest gene therapy manufacturing facility of its kind, and it will allow BioMarin to meet commercial demand throughout Roctavian's product life cycle. Another thing I'd like to add before we get into Q&A is that we are making great progress in Germany. Actually, the number of patients that are willing to be tested for AAV5 positivity is accelerating over the past few weeks, and we are now -- we have tested close to 60 patients now which bodes well for the future demand in Germany and commercial treatment once we get the final driven price, which is expected sometime this summer. So with this, I will turn the call again to Q&A.

[Operator Instructions] We'll take our first question today from Salveen Richter at Goldman Sachs.

Firstly, congratulations on the approval here. I know it's been a long ride. Two questions from me. One on the demand side here. Can you just help us understand if you look to these various HTCs, who these early adopters are, whether you have them lined up, how to just think about in the context of the trajectory. And I know you mentioned the time period, but how much -- I guess, how much should we look at what's playing out with CSL as kind of a benchmark here. And the second question is with regard to losing response for reimbursement, can you just walk us through criteria and how that differs across payers.

Hi, Salveen, Jeff here, I'm going to take your questions. The first, with respect to the demand side. We have identified, as I noted, the largest and most capable hemophilia treatment centers. And probably it would be good to add a descriptor to say these are also the HTCs that we think are going to be most amenable to early adoption. We don't want to disclose the nature and name of those HTCs for competitive reasons, I'm sure you'll understand. But we're lined up. We've had appropriate pre-approval scientific communications with these HTCs. We have addressed pre-approval what is appropriate to address for in-servicing so that those HTCs can begin to be ready to treat patients. All these is in motion as we speak. I don't know that I would guide that the Hemgenix launch is an appropriate benchmark for Roctavian for a number of reasons. I'll just pause there on that one. And then your second question was about the terms of the warranty, I believe. And essentially, the terms of the warranty are intended to address payer risk of lack of response of Roctavian, if there is any lack of response in the initial period, in which case, we would be willing to refund up to 100% of the cost of the product. And then durability over time, and we're talking about a 4-year window here. So lack of durability. To see as an easy example, if we had an initial responder to Roctavian that stopped responding at year 3, that payer would have received 75% of the value of Roctavian, and our warranty obligation in that case would be 25% of the purchase cost of Roctavian to keep things simple. Lack of response is defined on multiple criteria that payers that we've interviewed in advance of launch have fed back that they think it's reasonable. For competitive reasons, I'm not going to disclose more detail on that multifactorial criteria. And am I missing anything?

No.

[Operator Instructions] With that, we'll go to Geoff Meacham at Bank of America.

Congrats on the approval. I just had a few. On the calculated ABR, did FDA make the same assumptions on Hemgenix or even Hemlibra? I think the 52% today was a bit of a surprise post the press release? And then does the ABR math today change how you guys think about the cost-benefit calculation. I was just trying to look forward to your discussions with payers in the U.S. I'm wondering if that would be an informing metric?

Geoff, post-treatment ABR, which by the way, includes all bleeds, not just treated bleeds. So 2.6 is pretty darn good. And that's carrying the burden of this imputation, which was done for Hemgenix, and that's why I referred to this as category type of labeling and also it's driven by some statistical considerations as a general policy matter from the agency. I think we're really super pleased about the references to the most severe impactful forms of bleeding, not cut shaving, not ordinary cuts, but spontaneous bleeding and joint bleeding. The result of which was that there's a 96% reduction as Jeff mentioned during his remarks in factor use. And I think that's going to be a key driver of people's perception of the economic side of the value. Again, as Jeff mentioned, there's a lot of value in Roctavian that goes well beyond just sort of bleeding rate data. And I think we could not be happier with the fact that we have all of this in the product's label and available as an option for patients.

I might just add, Geoff, that it's the entirety of our experience with Roctavian insofar that has informed our expectations of how Roctavian will perform in the commercial world, and the criteria for the warranty is tied to those expectations. So there's not really kind of a loop back to label language in the warranty.

We will go next now to Chris Raymond at Piper Sandler.

I've been getting a lot of questions here on the liver monitoring requirements. I'm actually kind of surprised, people are surprised because looking at your EU label, it's -- there's a weekly monitoring requirement, and Hemgenix has, I think, a weekly or requirement for 3 months. But I guess the question that -- I'm a little surprised the question I had on was the second 26-week period and monitoring beyond that. I don't know, Hank, can you give any color as to what FDA's sort of concerns were on that? And maybe, Jeff, any sort of sense of the commercial reaction so far to that kind of monitoring going out for that period of time?

Chris, I think the embodying principle from the agency as regards this was the safety measures that were used during the trial should be the safety measures that were used during the follow-up period, and that was what the trial protocol is, and respecting the fact that it's still early generation in terms of the use of gene therapy for hemophilia overall. I think that was part of what informs the FDA's conservativeness. Now the other half of that is the actions to be taken on -- well, one other thing to say is the ALT monitoring can hopefully be accomplished in the real world in as simple a fashion as possible for patients so as not inconvenience them too terribly. I think the spirit of the frequency of monitoring was to assure the patients don't have significant hepatic reactions that would cause the need for steroid and/or factor loss, if not caught. And so I think coming out of the gate with some conservativeness about ensuring effective patient outcomes was on everybody's mind, and I think it's what drove the agency towards this strategy.

I might come in on your commercial relevance question, Chris. We have market researched this question, and we've also gotten input from -- on the question of post-treatment monitoring from clinical trial patients. And I might borrow from that latter experience where a patient is characterized by monitoring as an investment in the benefit of Roctavian. The 26 weeks of weekly monitoring and up to weekly monitoring in the second 26 weeks is a 52-week window after which the monitoring guidance significantly lessens. So all in all, we think this is a very manageable profile for monitoring.

The next now to Joseph Schwartz at SVB Securities.

I'm Joori, dialing in for Joe. First, could you elaborate on the FDA-approved test for AAV5? How many patients have already been tested using other antibody tests to see if they might be candidates and need to be tested with the FDA-approved test? And secondly, you previously said that you've interacted with approximately 300 patients from leading disorder centers in 1Q. So how far along in the process are they? And of them, how many do you expect to be early adopters.

On the companion diagnostic, I think it's important to appreciate that we use the same diagnostic lab and the same testing procedures for the clinical trial as what the agency is referencing in their approval letter to talk about a specific approved AAV5 companion diagnostic test. The license holder for that test is the testing lab, not BioMarin. It's our understanding that the test itself has been deemed approvable and the laboratory is waiting for receipt of the approval letter, which is expected. And I think that the -- this is really also a watershed. It's the first companion diagnostic for a gene therapy test. So we can really assure safe and effective outcomes for patients to receive Roctavian.

On the second part of your question regarding the 300 patients, these are patients amongst the broader population of individuals that have opted in for BioMarin to provide additional information about Roctavian overtime. This particular set of 300 individuals or approximately branded individuals are those that we have screened and found likely to be actual hemophilia A patients. And so Joori, you won't be surprised that having opted in for further information, it's very likely that one of the first things that we do is get back to those 300 individuals to inform them of Roctavian's approval in the United States.

We'll go next now to Phil Nadeau of TD Cowen.

Congratulations on the approval. With BioMarin reiterating guidance for revenue this year, it seems like you're confident that some patients will be treated certainly by year-end. Can you speak a bit more about that confidence? It does seem like other gene therapies have taken about 6 months before they're able to dose their first patient in hemophilia as well as other conditions. So how confident are you that you can actually get patients on therapy this year? And can you talk a bit about the bottlenecks or the hurdles that will have to be overcome in your mind to get the first patients on therapy? What are the significant impediments?

Yes. Thanks, Phil. So we've noticed that the first gate that we'll pass will be approximately 8 weeks from now, that's when we will have Roctavian with the commercial label that has been approved and sitting in a commercial distribution warehouse ready to ship to pharmacies. So that will be the first gate, and that's a onetime gate. Beyond that, in my prepared remarks, I noted that -- and we've got some real world experience on this one now from Germany. Germany is a little different from the United States, but we can use that experience to guide to expectations in the U.S. We think that from a point of expressing interest to getting all the way through the steps, eligibility testing, decision-making, scheduling that's required for a patient to be dosed, probably on the quick side would be about 2 months from expression of interest, which could start today for any given patient to about 5 months on the longer end with other patients falling kind of in that range of time frames. That gives us confidence, along with our historical experience of being able to navigate early approvals with payers for our previously launched products and all the work that we've done in advance of Roctavian and approval in the U.S. to facilitate rapid review and potentially approval through the medical exception process by the major U.S. insurers. So I think we're confident in our guidance today.

Yes. Thanks, Jeff. This is Brian. Phil, just a reminder that also contributing to our 2023 revenue guidance for Roctavian is Germany. And so while "early access" before we have a final price has taken a bit longer in Germany, JJ commented on the continually increasing numbers of patients that are commencing the early testing process, therefore, interest in Roctavian. So even if more German patients that volume don't start Roctavian until after we have that price in September, that still gives us a significant amount during 2023 to generate global revenue.

And if I may add also, we're likely to have some patients on an in-patient basis in South America before the end of the year, essentially the Middle East and probably Italy too. And a few other things to add is that the product in terms of commercial shipments won't be available until late August, 2 months from now, but we're not going to wait for that to get some of those -- 300 patients in the U.S. that are interested in Roctavian to get tested if they wish to, for the presence of AAV5 antibodies so that we don't have to waste time once we can start shipping and then once the reimbursement, some of it has been [ given back ], to treat some of those patients. And finally, I would say, as compared to other players in the field, we don't have an existing hemophilia business to protect.

We'll go next now to Paul Matteis at Stifel.

Jeff, I just wanted to dig into a little bit of some of the things we've heard as it relates to Hemgenix and maybe you can talk about your experience with other drugs if there's anything related here. But specifically, some of the challenges that were spoken to were at a site level related to centers feeling comfortable with billing the product, how they get paid, how their economics work also as it relates to payer reimbursement. So I don't know what drove that confusion since CSL is already in this marketplace. But I guess, can you just talk about the center -- the conversations you're having with clinicians right now? And I guess what needs to happen exactly on the payer side in the coming weeks or months for them to be ready to prescribe the drug with confidence?

Thanks, Paul. We've been doing a lot of work with payers prior to launch and also with hemophilia treatment centers to get them ready, there's a number of things. There's kind of the product handling and dosing administration. That's the physical side. And then there's the -- as you termed it, I think, the practice economics piece is another one. I'll remind everybody here that all hemophilia treatment centers or qualified hemophilia treatment centers have access to 340B rebates. That's statutory, and the intent behind that statutory provision is to allow hemophilia treatment centers, a self-funding mechanism for the important work that they do on behalf of hemophilia patients. We've previously guided that we expect the majority of Roctavian to be subject to those 340B discounts. And indeed, in my opening remarks, I gave you an estimate of the magnitude of the gross to net impact of that. So probably those 340B economics, which were set up long before BioMarin got involved, is an important piece to note there. In terms of billing and reimbursement, we noted -- I also noted in opening remarks that we have an executed agreement with a substantial group purchasing organization that operates in the hemophilia space and with hemophilia treatment centers. And we think that, that is an important facilitating step for the hemophilia treatment centers to confidently go through the purchase process with Roctavian. On the payer side, we have been appropriately educating payers in advance of launch focusing on -- initially on the largest payers, and we've been discussing as the clinical profile of Roctavian also discussing with them our warranty, which is an important part of absorbing risk and giving payers the confidence to move forward with reimbursement approvals for Roctavian given the rest of the economics around Roctavian versus standard prophylaxis, treatment, which is chronic as you know and very costly. And finally, we know how as an organization to navigate both getting payers to the point of publishing coverage policies, which is important that takes time and in advance of that being able to go through the medical exception process for individual patients seeking reimbursement approval. So those are all pieces of a puzzle that we think we have well in hand. I'll probably leave it there and not try to benchmark against another company's efforts.

We'll go next now to Robyn Karnauskas at Truist.

Congratulations. I guess I'm going to ask a more longer-term question. A lot of people are focused on the near-term launch. When you think about what centers are up and running, if there are 2,500 patients, have you gotten any sense of what the cadence is or what these centers need to see to actually start treating a lot more patients? Like how are you viewing this launch? Would it be like a hockey stick? Is it slow and steady? And then my follow-up question, is there any accounting that we need to know of given the warranty?

Jeff, why don't you start with the long-term view of the launch, and then Brian will answer the accounting question?

Yes. Thank you, JJ, and Robyn, for the question. What we think about Roctavian in hemophilia A in general is that we're probably in a marketplace where there are classic early to late adopters on both the prescriber side and the patient side market research reinforces that. And so as we think about the launch, we are appropriately focused first on those early adopter segments on both patient and HTC side. And we think over time, we will get to those later adopter segments. And interestingly, the later adopter segments on both the patient and the HTC side has indicated that they would like to see some peer experiences before committing to action. So that would reinforce getting to the early adopter part of these patient and prescriber segments to inform those later adopters. That's one piece. Another piece regarding the cadence that we've learned from Germany is that patients are on a regular cadence for their visits to the HTC. Might be every 3 months, could be every 6 months, might be every 12 months. And what we learned is while some patients are raising their hands and trying to get an early appointment of their HTCs, other patients are waiting for their next appointment to come up. And that's the opportunity to begin the discussion with their prescriber about Roctavian and for the HTCs to begin the discussion with their patients. So in the next 12 months, I would say the cadence of those regularly scheduled appointments are important and to be expected. Beyond that, in the longer term, I would also point to life cycle management activities like an adolescent study, for example, that are intended to unlock additional patient populations over time if they're successful beyond the initial estimate of 2,500 eligible patients. So that's an important part of the long-term work that we're doing to maximize the opportunity for Roctavian. Maybe I'll turn it over to Brian.

Actually, if I may, right before Brian talks about the accounting. I would say also to add to Jeff's remarks, I would say the best salespeople for Roctavian are going to be the first few patients that are being treated with Roctavian and the feedback they're going to be giving to their physicians. I mean if you interview the patients, which we have over 130 patients now in our clinical trials, interview these patients, and they will tell you, even the ones that some of them had to go back relatively soon within 2, 3 years, which is not the majority as clearly seen in our label, they say that the Roctavian experience was -- this was the best years that they have had in their lifetime, and they have absolutely no regrets having been treated with Roctavian even if it didn't last forever. So that just something I would like to highlight. So Brian?

Yes. Thanks, JJ, and thanks, Robyn, for the accounting question. So Jeff remarked on the estimated growth revenue per patient and net revenue per patient. We are planning that a Roctavian sale, despite the warranty obligation over time that we will be able to recognize the full amount of the net Roctavian revenue upfront. If you do the math, and Jeff commented on the gross-to-net adjustment, if you will, and an estimated approximately 35%, that's larger than our current product portfolio, but the largest piece of that 35% is the estimated 340B discount because we understand that most hemophilia treatment centers in the U.S. are eligible for 340B rebates. That's different from the ERT business as an example. So that's a newer and larger piece. But also in that gross-to-net adjustment is the estimated future obligations under the warranty. We are able to use our experience in the Roctavian clinical trial for patients who remain off prophylaxis and other durability measures and those that would, under the warranty terms, trigger the warranty. We're able to make those estimates. Jeff commented on the pro rata value time and the longer patients are -- for which Roctavian is effective, the smaller the outstanding remaining warranty obligation for BioMarin. So we're able to estimate that and build that into the gross-to-net adjustment as part of the upfront revenue recognition based on the clinical trials, and we'll true those up over time based on commercial experience.

Quick question. Would you be willing to take that 2,500 patient number and give us some sense of what percentage are late adopters versus early adopters? Or maybe you won't comment on that yet?

No comment on that for today, Robyn.

We'll go next now to Gena Wang at Barclays.

I also would like to add our congrats on the approval. I have a few very quick clarification questions. First, for the commercial products, do you need FDA to see relief? Second, regarding your guidance to 2,500 patients, the eligible patients, can you walk us through how did you derive that number? And then lastly, initial response you were seeing regarding pay for performance, the initial response. What is the time frame for that -- to define that initial response?

Maybe I can take the first question. This is Greg Guyer. In terms of the release, yes, there's a protocol that we got approved with FDA in terms of what data they needed from each batch that we get released. That information is with the agency, and we look forward to hearing back from them shortly. They approved the protocol, all of our testing met all the specifications, but the procedure is we file with them and then they give us approval on a lot-by-lot basis. So that usually takes a couple of weeks, and then we'll get a response.

Thanks, Greg. And then, Gena, I'll take your second question, which is how did we get to an estimated 2,500 patients. And the preamble on this is in the United States and most of the strategic markets around the world, there is really good data that is publicly available that characterizes the hemophilia patient population. It bounces around a little bit from year-to-year in the United States. But anyway, we start with a pretty good characterization of the total population of people with hemophilia A in the United States. We -- and we take various cuts to get exactly down to the label indication that was approved today. And it's kind of like algebra. It doesn't matter which order you take these cuts, you get down to the same number. So we take a cut for severe patients. That's probably the biggest cut. We take a cut for patients that are 18 years and older. So that's an age cut. We take a cut for our estimate of patients with -- active in prior inhibitors, and that number is just a little fuzzier than the first 2 numbers. We take a cut for AAV seropositivity that would not be eligible. And that cut is based on some survey work that we commissioned a few years ago and published on. That's a pretty firm number. We take a cut on liver health or estimated liver health. That's a little bit of a fuzzier, but anyway a smaller cut. And then that gets us down to the eligible population that ties exactly to the U.S.-approved label, that much on that one. And then in terms of the initial response in the warranty, we're not disclosing those details, Gena. But a couple of things from our clinical trial experience and the label. The label says it can take a few weeks for Roctavian expression to take hold, that would be consistent with our clinical trial experience. So we know the initial response before very long. And also from the GENEr8-1 Phase III study, we know that the nonresponse rate is very, very low indeed. But anyway, if there is a nonresponder, BioMarin owns that -- the cost of that nonresponse, not the payer. That's very important.

We'll go next now to Tim Lugo at William Blair.

I know most of the liver monitoring was expected, but was the language around alcohol consumption and avoidance also expected. And does that change your thinking on uptake at all? And I'd also like to pass along my congratulations on the final approval.

Again -- hi, Paul, and thanks. And again, consistent with the clinical trial. As long as I got the microphone, I'll tell you, the companion diagnostic test has been approved. Late breaking news.

We do have time for one more question this afternoon, we'll take that from Luca Issi at RBC Capital Markets.

Congrats on the approval of Roctavian. Maybe I want to circle back on ALT. How did -- the label cite the majority of patients, I believe 64%, had ALT elevations that occurred beyond 52 weeks. What's the biologic rationale to have ALT still elevated more than 1 year after receiving the therapy? Wonder if you could comment on that, and what are just could be potentially deterrent to the adoption, especially for patients that stable on the current standard of care? And then maybe second, on pricing, I wonder if you can comment on what's the latest thinking on final pricing in Germany? I think you previously guided that you were expecting net pricing a little less than EUR 1.5 billion. So wondering if you still stand by that guidance or whether your thinking has evolved since then. So again, any color there is much appreciated.

Yes. I want to step back a little bit from the clinical trials experience and talk about -- I just mentioned that there's a lot of indexing on the liver's response to transgenes because in the early days of gene therapy, there were liver inflammatory responses. And who knows what those were in response to as early generation investigations, probably had early generation products and early generation product purity. Out of an abundance of caution in the clinical trial, we took a lot of care to make sure that liver inflammatory responses didn't cause transgene loss. So we set the criteria of what an elevated liver function test result would be, incredibly low. And if you're -- in my prepared comments, I talked about were function test results that were above the normal range or 1.5x the pretreatment baseline level. So if normal is 43% and your value is 20% and a year-plus later, you have a value of 31% that would be considered a liver function test abnormality. Now most clinicians, most hepatologists that we talked -- not most, I think all that we talked to, we showed them our liver function abnormalities and they say, "Well, that's not somebody that I'd even see in referral for liver function abnormality workup." So I think there's been a tremendous lens on this for historical reasons. And I think over time, we're going to learn a lot more about how consequential that really is. The net of all of this is that 3-plus years and counting, the vast majority of patients remain free of prophylaxis and experiencing an incredibly low spontaneous bleed rate, an incredibly low joint bleeding rate. So regardless of all that background and laboratory noise, the outcome for patients at the level that's tangible for them is highly valuable.

Thanks, Hank, and thanks, Luca. This is Brian. I'll answer your European price question. You're right that we had commented that we'd expect in our estimating Roctavian revenue or pricing in Europe less than EUR 1.5 million. We have not yet updated those comments. We're still actively negotiating the price and working with the German authorities and elsewhere in Europe. So over time, as we actually get final negotiated prices and generate revenues, we'll give more color on that. But we have not updated that commentary at this time.

At this time, ladies and gentlemen, I'd like to turn the call back to Traci McCarty, Head of Investor Relations, for any closing comments.

Thank you, Bill, and thank you all for joining us today. It's a great day for hemophilia A patients and a great day for BioMarin. We thank you all for your support, and we look forward to seeing you soon. Take care.

Thank you. And again, ladies and gentlemen, that will conclude today's BioMarin conference call. We'd like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.