BioMarin Pharmaceutical Inc.

Welcome to the Biomarin First Quarter 2021 Financial Results Conference Call. Hosting the conference call today from Biomarin is Tracy McCarty, Vice President of Investor Relations. Please go ahead, Tracy.

Thank you, Grace. Thank you all 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 authority, availability of capital, future actions in the pharmaceutical market, and developments by competitors. And those factors detailed in Biomarin's filings with Securities and Exchange Commission, such as 10Q, 10K, and 8K reports. On the call remotely from Biomarin management today, are JJ Bien-Aimé, Chairman and Chief Executive Officer, Jeff Ager, Executive Vice President, Chief Commercial Officer, Hank Fuchs, President, Worldwide Research and Development, Greg Geyer, Executive Vice President, Chief Technical Officer, and Brian Mueller, Executive Vice President, Chief Financial Officer. I will now turn the call over to BioMarin's Chairman and CEO, JJ Bien-Aimé.

Thank you, Tracy, and good afternoon, everyone. We hope you and your families are well and enjoying the return to normal day-to-day activities as access to COVID-19 vaccines increases and the U.S. continues to open up. So we had a very strong start to 2021, recording $486 million of total revenues and gap net income of $17 million in the first quarter and $114 million of cash flow from operations, an important achievement. We have also reaffirmed previously released financial guidance for the full year. This takes into consideration both the typical uneven ordering patterns in some of our ex-US regions, as well as continued uncertainty outside of the US due to COVID-19. It is not by chance that Biomarine has successfully managed through the challenges caused by the global pandemic. Our business is built to weather uncertainty, given the essential nature of our products. The underlying strength of our business is quantifiable across a number of metrics. Balmain's five-year non-GAAP income compounded annual growth rate, or CAGR, of 62% far exceeds the 12% average of biotech companies with at least $1 billion of revenues in the last five years. Our five-year revenue CAGR of 16% is better than 10 of the 15 biotech companies with at least $1 billion of revenues over the last five years. With the approval of Bozoritide in European sites and the EMA marketing representing an opportunity, the new EMA market, so we're representing an opportunity that's roughly three times the size of the U.S., we are poised to deliver meaningful growth beginning in 2022. On the heels of potential Bozoritide approvals this year in the U.S. and Europe, and with the European filing of Roptavion, she's targeted for this June, we could potentially receive a second significant product approval in Europe in the second quarter of next year. Similar to the achondroplasia market opportunity in the EMA, we believe that there are three times as many severe hemophilia patients in that region as compared to North America, representing transformational growth opportunities with the zorotide and roptavian approvals and commercializations. Assuming favorable results with Roktavian at year two, we will target a biologic license application, or BLA, resubmission in the U.S. in the second quarter of 2022, followed by an expected six-month review procedure and then potential U.S. approval at the end of 2022, next year. Based on the cumulative data to date with Roktavian, with both the 60 to the 13 and the 40 to the 13 doses, We believe it is reasonable to expect durable bleeding control at year two in the phase three study. And also that's based on the first 17 patients that we communicated that reached also the two-year goalpost. So if the data are supportive to your efficacy and safety data from our expansive program, it would represent significant cost savings to global healthcare providers. It should be a very momentous 2021 and 2022. with this exciting catalyst on the horizon. Thank you all for your continued support, and I would like to turn the call over to Jeff to discuss the commercial business update. Jeff?

Thank you, JJ. As we begin 2021, I am very pleased with the team's performance across all brands and all regions during the quarter. As JJ mentioned, we achieved total revenues of $486 million in the first quarter, Excluding Kuven contributions, total revenues grew 9% in the first quarter 2021 compared to first quarter 2020. Before discussing commercial results, I'd like to introduce the brand name for Visorotide. As we are currently in label negotiations in the EU and with ample product supply ready for launch, we are pleased to introduce Vox Zogo to the investment community. The name is as unique as our company and our product, and we look forward to spreading the word once it's go time with Voxogo, spelled V-O-X-Z-O-G-O. Turning to results in the quarter, I begin with a reminder of the dynamics of large irregular order patterns specific to our enzyme replacement therapy brands. I want to emphasize that we received large orders during the first quarter from such markets as Turkey, Brazil, Egypt, Russia, and Saudi Arabia that are gratifying and good for our business and which we expect will cause the first half of 2021 to have some concentration of our annual revenues for both Naglazine and Bimzim relative to the second half of 2021. We reaffirm our annual guidance for total revenues and for each of the commercial brands and ask that you consider that guidance when modeling your expectations for the balance of 2021. Relative to my comment of gratifying and good for our business, having inventory in these markets helps maintain continuity of supply, the lack of which can occasionally present a challenge in these and other markets and which can have a negative impact on compliance and demand generation. For Brunera, we experienced a different impact from order patterns. In this case, inventory purchases late in Q4 2020 were followed by drawing down of inventory in Q1 2021, which contributed to a decrease in revenue quarter to quarter for Brunura. A few more details on our products for lysosomal storage disorders, Naglazine, Vimizem, and Brunura. All three products have maintained strong patient compliance despite the persistence of COVID-19 globally, and our mitigation tactics across the most pandemic-impacted markets continue to successfully support patient access and adherence to therapy. Of note, patient demand for both Maglazyme and Vimizem increased approximately 10% year over year, underscoring the essential nature of these important therapies for the people who rely on them. We expect that Brunura, in particular, will resume a trend of modest quarterly growth following the normalization of customer inventory levels in Q1 and driven by roughly 30% increase year-over-year in patients on commercial therapy. Moving now to Palantzeek, where year-over-year growth of 56% translated to $54 million in first quarter revenue. The U.S. continued to be the main contributor of growth in the quarter, driven by U.S. patient increases of more than 20% year over year. While we are still experiencing net patient growth, new patient starts in the U.S. have continued to be impacted by COVID-19 in the quarter. We are optimistic about the growth prospects for Palantir for the balance of 2021, with an expectation that PKU clinics that have been operating at partial capacity are able to increase capacity over the coming quarters. The pandemic impact on Palantzeek has been more severe in the EMEA region where we continue to experience delays in price and reimbursement approvals and very little new patient activity. In spite of that, we are making incremental progress and I continue to expect that we will see more material Palantzeek revenue from this region when PKU clinics have more freedom to operate and start additional patients. Continuing with the PKU franchise, KuVan contributed $71 million in revenues in the quarter. KuVan net product revenues decreased by $51 million year over year, primarily due to the loss of market exclusivity in the United States in October 2020, resulting from generic competition and as anticipated. Circling back to our next potential commercial product, Boxogo, launch readiness in key EU markets in the U.S. are quite advanced. Sales, brand, and market access teams are in place and working on finalizing details of the launch. Released labeled finished goods are expected to be available in key markets, including Germany, France, Italy, and the U.S., and ready to ship to customers within four to eight weeks. of an approval. We have been able to leverage existing teams that are well experienced from recent launches of Palantzeek and Brunura and expect to be well prepared for what could be Biomoran's largest brand yet. In conclusion, it was a strong start to the year from a revenue perspective and I'm very pleased with the continued commitment and resilience of our teams globally. Thank you for your attention and I will now turn the call over to Hank to provide an R&D update. Hank?

Thank you, Jeff. As JJ conveyed, we look forward to a number of important events on the horizon in 2021. Accumulating data on the durability of both Voxogo and Roctavian suggests meaningful clinical benefits will be maintained, and therefore we remain optimistic about the potential of these two innovative therapies to be transformative to the people who need them. In Europe, and beginning with Voxogo in the quarter, Our dialogue with European health authorities has been quite positive, and we look forward to a CHMP opinion in June, followed by a European Commission decision in late summer. With labeling discussions well underway in Europe, we feel that the Vox Ogo path forward is significantly de-risked. Turning to Roctavian and the European Union in the quarter, we held a very productive pre-submission discussion in meetings with the European Health Authorities and remain on track to submit the marketing authorization application in June. Of particular note, the rapporteur and co-rapporteur are fully aware of the coming five-year phase two and two-year phase three Roctavian data cuts and are not requiring those data to support submission, giving us added confidence in our ability to meet the June submission goal. Assuming we remain on the anticipated timelines in Europe, therefore, we could potentially receive a CHMP opinion on Roctavian in the second quarter of 2022. Turning to the United States and Voxogo, in the quarter we provided the Food and Drug Administration with the two-year results from the phase three extension study to supplement the new drug application already under review. As anticipated, they designated the submission a major amendment to the application to provide the time for a full review of the submission thus extending the PDUFA target action date by three months to November 2021. We are pleased that the pre-approval inspection of our Novato facility for the manufacture of Voxogo was completing, checking off another milestone for regulatory review. Special congratulations to our technical operations team and our compliance teams for that accomplishment. We're also happy to report the phase two study with zero to five-year-olds completed enrollment in the quarter. The importance of starting treatment with Voxogo as early as possible cannot be overstated, and we are hopeful that the output of our zero to five-year study will provide support to regulators to enable the youngest children to benefit from the first potential therapeutic option to treat the underlying cause of achondroplasia. Developing Voxogo has been a 15-year journey, and I want to extend my deep appreciation for the team at Biomarin, our investigators, and the generous families who have dedicated themselves to advancing the standard of care in achondroplasia. Thank you. Moving to Roktavian in the U.S., following discussions with the FDA this quarter, we have aligned on the previously communicated base case scenario of resubmission with two-year follow-up safety and efficacy data on all Phase III subjects in the second quarter of 2022. FDA remains committed to this path forward with Roktavian to support their final benefit risk assessments. Based on the consistent and dramatic bleed control observed to date across our Phase II program, not just with the 6E dose, but also with the 4E dose through three years and the 6E dose through four years, as well as the Phase III data to date, now out to two years, we are encouraged that the combined dossier will provide ample evidence of clinical benefit with roctavium. We remain on track to share the Phase II five-year update with the 6E13 dose, as well as the four-year update on the 4E dose later this year and plan to also include those data in the USBLA resubmission in 2Q22, assuming favorable results, followed by an expected six-month review procedure by the FDA upon resubmission. Briefly, on the earlier stage pipeline, dose escalation has commenced with BMN307, our investigational gene therapy for phenylketonuria. And the program continues based on the encouraging fee-lowering observed with the lower dose that's been tested so far. In our IND-enabling studies for BMN351 for the treatment of Duchenne muscular dystrophy, this antisense oligonucleotide therapy demonstrated dystrophin protein expression levels of between 30% and 50% of normal levels in the quadriceps in a DMD mouse model treated for at least 13 weeks and who possess the human skippable mutation. The familiar chemistry and novel biology of BMN351 position us uniquely in this context. Levels of antisense oligonucleotide that are known to be achievable in muscles with this class of molecule are expected to produce enough protein in human to transform lives. And while it is early days, we are very encouraged by these data, as we shared at the World Muscle Meeting last fall, because this may represent the potential of another important new therapeutic to address the unmet need in this population. With BMN331 gene therapy for the treatment of hereditary angioedema, we're conducting IND-enabling studies and expect to file an IND in the middle of the year. Our collaboration with Dianacor on hypertrophic cardiomyopathy, which we announced in May last year, is progressing well. Preclinical studies are underway and we plan to select our candidate vector in 2021 for this program. We look forward to sharing a deep dive on all of these next generation products at our upcoming R&D day tentatively planned for this coming November. The R&D organization is energized and very busy as we advance multiple early to late stage programs this year to deliver on our goal of bringing transformative therapies to patients with rare genetic diseases. Thanks for your support, and a special thanks to the WWR&D team and the organization for driving as hard as they can on behalf of our patients. I'll now turn the call over to Brian to update the financial results in the quarter. Brian?

Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the first quarter of 2021. As usual, our comprehensive report on the quarter will be available in our upcoming Form 10Q which we're on track to file tomorrow. As JJ mentioned, the anticipated timing of revenue and expenses over the course of 2021 resulted in a strong start to the year with our financial performance in the first quarter. With respect to revenues, Jeff mentioned some of the specific markets that placed large orders in the first quarter. While we don't expect that pattern to repeat this year, and future quarterly revenues in 2021 may be lower, we are pleased to be able to supply the market earlier rather than later and we continue to emphasize our full year guidance and our annual business cycle as the best metrics to measure our performance. Moving to operating expenses, while R&D expense in the first quarter of 2021 was largely flat compared to the first quarter of 2020, the program mix of our R&D spend is starting to shift to our earlier stage pipeline. As we advance these early stage assets, we expect R&D expense to increase over the course of the year which is a key timing element driving the quarterly financials this year. Likewise, as we hope to be launching Voxoco in the second half of the year, SG&A expenses are also weighted towards the back half of the year. Timing aside, SG&A expense for the first quarter of 2021 was slightly lower than Q1 last year, primarily due to lower foreign currency exchange losses and slightly reduced operating activity in Q1 2021 due to the pandemic. Turning to bottom line results, we reported gap net income of $17 million in the first quarter of 2021, compared to gap net income of $81 million in the first quarter of 2020. The decrease in income was primarily due to the absence of the $60 million gain on the sale of the Ferdapps commercial assets in the first quarter of 2020, and the impact of the U.S. KUVAN generic competition in 2021. Non-GAAP income decreased to $104 million in the first quarter of 2021, compared to Q1 2020 non-GAAP income of $117 million, also primarily due to the QVAN U.S. generic entry late last year. Based on the expected timing dynamics of both revenue and expenses from quarter to quarter in 2021 and our business plans for the remainder of the year, we reaffirm full-year 2021 R&D expense, SG&A expense, and bottom-line guidance. Lastly, with respect to total cash and investment, we ended the first quarter of 2021 with $1.4 billion, compared to $1.35 billion at the end of 2020. We set a goal of earning positive operating cash flow in 2021. And while the aforementioned timing dynamics also impact cash flow, the business is off to a strong start in 2021 with $114 million of positive cash flow from operations in the first quarter. This solid cash position coupled with Biomarin's business fundamentals, as shown with our stable operating financial performance, put us in good standing to manage through this year when our rapid growth is on pause in anticipation of the potential launches of Voxogo and Ractavia. And beyond our late-stage pipeline, our increasing investment in the early-stage pipeline sets up the advancement of the next generation of transformative Biomarin products. Thank you for your support, and we'll now open up the call to your questions. Operator?

All right, so as a reminder, to ask a question, you will need to press star 1 on your telephone. To resolve your question, press the pound key. Again, that is star 1 on your telephone. We do have a question from Joseph Swartz from SBB Lyric. You are now live.

Hi, I'm Jury Dialing for Joe. Thanks for taking our question. I was curious about your Rocktavian program first. how satisfied are you with your pricing discussions in the EU health authorities, given that another gene therapy manufacturer recently decided to forego offering their gene therapy product in Germany after they didn't get a lot of traction for their premium price?

Jeff, you want to answer that? I might add some comments.

Sure. Thank you. So, uh, I think the first thing to recognize is Roctavian is a very different situation with respect to value proposition compared to Syntegro, the product and the situation that you referenced. I'll remind you that ICER in the United States recently reviewed Roctavian and Hemlibra against standard of care. prophylaxis with respect to Roctavian, their determination was that Roctavian would be a superior choice at a presumed cost of $2.5 million. And so thinking about that in the situation of Germany, the Zenteglo situation relies on cost offsets indeed. but cost offsets of transfusions, which are relatively lower cost than the cost offsets due to the ability to reduce or eliminate factor VIII replacement therapy. That's the main situation. In addition, when we price Roctavian, we intend to capture the full value of that product, which includes in part, cost offsets, but also potentially superior clinical outcomes and quality of life benefits. So I think you've really got an apples to orange comparison here that needs to be thoughtfully considered.

And if I may add, also, I think the price that they turned down wasn't that low. It was close to $900,000 per treatment. And I think the issue they were picking is that I understand that the market in Germany for the indication that Integra was looking for is very small compared to Southern Europe. The disease is mainly prevalent in Southern Europe, and it was just not worth the effort, which is a very different situation for us. Germany is a pretty large market for us in Europe for Octavius.

Okay, great. Thanks for that. And then my second question is on Vox Zogo. You said that this program could be your strongest launch in the company's history. So, you know, what is the driving factor that makes you believe that this could be the largest brand? You know, are you detecting high demand from like younger patients, older patients, you know, parents, advocacy groups? Like, I guess I'm curious to know, like, one, what gives you confidence and two, how you're thinking about the adoption pattern, you know, assuming approval. Thanks.

Jeff, you want to start again?

Sure, happy to. Yeah, we're really excited about VoxAgo. I'll start with the fact that we've got a really comprehensive clinical package that is supporting the potential approval and launch. So we've got very large and multi-multi-year effort behind defining the natural history and burden of illness behind achondroplasia, which hadn't been really well characterized before Biomarin started working and which is foundational to our value proposition. We've got many years of durability expressed in the Phase II We've got a very robust phase three study that's augmented by the crossover arm from year one to year two and the full two years in that phase three from the active participants. In addition, we have another study that we'll read out in the not too distant future studying VoxOgo in zero to four-year-olds. And we have additional work ongoing. So very robust clinical program with very robust results to support that. And a relatively large patient population to go after. We mentioned that our EMEA operating region, which includes the EU and Europe outside of the EU, Middle East, Africa, unlocked. a patient population roughly three times the size of the US market. So there's a lot of patients. There's a really powerful value proposition. And yes, we know that our investigators are excited about this program. And to the extent that we've been able to communicate about this program in advance of launch without promoting it, we're getting very good signals of enthusiasm back from the market.

Just with that, as Jeff said, it's a large opportunity. We have estimates in the EMEA region of about 11,000 eligible patients. There is no approved therapy for echocardioplasia, no competition. In some of those countries, over 80% of the patients undergo limb lengthening surgery, which is very painful. and potentially risky, so that's an illustration of the unmet medical need in that region and in the world for echinoplasia patients.

All right, so next one on the queue is Corey Casima from J.P. Morgan. You are now live.

Coming on for Corey. Thanks for taking our question. I guess we just had a follow-up on the sorotide. You spoke to the 3X greater patient population. I just want to get the sense of uptake, initial uptake in geographies comparing EMEA and U.S. What are your expectations there? And then just how should we look at this, the commercial opportunity, you know, at peak, the split between these geographies?

Yep.

Yeah, thanks for the question. And I'll refer you also to the transcript from our earnings call for the fourth quarter of 2020 where I addressed this question in some level of detail. So we always anticipate that payer coverage for Biomarin drugs comes fastest. We get the best pricing and the most rapid uptake in the United States. Relative to that, the EMEA region is a 3x, as you noted, larger opportunity. Those price and reimbursement approvals take a little bit longer to navigate. We have to go market by market to do that. That can take some time. And then typically the patient uptake comes a little bit slower. In spite of that, it's exactly the EMEA operating region and other international markets that become kind of the long-term engine of growth for our brands. And you can see that embodied in the continued growth in patient demand for Brunura and Vemism and even Naglazon, which has been on the market now for almost 16 years. So that's how we think about the uptake from the EMEA region relative to the U.S. opportunity.

And if I may add, so again, the market size is eligible patients, I'd say about 11,000 in the EU, EMEA, that does not include Latin America, Asia, you know, other regions, but still, and 3,100 patients or so in the U.S. So let's say, you know, Volpar, we get an average reimbursement price of $150,000 in Europe and $200,000 in the U.S., so that would be $1.6 billion market in EU, in EMEA, and about $600 million market, adding to $2.2 billion market between the two regions combined. And the market is wide open. There's no competition, and we don't anticipate any competition for at least five to six years.

Great, thank you.

Next one on the queue is Salveen Richter from Goldman Sachs. You are now live.

This is Elizabeth on for Salveen. How have your discussions with the FDA been progressing with respect to their willingness to allow you to submit Roctavian ahead of having the full two-year data set? Thank you.

Thank you. The FDA has reiterated their request to see the two-year data. They said that before the one-year data, and they repeated it after the one-year data without looking at the one-year data. So that's why we have reiterated our working case to file Q2-22. Thank you.

first handler. You are now live.

Hi. It's Chris Raymond here. Yeah, thanks. Just a couple of pipeline questions. I guess first on BMN 307, I know you guys said last month you were moving to the higher dose, I think the 6013 dose, if I remember, and that you'd share an update in the second half. Just on timing, Hank, are we to wait until your R&D date for that, or Could we get maybe something sooner? And can you maybe just confirm if you've actually treated a patient at that higher dose yet on that one? And then maybe a similar question on 255, BMN 255. Again, I know you've been a little coy in terms of what the target is. Is this another November reveal, or could we get something from you guys earlier? Thanks.

Hi, Real Chris. Yes, I can confirm it's the 6E dose. Yes, I can confirm that we've already treated that patient. I want to reiterate that our plan for data sharing more concretely and specifically will be when we pick the dose to take into the registration enabling program. And I unfortunately want to confirm that as regards to 255 and ongoing data availability later this year for 307 that we're going to remain somewhat coy about that for competitive reasons until we have, you know, much more clarity about next steps. Great. Thank you. But all that said, we're very excited. You know, the PKU market is not, in spite of Jeff's fantastic work and in spite of how good Pell and Zeke is, there's plenty of opportunity to expand the PKU market. And in 255, fits into our model of genetically validated and potentially transformative interventions. So we're very excited about the programs. We're just being a little bit coy for competitive reasons. Thanks.

Next one on the line is Phil Nadeau from Cohen and Company. You are now live.

Hi, this is Ernest Rodriguez for Phil. Thank you for taking my call. I'm curious, do you have any concerns of the effects from shortening the lead time that you have against competitors with Rock Tevian now being delayed up to 2022 or any commercial potential that harm that results from the delay?

I might start, maybe hand it over to Jeff. It's hard for me to imagine how the commercial competitors won't end up having to do what we end up doing. It's pretty apparent from Pfizer Sangamo's product that there's attrition and factor activity from year one to year two. And that was the agency's question of Roctavian. And frankly, they've got to enroll a larger trial and potentially follow for longer than they're currently planning to. and I don't have visibility into where they are with their commercial manufacturing. So in spite of our delay, if anything, it feels like the spacing is either maintained or growing. And the one thing I'd say before turning it over to Jeff for his commercial interpretation of things is that as time goes by, the Rocktavian data package just gets stronger and stronger and stronger. Maybe, Jeff, you want to comment?

Actually, before Jeff, let me see here. Also, if you look at the most recent update, the Pfizer-Sycamore update, it was actually with Phase 2 product. There is no data yet, as far as I know, on the Phase 3 product. The variability of response was even greater than with Roktavian, and the drop in factory levels at 31 was greater than with Roktavian. So I would say it's unclear as to what competitive advantage they will have, if any. Jeff?

Well stated, Hank and JJ. I guess I would just add that with an expectation that that lead in the marketplace is likely not diminished by the moves that we're taking, I am super excited about the potential to go to the marketplace with five years or greater durability from our Phase 2 studies and the largest phase three of any gene therapy completed with two years of data coming out from that, never mind the significant lifecycle management work that we're already into that the competitors aren't. I wouldn't say that we're at a competitive disadvantage at all. I would say the opposite. Our position got stronger, not weaker.

Thank you. That's helpful. And another question regarding ,, you mentioned that you still see the impact of COVID on new starts. And I was wondering if you have seen any sort of recovery reflected with the vaccine rollout. Has the vaccine rollout basically accelerated this process at all of getting the patients into the clinics?

Yeah, so in the United States, where we know that the vaccine uptake is way, way further along than it is in Europe, we haven't seen an explicit effect yet on the operations of our PKU clinics. But in my remarks when I said we're optimistic that PKU clinics will be able to increase their capacity as we go through the year, It's exactly that vaccine uptake in the United States that grounds our expectations of increased capacity later in 2021. What I would say is the, by and large, there's a lot of variability by clinic, but by and large, the clinics in the United States have been operating at partial capacity since around Q2 of last year. That's what has allowed us to continue the growth that we've achieved over the last year with Palantir, particularly in the United States. So we are getting growth, just not as rapid as we would hope or expect. And so as conditions improve in the United States, we do expect that our business uptake will pick up here.

Okay. Thanks again for taking my question.

All right, next one on the line is Jeff Nicker from Bank of America. You are now live.

Hey, guys. It's Jeff. Thanks for taking our questions. Just two from us, first on Ractavian and then one quick one on the sort side. On Ractavian, so we have the five-year and four-year data coming up. I think the last time we spoke, you mentioned that the low dose is going to be kind of the focus here for the readout. Maybe you can walk us through again your thought process there and how you think that Lodos could be an arbiter for the phase three longer term data.

I don't have the numbers as encyclopedic as I did like maybe a quarter ago. But the framework that I think we carry is that, you know, it's like we just talk about chromogenic and median because these are the lowest numbers on the board and, you know, everything else is kind of upside. The median factor 8 expression in the NO17 after two years in the 301 study was on the order of like 14 IU per deciliter. And at the end of two years after transduction in the 4E group, factor VIII expression median was a little bit lower, closer to around 10. In the ensuing year after that point for the low-dose group in the third year, factor VIII expressions remained in the 789 IU per deciliter range. And that was accompanied by extremely good hemostatic efficacy with an ADR that was around one or lower. So assuming that the decline in year three from 14 IU per deciliter is not worse than the decline was in the 201 study, then the expectation would be that the ADR in year three would after the 301 dose was administered, would be similarly close to zero. And that gives us a lot of confidence. And if the same thing is observed in the fourth year after transduction, it would auger well for maintained durability of roctavian through three and four years after dose with the TB commercialized material. So we see that You know, in spite of having launched, if you will, a little lower, that is to say achieved a slightly lower peak factor rate expression with the to be commercialized material, the patterns of trajectory are starting to emerge with much greater clarity. And namely what that clarity is, is that following peak factor expression, there's a little bit of decline in the first year after that peak. but that decline decelerates as time goes by. And also that decline is dependent on the initial height. So all that together says, if we do well, if we did well in year three after 4E, that augers well for Roctavian to be commercialized material. And with the four-year data, that will auger well for the fourth year after the Roctavian administration. Hopefully that puts the story together for you.

And if I may add also, if you look at the factor VIII levels observed so far in the phase III trial at one year with all the patients and at two years with the 17 patients, they're always tracking above the low-dose phase II. So consequently, in a sense, if you believe in a case that factor VIII is representative of what's going to happen, that's why the 4E data at year four that we're going to see in a few weeks, it's kind of potentially the worst case scenario.

Got it. Got it. That's helpful, JJ and Hank. I appreciate that. And just two really quick ones on the SOAR side. So I just want to confirm that, you know, when the FDA provided their extension of the PDUFA, that there was nothing else they brought up that they wanted to look at in the data package. It was just that they wanted the two-year data. And then I think you mentioned that there's a four- to eight-week turnaround from from the potential approval to shipping orders. Just want to confirm that that means that we're going to see very low or negligible disordered items this year. Thanks.

So maybe I'll start with the answer to the last question, and then Hank can answer the other question. So obviously the U.S., you know, with the PDUFA extension, approval will be late. If it happens, hopefully, it will be late November, so you need to You're not going to see any revenues in the U.S. for Voxogo this year, but hopefully you will see some revenues from Europe this year for Voxogo since we anticipate approval, final approval in the mid to late summer. So, Hax, you want to answer the first question? Or is that for you?

Yeah, yeah. So, first of all, the process of review at the FDA is that they can send me information requests really at any time and And that has continued. That was before and that's true after the submission of the two-year data. I think what's important about the submission of the two-year data is they got right on it and they started asking us lots of questions about the two-year data, which means they're fairly deep into the review of it. And so the fact that they're deeply reviewing the two-year data, they're continuing to ask questions about the application in general, they've conducted their site inspection, This is feeling like they are working towards their producer action date. I appreciate it. Thanks.

Next one on the queue is Robin Kournoskas from Chuwi Securities. You are now live.

Hey, guys. Thank you so much for taking our question. This is Kripon for Robin. You mentioned that the FDA did not even really look at the one-year Roctavian data. It would be great to get any additional color you can give us and what sort of conversations you had around Roctavian, any additional, any idea of what they were thinking. And also given that they've been set on the two-year data for a while now, have they conveyed if there is a bar for what would be acceptable two-year data? And finally, and Is there any concern that this could be a moving target? Could they want three-year data?

Well, on that last piece, I would say once bitten, twice shy, meaning they make the rules, and we didn't exactly know that they were going to shift the goalposts until they shifted the goalposts. And, you know, and I think the agency would say about themselves that their communication ability is maybe not the best that it's ever been right now. And, you know, back to the any further color on the why, I think it all is as described in the CRL. That is to say, they saw a decline in factor VIII activity between year one and year two, and they want to make sure that factor VIII activity decline between year one and year two is not using the 2B commercialized material in the steroid regimen that we used, given that launch was a little bit lower. And, you know, everybody's well aware, we are well aware of the NF17 that did great, but their attitude before the data was even looked at was we want the NF134 for the two-year population. And I don't think there's really that much more insight to be had other than You know, when they see the data, they'll have a lot more information. Now, at the two-year mark with an N of 134, if things go as they're expected to go, you know, we should see a clinical outcome that's really fabulous. Side effect profile at that point will be well-defined. All patients will be off of steroids. All of the ALT rises will have calmed down, et cetera, et cetera. And we'll be looking at factor VIII trajectories. And if what has happened... basically already three different times continues to happen. That is to say, and it's a complicated kind of concept to get across, but the rate of decline is decelerating. As long as the rate of decline is decelerating as it did, you know, in all prior years for the other doses, then I think that they're going to be looking at what we just talked about in terms of how does this auger for a third year of protection. And I think you know, given the magnitude of clinical benefit that we observe, that really should be enough. And I want to remind about the magnitude of clinical benefit because it's sometimes getting lost from the argument. You know, we took people, it's not just, it's not just that we, you know, compared ourselves to nothing. You know, we like took people off a marginally effective standard of care. We took people off an enormously effective standard of care, you know, prophylactic factory therapy. If you give somebody 150 infusions a year, this stuff, you, they'll reduce their bleeding from 30 times a year to like four times a year, five times a year. Well, we took that away. These people would have bled 30 times a year, and they bled less than or around one time a year. And in the second year, they bled around one time a year. And even with those lower factor levels that JJ mentioned from the lower dose, they didn't bleed in their third year. So the treatment benefit here is large, and I think if we just corroborate that in a much larger sample size – that will really carry the day.

Very helpful. Thank you so much.

Next question comes from Akash Tewari from Wolf Research. You are now live.

Hi, this is Leo for Akash. Thank you for taking our questions. According to your market analysis, how big is the tractable market of Ractavian for severe immobilia A patients in the U.S. and the EU, respectively? For example, based on our math, there are about, like, 2,000 to 3,000 patients eligible for Rectavia in the U.S. after taking into account, like, AV5, HIV, HPV, and inhibitor status. And also, among those patients who are eligible, how many of them do you think are interested in receiving gene therapies? Thank you.

Yeah. And again, I think I'll let Jeff answer that question. Again, just want to emphasize also that, again, it's a European... In the U.S., there's a lot of emphasis on the U.S. market. The European market is three times or more the size of the U.S. market, so eligible 9,000 patients. And the eligibility criteria you mentioned were just at launch, not in the future. We have late-cycle management projects to actually expand the eligible population. But that being said, Jeff will answer your question. Thank you.

Yeah, thanks, JJ. Okay. So just to sharpen the pencil a little bit, when we quote 3x larger patient population, we're talking about our EMEA operating region, which includes the EU or Europe beyond the EU, Russia, Turkey, Middle East, Africa, that sort of thing. And our logic on that is that and EU approval begins to substantially unlock the market, not just for those countries in the EU, but for those other markets, many of which key their actions off of an EU approval. So as you're doing your market analysis, we would note that there's 112,000 hemophilia patients around the world. 50 to 60% of those are severe. When you take a cut for patients that are less than 18 years old, which we presume will be our initial but not final label, and you take a cut largely for mild and moderate, that's how you get down to an addressable patient population And we'll be working on lifecycle management activities that would allow us potentially in the future to start to unlock part of that age-limited segment, 0 to 18, and mild and moderate population perhaps over time.

Thank you. Next one on the line is, Kennean Mackay from RBC Capital Markets. You are now live.

Hi, thanks for taking the question and congrats on the quarter. Maybe one for Hank, another one for Hank. From where we're sitting, it seems like BMN 307 is kind of staying upside to valuation. And I think this is maybe partially because some of the competitive PKU gene therapy data out there aren't super encouraging. Can you maybe sort of help us with what you see as the key differences between 307 and the competition that's out there as it relates to the expression cassette or construct or even the vector itself, to really help add some confidence and potential there? Thanks.

Well, AAV5 is a little bit better known to us than any other AAV might be to almost any other company just because of having a large amount of both clinical experience but also manufacturing experience. We have an enormous amount of preclinical data on almost every single nucleotide product. in the cassette. I mean, every single thing has kind of been tested for specific reasons when it comes to matters like codon optimizations or spacers or tails or those sorts of things. So we leveraged a lot of the knowledge that was gained in the building of broctavian to build an even more potent phenylalanine hydroxylase. And I think if you don't have just as much experience as our group has, in terms of designing vectors, testing them in mice, testing them in non-human primates, and then ultimately bringing them to humans and being able to iterate what you've learned. If you don't have all that experience, then you're just sort of flying blind. I think that they can be encouraged that they got some expression of phenylalanine hydroxylase, but they're pulling back from that dose rather than leaning into a dose that's even more effective. Because of our confidence in the safety profile of Octavian and what we've seen so far, we're very confident that the dose level that we're at is going to produce meaningful, you know, extremely meaningful, you know, fee reduction levels. So I think at the end of the day, the real answer to your question is our view of the competition is that we're going to end up being more effective by virtue of having a better vector design the details of which are kind of inside the guts of the vector.

And if I may add, also, we are testing these patients with the anticipated manufacturing process and scale that will be used for commercial products.

Got it. Thanks again. Next one on the line is Gina Wong from Barclays. You are now live.

Thank you for taking my questions. I have two. One is regarding Roktavian. Hank, you mentioned that FDA did not see the one-year data. Are you planning to have additional discussion with the FDA regarding possibility of early submission with more data? So that's the first question. And also, same, Roktavian, I think you mentioned that $2.5 million. Would that be the benchmark price? in Europe, and if you can give a little bit more color regarding the installment, how many years you are thinking. And I have a quick question regarding the Vox Sogo. Will you submit the five-year data from Phase 1-2 study to the FDA? Would that be, and we saw five-year data had some decline. Would there be any concern there?

Hank, would you answer the question one and question three? And Jeff and I will do a question too.

Sure. You know, we press released the one-year data. So, you know, when I say the FDA didn't do the one-year data, what I mean is we didn't submit. We didn't make a submission. There was a press release. You're asking about additional discussions. You know, we're in fairly regular dialogue with the division on all sorts of matters. If you're asking me... Would I say no if the FDA said, you know, we rethought this and we really would like to take, never mind the 27 times that you've asked us and the times that we've communicated to you that we want to see the two-year data. If they changed their mind and said, would you submit the one-year data? I would say, hell yeah. If you're asking me if I have stopped bringing it up, no, I haven't stopped bringing it up. I think I'm trying to reflect to you that not as a result of an evaluation of the data themselves. The agency has recapitulated their request for the two-year data to form the basis of the submission. That request was made before the one-year data even existed and was carried through without any change. So our will remains high. Our confidence in Rockavian is enormously high. We're dealing with an agency that They're busy and they make the rules and this is the edict they've issued. On Voxogo, as you point out, as the kids get older, of course, the relative increase in growth velocity is not going to be as great, which is, of course, what animates the desire to treat younger and younger children. And I do suspect this will be you know, potentially some discussion around, you know, for example, labeling considerations. You know, next up clearly is going to be in the European Union, like I said. We're in labeling discussions, and you, too, will know shortly the resolution of how at least the first health authority is viewing long-term durability. Okay.

I mean, I think in the most recent update, some patients, you know, in the data set on the phase two that reached five years, they are getting close to their final adult height. Some of them are basically there. And as you know, as you get closer to your final adult height, even when you are unaffected by achondroplasia, your course velocity goes down substantially. On the pricing in Europe, I'll start and have Jeff then answer more details. But your question, I think, was $2.5 million by ICER. in the U.S. to be cost-effective. They've done an analysis on the U.S. market. They haven't done it on the European market. The prices of preparable agents of factoring with patient therapy are lower in Europe in some countries, not that much lower in other countries. So, obviously, if you use those metrics, the price might probably be a little lower than $2.5 million, but it's still going to be pretty significant here. I mean, Jeff, do you want to add your perspective?

Yeah, I think that's very well stated, JJ. And Gina, I think you also inquired about installments. So I might address that part of the question. And of course, we've heard about other companies talking about installment payments for their programs. I'm not sure what drives that. We've had extensive interaction with European payers, and we have established relationships to facilitate that. And when we talk about European markets, we're not talking about a monolithic viewpoint, of course. Every country, particularly the major ones, has a different viewpoint. Some of them have different models upon which they review products like Roctavian and Voxogo to come to their pricing decisions. What we have heard is an appetite for risk management. based agreements, not everywhere, but in a number of key markets. So we won't be focusing on installments. There's been no signal of a desire for installments that I'm aware of. We will be focusing, at least in certain markets, on having a risk-based agreement. What I like about the risk-based agreements, both in Europe where they can be used and also in the United States, with payers that would be willing to do that is that allows us the possibility of maximizing the potential value that we capture for Roctavian with the offset that we're at risk, Biomarin is at risk to cover if a patient or patients don't achieve the maximum benefit. And I'm personally and professionally okay with that trade-off. I think it's a good one.

Great. Thank you. Next one on the queue is Devjit Chattopadhyay from Guggenheim Securities. You are now live.

Hi, guys. Thanks for taking all the questions. This is Aaron. I just wanted to ask about BMN 307. What fee levels do you think would be commercially viable? Do you need to get down to $120, $360, or $600? And can you say anything about any immune response? Is it looking like it's going to be similar to Octavian? Thanks.

Pat, do you want to start?

Yeah. Well, let me just start by saying that PAL and Z can get people under 600. PAL and Z can get people under 360. PAL and Z can get a fraction of patients to normal. What would be really cool for gene therapy to do would be to get everybody normal on a normal diet. And, um, that that's the working direction now, whether that ends up being actually a hundred percent or, uh, you know, we'll, we'll let the data tell that story, but, um, you know, we're, we're looking for the profile of the product to be, you know, normal fee, normal diet. Um, and we believe that, you know, even at the dose that we're now testing that that's, uh, within striking distance, um, you know, how low it has to go. There's a matter of medicine and science that are still a little bit undefined, and I think the easiest thing for us to do is to get people in the normal range, and then we'll have to argue about how low matters. Jeff, did you want to add anything?

If I may, before... Also, you know, based on what we observed with the 2E13 dose, the low dose, and based on the experience with Octavian that we observed going from 2E to 13, to 60 to the 30 was it was a very steep response curve. We believe, you know, there is a good chance that with a 60-30 dose, you know, we'll get to normal fee level. That is the objective. Obviously, in that case, a measure of commercial opportunity, but it's a good question you're asking there. Even if we couldn't quite get there, if we could get to something similar to polysaccharide, we believe there is still an opportunity, but that is not our objective. Jeff, you have anything to add?

Nothing to add. Well stated. Thank you.

Next one on the line is Matthew Harrison from Morgan Stanley. You are now live.

Hello. This is Costa Sean for Matthew. I have a quick question on 331. Would you be able to provide some color around the design of this trial, and how do you plan to differentiate from current therapeutics on the market? Thank you.

You know, if it's a little early, you know, we're planning to file the IND, and oftentimes you get a little IND feedback that could inform. No, I think the main competitive advantage is natural replacement as opposed to bioengineered molecules that require compliance. You know, I think one of the things that makes gene therapy special is the sort of persistence presence of what you're trying to replace combined with resulting, therefore, in complete disease control without having to chronically take a medicine or modify dosing or safety, et cetera. So when we talk to patients in these communities for our gene therapy products, their drive is to be free of their condition. And we see these things as potentially market expansion opportunities. So You asked about 331, but just again to illustrate with 307, you know, the problem with phenylketonuria for decades has been there's been only one approach to management, and that's to eat food that is completely free of phenylalanine. And, you know, some people trivialize that and say, well, you know, it's a convenience or it's a diet thing, and it's not. I mean, these alternative therapies are not without side effects. They're not without challenges. And patients take, you know, drug holidays, and they get sick as a consequence of that, and therefore their dream is to be done with their condition. And any number of years that we can provide that as an alternative to their current therapy is being viewed very highly in our patient communities. So on 231, stay tuned for more specifics on trial designs, and we'll keep you aboved.

Thank you. Next one on the queue is Paul Maries from Stiefel. You are now live.

Hey there, this is Alex. I'm with Paul. Thanks for taking the question. I think, apologies if I missed this earlier, but just wondering with this PDUCE extension for the sore thigh, is there any indication that there may not be an ADCOM from the FDA? Thanks.

Well, they have communicated that specifically. You know, whether the submission changes that, you know, we haven't had any indication that that's the case, but so far they have said to us no ADCOM expected. And you should remember that they had an ADCOM in 2018, and that substantially our program follows entirely the specification of that ADCOM. And the only difference between the ADCOM now and the FDA's articulation is the ADCOM was a little bit more divided on the necessity of a two-year placebo-controlled trial citing considerations like pediatric ethics, prospects for benefit, withholding therapies from pediatric patients for two years, not one year, that preclinical data could or long-term clinical data or biomarkers could substantiate durability claims. That was the 2018 ADCOM. Since then, we've actually provided the FDA the second year of that contemporaneously controlled trial anyway. So at this point, they'd be going back to an ADCOM that that's already basically answered all these questions to, you know, in our favor. So don't anticipate an end time, but don't know.

Great. Thank you.

Next question comes from Mohit Bansal from city group. You are now live.

We lost Mohit.

All right, so for the next one, we do have Tim Loga from William Blair. You are now live.

Thanks for taking the question. And digging into the early-stage pipeline, you gave us a little color on six of the early-stage assets in the press release. Do any of these assets have kind of a binaural-like fast-market development path potential? And I also believe you have a partnership with Deep Genomics up in Toronto covering, I think, four products. When do you expect we start to see some candidates roll out of that partnership?

Hi, real Tim, and I'm really glad that the operator pronounced real Tim a lot. I have to say that all of the assets that we consider, we aspire to do best to market now. We haven't always been able to, you know, Palantir took us a little longer. The Suratide has taken us a little longer. And sometimes the biology turns out to be a little more complicated in humans than you'd like. But we are sticking with the fundamental model of biomorality for discovery and development has been, you know, genetic, precisely understood etiologies, targeted therapeutics, discernible effects rapidly with transformative results. the collaborations that we're doing that have just been announced all neatly fit into having that potential. And I think part of the pipeline pivot at Biomarin is to really institutionalize what we did with Brunura. I'm really pleased to report that, you know, you see JJ a lot, you see Hank a lot, you see Jeff Ager a lot. Behind the scenes, there are these incredibly clever people. Kevin Egan, for example, who is our new head of research, just a phenomenal cell and molecular biologist. Dave Jacoby, who led the clinical development program for Brineura. By the way, both these guys are Harvard-trained guys. They're also getting along for that reason. And Dave Jacoby did it clinically for Brineura. He wants to do it again. We recruited Kevin. That's what Kevin wants to do over and over and over and again. So I don't think that part of Biomarin is going to change. I think the part that's going to evolve is is looking at both bigger assets potentially, looking at assets that can be extendable into other indications, or really leveraging our platform technology even more than what we were just talking about with 307, where we built a better vector faster for 307 by virtue of our expertise. And we want to do that across the advanced medicine space. So short answer is yes, Tim. Everything we are about is looking for these medical conditions that we can transform quickly through genetic insights.

Good to hear. And the Deep Genomics Partnership up in Toronto, I think you have four compounds up there.

Yeah, same basic concepts in that we learned in our antisense oligos program for Duchenne that the first target you find of effect may not be the best. We went about that through a much more manual process of tiling and then tweaking chemistry, retiling, tweaking chemistry, retiling. Once we mashed through all that, we realized that we had come upon a much better biological approach. I've talked before about the You know, the nature of the genetic condition and the targeted therapy, you know, it needs to fit in like a key fits in a lock. And the keys in these conditions, you know, can be highly, highly refined and specific. And there's another area, by the way, that Kevin is phenomenally interested in, you know, subject to RNA metabolism. So the concept is, is that, you know, as you learn from how genes are structured and you'll learn more and more about the regulation of RNA metabolism, which will give you insights into how to more quickly design. And this is a setup now that's really quite right for machine-based learning artificial intelligence, just because there's so much massive amount of genetic information, you know, reminder that the coding sequence in a human is vastly smaller than you would have otherwise expected. And all that They used to call that other DNA junk. It's not junk. It's regulatory elements. So Kevin is really intent on leveraging the deep genomics collaboration to figure out how to power through the identification of regulatory targets in the genome that are going to be transformative as therapeutics.

That's very interesting. Thank you for the call.

Yep.

Next question comes from Mohit Bansal from City Group. You are now live. Great, thanks for taking my question, and sorry about the mishap earlier.

Maybe a bigger picture question. Gene therapy space appears to be facing some challenges lately. Obviously, you face the regulatory one, but there are safety issues coming up, and some of these agents have, you know, those safety issues, some of them are tissue related, some of them are gene related, gene therapy related. Any thoughts, any updated view on what is happening around in the gene therapy world? And how do you think about going forward, picking up areas to go after, given this backdrop, in terms of prioritizing which targets to go after as well as which decisions to go after in terms of, you know, if there's existing therapy versus there's no existing therapy, those kind of things. Thank you.

I guess I'll start, JJ. Mohit, it's good to hear your voice. I'm glad you're alive. Sounds like the operator did CPR or something. You know, so what we experience with OTAD is obviously not new, or it's actually not novel in the context of, you know, you see a lot of this happening with them. Now, we were fortunate, Brad Glasscock, who's our head of regulatory services, was an influential partner in PDUFA negotiations. And so I think we have an opportunity to have some insight on what's going on at OTAT. And this is all public information. OTAT is basically understaffed. And CBER also happens to be doing a lion's share of the work on COVID, obviously, due to vaccines. So you're talking about an understaffed and otherwise incredibly busy group. And I previously commented that conservatism is not an unusual reaction to that sort of thing from a regulatory perspective, and we've seen that before. And I think also that the field is just so novel that the nature of the kinds of questions that get asked are being asked in there. You only get one shot at these things for the most part. And, you know, if there are alternatives to therapy, you know, people ask about questions about durability more than they would otherwise ask when there are an alternative to therapy. So that's created, you know, a lot more to be thought about by a group that is also, you know, relatively thinly staffed. Does it have an impact on how we pick and how we develop? You bet it does. Clearly, if you can offer a patient, you know, something where they have no other choice, it's going to be a little bit clearer to be able to develop that. And if they have choices, you're going to have to have a bit more robust of a program. Now, I think Valrox is a good exemplification of that. You know, maybe if there was no such thing as factor replacement therapy and, you know, we take people who are taking nothing and bled 30 times a year and put them on gene therapy and they stopped bleeding. We, we might end up being, having any talking about in Rocktabian second commercial year. But the fact is, is that they, there is factory replacement therapy. So what we did there was we did a proper comparison of factor replacement therapy to Rocktabian gene therapy in the absence of factor eight gene therapy replacement. So we had to do a bigger, more robust program because of the available alternative therapy. So these considerations, you know, they're not, you know, the OTAT understaffing thing, you know, it's just come to light more recently. But the evolution of requirement of conservativeness as you go in with very innovative things in spaces where there is available therapy but a remaining unmet need is, I think, the complexity that you're seeing the agency deal with. And I think, you know, as we accumulate more data, more mass, more experience, you know, comfort level with benefit-risk decisions will improve. And it's great that Biomarin's the sponsor of a lot of that stuff because we're leveraging all of that learning for the rest of our pipeline.

This is super helpful. Thank you very much, Hank. Mm-hmm.

And there are no further questions at this time. I will now turn the call over back to JJ.

Thank you all for your continued support. I would say with so many opportunities ahead for Biomarin, The momentum towards our next significant phase of growth is building. Again, I want to reiterate, we had positive operating cash flows of $114 million in the first quarter, which is a major growth as compared to last year's first quarter. It represents the strength of our underlying business. And with our next two larger product opportunities in Voxogo and Voxavian within sight, we expect 2022 to be a financially transformational year for Biomarine. Thank you, and have a nice afternoon.

Thank you, everyone, for joining. You may now disconnect. Have a great day.