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

Great. Good morning, everyone, and welcome. My name is Jess Fye. I'm a biotech analyst at JPMorgan. And we're continuing the health care conference this morning with BioMarin. We're going to start out with a presentation from the management team, including the company's CEO, Alexander Hardy and then we're going to go into some Q&A afterwards. There's a portal, you can submit questions to through the iPad or raise your hand in the room, somebody will probably bring you a mic. But with that, let me pass it over to BioMarin's CEO, Alexander Hardy.

Thank you very much, Jess. Good morning, everybody. Thank you very much for joining us. I'm Alexander Hardy, President and CEO of BioMarin. We're going to be making forward-looking statements and also talking about non-GAAP financial information. So please refer to these disclaimers and the reconciliation information included in the presentation, which is also available on our website. So I've been in the role for 13 months now, 12 months since I've presented for the first time at the JPMorgan conference. And it's been a very busy 13 months. We've revamped the strategy. We've made important decisions about the structure of the company, our operating model, important decisions about our portfolio and pipeline. We've strengthened our leadership team. That's a lot of changes. But what has not changed is our focus on being the leader in genetically defined conditions. This is what really sets BioMarin apart is our capabilities and our track record in this area. We identify the root cause. We go after it. We create category-defining medications with our excellence in research and development, our ability to manufacture is really excellent. And then we have this capability and this footprint in over 80 countries around the world that allows us to bring these amazing medicines to the patients that need them across the world. And this also translates to a very vibrant, resilient and strongly growing company and now increasingly profitable. And this is why I think BioMarin is one of the most exciting stories in biotech right now. The decisions we made with regard to strategy and operations are already starting to play through in terms of our financial performance. We've had strong financial performance through the first reported 3 quarters of 2024, exceeding overall guidance in each of those quarters. Through the third quarter year-to-date, we've had revenue growing strongly. We've had increasing levels of profitability and earnings per share on a non-GAAP basis growing much stronger than revenue. Well, we've been producing these results at the same time as setting a new direction and new exciting direction for BioMarin. And a key part of that is our strategy. And our strategy is based around three pillars: innovation, growth and value commitment. Innovation, of course, fundamentally, this company is about discovering, these genetically defined medicines for these genetically refined conditions. And that remains absolutely at the heart of everything that BioMarin does. But we also have a very exciting growth strategy. This is largely about further growth for already approved medications. So obviously, achondroplasia for VOXZOGO, but then 5 subsequent indications that we're developing all of these in last year have moved into the clinic. But also important advances in other parts of portfolio, and our pipeline is also advancing well. And all of this allows us to make some significant value commitments of revenue growth and profitability and cash generation for the years to come. So last year, one of the things we did was to prioritize our pipeline, make sure that our pipeline included only the most significant advances with the greatest potential to make a difference for patients in the future. And we're already starting to see the benefits of that in terms of our pipeline. We now have a pipeline of really exciting medicines that are poised to make a big difference, we believe. We've got a number of really important milestones over the next 18 months. We've got those 5 subsequent indications for VOXZOGO, moving ahead, as I mentioned. We've also got advances in our pipeline with regard to enzyme therapies. Palynziq, we have the readout of a Phase III study that hopefully will allow us to expand Palynziq into the 12 to 17 age group in both the U.S. and Europe. And we also have important milestones happening with new molecular entities in our pipeline over the next 18 months. And Greg Friberg in a moment, will share some of those. And then also what is going to be important under the leadership of James Sabry, you'll also hear from in a moment, leading our business development, is business developed is poised to pay a very significant front and center role in further augmenting the growth outlook for BioMarin over this next period. So all of these together allow us to communicate guidance over the long term of really a compelling picture of $4 billion in revenue in 2027, profitability of 40% operating margin in '26 and increasing thereafter. Significant cash generation and then longer term we believe that we've got the past significant continued high levels of growth, and we're targeting mid-teen CAGR revenue growth through 2034. And as part of this is the $5 billion peak potential we believe the skeletal conditions represent. So it's really exciting picture that all of these things lead towards is allowing us to make these very long-term exciting projections for BioMarin. So let's just talk a little bit about that growth strategy and the key part of this is achondroplasia and VOXZOGO's potential in achondroplasia. And whilst this has been a very successful launch to date, we have a lot of growth ahead of us. We're currently approved in about 40 countries around the world. And if you think that the BioMarin footprint globally is around 80 countries, we still have room to grow. And over the next several years between now and 2027, we'll be adding approximately another 20 countries to our global footprint. Now this pie chart represents the total addressable patient population for achondroplasia around the world. You see the orange part of the pie represents 22% of that total patient potential. This is in the highly penetrated markets. This is Europe. This is Australia, Canada, Japan, amongst the most significant countries in that pie. We're already highly penetrated. We aim to continue that penetration and grow in many of the remaining markets in that segment. But very importantly, you see the purple part of the pie, the Rest of the World segment represents 68% of the total achondroplasia patient potential. This is really excellent for us because this is what we're set up to do with our footprint in 80 countries. Now VOXZOGO is available in many of these markets, but we have a lot of room to further penetrate. We've been very successful in countries like Brazil. We're aiming to do that in many, many more countries. And then finally, you see that the largest single market, of course, is the United States, represents 10% of our patient potential. There, we're growing extremely well. And the next slide, let's talk a little bit about that growth outlook in the United States. Now between now and 2027, our financial forecast, we do take into account that we may have competitors in that time frame. However, we believe that VOXZOGO is very well positioned to maintain its leadership position. The reason for that is really 5 important factors. first and foremost, VOXZOGO has a compliance rate of around 95%, which really speaks to the excellent patient and CAGR experience that VOXZOGO provides. Secondly, we will have are approximately a 5-year lead over any potential competitor. Thirdly, we have a broad U.S. label all the way from both. Fourthly, 6,000 patient years of safety and efficacy data. And that's obviously, as of this point, by '27, there'll be many, many more thousands of patients, years of experience. And then lastly, I think very significantly is the growing level of evidence, a body of evidence we have of VOXZOGO's effect beyond growth. This is extremely important to caregivers and HCPs and the decision to treat in achondroplasia. And VOXZOGO by deferred nature of it's being on the market for longer and our really excellent profile. We're producing that evidence. And that's going to be really important. And this is why we believe that patients, caregivers, and HCPs will continue to put patients on VOXZOGO. And for patients that are doing well on VOXZOGO, the vast majority we believe will stay on VOXZOGO going forward. Now data is very, very important in this space. And this is really exciting. In the last couple of months, we've had 2 new really important pieces of data and evidence, which are both important in terms of the growth in achondroplasia and that outlook over the next several years, but also really important in terms of our competitive differentiation going forward. The first on the left is published in December in Med, and this is around proportionality. And again, caregivers and HCPs, the evidence beyond height is really extremely important. It's important to note that proportionality increases in all children untreated children as they grow. So to really to be able to elucidate the benefit in proportionality, you need to have an untreated control group in your study. And this is what this evidence on the left is. This is a 3-year data for VOXZOGO, showing that there was a statistically significant improvement in proportionality versus an untreated control group matched on an age basis. We are the only drug either available or in development for achondroplasia that has statistically significant impact on proportionality versus an untreated placebo-controlled population. This is a really important piece of evidence. On the right-hand side, this is very important in terms of the continued growth and penetration of achondroplasia is guidelines. This is guidelines, these were actually published this month. These were produced by 16 independent physicians. They speak to the importance of early screening, early diagnosis and specifically starting VOXZOGO as soon as possible after that diagnosis, so patients can get the maximum benefit from the treatment with VOXZOGO. I think these represent really good examples. -- of how VOXZOGO's leadership is going to translate to continued growth, but also should and if competitors come, why VOXZOGO will sustain its leadership position. Now the second indication we're aiming for, for VOXZOGO is hypochondroplasia, and we're making really excellent progress with this indication. We're recruiting extremely fast. Greg will touch on this in his words. We're making very strong progress here, I think, because the Phase II results were really compelling. They allowed us to go straight to a registrational study. And this is also driving, I believe, the very fast levels of recruitment that mean that we're on track to get approval and launch in 2027. Now in terms of our go-to-market strategy, this is exactly what BioMarin does so well. We're creating disease awareness. We're increasing -- we're working on increasing those diagnoses rates. And of course, this is very much an overlapping prescriber base with the achondroplasia treating population. So in summary, we're in a really strong position with regard to building and sustaining our leadership position with VOXZOGO in skeletal conditions. We're expanding geographically, as I already covered. By '27, we'll be in more than 60 countries with VOXZOGO. Secondly, we're making really good progress with our clinical program, where we focused and accelerated those, those 5 subsequent indications. But also BMN 333, which is our long-acting CNP, we're making excellent progress. I'm really pleased today to announce that we've initiated the first-in-human study of BMN 333. And then finally, as part of our leadership approach position in skeletal conditions is our strong intellectual property. We said that we would defend our intellectual property, all the hard work that we put in, elucidating the benefits of CNP in these really important conditions. Well, today, we announced in a press release was issued shortly that we've initiated an action against Ascendis in the unified patent court in Germany. So over the next 12 to 15 months, we will see what the court decides in 18 EU countries. And this, of course, builds upon the upholding of our patents by the European patent office last summer. Now moving on to the enzyme therapies business. This is a very, very important part of our future. I think this is underappreciated by investors. It's resilient, it's durable, but it's also growing. The resilience is because these are very complex biologics, they're hard to manufacturer, it also plays the importance of that global footprint. You need to be operating in 80 countries around the world to be able to maximize the potential of this portfolio. But we see there's even an opportunity for us to grow this portfolio even faster. With better patient identification, earlier diagnosis and improved adherence. So important to note, this portfolio has been growing very fast over the last several years. So over the last 3 years, the annual growth rate has been 8%. What we're aiming to do is to get target growth rate for this portfolio of high single digits. And you'll see on the right-hand side, various strategies we're going to employ for our enzyme therapy business to improve patient identification and diagnosis rates in many of those markets in that 80 country footprint. But it's worth taking a moment just to highlight, Palynziq for a moment, because that's got a very significant growth potential. I've already mentioned the adolescent indication, which should expand the total addressable patient population by about 10%. But we really believe also in the Palynziq profile. So this works across all the PKU phenotypes with very significant levels of efficacy, including the potential of diet liberalization which is extremely important patient benefit. So we're confident that no matter the competitive entries that we see right now that Palynziq has a very strong profile ahead. Now I mentioned the importance of external innovation. This is very exciting under James Sabry's leadership that this will be an important part of our growth strategy going forward to augment already exciting growth profile. We believe the environment is very well suited for us to be able to identify deals. We believe that our position as a leader in genetically defined conditions and our capabilities and our global footprint will allow us to do deals that are the right deals for BioMarin, but also the right deals to add value to shareholders for the long run. So James will be available for question and answers on this very, very important point. At this point, I'd like to be to hand over to Greg Friberg, just by way of introduction, Greg joined us at the end of September. After 18 years or so at Amgen, where he was responsible for the development, all the way through from early clinical NDA programs all the way through to late stage programs. And he's moved into the Chief of R&D role at BioMarin in a seamless fashion. He's been really doing a phenomenal job. He's responsible for all of research and development. So that is research, early clinical development, late clinical development, global regulatory affairs and medical affairs. So Greg, over to you.

Thank you, Alexander. It's a real privilege to be here today and represent the dedicated R&D colleagues at BioMarin. I want to focus a little bit on 2 programs that are in our pipeline, which have some upcoming milestones. And then finally, I'll wrap up with a quick overview of additional milestones. The first is BMN 333. This, of course, as Alexander alluded to, is our half-life prolonged CNP analog. It uses technology that's currently used in other approved drugs. And this should afford a weekly dosing paradigm. But beyond just the convenience. This molecule is engineered in order to try to increase -- the CNP exposure that we can reach in patients. What sort of level we're talking about multi-fold levels of increase. And what I mean by this is illustrated in the right upper hand quadrant here. This is cynomolgus monkey PK data that shown and you see it blackish purple on the top, you see again a weekly dosed BMN 333 molecule. But what you also see is that this reservoir, if you will, holding CNP bound in the inactive state slowly releases that CNP into the cyno. And in blue, you see the resulting free CNP species. Of course, there's a nice wave-like function here. You don't see the sawtooth pattern that often is seen with shorter half-life, more frequent administrations and that shape affords 2 qualities that we're hoping to test in the clinic fairly rapidly. One of those is that the Cmax of this molecule avoids by about a tenfold margin, the levels where we can run into some toxicities. But it also, you can see after several doses reaches sustained levels of about 100 picomolar or higher. And when you compare apples-to-apples across other cyno PK models, this is where we get about a two to threefold increase compared to what's been published with other long-acting CNP molecules. And that's a conservative estimate. Similarly, you're probably asking the question, okay, well, there can be more free CNP exposure, but what is the importance of that to patients? And below the upper right-hand corner, you see a separate model. Now this is in mice, a different species. But what you see here is that these mice, when they're dosed either with a vehicle or a fairly healthy dose of vosoritide, VOXZOGO or BMN 333, you see gradually increasing total body length. So the message here is there is more meat on the bone. It appears that increasing exposure beyond what we can see with VOXZOGO with vosoritide dosed here does result in more pharmacodynamics. And that's exactly what we're hoping that this molecule will be. This molecule, as Alexander points out, is currently in Phase I testing. The FDA cleared our R&D at the end of last year in the fourth quarter. And so this study is currently enrolling. Similarly, we're hoping that by the end of the year, in-house, we're going to have the full PK profile from this molecule that will allow us, again, to test not just the BMN 333 levels, but the free species as noted below. We are on target, should all things play out for a launch in achondroplasia in the 2030 time frame. And of course, we're working on a variety of levers to try to accelerate that wherever possible. We hope that, again, this PK data that will have in-house by the end of the year will be something that we'll be able to present publicly at a scientific congress in the first half of next year. The second molecule I want to highlight briefly for you is BMN 351. We're pivoting into Duchenne's muscular dystrophy in particular. These are the patients that are exon 51 skip amenable. And this molecule is an oligonucleotide therapy. There are 3 factors that we've engineered into this molecule that I want to highlight for you that give us confidence that this will at least look different than molecules that have been tested previously. The first of those is that this targets a novel splice site for exon 51 skip induction. In the animal species, we see 30%, 40%, 50% dystrophin levels. And that gives us the confidence that we can target in humans to try to reach greater than 10% levels at steady state. Why 10%? Well, 10% in patients is a level at which we start seeing different phenotypes. You see more like the Becker muscular dystrophies rather than patients losing ambulation in their early teenage years, and of course, succumbing to their disease not long thereafter. Patients live well into their 40s and 50s and beyond. This isn't just a story of quantity of dystrophin. This is also about quality of dystrophin. And this molecule, in particular, should produce near full-length dystrophin. It's not a micro species. And we know from looking at some genetic data that actually this particular splice variant, if you look at this near full length, you can ask the question, how do these patients do in the real world? There are folks walking around with this team product. And that's what you see in the figure there right below the heading. You see that patients in blue with this full length dystrophin actually maintain ambulation well into their 50s and 60s as opposed to again what we know to be the tragic case in boys with Duchenne's muscular dystrophy. Finally, a third factor of this molecule with regard to the chemistry is that this is a non [indiscernible] compound. This is a phosphorothioate. The implications of that are that we're hoping that there will be a therapeutic window, a benefit/risk argument that will look different than some of the other high dystrophin-producing molecules that have been brought into the clinic thus far. It's early days, but we have a lot of confidence certainly in the preclinical data that we've seen. And you see in the upper right-hand corner that we've published quite a bit of the preclinical data to support this molecule. This is currently in Phase I testing. Six boys have been treated at the 6-milligram per kilogram dose level. And we are eagerly awaiting the data of the 26-week muscle biopsy that will be available later in this half of the year. We're hoping to publish that data in the second half of the year at a scientific congress. We also are eagerly awaiting that 26-week data because we have some data in-house. Now it's very early, but we have 2 patients with muscle biopsies at 13 weeks. And again, steady state is actually out close to a year or farther. So this is a very early time point, very small numbers. But from that data, we've been able to determine that indeed we can penetrate the muscle. So we're seeing PK there. We can induce skip induction. We see the gene product and we are seeing measurable levels of functional dystrophin. And so again, eagerly awaiting the 26-week data, second half of the year is where we anticipate releasing that at a public scientific discussion. Finally, I want to wrap up by just highlighting some milestones. Alexander has noted several here. In addition to the pipeline, of course, we have some market-facing molecules with really important cards to turn over. In fetal ketonuria we talked about the adolescents. But the one I want to highlight in addition for you is hypochondroplasia. We have identified the patients who will be needed to complete our enrollment of the dosing cohort in the first half of this year and again, several months ahead of schedule of where we have anticipated. And so again making a very good progress there. So thank you for your time. I'm going to hand it back to Alexander and then I believe we're going to take your questions.

Thanks, Greg. Well, I think you can see the enormous amount of progress we've made over the last 12 months. We're executing an exciting bold new strategy with a restructured and invigorated organization and with a strong new leadership team. So we're very excited about what the future holds. We believe that the future of BioMarin is very, very bright. We're posed to make even -- poised to make even more difference for patients going forward. And that bright future is for patients, for our employees and we believe for our shareholders. And with that, I'd like to invite up for question and answer to join Greg and myself, Cristin Hubbard, who is our Chief Commercial Officer; Brian Mueller, Chief Financial Officer; and James Sabry, our Chief Business Officer. Please come and join us.

Great. And maybe while the rest of the team is coming up here, maybe just start with the first question. We're getting a bunch of investor questions on the back of the litigation that you just announced. Can you outline the potential outcomes that could result from the allegation in Europe against Ascendis. I think a lot of investors view this as sort of a best case scenario as royalties to BioMarin versus actually blocking them. But is that accurate?

We will be seeking an injunction preventing the launch and commercialization of TransCon CNP in those 18 European countries. And once again, by initiating this action at the UPC, Unified Patent Court in Germany right now, we expect that decision within 12 to 15 months. So that's important in terms of that timing.

Got it. Maybe a question for Greg, and thank you for the presentation on the pipeline. Can you expand a little bit on the nonhuman primate data for BMN 333 and how that compares to other long-acting CNP products. What levers do you have to accelerate development there. For example, could you go straight from this Phase I to a pivotal trial. And then I just want to clarify, I think you mentioned PK data at a conference in the first half of '26, but you get the data by the end of '25. When do we get the data?

Yes. So lots of questions there. With regard to the PK data that I showed, indeed, that was cynomolgous monkey data and that 100 picomolar level, those sustained levels that's where this kind of two to threefold higher than what's been published from other long-acting agents. That's probably a conservative estimate given some differences between species. But that's certainly one of the areas and data points that gives us confidence. With regard to the potential pivotal studies for the program, once we have the PK data in hand, we will be moving into patients. And there'll be an opportunity, of course, to not only do dose ranging, but potentially begin a pivotal study. And we're, of course, working on a variety of levers to see how can we speed that up. VOXZOGO, again, was the first-in-class molecule. It took about 10 years from first patient to approval. Right now, we're targeting and feel very confident that we could reach in achondroplasia and an approvable package for the 2030 time range, but there's a variety of levers we're using to try to accelerate that. First and foremost, study design elements, and this is what you were getting at. We can't make those along. We have to work with regulators, but we're obviously looking for opportunities to use adaptive designs borrowing, all of those things to make that recruitment process faster. Secondly would be actually the patient recruitment. And of course, we'll look not only geographically, but at sites to make sure that we can reach patients as quickly as possible. And the third factor we'll be looking to use would be what I call operational efficiencies, regulatory reviews, chances to decrease white space in between any of those decision making. So we will have that PK data in-house hopefully by the end of the year. We're hoping to present at a scientific congress in the first half of next year. There potentially may be opportunities to share information sooner, but we're going to want to take it one step at a time. And what we're committed to is a scientific presentation in the first half of next year.

Maybe one for James, and I'll kind of keep it open ended here. What kind of business development deals do you want to do?

Well, there's a lot of opportunity for BioMarin at this stage. The company has a strong financial basis as you've heard about, and Brian can expand about what you heard about from Alexander. That, combined with the R&D group that Greg leads really gives us an opportunity to extend our innovation not only with the internal programs that we have, but externally as well. And so we're interested in deals that will be a planar extension of what we're working on, Jess. There are many companies, both private and public that are in the rare disease or building medicines for genetically defined populations. And many of these are looking to us as a partner of choice for commercialization, manufacturing and further late-stage development. So our focus will be on clinical stage deals, but we'll also do some research stage deals. We're used in deals that are focused in the business units that you've heard about. And there are a number of possibilities. We have a very busy JPMorgan in front of us on the BD side. So we think there's some real opportunity here over the next 12 months to do many deals.