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

Great. Thank you so much for joining us for this afternoon session. My name is Mohit Bansal. I'm one of the biotech and pharma analysts here at Wells Fargo. And I'm joined by Team BioMarin with us today. So we have Greg Friberg with us, the Head of R&D at BioMarin, and then Cristin Hubbard, she's the Head of Commercial at BioMarin. Thank you very much for joining us today.

Thanks for inviting us.

Awesome. So maybe let's just start with big picture. There has been a lot of development at BioMarin since you both joined. So what makes you excited about all the accomplishments in the last 1 year or so? And tell us about the investment story at this point?

I'll start. Okay. Well, we are really excited at BioMarin. As you've mentioned, we've had a lot of updates over the last year, and I'd say the last couple of years. And I know you'll get into some of the R&D updates. But some of the things that we're really excited about is that when we look at our established business units, so we have 2 of them, one which we used to call enzyme therapies, but since the acquisition of Amicus, we're now calling it metabolic conditions. And we have a lot of exciting activity there. And this was historically a durable franchise, if you think about it, right? We had 5 products that we considered, in that, 4 of which were first in disease. And these were products that we've seen 9% CAGR over the last 3 years, going up to $2.1 billion at full year last year. And this was things that aren't coming from new launches, right? These are -- we have Naglazyme launched in 2005, hit $500 million last year. We have Vimizim launched in 2014, $800 million last year. We have a really durable franchise there. But then we have the addition of Amicus, just as we closed this last April, really exciting growth story that I know that we'll likely get into, but we were able to talk a little bit more about the opportunity in our Q2 call. And this is where we're talking about the potential. These are 2 commercial fast-growing products that we have real potential to expand on, growing to possibly $1.4 billion for Galafold in Fabry and $1.2 billion at peak in the mid-2030s, late 2030s for POMBILITI and OPFOLDA in Pompe. So really exciting growth areas for us, not to mention what we have going in skeletal conditions, which I'll touch on quickly. We did just recently announce just to start it off, a settlement with Ascendis, which I think helps to clear some of the competitive overhang, which I'm sure we'll get into. But this is also an exciting area for growth for us in terms of VOXZOGO. We had 14% revenue growth at the quarter, 20% patient growth in Q2 year-over-year, but also growing sequentially. And just a really exciting time where we're seeing great growth coming out of the younger population for VOXZOGO, but also importantly, we're seeing global expansion of this brand. So very exciting times. And then we've added some things to our pipeline that I know you'll get into, Greg. So I'll hand it over to you.

Yes. No, hot off the press is, of course, this morning, we were able to show the world the totality of our hypochondroplasia data. Really excited about that. Again, the opportunity for really a first-in-disease therapy for VOXZOGO as an extension. The results exceeded our expectations. And again, not only on the efficacy side, but the safety came out quite nice. And again, that is currently -- has been submitted to the FDA for review. Similarly, we're looking across our portfolio and really trying to restock our pipeline. That involves both internal as well as external innovation sources, we most recently closed the deal with Alesta Therapeutics for an HPP oral therapy. I'm happy to get into it if we have additional questions. And then, of course, looking forward to our next-generation CNP product in BMN 333, which will turn over a card looking for superiority versus VOXZOGO in achondroplasia next year. I'll just kind of wrap it up by saying along with the Amicus acquisition, we also acquired the U.S. rights to a molecule called DMX-200 that we call BMN 820. This is for FSGS, focal segmental glomerulosclerosis. And again, that is an ongoing Phase III study that will read out in the 2028-time frame. So our pipeline is looking different than it did even a year ago when I was sitting here, and we're looking forward to continuing to build it, both with internal as well as external innovation sources.

So you guys have been very, very busy between Amicus and all those deals you have done. So let's just start with the base business first, right? For years, this base business was growing at like mid-single digit to low single digit. What is the secret sauce for this like 9% growth in the last 3 years or so? Is this like extra effort on sales because this market is very sensitive to sales and marketing effort and finding patients effort as well? So talk a little bit about that.

Yes. So what we've really been focused on with regard to our metabolic conditions business is a platform, a commercialization platform, I would say, that we've built over the last couple of decades at BioMarin. And what we focus most on is what we call kind of the 3 pillars that we focus on. It's find, find patients where they are, start patients on therapy and then work to make sure that they stay on therapy and they adhere to therapy. A lot of what I would say the secret sauce has been really in that find category. These are conditions for which there was no previous prior treatment. So it wasn't like you had people that knew to necessarily seek treatment. But what we've done is we put a lot of energy and resources into making sure that we are finding patients. This comes in the form of genetic screening. It comes in the form of family cascade screening. So once you identify a member in the family, how can we ensure that other patients in that -- or sorry, other members of that family get tested? But we're now introducing new areas of using technology, AI technology, investing more in different forms of data, both structured and unstructured, in addition to just making sure that we're investing in digital campaigns to find patients, educate on these conditions and then hopefully get them to a point where they can be treated. Lastly, I'd say in terms of the starting, we have a country footprint that is 80 countries wide. These are not necessarily easy countries to find reimbursement and really navigate the reimbursement landscape there in. So that's what we've also been focused on is really understanding in each of these respective markets, how can we ensure that we have the right commercial, medical, but importantly, market access capabilities so that we can get patients on therapy and keep them there.

Got it. Very helpful. And then that's a nice segue into like that's exactly what you talked about when you acquired Amicus that like -- so you could use that infrastructure for both Galafold and Pompe. Amicus has done a tremendous job in selling that product by themselves as well. So help us understand which geographies they were not in and where you can actually add value to that franchise here.

Yes. And to your point, Mohit, I think Amicus did an incredible job at kicking us off in both Fabry as well as Pompe. What I would say is that we have gone by country by country and understanding in our 80-country footprint where we think we could provide the most value. In some cases, for both Fabry and Pompe, this is going to be to accelerate in some of the countries they already were in. So when we acquired Amicus, Galafold was already in 40 countries, PomOpf was in 15 countries. We looked at this country by country and found that we very much think that we could successfully expand into 10 more countries for Galafold and another 20-plus countries for PomOpf, just given where it is in its life cycle. And like I said, we wanted to make sure we understood the landscape there, what is the competitive dynamic in each of these countries and how can we build on this. We've also found that even in countries where they were already marketed, we believe that there are areas that we could add additional resources to that could help us to accelerate in those specific countries. So again, we've done a country-by-country buildup, and that was what then informed those peak year revenue numbers that we provided.

Got it. Completely understand. And that's the reason why you raised the guidance...

That's right.

Peak revenue, everything. So on that -- the question is there's this recent shortage for Sanofi's drug related to manufacturing issues. Are you seeing any early signs of any switches to PomOpf?

Yes. What I can say at this point, and we'll update as soon as we have more information and are able, we are definitely hearing about the shortages primarily in the EU. We've heard that from the community, physicians alike. And so what we're doing is we're working very closely with the community as well as the regulatory bodies to see where we might be able to provide, but until we have more information.

Understood. So I want to talk about VOXZOGO and then we'll get into BMN 333 with that segue a little bit. So VOXZOGO has grown really well. And now you have settled with Ascendis as well. So can you talk a little bit about like the thought process behind the settlement, first of all? And then the competitive overhang is still there. So what dynamics switch versus non-switches you have seen so far in the U.S.? And do you think there's a bolus there that could stabilize over time? So how should we think about that?

Yes. So with regard to the -- first, the first part of the question, which was the Ascendis settlement, we just announced this very recently. And this is something where we will get retroactive royalties applied to any commercial sales, net sales for Ascendis, and that's 20% in the U.S. and 18% in the EU, Brazil and South Korea. We are really excited to do this because we think that it does help to clear the overhang, quite frankly. It also enabled us to actually capture value immediately because we were in the midst of our ITC litigation in the U.S. that doesn't actually provide rewards. They cannot rule on rewards. And so we would have had to go through U.S. district courts and then litigations in multiple jurisdictions in other countries. So we felt like this was a very good thing to just clear that overhang. Most importantly, it helps the community. We know that it's good for patients to have options. And if and where Ascendis is able to drive any additional growth in territories that we were not able to, we could also share in that value capture. So excited about that. But with regard to our commercial strategy and how it affects what we're doing on the day-to-day, it doesn't affect anything we are doing commercially. We will still continue to grow and to compete just the way that we've always been. And really where we see the biggest drivers for VOXZOGO are in what I talked about, the 0 to 2 population. So this is about getting patients as early as possible, treating them when we know that this provides the most benefit to their overall health. And we will have exclusively -- we believe we'll have the label in those 0 to 2 population exclusively for the next couple of years. So an area that we certainly intend to drive growth. In addition to the broad swath of countries that we are continuing to commercialize in, we've built a network in 55 countries where we're commercially available. This is not necessarily easy to catch up to. This has taken time, and we anticipate that it would take any competitor's time to do that as well. With specific regard to your question about Ascendis and how we're doing with the competition, we were able to report in the quarter that we have retained 90% of our patients to date on therapy. We believe in large part, these are families that have seen the benefits of VOXZOGO and have gotten used to the daily routine that they have, and we anticipate continuing to do what we can to keep these patients on therapy. It remains to be seen whether or not this is a bolus, if this is a steady state in terms of the competition, and we'll look to provide color in future calls.

Got it. Makes sense. But then -- so the guidance you have given, you assume some amount of competition for the year?

Yes. So what you're referring to is the guidance that we updated on the quarter call. So we raised the midpoint for global VOXZOGO sales to be at $1 billion at the midpoint. And really, this did take into consideration the switching rate that we were seeing. It takes into consideration the growth that we're seeing globally, not only in the U.S., but also in addition to that globally. And importantly, we had talked a little bit about there were 2 major market access renegotiations that are underway. One, we've -- has come through favorable to us and the other is still underway. So all of this was taken into consideration as we looked at the updated guidance. And I do want to say we did not update the guidance, nor do we think that there'll be a big impact in this year due to the settlement itself.

Got it. Completely makes sense. And then, I mean, you did touch upon the international markets. I mean, they are the bigger portion of the business here. What are the puts and takes in those markets? Like are they similar to U.S. market? Are they different versus U.S. market? And there's a time element there. You have to negotiate country by country; it takes time to get there. So how defendable do you think this -- your position is in international markets versus U.S. market?

Yes. So our global business outside of the U.S. is 75%, currently 75% of our revenue contribution on VOXZOGO. And we believe that this is a defendable state, if you will. And like I mentioned earlier, it certainly takes time to understand local market dynamics, how to expand on those dynamics and really how to build those relationships. And so what we've seen is that it really does depend on country. In some cases, you find more centralized single-payer countries, which you can really get out the gates quickly on, you can treat the broad population quickly, and we've seen that in some countries. In others, it's a little more of a build. So it does depend on country by country. But what I would say is that I think that some of those countries or many of those countries are going to take longer for any competition to really entrench into.

Got it. Completely makes sense. So from defense to offense actually. So BMN 333 is offense. So talk a little bit about like -- I mean, the dose selection was very interesting. So you -- in the PK study, you had like the 500 microgram per kilogram dose actually produced significantly high increase in free CNP level. I think almost 14x the...

Yes, 13x...

Yes, something like that, right, of the other longer-acting CNP. So how should we think about the greater cCNP translating into AGV improvement here? And then the reason for selecting the 350-microgram dose versus the 500-microgram dose.

Yes, so it's pretty typical in single-dose studies to test 1 dose higher than you're going to go in your multi-dose study. And that has to do with the fact that it's a 100-hour half-life molecule. So there's some accumulation. So that's really the only reason that, again, that there was a higher dose in the single-dose study. The 3 doses that we picked, 150 micrograms, 250 micrograms, and 350 micrograms per kilogram, all represent molecule or represent levels that met our criteria of what we were looking for. We were looking for a sustained 3x AUC exposure to free CNP. And that gets roughly 3x, 5x and 7x. Interestingly as well, and this was in our poster from the Phase I study, all of those also provide increases in plasma cyclic GMP levels. Again, that's systemic. But again, a nice biomarker that we're getting closer to the physiologic activity and showing that there is more biology to be had there. Beyond that, what we've looked at, of course, is the exposure response as well as the dose response data from the available therapy, from the YUVIWEL data. And again, we're convinced that there is additional growth to be had there. There are a variety of ways to measure the sigmoid curves that are there. But again, there is a good belief that not only do we have a lot more free CNP that we're going to be able to deliver, but that we believe that there is no plateau that's been clearly established if you look at the mathematics behind those curves.

Got it. Completely makes sense. And then how much room there is for this mechanism to improve the AGV here because there is a natural barrier, right? I mean, these kids grow at about 6-plus centimeters per year, normal healthy kids versus these kids are more like 4 centimeters -- 3.5 centimeters to 4 centimeters...

Yes. Our investigators always kindly remind me that during growth spurts, teenagers can be 10 centimeters, 12 centimeters, even 15 centimeters a year. So physiologically, there's growth to be had. With the achondroplasia and to a lesser extent, but still true with hypochondroplasia, part of the challenge also is fighting that growth deficit that they're either born with or because of the lack of the growth spurt is there. The question of whether there is a plateau and when it will be reached is an unanswered question. What we think we have with BMN 333 is the right molecule to answer that question. Again, from an AUC standpoint, the cyclic GMP and again, the behavior of the molecule, we think that the weekly administration of 333 is going to be able to answer that question. So in Phase II, we are measuring 3 different dose levels. We have a control arm of VOXZOGO as well. Of course, we've got the world's largest supply of data for VOXZOGO also that we can use when it comes to looking at the Bayesian model. But our goal there is to have that result, which we would have next year and be able to again inform what a Phase III study for superiority versus VOXZOGO would look like.

This is a 6-month trial or 1-year trial. This is a 6-month trial.