BioMarin Pharmaceutical [BMRN] Conference call transcript for 2022 q1
2022-04-27 22:06:05
Fiscal: 2022 q1
Operator: Good day and thank you for standing by. Welcome to the BioMarin First Quarter 2022 Financial Results Conference Call. Hosting the conference call today from BioMarin is Traci McCarty, Group Vice President of Investor Relations. Please go ahead, Traci.
Traci McCarty: Thank you, Ashley. Thank you everyone for joining us today. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc. including expectations regarding BioMarin’s financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin’s product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin’s filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K report. On the call today from BioMarin management are J.J. Bienaime, Chairman and Chief Executive Officer; Jeff Ajer, Executive Vice President, Chief Commercial Officer; Hank Fuchs, President, Worldwide Research and Development; Greg Guyer, Executive Vice President, Chief Technical Officer; and Brian Mueller, Executive Vice President and Chief Financial Officer. I will now turn the call over to our Chairman and CEO, J.J. Bienaime.
J.J. Bienaime: Thank you, Traci and good afternoon everyone. Thank you for joining us today. So we begin 2022 points for significant growth and the transition to sustainable GAAP profitability, interest in VOXZOGO from a family seeking a treatment option that addresses the underlying cause of achondroplasia has been very positive, as underscored by today’s increase in full year 2022 VOXZOGO guidance to between $100 million and $125 million. We also reaffirm previously released financial guidance for all other metrics included in our full year 2022 guidance. So, we generated $590 million record revenues in the first quarter, representing 11% growth year-over-year, excluding Kuvan. This marks the start of BioMarin’s return to significant double-digit growth. Actually, the revenues for products marketed by BioMarin were up 15%, including Kuvan. So really off our strong start as to double-digit revenue growth hopefully over the next few years. So, these results highlight the strength of our base business and the significant opportunity that lies ahead with VOXZOGO. It is important to note that $13 million of the $20 million total for the first quarter from VOXZOGO sales were from outside the United States, emphasizing the breadth of our global footprint and commercial capabilities and the importance of the ex-U.S. markets. This will be advantageous as we prepare for a potential European launch of our ROCTAVIAN in the second half of this year, ahead of a potential U.S. approval. With the financial outlook and robust global launch of VOXZOGO tracking to plan, we look forward to the next important regulatory steps with ROCTAVIAN over the coming months. For people with hemophilia – seeking hemophilia A, seeking control a superior to test prophylaxis, we think ROCTAVIAN presents an treatment option based on the results that we observed in our Phase 2 and Phase 3 studies. We believe this data provides supportive evidence of efficacy as part of the marketing authorization application currently under review in Europe and planned for inclusion in our BLA plan for resubmission in late June. We were also pleased to share the news today that we have completed the genomic analysis of the salivary gland from the participants in our Phase 2 ROCTAVIAN study, which was treated over 5 years ago. And findings from the completed analysis did not identify evidence that vector integration contributed to the salivary gland mass. This is great news for patients and the safety profile of ROCTAVIAN and actually for the entire AV gene therapy field. Hank will say a few more words on this in a moment. As we look forward to the remainder of 2022, we are on our way to achieving the goals set forth at the start of the year, turning the quarter to the stable GAAP profitability, ramping up our largest pediatric opportunity to-date with VOXZOGO and progressing ROCTAVIAN applications with health authorities in Europe and the United States and also addressing the broadest exchange pipeline in our history. We will continue to build on this financial, commercial and regulatory momentum in 2022 and beyond as we make the transition to an earnings growth story. So, thank you for your continued support. And I will now turn the call over to Jeff to discuss the commercial business update. Jeff?
Jeff Ajer: Thank you, J.J. I am very pleased with our performance in the first quarter of 2022, recording $119 million in total revenues. The $20 million VOXZOGO contributions in the first quarter drove increased VOXZOGO 2022 full year guidance to between $100 million and $125 million and will be an important component of our 2022 growth story. Now, turning to specifics of the VOXZOGO launch, we are pleased to share that as of March 31 this year, an estimated 284 children were being treated with commercial VOXZOGO. This includes 201 children in countries outside of the United States and 83 children within the United States, and estimated additional 53 children were in process in the United States as of April 15. At the end of the first quarter, VOXZOGO sales were spread across 15 active markets including sales in new markets that previously reported in Saudi Arabia, Slovenia, Czech Republic, United Arab Emirates and Italy. We continue to be very pleased with uptake in the EMEA region, which has been driven by a combination of growth in Germany and collectively from individually smaller markets. Upcoming and outside of the EU, we expect potential approvals in Japan and Australia later in the year. The opportunity in Japan is expected to be significant, and we expect revenue contributions to begin there later this year. Turning to launch dynamics in the United States, we have seen prescription demand pick up quickly. We have been able to rapidly convert patient referrals to patient starts. In the quarter, we experienced prescriptions from genetics and pediatric endocronologists as expected. We also see more payer coverage policies published which are largely consistent with our label or our clinical trials criteria and are aligned to our expectations. In summary, we are very pleased with the pace of uptake during this ramp year for VOXZOGO. Launching in the EMEA regions ahead of the United States was the first for BioMarin and underscore the ability of our experienced commercial teams that tap into large market opportunities regardless of location. This is of particular importance as we look toward a potential ROCTAVIAN launch in the coming months should the CHMP and European decision be supportive. Turning now to our enzyme replacement therapy brands, Vimizim and Naglazyme both achieved record quarterly results in Q1 of 2022. Consistent with our experience last year for both brands, we fulfilled large orders during the first quarter from such markets as Turkey, Brazil, Egypt, Russia and Saudi Arabia. This demand is gratifying and good for our business, and we expect will cause the first half of 2022 to have some concentration of our annual revenues, similar to our experience last year relative to the second half of 2022. As J.J. mentioned, we reaffirm our annual guidance for Naglazyme and Vimizim revenues. For Brineura, 33% growth year-over-year and revenue of $36 million in the first quarter was driven by 18% growth in new patients starting therapy. Moving now to Palynziq, net product revenues grew 2% in the first quarter as compared to the first quarter of 2021 and were impacted by a variety of factors. In the U.S., seasonality of health care coverage similar to what was experienced with Kuvan in the past resulted in a Q1 dip in Palynziq revenues as compared to the fourth quarter of 2021. And while we expect this dynamic in the U.S. to recover for the remainder of 2022 impact from ongoing PKU clinic limitations as full year Palynziq revenues trending to the lower end of the guidance range for the full year. Continuing with the PKU franchise, Kuvan contributed $59 million in revenues in the first quarter of 2022, down 16% as compared to Q1 2021. Since the loss of U.S. market exclusivity in October of 2020, we experienced a further step down in the U.S. in the first quarter. As Kuvan nears the end of its life cycle, as we would expect from a small molecule drug, we are gratified to be able to retain the market share and the resulting revenues we are experiencing. Based on market conditions, we expect full year Kuvan revenues in 2022 to trend closer to the lower end of the previously provided full year guidance range in 2022. Lastly, with the CHMP opinion on ROCTAVIAN expected in the near future launch readiness activities continue to progress. The team is onboard and well prepared to launch, assuming regulatory approvals later this year. We are encouraged that our longer term data results offer a potentially attractive value proposition and treatment option for those with severe hemophilia A, and we look forward to providing you with more detailed updates at launch. In conclusion, in 2022, we anticipate increased demand for all of our commercial brands with the exception of Kuvan as just described. Our MBS products are expected to contribute significantly to revenue growth this year. We also expect VOXZOGO to be a meaningful factor in this ramp year noted in today’s increase in VOXZOGO revenue guidance. We believe that robust prescription demand represents a foundation for continued growth, including the new markets throughout 2022. Thank you for your attention. And I will now turn the call over to Hank to provide an R&D update. Hank?
Hank Fuchs: Thanks, Jeff and thank you all for joining us today. The R&D organization had a very busy quarter as well. Our regulatory team has been focused on health authority interactions with the European Medicines Agency on the ROCTAVIAN application currently under review and preparations for the June resubmission of our biologics license application in the United States. We have enjoyed a high degree of collaboration with the EMA as we enter the later stages of the review procedure. Thus far, we have been able to satisfy their request for information, putting us on track for a potential CHMP in midyear as precise scheduling and subject to the EMA. As J.J. mentioned, we were pleased to have completed the analysis of the salivary gland tumor that was identified and one of our Phase 2 study participants as noted in our EHA presentation this past February. Results are consistent with the benign integration profile for ROCTAVIAN as we did not observe our ROCTAVIAN integration associated with growth of the tumor cells. We plan to provide EMA these data as part of the ongoing review of our market optimization application as well as include the data in the biological license application in the United States and the resubmission in June. Needless to say, we are pleased with the findings – with the findings as it further supports the safety profile ROCTAVIAN has demonstrated to date. As leaders in the field of gene therapy, we look forward to sharing the results of the analysis of the scientific community, at the upcoming World Federation of Hemophilia 2022 World Congress and the Annual American Society of Cell and Gene Therapy Union in addition. Turning to VOXZOGO, we are pleased to share that Dr. Andrew Dave will present results from his study in genetic natural conditions at the Pediatric Endocrine Society Meeting this coming Sunday, May 1. As we shared in our last R&D Day, the study spans 6 different genetic statural conditions. So, we look forward to learning about the potential of VOXZOGO to positively impact children with other conditions besides achondroplasia. Next milestone with VOXZOGO with the data update from our Phase 2 randomized double-blind, placebo-controlled VOXZOGO study in infants and young children of the 5 years age with achondroplasia. Team has had the opportunity to analyze the results since they were unblinded in February, and we expect to share them at a medical meeting in the middle of the year. Finally, turning to the earlier stage pipeline, all of the candidates under development continue to advance. A new update today is that we have begun dosing patients in the Phase 1/2 HARMONY 1 study using BMN-331 or gene therapy for hereditary angioedema. We are encouraged by this new opportunity for HAE patients. as our preclinical data suggests that BMN-331 can reduce the frequency and severity of attacks and potentially eliminate chronic therapy for some patients, significantly reducing the treatment burden of HAE and the current standard of care. We are excited to begin this development journey and learn about the potential for BMN-331 to restore C1-esterase inhibitor protein in humans based on the encouraging preclinical data set. The BMN-255, which addresses the subset of chronic disease, we completed the single-ascending dose arm of the Phase 1/2 study and are in the process of analyzing results. Concerning BNN 351 for Duchenne muscular dystrophy, we expect to file the IND in the first half of the year with the goal of treating the first Duchenne boys in the fourth quarter of this year. Our preclinical studies of BMN-349 continue to build our enthusiasm for its potential to dramatically improve liver health and people living with AYD, alpha-1 antitrypsin efficiency. And the BMN-293 formerly referred to as DYNA-001, is on track to be our next gene therapy clinical candidate. In this case, for the treatment of hypertrophic areas caused by mutations in cardiac myosin in C3, we continue to advance 349 to 293 towards INDs in the second half of 2023. Lastly, on BMN-307 PKU gene therapy, we await the results of 9 clinical studies required to remove the current clinical hold. And as we said in January and February, we believe that this will be a multi-quarter process. So we will update that program status when available. Look forward to keeping you apprised of our progress across the R&D organization as we advance our ROCTAVIAN applications, present data at upcoming medical meetings to move the earlier-stage pipeline products work. Thanks for your support. And I’ll now turn the call over to Brian to update financial results in the quarter. Brian?
Brian Mueller: Thank you, Hank. Please refer to today’s press release summarizing our financial results for full details on the first quarter 2020. Since Jeff touched on many of the top line results from the commercial business, I will primarily focus on operating expenses, bottom line results and other key financial updates this quarter. As usual, all results will be available in our upcoming Form 10-Q, which we are on track to file over the next few days. As we highlighted in February, we believe that 2022 is an exciting year for BioMarin. As the company anticipates transitioning to sustainable GAAP profitability driven by the continued strong growth of our base business, plus a significant contribution from VOXZOGO in its launch year. We are pleased to be tracking the plan based on the company’s first quarter results provided today. Total revenue growth of 11% in the first quarter of 2022 as compared to the first quarter of 2021, excluding Kuvan sets us up nicely to achieve our full metered GAAP and non-GAAP income goals in 2022. To elaborate upon one important comment of Jeff, while we expect Naglazyme and Vimizim orders to be weighted to the first half of 2022. Based on the ordering patterns of select markets, we expect that our total revenues for the full year will be balanced out by growth in our other brands in the second half of the year, and that total BioMarin revenues will be roughly even between the first and second half of ‘22. Also a comment on VOXZOGO, while we are pleased to observe the early patient uptake trends for VOXZOGO globally, which drove our increased expectations for the full year 2022. It’s important to note that even though we expect to continue to add new VOXZOGO patients over the remainder of 2022, the mechanics of daily dosing mean that these new patients on therapy for just a portion of the year will contribute slightly less to full year 2022 revenue. Moving to operating expenses for the first quarter of 2022, both R&D and SG&A expense fell in line with our expectations. R&D expenses for the first year were $161 million, a slight increase as compared to the first quarter 2021, reflecting increased ROCTAVIAN development efforts and increased R&D on our early-stage programs. SG&A expenses for the first quarter of 2022 were $195 million as compared to $174 million for the same period last year and reflects the global VOXZOGO commercial launch efforts since the European and U.S. approvals in the second half of last year as well as in ROCTAVIAN’s commercial launch preparation costs. Moving to bottom line results for the first quarter. As we shared in February, during the first quarter of 2022, we sold the priority review voucher received with the approval of VOXZOGO in the United States. The transaction was recognized as a gain on sale of a non-financial asset on our statement of operations and was the primary driver of Q1 GAAP net income of $120.8 million. While GAAP profitability in 2022 will benefit from the sale we note that our business plan for the year and the related profitability expectations are not dependent upon the after-tax gain from the PRV sale. With respect to non-GAAP income, Q1 2022 non-GAAP income of $105 million excludes the gain on the sale of the PRV and was relatively flat to 2021 and first quarter non-GAAP income of $104 million and represents a strong start to our expectation of earnings between $350 million to $390 million of non-GAAP income this year. Turning to total cash and investments, we ended the first quarter 2022 with $1.5 billion, mostly flat to year-end 2021. While our total cash increased with the proceeds from the sale of PRV, we also experienced quarterly working capital timing differences during Q1 2022. As we said when we provided 2022 guidance, we do expect positive operating cash flows for the full year, briefly on the Ukraine crisis given our global footprint and commercial presence in this region. As we previously shared, the Russia and Ukraine markets represent approximately 2% to 3% of BioMarin’s total revenue. And based on what we know today, we expect that to be consistent in 2022. Given the essential nature of our product which treats underlying conditions for which no alternative pharmaceutical treatments are available, we continue to serve our patients in the region and are working to minimize the treatment disruptions for Ukrainian patients. In fact, we have already fulfilled a significant portion of the expected 2022 supply to Ukraine and Russia. In closing, 2022 is off to a great start, and we are on track to achieve our transition to sustainable profitability with record first quarter revenues, driven by a strong global launch of VOXZOGO and solid growth in the base business. Our plan to support both continued product approvals and innovative pipeline growth, while at the same time generating sustainably increasing revenue, profit and operating cash flow is being realized with an eye towards continued growth further into this decade. Thank you for your attention. And we will now open up the call to your questions. Operator?
Operator: Your first question comes from the line of Salveen Richter of Goldman Sachs. Your line is now open.
Salveen Richter: Good afternoon. First, congratulations on turning GAAP profitable. Two questions from me, for VOXZOGO in the U.S., how is outreach and uptake progressing in pediatric endocrinologists. And then for ROCTAVIAN, anything you can provide us on how regulatory discussions are playing out in the U.S.? Thank you.
Jeff Ajer: Hi, Salveen. I will take the first question. Yes, we are doing really well with outreach to pediatric endocrinologists. It is a new call point and as we are emerging from the shutdown, our teams are establishing connections with this new call point in the United States and other markets where we are active, for example, in Germany. And we are seeing prescriptions coming in from a mix of physician specialties, as I noted, but mainly from geneticists and as we would expect. So I would say it’s going right on track with nothing notable to describe that’s kind of surprising or different than we expected.
Hank Fuchs: And on regulatory discussions, again, the bulk of the conversations have been with European Medicines Agency and we feel pretty good about the connection between the remaining questions they have and the information that we have to provide them including the recently completed genomic analysis and the salivary gland tumor, which is favorable. In regard to the U.S., we do plan to have even further discussions with the Food and Drug Administration in advance of our resubmission, pre-submission interaction is in fact scheduled with Food and Drug Administration. But we have also already had quite a bit of dialogue since the CRL about information they will want us to provide back to them when we do resubmit. We also feel pretty good about the sufficiency of the data that we have in hand for satisfying the concerns that were raised in the letter. So, feeling pretty good about the regulatory situation in both markets.
Salveen Richter: Got it. Thank you.
Operator: Your next question comes from Chris Raymond of Piper Sandler.
Chris Raymond: Hey, thanks for taking the question. Just on VOXZOGO, maybe just a couple of questions on the dynamic there. I think with the number you guys gave about a third or so of revenue last quarter was in the U.S. and just a little less than a third of patients. I know it’s early, but is this maybe indicative of more sort of parity pricing or is there some sort of patient add dynamic? And then also, just doing the math on the revenue and then the patients that seems to be a relatively high number for the quarter. Just is there anything you can add there in terms of the pricing dynamic? And if I can ask a pipeline question, no mention of – I think I heard no mention of BMN-307. Can you just give us a sense of where that program sort of sits? Thank you.
Jeff Ajer: Chris, I’ll start off on the VOXZOGO question. So you mentioned and confirming that we stated about third of our revenues from the United States and the balance ex U.S., which ties up pretty closely to the patient numbers that we’re reporting also in the United States. Early in Q1, we did have some specialty pharmacy stocking, which was a one-time event. Not a huge number, but enough so that there is a resting inventory in our specialty pharmacy network. That’s kind of a – as I said, a one-time event. And by late March, I would say, we were seeing reorders of our specialty pharmacy network in the U.S. on a consistent enough basis that you would conclude that there was no further buying down of that inventory and that the SPs were essentially ordering to demand. So that could be a little bit of a bump in Q1 and for tilted towards the U.S. And you followed along our pricing discussion. As usual, we have a robust price, particularly in the U.S. And so far, we’re managing a pretty tight price corridor for VOXZOGO in other markets. Does that cover your question?
J.J. Bienaime: If I may add, so actually, the launch is going very well in both sides of the Atlantic and the different shares, I mean, two aspects, the difference you see a little bit is because we started selling in Europe and Germany actually in October of last year, so a little ahead of the U.S. really started spending in the U.S. in January. But basically, what’s happening is that the revenues are commensurate to the market size. And we have always said that the largest opportunity was outside the U.S. and the numbers are confirming that. So the good news here is that, again, I think there were some anxieties I’ve read in some analyst report about launching a product first in Europe and before the U.S., that’s the first time we do that. And issues show you that we can be very successful launching a product in Europe ahead of the U.S., which is likely to happen for updates. So all this is pretty good. Hank, you want to answer the...
Hank Fuchs: Yes, Chris, the game plan is we’ve got to complete some additional preclinical studies that pertain to the findings that had been previously reported to the agency. We were hopeful that based on some early interactions with the agency that we would be able to remove the whole quicker. But unfortunately, with this requirement to conduct additional studies, we probably won’t have any updates for you on that until we have the results of those studies, which are going to be several quarters from now. So I’d say, unfortunately, they will be looking for near-term updates on 307.
Chris Raymond: Great. Thanks, guys.
Operator: Your next question comes from Robyn Karnauskas of Truist.
Robyn Karnauskas: Hi, guys. Thanks for taking my question. So just a quick one. I guess for the EMA discussion in the U.S. discussion, given that you’re adding additional salivary gland data. Is it possible that we could go into July? I know you’re not on the docket, it looks like for April for EMEA. And same for the U.S., do you think that this could take a little longer if the filing could be middle of the year, like July, August? And then second question is on VOXZOGO. So, it seems like you have the same number of patients in process that you did last quarter. Do you expect this – the addition of patients to be consistent? Or do you think this is more of a bolus upfront? And then maybe you can comment on – and it’s a lot, but maybe you can comment on compliance. Given the early – and it’s early, but compliance with daily subcu dosing. Thanks.
Hank Fuchs: This is Hank. I’ll take a shot at the first part of your question as to the time line in the European Medicines Agency. We we’re feeling pretty optimistic that all the information that we said we will be able to provide the EMA and the last leg of review will enable them to make a decision in June. But it’s also a decent amount of information and EMA has – based on the questions that they have asked the question, a decent chunk of information is then to review in terms of risk management plans, label, subscriber commitments and things like that. So yes, it could drip into July, but we were getting to be lined up with them and enable them to come to the positive opinion. Of course, that’s the objective of all that. And in regard to the U.S., you’re right to ask the question to my team will certainly appreciate the nature of the question, which is that they are carrying a lot of water on the European application at the same time. We’re finalizing the U.S. application. So as with the execution thing, and that’s really done execution. Yes, sure, things may take a little longer. We really want to make sure that we will submit an application that will facilitate an effective review by the U.S. But that target, again, is in June, and we are hopeful remaining on that track.
J.J. Bienaime: And on your question on VOXZOGO, I mean, I’ll let Jeff answered the question of whether it’s bolus of patients or whether the growth is going to be sustainable. I believe it will be, but just can elaborate under compliance. I think we’ve lost only one patient. Is that correct? All the patients we saw, we have lost one patient so far. Jeff? So extremely good compliance.
Jeff Ajer: Thanks, Robyn, for the question. It’s actually a positive sign of the launch trajectory in the United States, which is the one place in the world that we’re able to track patient numbers in process. So the fact that our in process is holding steady compared to where it was a quarter ago is indicative of getting a steady stream of both of new patients being enrolled and then also having the ability to pretty rapidly work through those patients get them approved for treatment, get products shipped out and prescription fulfilled. So I view that as a positive related to compliance, J.J. noted a small number very small number drop off so far. We don’t have – at this stage, I don’t have a quantitative estimate of compliance other than the drop-off figure, which is supportive of a high rate of compliance so far. The other thing that we’re doing is we’re being very proactive with patients and their families about kind of training for this daily injection. And we’ve gotten super feedback in both Europe and the United States. So that’s been really helpful for families, giving them the confidence to go out and begin the daily injection routine. And I think that bodes well for compliance going forward. Thanks.
J.J. Bienaime: I mean it’s right. We have very good visibility as Jeff said in the U.S. because this is basically first and roll kind of in they signify that they want to be on the family they want that kids to be treated with VOXZOGO. So we have a good visibility for the accretion rate, and we have those in at this time that this is in terms of new patients wanting to be treated that it is slowing down. And I think – and Jeff, you want to mention how long it takes between when the patient is basically signed up and when we start shipping on average in the U.S.
Jeff Ajer: Yes. So, so far, it’s pretty rapid. Our average is 23 days from complete enrollment with the prescription to shipment of that first prescription to a patient with some variability around that means.
Robyn Karnauskas: Great. Thank you.
Operator: Your next question comes from Cory Kasimov of JPMorgan.
Cory Kasimov: Hi, good afternoon, guys. Thanks for taking my questions. Two for me as well. Both probably for Hank. First, just a follow-up on the U.S. ROCTAVIAN situation. Is there anything specific that needs to be addressed in the pre-BLA meeting that hasn’t been dealt with already? I guess just curious if this is a standard operating procedure for a resubmission or if there are issues to still discuss. And then the second thing, I was just wondering, Hank, if you could set the stage ahead of the short stature update this weekend for VOXZOGO. What would be compelling in your view or an investigator’s view when you speak with them? Thank you.
Hank Fuchs: Yes. No, I think interaction with the FDA pre-submission ROCTAVIAN is more of the SOP revenue than necessarily particularly new information. I think the agency stance is likely to be – these are all issues that are going to be resolved during the review. What we – what’s important for us to do is to make sure that we have a clear eye view of the information that they are looking for. We have all these data. So it’s really just a matter of making sure it’s in the form of content of what they are looking for. So more on the SOP side, ass far as Dover presentation, I think the expectation to have is that in the amalgam that sort of across a range of mutations that I think a reminder is, I think he’s indicated that he’s accrued patients with six different types of mutations, that there can be an improvement in stature as measured by in children who have mutations that are different from the achondroplasia FGFR mutation. And he’s got a lot of biology as to why he believes that to be the case. But of course, the data itself themselves will be that’s positive for this underlying hypothesis. So I would focus in on the AGB change from baseline across the different types of mutations that he’s included. And I think the – a good outcome would be similar or better than similar to what we’ve seen in achondroplasia, a great outcome. And it might be mutation-specific might be that some mutations are even more responsive to the seretide. So I think that’s the stage to set for the data.
Cory Kasimov: Great. Thank you.
Operator: Your next question comes from Paul Matteis at Stifel.
J.J. Bienaime: Sorry, we couldn’t hear.
Paul Matteis: I think she said Paul Matteis, Stifel. Thanks for taking my questions. Good to talk to you. Just one VOXZOGO question on the commercial side. I guess – are you seeing physicians or do you think physicians will do anything to determine whether or not patients are benefiting. Obviously, you can look at growth natural history, but every patient is different, you kind of get into hypotheticals. So maybe just comment on how you sort of verify efficacy with this drug. And then to the extent you’ve seen any discontinuations so far, what are the reasons, if you wouldn’t mind clarifying? Thank you.
Jeff Ajer: Thanks for your question, Paul. So in terms of tracking benefit, that’s not something that we guide specifically to – but we would certainly expect – we would certainly expect physicians to be following along the progress of their patients. There is a newly published guidance on the management of achondroplasia, which I think is helpful in providing those prescribers the guidance to do that in growth velocity and height would be kind of a lowest common denominator that could be expected. Some of the U.S. insurers are requiring evidence of benefit for future renewal of prescriptions, for example, which seems reasonable enough. And back to the publication on management guidelines. As you’ve heard me say before, really, there was no medical home, particularly in the U.S. in our system, no medical home for achondroplasia patients. And I think part of the opportunity here is to establish a medical home for kids with achondroplasia up to and including, but not limited to the use of VOXZOGO as a part of that overall management scheme. And I think that’s going to be good for BioMarin and VOXZOGO and it’s going to be great for the kids with achondroplasia and their families. In terms of discontinuation, we don’t really have enough data, as J.J. mentioned, I think we have one discontinuation and I have a stated reason for that one.
Paul Matteis: Okay, thanks. And maybe just one – sorry, go ahead.
J.J. Bienaime: If you go back to tracking the efficacy, this is not a scientific way to do it, but just an anecdote that when we tested the advertising campaign, with European healthcare professionals and patients. We actually have – we have a picture of a young who had been treated with VOXZOGO for, I think, over 4 years or close to 5 now. And she is obviously she is on a inoperative patient and the reactions from the doctors and families of take-on patients that we should be using – we should be using really chondroplastic patients for our advertising. But that’s my other way to answer your questions.
Paul Matteis: Thank you, J. J. And last, just one quick thing. Any update on the path to full approval? Thanks, again.
J.J. Bienaime: Not in particular, the good news is that we’re – the data that’s going to generate the core package is going to be you follow-up these patients from the pivotal clinical trial. And as you just heard, the compliance and the program overall is very excellent. So we do expect to be able to provide that in a filing fashion I don’t know that we’ve guided to a specific submission date.
Paul Matteis: Understood. Thanks, again.
Operator: Your next question comes from Gena Wang of Barclays.
Gena Wang: Thank you for taking my questions. I have two sets of questions. So, the first one is regarding the ROCTAVIAN salivary gland mass integration analysis. So you saw a similar pattern, but did you see any unwanted sites that show up in this analysis? And a related question for your 307 TTU program, your analysis also showed the integration not tumor-initiating event, but FDA still ask for data that requires several quarters of work. So what makes you confident that similar situation won’t happen here to ROCTAVIAN. And I have quickly on VOXZOGO question. Just wondering, what is the price range for the ex U.S. different countries? And for France, now you have like listing prices of $300,000. But since you expect future negotiating price will be lower, how would you book the revenue here?
Hank Fuchs: Hi, Gena, so as regards the pattern of integration, there really was nothing particularly noteworthy about the pattern of integration. And then I think one of the case is to compare the pattern of integration between the healthy tissue and the adjacent in the block to the tumor tissue. And as has been previously described for wild-type AAV recombinant vectors have a relatively low propensity of integration. And I think that has been foundational in the regulatory perspective. You might remember there was an FDA guidance document on this and they referred to AAV vectors is having a low propensity for integration. I think one of the great things about what we’ve found so far is that it appears that the ROCTAVIAN in vector is saving similarly in terms of distribution integration patterns, frequencies and size of integration similar to the wild-type that is to say not binding preferential hot spots of particular relevance. And so the next part of your question was the 307, how does that read effectively undershot how does it meet on the 270 evaluation? And why not imagine that they are going to be the similar requirements for 270 as there have been for – as they appear to be for 307. I think the short answer to that is because the 270 vector has cleared its safety studies for the adequate satisfaction of health authority state. There have been the only sort of suspicious signal that’s arisen in the 270 program is what we just talked about, which was the product tumor, there is nothing unique particularly in the findings in this individual. And so I think having not seen us with neither the preclinical ROCTAVIAN itself or with a vector that whose construction is very, very similar to Octavia and studied for a longer period of time, even the ROCTAVIAN study that similar vector similarly is not oncogenic and preclinical species. So I think all these things take together, taken together bode quite well for the ROCTAVIAN overall risk-benefit evaluation namely that in preclinical studies and in humans, no particular confirming signal of oncogenic potential of the vector has existed.
J.J. Bienaime: Clearly, the FDA seems two products we differently is respected as although ours on clinical hold, ROCTAVIAN is not some clinical hold. We are rolling issue these studies as we see.
Hank Fuchs: More is BMN-331, either also enrolling. And therefore, I think that the agency is reacting to this as it’s a vector-specific indication-specific decision.
J.J. Bienaime: And you had a question on the revenue price range of VOXZOGO in Europe and revenue recognition, we will start with Jeff and then Brian, you explain?
Jeff Ajer: Okay. Regarding the price range, Gena, the prices that we’re anchoring to, we’ve got the WAC price in the United States and on our approval call, we guided to our expectation of kind of gross or WAC price to net realizable price per patient. I think that’s a pretty solid estimate. We’ve got the list price, as you note, in Germany and France. And our expectation is that it’s going to take about a year from product introduction to get to kind of negotiated prices for full reimbursement. So that will happen later this year. And in the meantime, where we’re establishing pricing for our named patient sales markets are right in a pretty tight corridor consistent with the U.S. French and German pricing. And I’ll let Brian cover the discount basis.
Brian Mueller: Yes. Thanks, Jeff. Thanks for the question, Gena. This is Brian. There is nothing materially unique to speak about with respect to VOXZOGO gross to net our experience and our expectations are that the overall gross to net will be similar to our other products as well as our prior launches not to get into each of the European country-by-country dynamics. But in some cases, you do start with an initial price and then there could be a clawback when you get to that final negotiated price to get lower but we’re required under GAAP to make estimates of those and record those reserves, if you will. So what you’re seeing in our reported revenues would be the net-net revenue.
Gena Wang: Great. Thank you. Very helpful.
Operator: Your next question comes from Geoff Meacham of Bank of America.
Geoff Meacham: Hey, guys, thanks so much for the question. I just had a couple along kind of the same theme as everyone has been asking I think on ROCTAVIAN – I know it’s parsing the language a bit, but is the shift from 2Q to mid-2022 from the CHMP. Is that just a normal fluctuation or was, in fact, there an impact to the review clock when you look at the tumor analysis. And then on VOXZOGO, commercially, I know it’s early, but are there some themes and new patient starts in Europe who weren’t in the clinical studies in terms of patient flows or awareness. I’m just trying to get a sense for what was working there this early in the launch and maybe if that could be similar or different when you look to the U.S. launch? Thank you.
Hank Fuchs: Geoff, on the earlier, there is no concrete piece of information that is underneath the shift the minor I was talking about being June, maybe shifting to the summer. I think the only news here is that’s not even new is we’ve been – we’ve just seen off accelerated assessment. And that was anticipated. But you never know at the beginning of the procedure even with the met procedure as just sort of how their time lines line up and when they want to receive information. And so I think as much as anything, we’re just being a little abundant caution here in terms of projecting teams because they are not entirely in our control as a result of the fact that we’re giving them a pretty big slug of data towards the tail end of the review. They obviously do what’s coming. So that’s why we’re confident with staying in the procedure and that we’re going to have an opinion by the summer, but it also has like got to follow their lead in terms of exactly when they are going to take it through the pigment. And the most important thing is we believe that we have the information that addresses the questions that they issued to us. And based on those questions, we believe that a positive benefit risk opinion can come, but that happens after they have done their means on those stores. So that’s what we’re working to support.
J.J. Bienaime: VOXZOGO patients European business.
Jeff Ajer: Yes. So Geoff, what I would say about themes is diversity of experience here with which points kind of away from common themes in an important way. Diversity, I would say, diversity of age group that we’re seeing starting therapy, one example, diversity of prescriber specialty that we’re seeing mainly genetics and pediatric endocrinologists, but also some pediatric orthopedics and pediatricians showing up here. And also kind of diversity of approach, so in Germany, we were essentially operating under a full price of reimbursement approval, even though we haven’t negotiated a final price there, kind of how the market behaves. And so we’re seeing pretty rapid uptake in France, in contrast, we’re currently operating under a very structured expanded access protocol there. So it’s a more kind of structured approach to getting patients started and from as a relatively small network of clinics. And in France, as I’ve noted before, the physicians there are actually starting older patients and working down in age on the logic that they want to take full advantage of the window for treatment with their older kids. That’s not really something that we have seen anywhere else. And in the smaller name patients, sales market that I would say the theme there is we are getting one or a couple of patients approved initially under named patient sales approvals and our opportunity there has been to kind of build off that, get the third, the fourth, in some cases, the fifth or the eighth patients treated, and we are working hard to do that. So, a lot of diversity actually we have experienced.
Geoff Meacham: Got it. Okay. Thanks guys.
Operator: The next question, we have Phil Nadeau with Cowen.
Phil Nadeau: Good afternoon. Let me add my congratulations on a productive quarter. Just a couple of follow-ups from us on VOXZOGO and ROCTAVIAN. First, on VOXZOGO, Jeff I think on the approval call, you identified one of the challenges of the U.S. launch that a lot of patients were in expert centers. Are the expert centers reporting that patients are inquiring about being treated, or is there a general flux of patients towards the expert centers with the availability of VOXZOGO? And then second, on ROCTAVIAN. Hank, just briefly, what are your expectations for an AdCom? I know there wasn’t one in the first review. Do you think the FDA is likely to hold AdCom to review the ROCTAVIAN resubmission? Thanks.
Jeff Ajer: So, I will start on the VOXZOGO experience in the United States. You are right. When we – on the approval call, I noted that longer term, our big task was to establish a referral network and kind of get patients out of the random physician, which is not a medical home for achondroplasia, get them referred either to a genetics clinic that’s interested in achondroplasia or to a pediatric endocrinologists. And moments ago, I mentioned that, that’s an opportunity to create a treatment home for achondroplasia. And also earlier, I said, we have got a pretty steady rate of patients coming in, in the United States for referrals and an in-process group and that’s a good signal indicating that we didn’t just have a bolus of patients that were off and is slowing down over time. However, underneath that, I think you are right. A lot of our early patients were coming from the genetics and skeletal dysplasia clinics, expert centers that had achondroplasia patients lined up, so a lot of interest and referrals early on from that channel. And in the last couple of months, and we have been able to get that referral network established in the U.S. and start driving patients from random physicians that they are being seen by to pediatric endocrinologists. So, that’s picking up now. And I think that’s going to be the longer term driver of growth for the U.S. market.
Hank Fuchs: The issue of headcount, so I don’t know that I have like meaningfully more information to add a dialogue since the agency won’t really decide that AdCom until they are in review. I mean I think if you were asking personally, what would you say, and it would be something like what the agency called that comes generally for two purposes. One is when they want to approve something and they want to rally the troops around the decision they make and then the others when they want to tell something and they want to use the AdCom to tell it. It feels like there is not a lot of info that they could show to an AdCom to kill it because the efficacy profile is good, safety profile is good. And so what would you point to, to be the modus for killing it. So, I guess they could say, I hope they didn’t all come because I hope that what they are doing is going to be serious about like how they regulate gene therapy products and use a fairly robust package of ROCTAVIAN to establish standards for review. But we will...
Phil Nadeau: That’s helpful. Thank you.
Operator: Your next question is from Matthew Harrison of Morgan Stanley.
Matthew Harrison: Great. Good afternoon. Thanks for taking the questions. Jeff, I just want to follow up on two things. One, I think you talked about some inventory dynamics that helped VOXZOGO this quarter at the specialty pharmacy. Could you be or maybe you are willing to just quantify or give us some sense about how much that helped? And then secondly, just as you are preparing for ROCTAVIAN in Europe, can you give us some sense of how much work has been done so far and how much engagement you have had with each of the countries around or if any, engagement around price and just sort of initial commentary there. Thanks.
Jeff Ajer: Okay. Thanks Matt for the question. So, back on VOXZOGO in the U.S. and kind of resting specialty pharmacy inventory, you could judge from the mix of revenue ex-U.S. and U.S. And so, well, BioMarin is guiding the $7 million of revenue was U.S. I also said that by March, we were seeing orders that indicated to be that specialty pharmacies were not drawing down that resting inventory. We also know specialty pharmacies don’t like to hold a lot of inventory. And really, they don’t have to because we have got really good reorder dynamics for them. So, I might guide to a couple to several million dollars of resting inventory in the United States. And then with respect to ROCTAVIAN in Europe, one of the things that I think the VOXZOGO launch in Europe is doing is validating that where there is a large market opportunity and you have an experienced company with experienced teams that know what they are doing, we can capitalize on that market opportunity and have successful launches in the EU, in particular, we are leveraging all of the experience that we have gotten from the past launches. As in the United States, we formed specialized teams to prepare for ROCTAVIAN including seeding our teams with people with significant experience in the hemophilia business. We are essentially ready to go in, particularly in the markets where we are expecting first revenues. And you might expect from the current past experience that would be in places like France and Germany and Italy first and in places where we get patient sales uptake on a relatively rapid basis. So, we have got people in those places. Yes, we have been doing price research. We have an active program working with market access advisors in Europe. We followed that practice, for example, with VOXZOGO. We are doing the same thing with ROCTAVIAN. I would say we are really ready for this launch and we are excited about it if we get a CHMP positive opinion and an EC approval here.
J.J. Bienaime: Let me add a few things. So, in Germany, at least at launch, we are being a price close the U.S. Fed price or around $2 million. And we also have done a lot of reimbursement research. There is major interests by driven payers about outcome-based agreements and we will be making those available because now we have great data assuring that majority of the patients do respond very well to ROCTAVIAN and maybe few of them, low-single digits are either not responding or go back to prophylactic Factor VIII therapy after a few years. So, we can maximize the products at launch by basically offering a guarantee of success to the payers. And that’s something that they understand very well and they are very interested in considering that they know how much the species are costing them. So, that’s kind of the plan.
Operator: Your next question comes from Joseph Schwartz with SVB Securities.
Joseph Schwartz: Hi. A lot of my questions have been answered. So, I will ask some things about your mid-stage pipeline. I guess it’s been over a year since the IND was filed for BMN-255. So, I was wondering if you could give us an update on this program. I see you completed the SAP work and are analyzing maps. Do you think you will be advancing to the MAD portion? And when can we expect to see some data there? Is it possible to see a signal from the mantra than these are healthy volunteers?
Hank Fuchs: Hi, Joe. All good questions. The early stages of small molecule development are the sort of oftentimes is the twistiest part of the road. So, I think all I can share with you now is that is what you put in your question, which is we have completed the single ascending dose portion of the study and we are analyzing the results of that. I think the excitement for 255 is its genetic enablement, namely that we understand there will be a molecular pathway that’s key to regulating oxalate excretion. And there is a lot of oxalate excretion of recurrent stone corners or people who have chronic renal disease. So, if we really figured out a way to open the tap on oxalate, it should be excretion, it should be, or I should say, close with that, it should be exciting for patients. But stay tuned as we gather data in this particular tristiase of the development program.
Joseph Schwartz: Okay. Thanks.
Operator: Your next question is from Debjit Chattopadhyay with Guggenheim.
Debjit Chattopadhyay: Hey. Thanks for letting in. So, just on VOXZOGO, on the commercial launch so far, upper age limit of patients who are currently getting prescribed. And number two, any clarity on the sleep apnea signal noted in the younger subjects in the zero to 5-year-old study? And finally, are you planning to advance the long-acting version into the clinic. Thanks so much.
Jeff Ajer: Hi Debjit. I will start with the question on the age range. As noted earlier, we have seen here we have the data to measure it quite a lot of diversity in age range, including teenagers being enrolled for present as well as younger kids. So, don’t have a ceiling age, but what we know is that kids that have their growth plates close will not benefit. So, we would expect that upper limit to be something plus or minus or 18-years-old plus or minus. And I think your second question was related to the zero to 5-year-old.
Hank Fuchs: Yes. So, biggest possible picture on the zero to 5-year-old is that in Europe, where the first set we launched, Europeans were compelled by the overall package of data in seminal data that we have provided to them during the application that we talked about that. I think we have talked about that in the – we have a label and we can sell the product with the 2-year-old to 5-year-old population. In the United States, FDA wanted a little bit more information and the results of 206, we are going to inform that. We have announced the positive trends were observed. And I think in the treatment of these young children, I think the next step, therefore, is to have conversations with Food and Drug Administration about labeling requirements. And we are going to pursue a similar pattern throughout the rest of the world. We believe data support, giving families treatment option for children who are under 5 years of age with achondroplasia and working with health stores provide them the information that they need to come to that decision. And different geographies may come to that decision at different time points based on emerging data. So, I would say stay tuned for further updates from us on both regulatory plans as well as overall plans for addressing...
J.J. Bienaime: And we are in the late stage of review in Japan for our application that the filing is for zero commit for any patients from birth to big four. So, and also do you want to say a few is about when the – so data will be presented.
Hank Fuchs: Yes. So, the data we presented, I think we said summer on the call or further. And then I think you also asked about long acting, long-acting, I think so far, thought about it as not much of an efficacy advantage in most children, not much of a safety event. We have talked about all the numbers behind all that. It is an interesting question as it pertains to the children who are under 5 years. You might know that Ascendis has in their Phase 2 study enrolls the patients who are under 5 years. So, there could be some data about the effect of long-acting on overall growth. But again, a key reminder about that is how far behind us. Ascendis really is in terms of development pathway. And this is a relatively small Phase 2 study. So, I think we have some room to both offer this option on a global basis for young children because there is nothing else and time is of the essence as well as to further iterate our product offerings to continue building strength in the VOXZOGO brand.
Debjit Chattopadhyay: Thank you. Good luck.
Operator: Your next question is from Joel Beatty with Baird.
Joel Beatty: Thanks for taking the questions. The first one is for VOXZOGO. What’s the level of awareness of the drug among patients with achondroplasia and their families? And then also for 351 for DMD, what will be learned from the initial study starting later this year?
Hank Fuchs: Maybe I will start with the question at level of awareness. That’s something that we would typically be market researching to get a quantitative estimate following launch and the answer on that one is we haven’t yet gone out to market research, that question. We will, at some point during the year, and we will have to wait until we do that work to have an estimate. Qualitatively, I would say it looks to be pretty high based on the level of patients that we see coming in for treatment.
J.J. Bienaime: And as regards to what we will learn from the initial 301 study, as I said, our goal is to get into the treatment of DMD boys as quickly as we can by the end of the year. And of course, that’s always subject to regulatory review of an IND. But assuming that, that’s the plan, I think – and that should be the plan because the essential question really is what’s the relationship between a delivered dose, its safety profile and the level of dystrophin increase that you can achieve. And based on the biology of the compound that we have developed, we believe that the nature of the chemistry being so similar to what we use with drives a person that we should be able to achieve tissue concentrations, muscle tissue concentrations of our 351 compound that would produce skipping in the range of between 20% and 40%, meaning that the patients would have 20% or 40% of this shortened dystrophin protein, which is pretty high relative to what ambulatory patients with far less severe condition called Becker dystrophy, muscular dystrophy now. So, as quickly as possible, the initial proven concept selling will gear itself towards demonstrating safe improvement on a meaningful quantity of dystrophin protein in muscle. Can’t give you timeline specifically to one that will be available as we are just getting started.
Joel Beatty: Thank you.
Operator: Your next question is from Luca Issi with RBC Capital.
Luca Issi: Well, Great. Thanks so much for taking my questions. Quick one on ValRox. I know you are rolling out AAV as the potential cause of the salivary gland cancer, but can you actually share the integration frequency that you have observed on the surgical piece. I know uniQure mentioned in the past is 0.027% of their cell showing evidence of AAV integrations for their paracellular carcinoma case. So, just wondering how your number compares to that number. And maybe also related, I think asked by or reported tonsil cancer in the hemophilia B program. So, wondering how you are thinking about read-through for your program? And then still on ValRox, assuming it does get approved, remind us what’s the latest thinking on pricing strategy and feel free to dichotomize the answer between the U.S. and the EU, should that make sense? Thanks so much.
Jeff Ajer: I think specifically as regards to numbers, coming to the presentations that are coming around the corner at both WFH and ASGCT. The way I think about it is that – what we have seen so far is consistent with what’s been previously described as low propensity for integration. So qualitatively, anyway, that’s the frame take into your view of those presentations. As regards the occurrence of other tumors, I mean I do think that, over time, there are going to be patient developing cancer. I mean that’s just a fact of getting older in life. And I think that what we have seen to-date doesn’t really suggest that there has been particularly clustering of tumor types. I think also one has to really consider sort of vector at a time. That’s kind of what we have learned in our 307 drains we are talking about earlier, that is to say, the agency is proceeding with 331 and 270 enrolling clinical trials it’s only three out of seven in which this question is kind of raised. So, instead of sort of moving everything to I think the agency is taking each factor in each clinical situation sort of audits on face for the time being. I think the data that we are talking about today are pretty encouraging as regards to reaffirming what we have known all along about AAV, relatively low density for integration, relatively low specificity for integration events in particular spots in the genome and reasonably fundamentally that what’s been observed with AAV. It’s not – people run around talking about the cancer risk of hepatitis C or hepatitis B, AAV is not the contain that people are running around talking about systemic cancer risk from. So, I think that low propensity of integration corroboration that we are talking about today is really a powerful finding. J.J, do you want to…
J.J. Bienaime: We covered already the previous question, the pricing in U.S. or in Europe. So, I don’t think we need to go over that again. But you want to see a word about the U.S. Pricing, Jeff?
Jeff Ajer: Yes. So, what you heard J.J. say publicly a couple of years ago was probably not less than $2 million at WACC, probably not more than $3 million. But that’s the range that the ICER first review that showed ROCTAVIAN to be a dominant choice at a presumed price of $2.5 million kind of worked up. We will announce the final price when we get an approval and launch. But I think generally, those ranges look pretty solid to me. Maybe just one other comment on pricing and our ability to capture a premium price. J.J. mentioned outcomes-based agreement earlier that’s crucial to our ability to capture value for ROCTAVIAN. Payers, in addition to wanting our patients to do well to not bleed, to not have to infuse 2.5x a week on average. Payers are concerned financially about the risk of non-performance following administration and the risk of durability of effect over time. The data that we have so far would suggest risk of non-performance following administration is very, very low and the durability data that we have seen both out of the 201 study and the GEN-1 study including the 17 patients that we have 3 years at is really encouraging about the durability of effect over time. So, we think that we can largely take those risks off the table for payers. And that’s one of the factors that will allow us to capture a high value initially. Thank you.
Operator: This concludes the Q&A session. I will now hand it over to J.J. Bienaime for closing remarks.
J.J. Bienaime: Thank you, operator, and thank you all for joining us today. We are again pleased to begin 2022 with a record first quarter results. The addition of VOXZOGO to our commercial portfolio is definitely an important component of our growth story going forward and it paves the way for GAAP profitability, a sustainable GAAP profitability beginning this year. We have successfully transitioned our focus to the development of commercialization of innovative therapies for larger genetic conditions, and we are hopeful that 2020 will be the year that the ROCTAVIAN will be approved in U.S. and Europe. And we look forward to hoping you – sorry to keep you apprised of our progress over the coming weeks and months. So, thank you all for your continued support and we look forward to seeing you soon.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
