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

All right. Thank you very much for joining us today. My name is Mohit Bansal. I am one of the biotech pharma analysts here at Wells Fargo. And this is my first session of the morning. And I'm very happy to have, from BioMarin, Greg Friberg with us. Greg is the EVP and Chief Research and Development Officer at BioMarin. Thank you very much for being here.

Yes. No, thanks for the opportunity to join you.

Great. So I mean before I get to specific questions, I would love to know, it has been how long for you at BioMarin?

It's been a year.

It has been a year, right? So yes, I mean, I think BioMarin, from the science point of view, is a great company. I mean so many rare disease drugs you have developed.

So can you talk a little bit about your experience last 1 year and what investors should look forward to from the R&D engine side of the company?

Yes. No, thank you for the opportunity to be here and talk about what I love most, of course, which is the science. I've been at BioMarin for a year now. And of course, when our new CEO joined about 18 months ago, we began an organizational transformation. A lot of focus on operating margin, but also an attempt to make sure that we're focused on the most high-priority programs, opportunity to make the biggest difference for patients, and really a focus on genetically defined conditions. We've had a lot of wins over the last couple of months and we have some activities looking -- we're looking forward to. In particular, our BMN 333, our long-acting CNP program, I would love to talk about a little bit. We just released some data publicly about a month ago at our earnings call. Similarly, we have 3 events coming up. One, a filing for adolescent expansion for our PALYNZIQ project for PKU. We are turning over a card with our newest member of the stable of assets, BMN 401. This is the Inozyme program, a first-in-class -- first-in-disease therapy for ENPP1 deficiency. We'll turn over a card for the so-called ENERGY 3 study in the first half of next year. And finally, for VOXZOGO, the hypochondroplasia program, which recruited about 5 months ahead of schedule, we saw that as a very good sign, we'll be turning over the card for that pivotal study next year in the late second half as well. So more to come there. And again, it's not just about internal innovation. Part of our evolution, James Sabry joined our organization just 1 week after I joined, and we're thinking about R&D not simply as sourced internally, but really internal and external innovation are going to be part of our future. We'll judge external science just like we judge our internal science, make tough calls when we need to. But business development is a large part of our activities right now. The Inozyme transaction was the first of what we hope will be many, not only in the early space, but also looking at some late-stage assets. So more to come there. But it's busy times. And it's good, of course, we now, based on some of the transformation we've been going through, we've got cash and we've got free cash flow. So it's a good time to go out and try to find additional innovation to bring into the stable.

Great. One question I want to ask is that, in the last 18 months, the company has gone through a lot of rationalization of R&D in terms of what makes sense, what doesn't make sense. And you were part of some of those processes, and some were in place before you joined as well. So can you walk us through like what -- when you look at prioritizing an asset and deprioritizing, what do you really do?

Well, that's the magic that we do in R&D, we try to pick winners. But it's humbling. You have to be -- you look at the science, but also look at what the needs of the world are and the realities of where a medicine you'll be bringing forward will plug into that world. So we apply not only rigorous scientific standards to our program, but we also develop target product profiles. We do market research. And we make sure at very early stages that that cross-functional dialogue is happening and that the molecules we're bringing forward have a chance to be embraced by society. I would say that there's no one size fits all. You can only know so much about what the world is going to look like in the next 10 years. But when we go through that process, when we apply those rigorous filters, I mean there are some examples in the last 18 months where we've deprioritized and terminated programs. Partially, a few of them, we just thought were not good bets, they weren't going to deliver what patients wanted and needed. Others, regulatory endpoints or the time that it would take to get from here to there were just going to be too long. And we have a fixed, of course, R&D budget, it grows every year. But we want to make sure we're spending those research dollars, the time and effort and the patient time on molecules that we think will bring the most value. The only truism, I would say, that we hold really steady to and don't waver from is that we are a company that focuses on genetically defined condition. We develop medicines for them. But we also help shape the way that those diseases are defined and the way medicine is practiced. And so we're continuing in that space. But beyond that, again, lots of opportunities both internally and in the business development realm.

Got it. So I mean, on that, I mean, something that can really be helpful for the patients. I mean 333, the recent data you generated, it wasn't healthy volunteers, but at the same time -- can you talk a little bit about the significance of that? Also, like I mean, you have VOXZOGO, but then there is a longer-acting CNP competition coming soon. The context of how the field could be in 4 to 5 years, what is the significance of these data?

So if I could take VOXZOGO first, if that's okay. VOXZOGO is a safe and effective therapy for achondroplasia. As I mentioned, we're hoping that the related but distinct condition of hypochondroplasia, we'll be turning a card over soon. And we're continuing to develop data both in those settings as well as new indications. What I would say with VOXZOGO is we see it as our duty to leverage the 6,000-plus patient years of experience in now 52 countries around the globe, and growing, to make sure that we communicate and patients understand the value of the therapy. This isn't a drug that's simply meant to stimulate growth. We talk about growth a lot, we talk about annualized growth velocity. But that's not what the patients care about. They care about their health and their wellness. And that means we need to do a better job, and we will continue to do so, analyzing, developing, publishing our data with regard to those angles of health and wellness. This is tibial bowing, this is spinal stenosis, this is looking at angles of the spine, looking at facial morphology, looking, of course, at quality of life, all of the health and wellness factors that we're familiar with that unfortunately achondroplasia patients can suffer from. We're going to continue to develop that data. We're going to develop the molecule further as well. We're developing a citrate-free formulation. And we're going to continue to spread around the globe. We see, again, tremendous unmet need in other countries, and we're going to continue to find those patients. But we're not going to stop there. We're thinking about this molecule as the beginning of a franchise, the CNP franchise. Now we pioneered the biology here. CNP 39 is -- the 39 amino acids are something we're quite proud of, that elongate the half-life beyond what natural CNP, which has a half-life only of a few minutes can provide. Now by not stopping there, we've also generated a long-acting molecule in BMN 333 that uses an albumin binding peptide and essentially creates almost like a molecular depot effect where low levels of CNP will be released into the blood stream. What that accomplishes is you avoid the very high C-maxes, where we can see excursions in heart rate and blood pressure that we want to be avoided. They're not life threatening, but they certainly are to be avoided. And it also allows us to increase the AUC exposure of CNP to levels that, in animal models, are giving us continuing increases in growth when we increase AUCs beyond what's seen with VOXZOGO and beyond what's seen with other long-acting CNP agents. What we predict from the mouse models is that an AUC of roughly 3-fold or higher can unlock growth on the order of twice as much attributable growth as compared to the comparator arms. Will we see that in humans? To be determined. But what we have in 333, the new data that we've discussed, is we have the right reagent to test this hypothesis. The animal models suggest that there's more growth to be had. There's genetic data from human systems. There are very rare individuals with high CNP levels or activations of NPR-B pathways that grow to be 7 feet tall or more without nonskeletal side effects also. So it appears like, other than at the bone, these are going to be areas that could be quite safe. And then, of course, looking at other long-acting CNP agents that are on the market, there does appear to be a dose response relationship as you march up the curve. The question that hasn't been tested, the final question, is, does that curve keep going in humans when you have higher AUCs? We believe that that's a good bet, and we now know that we have a molecule that, in multiple cohorts, we've seen AUCs above 3x. It's a 6-cohort study. We mentioned in both cohorts 4 and 5, we had met that criteria for moving forward, and 6, of course, just completed. So in that regard, starting as a combined Phase II/III program in the first half of next year, off to the races in achondroplasia. The hope is to have a superior growth profile. It will be -- there'll be a comparative effectiveness study directly against VOXZOGO as the Phase III portion. And we hope to have that program available with data to be on the market by the 2030 time frame. We're going through a lot of exercises to try to speed that up, but we're committed to the 2030 time frame as we speak, with the goal of beating that as well.

Got it. So let's just -- I want to talk a little bit about this AUC aspect of it. Do we know -- so when you say 3x of AUC, it is compared to the long-acting CNP, not with VOXZOGO, right?

So it's compared to both simulated long-acting as well as VOXZOGO. When we lock those into the animal models, we see in a linear fashion, as we go up on AUC, there's more growth to be had. The 3x just happens to be a threshold where we saw significant growth as well.

Got it. So did you see higher AUC for the longer-acting CNP, the comparator CNP, versus VOXZOGO?

When you -- well, so the short answer is yes. But if you take the AUC of the spike-shaped profile of VOXZOGO and you multiply it times 7 doses, the AUCs are actually in a similar ballpark. I don't know if that's really a useful math exercise. The concept of VOXZOGO, of course, is that there's pulsatile activation of the pathway, kind of like running the first 100 meters of a mile race and then maybe walking the rest of it. Whereas long-acting is more of a smooth jog over the course of the whole mile. The biology, at least looking at the published data for long-acting versus VOXZOGO, it looks quite similar in terms of growth...

Right. The data are too, right?

Yes. And so I think that that gives us confidence that we're not going to see, say, like with parathyroid hormone, dramatically different biology from pulsatile versus continuous. Though I suppose with long-acting, again, longer follow-up, all we have is 1-year data, longer follow-up and additional time points are needed. Clearly, with 333, we believe that that's a good bet. And we believe that there's going to be so-called more meat on the bone here. There's an opportunity to continue to go higher, and we hope that that benefits patients. We talk a lot about growth, we talk about it in the animal models, it's what we can measure. But the implication is that we're pulling through to those measures of health and wellness as well.

Got it. So this is the other question, is that these patients have at least the trial, you enroll about 4 centimeters of growth velocity by 1 year on the baseline. The baseline, and these drugs can actually get to 1.5 centimeter extra per year. How much more you can extract out of this mechanism? Could it be like 2, 2.5 centimeters? Like what is the normal, 6, 6.5?

Well, so when I talk to pediatric endocrinologists, they remind me that teenage boys in their growth spurt can reach 10 or even 12 centimeters a year. So again, physiologically, there are opportunities there. But what we're looking for is to improve upon VOXZOGO. We know VOXZOGO, roughly, a 14-year-old boy with achondroplasia probably has an 18-inch growth deficit compared to normal stature peers. If you extrapolate out over the course of their entire life, VOXZOGO probably can achieve about 10 centimeters -- I'm sorry, 10 inches of growth, of that 18. Clearly, we'd like to do better. We'd like to be able to restore to average stature. So there is additional growth to be had. The challenge, of course, is that not all growth is linear in these patients. There are 2 particular growth sinks, so to speak. One is at the time of birth, these patients are -- achondroplasia patients are already growth-deficient. And they don't have a typical growth spurt also in the teenage years. So to make up for that, we know something north of the 1.5 centimeters is needed. It's hard to know where the top is. But clearly, something between 1.5 and the growth curves of a normal stature individual, that's what we're looking for.

Got it. And I want to bring in the question about the growth hormones as well. So I mean, I think competitor shared some data in combination with growth hormones. Basically, the thought process, the new growth hormones, the way they work, they actually give you a nice growth initially, right? And then -- and that's -- like you can see the difference. While VOXZOGO and all, I mean, because of the mechanism [ is like over a slope of your ] time. Do you see a reason to use a CNP in combination with growth hormones or?

Yes, it's a tricky question. If I ask the question slightly differently, why don't -- why does the world not use growth hormone in achondroplasia, with the exception of Japan? And the answer has historically been that growth hormone is great in growth hormone deficient condition. This is not a growth hormone deficient condition. Growth hormone is also not a targeted therapy. There's a variety of downstream effects. And in achondroplasia patients, historically, you can uncork additional growth, but it doesn't tend to last. Over the course of 1 to 2 years in achondroplasia, you tend to see a waning effect in terms of growth velocity increases. When you look at final adult height, a variety of publications, you also don't see a dramatic difference with growth hormone in achondroplasia. So hypothetically, the concern here is that you're accelerating bone growth, but it's at the expense of bone age and perhaps closing the growth plates earlier. These are the, I think, the concerns that will only be alleviated by looking at longer endpoints. Six months is not going to be enough time to see, is this a persistent increase? Are there accelerations of bone age? So additional time is absolutely going to be needed. What I believe these patients need and what the future will ultimately bring forward are more rational combinations. We're, again, as we develop the data, I think we'll get a better idea of phenotypes and genotypes of patients that are responding more favorably or less favorably, whether it's the CNP or FGFR3. And thinking about a future with rational targeted combinations, rational targeted sequences, I don't believe growth hormone is going to necessarily be the major player there, though again more to be seen and we'll have to see. Growth hormone also comes with other side effects and challenges. The pediatric endocrinologists are well aware, and can handle the intracranial pressure increases, but soft tissue hyperplasia, there are a variety of cardiovascular effects. Again, we're talking about children, children who are going to be on these therapies for years at a time during their formative years. These drugs can be used, but we should ask the longer-term safety questions when we think about adding a second drug like growth hormone.

Makes sense actually.

Thanks for the water.

Of course. Just talk a little bit about the plans for a registrational study. I mean you are planning to start it in next year.

For 333?

For 333. You are talking about there could be a superior profile to VOXZOGO, but again...

That's the ambition. Yes.

That's the ambition. So how do you design a trial like that? And do you go for CNP-naive patients, you go for experienced patients? Because I mean, by that time, there will be a lot of patients already on CNP, right? So like I say, it reminds me of Alexion, right, back in the day, they were trying to develop...

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