BioMarin Pharmaceutical Inc.

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

Thank you, Operator. 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 program, 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 the Securities and Exchange Commission, such as 10Q, 10K, and 8K reports. On the call today from Biomarin's management team are JJ Vianame, Chairman and Chief Executive Officer, Thank you, President Worldwide Research and Development, Greg Geyer, 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, JJ Bien-Aimé.

Thank you, Tracy, and good afternoon, everyone. Thank you for joining us on today's call. I think I'm very pleased with our performance and progress in 2021. and also pleased to share our outlook for the year ahead for 2022. So last year, we laid the foundation for our transition to sustainable gas profitability beginning in 2022. The addition of our seventh commercial product, Voxogo, is expected to drive a meaningful step up in revenues beginning this year, as indicated in the increase in full-year 2022 Voxogo revenue guidance announced today. $2.1 billion, or 14% growth year-over-year, represents the midpoint of our 2022 full-year guidance and demonstrates, in terms of revenues, and demonstrates the return to significant double-digit sales growth for BioMoren. It is important to note that our anticipated top-line growth in 2022 is expected, despite the reduction in proven contributions since the loss of exclusivity in the United States in late 2020. This further underscores the strength of our base business and the opportunity that Leisa had with Voxogo, especially considering how early we are in the global launch. Jeff will provide, you know, more details on the launch in a moment, but also I guess you noticed in our release that we generated $5.8 million in Q4 for Voxogo. That was the first quarter that the product was on the market mainly in Europe. And the vast majority of the sales were in Europe, and that does show that once you have the right products, European launches can go up, take off pretty fast. So beyond the strength of our financial outlook and the reverse launch of Voxogo, the recent two-year update from our pivotal study with Roktavion provided further evidence of the transformational nature of GSIP treatment for people with severe The results from our 134-subject people study that we shared in January demonstrated durable, consistent bleeding control with annualized bleeding rates reduced by 85 percent and with 95 percent of participants remaining off-factor-rate prophylaxis therapy through two years. To those people with severe hemophilia seeking bleeding control that is superior to standard We believe roctavian represents a very attractive treatment option, and based on the results observed in our Phase II and Phase III studies, we believe that this data will provide supportive evidence of efficacy as part of the review currently underway in Europe, as well as the VLA we intend to resubmit in the U.S. in June. To summarize, we have set the stage for transformational growth for the company and the people we seek to treat. In 2022, we expect to turn the corner to sustainable gap profitability, wrap up our largest pediatric opportunity to date with Voxogo, advance our applications to Europe and the United States with Rokitian, and see the progress of the broadest early-stage pipeline in the history of Biomarin. The financial, commercial, and regulatory momentum at Biomarin I've never been stronger and we want to thank you for your continued support throughout our foundation building journey. I especially want to thank our Biome Wing colleagues for their continued commitment to developing the essential medicines that help so many. So we'll now turn the call over to Jeff to discuss the commercial business update. Jeff?

Thank you, JJ. I am pleased with the team's performance across all brands and regions during 2021 and I'm very excited about our uplift for 2022. As noted in today's press release, 2021 Voxogo revenues were $5.9 million, and today we increased Voxogo 2022 full-year guidance to between $90 and $115 million based on strong prescription demand seen so far this year. We continue to believe that Voxogo represents our largest brand to date. As JJ already noted, the underlying demand for our products is expected to drive double-digit sales growth this year, with Voxogo being an important contributor to the growth story. On that note, starting with the Voxogo launch, we are pleased to share that by February 15, 2022, or midway through Q1, an estimated 210 children were being treated with commercial Voxogo across 10 active markets, with an estimated additional 54 children in process in the United States. The active markets include Germany, France, the US, Switzerland, Austria, Israel, Singapore, Argentina, Luxembourg, and Chile. In Europe, we have been fortunate to have access to the two largest markets, Germany and France. This has resulted in rapid uptake early in the European launch which we expect will continue through 2022. As noted in the list of active markets, we are also seeing uptake in smaller individual countries, which collectively will contribute to meaningful revenue uptake also this year. We are pursuing reimbursement in other material European markets, such as Italy and Spain, and expect that it will take time to reach price and reimbursement approvals in these markets. Outside of the EU, Russia and Middle East markets are also expected to come online this year. In the US, we have the ability to quickly respond to prescription demand following approval. While US payers are numerous and diverse, we have been successfully navigating the medical exception process to facilitate access to commercial Voxogo. We have seen the first coverage policies being published by US payers. the details of which are consistent with our expectations. As expected, we are seeing prescriptions mainly from geneticists and pediatric endocrinologists, which is a new and targeted call point for Voxogo. In summary, we're very pleased with the pace of uptake during this ramp year for Voxogo. Launching in the EMEA region ahead of the United States was a first for Biomaran, and our experienced commercial teams are managing the dual launches as planned. We look forward to registrations in Japan and Australia later this year, as these markets are expected to generate a high level of demand for Voxogo. Turning now to our enzyme replacement therapy brands, Vimazem, Naglazyme, and Brunura, we were pleased to have achieved 8% growth year-over-year in 2021 for these brands in total. Starting with Vimazem, revenues in 2021 were robust as expected, and benefited from additional Q4 ordering to end the year at $623 million, or 14% growth year-over-year. As mentioned with Naglazyme, 2021 year-over-year results were impacted by the timing of large orders from Latin America in 2020. We remain encouraged by high compliance rates and year-over-year patient growth of approximately 5% and 1%, for Bimazem and Naglazum, respectively. For Brunura, 16% revenue growth year-over-year, and sales of $128 million represents continued growth in North America and the EMEA regions principally. Children on Brunura therapy increased by approximately 18% year-over-year. Moving now to Palantique. Net product revenues grew 39% in 2021 as compared to 2020, and reached $238 million for the full year. Sales were driven in the U.S. by a combination of new patient initiations and patients achieving maintenance dosing. Patients on therapy increased approximately 15% in 2021 as compared to 2020. We are seeing the majority of growth from the U.S. market, which continues to be impacted by reduced PKU clinic bandwidth due to the pandemic. Continuing with the PKU franchise, Kuban contributed $286 million in revenues in 2021, reflecting incremental erosion to generics. Revenues decreased by 38% year-over-year compared to full-year 2020, primarily due to the U.S. loss of market exclusivity in October 2020. We continue to expect a material contribution from Kuban in 2022, as noted in our full-year guidance. Lastly, with the CHMP opinion on rock deviant expected in the second quarter, launch readiness activities continue to progress. The team is on board and well prepared to launch, assuming regulatory approvals later this year. We are encouraged that our longer-term data results offer an attractive value proposition and treatment option for those with severe hemophilia A. 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 Kuban. Our MPS products are expected to contribute significantly to revenue growth this year. We also expect our newest brand, Voxogo, to be a meaningful factor in this ramp year. The global launch is on a strong trajectory, and while it is early days, we believe the robust early prescription demand represents a foundation for continued growth including in new markets through 2022. The commercial team is energized to be in global launch mode with Boxogo, our largest potential revenue opportunity to date, and we look forward to keeping you apprised of our progress over the year. So thank you for your attention, and I will now turn the call over to Hank to provide an R&D update. Hank?

Thanks, Jeff. The R&D organization echoes your enthusiasm and appreciates all the hard work of the commercial team making available the first and only treatment option for children with achondroplasia, following Voxogo approvals in Europe and the United States last year, as well as other territories. Based on the targeted mechanism of Voxogo, which promotes endochondral bone growth while growth plates are open, treatment can have a meaningful and lifelong effect on children with achondroplasia. For families in Europe seeking treatment, we're very pleased that health authorities approved Voxogo for children ages 2 and up, underscoring the importance of beginning treatment as early as possible to provide maximum benefit. Today, we provided a top-line update from the Phase II randomized double-blind, placebo-controlled VoxOgo study in infants and young children up to five years of age with achondroplasia. We are encouraged to share that 52 weeks' results trended in favor of VoxOgo compared to placebo on height Z-score, annualized growth velocity, and no worsening in proportionality in the overall study population. This is a relatively small Phase II study when one considers the high variability between age cohorts. Regarding the safety profile, it was generally consistent with older subjects from the Phase III VoxOvo 301 study and current labeled population. Serious adverse events were higher in the placebo group, 18%, compared to VoxOvo-treated children at 7%. All serious adverse events, including a fatal event of sudden infant death syndrome in the treatment group, were deemed by investigators to be unrelated to treatment. A small increase in events of sleep apnea were reported in the treatment group that were mild or moderate in severity, and did not require treatment discontinuation. These events will be fully assessed when sleep study and MRI data are available. Our next step is to engage with regulatory authorities to discuss next steps regarding efforts to expand access to VoxOzo treatment for this younger age group. We plan to share more detailed results at a medical meeting as we receive these data less than 24 hours ago, so please stay tuned. Briefly on Roctavian, as JJ said, 2022 regulatory milestones are tracking the plan. CHMP opinion is expected in the second quarter, and resubmission of the biologics license application is planned for this June. This resubmission will be followed by an expected six-month review procedure should the resubmission satisfy the Food and Drug Administration's thresholds, and appreciating that there has been inconsistent communication in this field with this novel platform. Based on the dramatic reductions in bleeding rates, factory utilization, and factory infusion rates at year two following treatment with Roctavian, shared in January, and again at EHAD earlier in February, we remain confident in roxavian's potential to be an important treatment option for those with severe hemophilia A. Turning now to BMN307 gene therapy for phenylketonuria, as we announced last week, the FDA has requested data from additional new nonclinical studies to assess oncogenic risk to human participants, which is expected to take several quarters or more. As a reminder, the hold was based on safety findings from a nonclinical non-GLP pharmacology study in immunodeficient mice. As we said when we announced the clinical hold and what holds true today, the scientists striving to serve patient needs, we remain committed to understanding these findings. We are in the process of collaborating with the FDA on specific next steps and will provide you with an update when we have meaningful information to share. Finally, turning to the earliest stage pipeline at R&D Day last November, we were very pleased to have shared a detailed overview of the many products currently under development. We have a number of candidates advancing this year, including BMN331, gene therapy for hereditary angioedema. That trial is currently open for enrollment. With BMN351 for Duchenne muscular dystrophy, we expect to file the IND in the first half of this year, with the goal of treating the first Duchenne boys in the fourth quarter of this year. We also hope to advance studies following dose selection with BMN255, which addresses the subset of chronic renal disease in the second half of the year. We look forward to keeping you apprised of our progress across the R&D organization throughout the year. Thanks for your support, and I'll now turn the call over to Brian to update on 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 fourth quarter and full year 2021. 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 our 2022 guidance. As usual, All results will be available in our upcoming Form 10-K, which we are on track to file over the next few days. At the beginning of last year, we referred to 2021 as a quote-unquote hold-the-line year for our financial performance, meaning that our goal was to navigate a handful of revenue growth headwinds with expense control and a focus on operating performance. We are pleased to have accomplished that objective. Despite 2021 revenue dynamics that included a decrease in CUBAN revenues of $172 million year over year, total revenues were essentially flat in 2021 as compared to 2020. And modest 2021 expense growth resulted in a full-year gap net loss of $64 million, landing at the midpoint of our guidance, and full-year non-gap income of $243 million within the top half of our guidance. Buying Marin's strong operating performance in 2021 also translated into substantial cash flow for the year. Total cash investments grew by $171 million in 2021, finishing the year with over $1.5 billion, fueled by over $300 million of positive cash flow from operations. Contributing to those bottom line results were operating expenses that fell in line with our expectations for the fourth quarter and full year 2021, and were mostly consistent with 2020 levels. R&D expenses for the fourth quarter and full year 2021 were $161 million and $629 million, respectively. SG&A expenses for the fourth quarter and full year 2021 were $218 million and $759 million, respectively. SG&A expenses increased in the fourth quarter of 2021 as compared to last year, mostly due to the global launch of Foxogo and some year-over-year increases in administrative costs. Now moving to 2022 guidance. As noted by JJ, the expected continued strong growth of our base business, plus a significant contribution from Boxogo in its launch year, we expect total revenues in 2022 of between $2.05 billion and $2.15 billion, which at the midpoint represents 14% growth over 2020. Within that revenue guidance, we observed that our base business marketed brands, except for KuVan, are growing by 13% year over year at the midpoint. And as Jeff highlighted, we're pleased to improve our 2022 Voxogo total revenue guidance from the preliminary guidance that we shared earlier in the year, based on our observations of the Voxogo launch the first two months of 2022. And lastly, regarding revenues, given the estimated timing of Roctavian approvals and launches in the second half of 2022, we anticipate that Roctavian will be a modest contributor to 2022 revenue. Moving to our expectations for expenses and bottom line in 2022, Consistent with our plans to increase leverage from the operational foundations built in recent years, our estimated increases to SG&A and R&D expenses in 2022 are at rates significantly lower than our expected revenue growth. And importantly, as we recognize the importance of fueling our innovation into the future, R&D expenses are increasing at a rate higher than SG&A expenses. This measured growth in expenses is a key component to our transitional gap profitability objectives for 2022 where we estimate earning GAAP net income of between $95 million and $135 million. Noteworthy is that our GAAP profitability expectations for 2022 are expected to benefit from but are not dependent upon the after-tax gain from the expected sale of our recently obtained priority review voucher announced earlier this month. With respect to non-GAAP income, we plan to adjust out the gain on the expected sale of the PRV And as further illustration of our journey into P&L leverage in 2022, we expect non-GAAP income for the year of between $350 million and $390 million, which at the midpoint is over 50% growth as compared to 2021. In closing, while 2022 is expected to be a transitional year into our long-term strategy, we are pleased to see our long-time goals for Biomarin start to materialize, which includes building an enterprise that can support both continued product approvals and innovative pipeline growth, while at the same time generating sustainably increasing profits and positive operating cash flow. We believe that the strength of our base business, the recent approvals and launches of Voxogo, and the commercial prospects of Ractavian after observing the two-year phase three data represent three strong pillars of near-term growth. These are followed by the increasing number of opportunities in our early stage pipeline that have the opportunity to drive Biomarin's growth further into this decade. Thank you for your attention, and we'll now open the call to your questions. Operator?

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw a question, press the PAN key. And please stand by while we compile the Q&A roster. For the first question, we have Salvin Richter of Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking my questions. One on Voxogo, how are you progressing with expansion to the dedicated achondroplasia centers versus the initial targeting of skeletal dysplasia or geneticists? And then secondly, on the clinical hole that's playing out with the PKU program, could you just talk about what exactly the FDA is requesting and whether there is something about PKU itself that makes it, you know, more of a concern or less amenable to gene therapy?

Hi, Salveen. I'll take the first question on Vox Sogo. So what we've experienced so far, which is consistent with our expectations, are that some, a portion, a minority of aconthroplasia children are being seen and followed by geneticists, including in skeletal dysplasia clinics. And this is a prescriber base that we have very good relationships with that are established. What we think is that, and our experience has been that that gives us kind of quick access to that group of patients based on our existing relationships. What we also think is that because the majority of a counterplagia patients, particularly in the United States, are not being actively managed by that prescriber audience, we think that Driving to a new treatment home with pediatric endocrinology or endocrinologists is an appropriate strategy. Pediatric endocrinologists being both the growth disorder specialists and also having capacity that we don't currently see in genetics clinics. So our early experience has been A lot of children in the United States referred in by geneticists and skeletal dysplasia clinics. That's great. And other children getting into a referral network and being seen by what is a new call point for Biomarin, but a very interested and engaged new call point, and that is a relatively small number of pediatric endocrinologists that specialize in growth disorders and are proving to be very interested in treating achondroplasia and prescribing Voxogo. So good news and good progress on both of those fronts.

And on the second part of your question, Salvin, it's a little bit hard to say exactly what the FDA is looking for insofar as we only just received their letter. It appears that while we satisfied some of their concerns, they appear to be looking for more direct evidence of the mechanism of the underlying cancer causation. And therefore, they've asked for these additional preclinical experiments and will provide updates when we have more specific updates to provide. As to the role of, you know, PKU in this consideration in general, I think the only thing I can say there is the agency has made no secret of commenting that they consider Gene therapy approaches for conditions for which there is available therapy different from conditions for which there isn't available therapy. And exactly how that fits into their overall decision-making is not crystal clear to us at this point.

I mean, Hank, you might want to comment also on the fact that, you know, gene therapy for PKU would be for adults only and adult PKU with less of a, you know, need for treatment in some parts of the world than PKU.

Yeah, and putting this in a positive way, I mean, I think the burden of illness is really quite substantial for children with phenylketonuria. And for adults with phenylketonuria, there's less compelling evidence of effectiveness of the products. But all that said, I think it's hard to dial in exactly how much PKU as a therapeutic indication is contributing to the agency's conservatism around the 307 findings.

Thank you. Thank you. And for the next question, we have Corey Kasimov of JP Morgan. Your line is open.

Hey, good afternoon, guys. Thanks for taking the question. Hank, I was hoping you could provide some more details on the Voxogo data and the zero to five-year-olds. I'm curious, was this powered for statistical significance and then intended to be a registrational phase two, or was it too small for that? And on the safety front, it's nice to see overall adverse events lower than placebo, but can you just address the sleuth apnea and single case of SIDS to just kind of any description or color around that would be helpful. Thank you.

Yeah. You know, so we're obviously hoping to get an amazingly great signal out of the 206 study, and we're very encouraged that, in fact, we did see trends. And I think the key lesson learned out of all this is that These different age ranges are a little bit more complicated in regard to both signal and noise. And so, you know, we just got these data. We need to dig into it a little further to generate some hypotheses about why we didn't get a gigantic signal of effectiveness. And so I'd say on that score, stay tuned. We are encouraged by the safety insofar as very low rates of hypotension that was clinically significant, consistent with the older population. In the older population, by the way, we did not see a meaningful imbalance of sleep apnea. We're reporting this now because these were adverse events that were reported to us, even though we haven't had a chance to fully dig into laboratory or MRI evidence of what's going on for these children in the main. As I said, and I apologize, I might have said it really fast, that the events of sleep apnea that occurred were mild to moderate in severity, were deemed unrelated by the investigators. And a large part of that has to do with the fact that sleep apnea is not an uncommon occurrence in this patient population. As I mentioned, even in the older population, there's a little bit of sleep apnea that's been recorded. So whether this is really drug-related or it's just a bad luck signal, we're going to need to get more information. The good news about it so far is, like I said, mild to moderate, didn't result in discontinuation deemed unrelated by investigators. Okay, thank you. And then the child with the sudden death is a child who, again, the event was deemed unrelated by the investigator as a childhood. You know, these children, you know, the standardized mortality rate for children with achondroplasia is like 50 times that of an unaffected child. So these events will happen, unfortunately, in children. And I guess at a minimum, you conclude that Hotoga didn't rescue this child. But You know, we'll have to look at the overall pattern of safety that we saw in the trial with a lot more detailed laboratory evidence still yet to come.

That's helpful. Thank you, Hank.

Your next question is from Chris Raymond of Piper Sandler. Your line is open.

Hi. This is Allie Bratzel for Chris today. Thanks for taking our question. So just on Voxogo, could you talk about your expectation for the geographic patient split that's embedded in your 2022 guidance? I think just by our math on Voxogo patient numbers, if you include those 54 U.S. patients in process, the split right now is around 20% U.S., 80% rest of the world. So should we expect that split to hold up for the full year? And related, I know you talked about Japan actually being a a more important country for you with the VoxGoogle launch. Could you sort of talk about what's driving your optimism on the VoxGoogle opportunity there, and just how you expect launch dynamics there to play out compared to the US and EU? Thanks.

Okay, good question. So the Q4 revenue that we reported was predominantly from ex-US, as you would expect, because We got a U.S. approval late in Q4, whereas we were able to start patients in Q4 in Europe and start driving that revenue. As we begin the year, we're off to a quick start in the United States, but we're also off to a quick start in Germany and France, which are the two largest markets in Europe. And we've got smaller contributions coming now from a number of smaller countries outside of the United States. And as you noted, we are expecting an approval in Japan around mid-year. So the picture is going to be pretty diverse. I'm not going to help you sort out the specifics of geographic mix. I am going to point you back to our revenue guidance for the year starting out this year. Relative to Japan specifically, Japan is, depending on how you measure it, either the second or the third largest pharmaceutical market in the world, and a market where Biomarin is long invested in having capabilities to operate on our own. It happens that with the rare disease portfolio that we have, we haven't had the right opportunity to have a brand that would be representative of the second or third largest market in the world. That picture is about to change with Voxogo, where we have relatively uniform incidence and prevalence of achondroplasia. It means that Japan is a large market with a large population. We expect a large population of achondroplasia kids And we know that Japan is developed already for achondroplasia. It's the only place in the world where growth hormone is approved for the treatment of achondroplasia. I think the prevailing opinion there would be pretty straight from prescribers that growth hormone is not particularly effective. if at all. And there's a lot of excitement, including from clinical investigators in Japan about Voxogo. So that's what's driving our enthusiasm about Japanese opportunity.

I think you're right. I mean, before the launch, we emphasized the fact that the ex-U.S. market was significantly larger than the U.S. market by 80-20, maybe even 85-15. So it's very likely that, you know, over time, the ex-U.S. sales are going to be greater than the U.S. sales. Also, the U.S., you know, as Jeff said, we only got approval in the U.S. in very late 2021. So, obviously, the European had almost like a quarter head start over the U.S. But that being said, the demand and the enthusiasm by the U.S. patient community for is very good. So, and definitely similar to ex-US.

Got it. Thank you. Your next question is from Phil Nadeau of Cowen. Your line is open.

Good afternoon. Thanks for taking our questions. A couple on Roctavian. First, you have been guiding to an FDA meeting during the first quarter of this year, pre-submission meeting. any update on the status of that meeting, whether it's happened or what's likely to be discussed. And then second, in the recent presentation of the updated Phase I-II data for Ractavian, there was a disclosure of one salivary gland cancer that was deemed unrelated to Ractavian. We're curious to hear more about that case, how long after dosing, and any other information around that patient that you have would be interesting. Thanks.

Yeah, thanks. Phil for the questions. As far as the, you know, status of individual interactions with the FDA, we're, you know, given the ongoing nature of our regulatory interactions, we plan to update you only at the major milestones of submission of the file by us and then, of course, FDA's action date. I mean, I think at this point, given the history of inconsistent communications from the agency, I think it would be unwise to provide interval updates because those are so much subject to interpretation and potential misinterpretation. So if you can bear with us, we're going to just stick to the basic facts of the U.S. review of submission and U.S. action. As far as the scientific report at EHAD of the individual patient, again, this was an individual who had a serious adverse event, the occurrence of cancer in the context of a clinical trial, but was deemed by the investigator as unrelated. We actually undertook an internal review that was really quite extensive in regard to the case, partly because we have a lot more information from preclinical and other sources about potential safety considerations. We also discussed these cases with this case with our independent data monitoring committee and concluded that out of an abundance of caution and not due to any particular regulatory requirements, we would go ahead and convey our understanding of the case when it occurred. which was, I think, in late November, early December that we communicated with the agencies. Since then, they've been fully aware of the case. And to remind you, this is an individual who was dosed more than five years ago and has an isolated salivary gland cancer. And we plan to undertake genomic analysis of the tumor. For all of us in this field, we're going to expect that cancers are going to be observed in individual patients. By protocol, where possible, we collect tumoral data to try to understand if there is any relationship at a molecular level between the occurrence of the cancer and the presence of the virus of Roctavian. And that analysis hasn't been concluded. When that analysis is concluded, we'll share that information in a scientific context. But again, this appears to be an unrelated adverse event that is in an individual who's under a lot of review by the investigator, by our independent data monitoring committee, by us, and by health authorities around the world. And the important point at this point is, is the Raktavian trials continue to be open for enrollment.

That's very helpful. Thanks for all the call.

Your next question is from Jeff Meacham of Bank of America. Your line is open.

Hey, guys. Thanks for the question. Just had a couple on Octavia. I know, Hank, you obviously don't want to give a play-by-play, but just to be clear, are there any other ongoing, say, CMC or preclinical or any other parts of the filing that will be new beyond the second phase three in the two-year data? And then the second question, more commercially, I know in the past you guys have talked about COVID still being a bit of a headwind in PKU clinics. How is that progressing? Do you still see that, you know, having a bit of a lingering effect in 2022, or is that going to generally work itself out as we move to the middle part of the year? Thank you.

Yeah, so I'll start with the first part. You know, the thing I can say, Jeff, about the submission play in the United States, again, getting into the blow-by-blow, what's about, what's between the blow-by-blow, and we're going to update you at submission and the FDA review. There's maybe not a whole lot in there, but what I can say is since it's practically March, we're targeting a submission in June. That doesn't leave a lot of time for whole lots of new studies to be assembled and digested. I think we feel, you know, especially with the two-year efficacy update, that we've really got the evidence that we believe would support a positive benefit-risk conclusion, and we'll be providing that to the agency, you know, in the first half of this year if all goes well. Craig, you want to talk about TMC and inspections done already by

Yeah, the only thing that we would from a U.S. standpoint, we would be inspecting and we would be expecting an inspection later this year after the filing and before, you know, the six month time period has ended. So that'd be probably in the third or early fourth quarter. So we're prepared for that. And in terms of CMC, as Hank said, the majority of the refile will be clinical, there's some minor things, but nothing of significance from a CMC perspective that we'll be including in the file.

Do you want to remind that we were inspected by you?

Yeah. So that facility has been inspected by Europe. So as you know, we're in the midst of that review right now. There's no there's no re-inspection necessary for Europe. So that's not an additional step for approval there. But it will be a step for the US since they have not inspected that facility yet.

Maybe moving over to the question about the pandemic impact on PKU. So if you look at the Palantique results for 2021, on the one hand, we're really pleased with the growth in revenue, and we have experienced growth of patients on therapy. On the other hand, that growth of patients on therapy, is slower than it otherwise would have been but for the impact of the pandemic on PKU clinic capacity. I think that earlier on we were expecting as a pandemic moved from some acute phase to post-acute phase that we would see further opening of PKU clinics. As you know, the pandemic has behaved as it has, and we have been disappointed that we haven't seen PKU clinics open back up as much as we had hoped for the treatment of adults with PKU. Some of that is due to the fact that these genetics clinics, PKU clinics more specifically, tend to be located in tertiary medical centers and major metropolitan areas. And those facilities have been impacted by the pandemic. Another part of it probably is that for the clinic bandwidth that does exist, geneticists see desperately ill children, and it's likely that PKU adults that require some attention to start Palenzec are not at the top of the priority list. So having said that, we do expect continued patient growth, and we are taking tactical measures to try to address the bottlenecks in the PKU clinics and help out where we can with tactics to help adult patients, more adult patients get started on therapy.

That being said, you know, we reported, you know, revenues for Pali and Zik in 21 of $237.5 million, and our guidance for 22 is $280 to $310 million. So we do anticipate some, you know, some pretty significant growth here in 2020.

Thanks, guys.

Your next question is from Jenna Wang of Barclays. Your line is open.

Thank you for taking my questions. I have one regarding roctavian safety data. So for the TQ program that FD asked you to do, the preclinical studies, do you have the same data package for hemophilia A? And then the second related question is, what is the latest human biopsy data regarding the AAV integration analysis from current patients? Like, what is the longest on-drug, you know, the data you have from these patients?

Very complicated question. Let's see if I can help there. You know, as regards to the Roctavian preclinical data package and its similarity of what the FDA is asking for from 307, since we just got the clinical hold letter from the FDA on 307, and they've requested additional studies, but they haven't specified additional studies, and as I've mentioned, we're going to be working with them to try to understand what those additional studies will likely be. It would be impossible to compare and contrast what's been asked for on 307 with what's available already for 270. But I think that a clear picture can be arrived at from just saying that whatever they're asking for for 307 is not in the way of enrollment in the ongoing 270 or 331 trials. So this appears to be, the clinical pool appears to be vector-specific in the United States. And then the second part of your question reminded me,

The AV integration analysis, the patient state taking roctavium, what is the longest data set? How many years, you know, you have?

Yeah, off the top of my head, I want to come back to you, Gina, on more specifics, and Tracy and I will do that. But exactly what's been published, I think there's something in the works on the subject, but I don't think it's yet appeared. But here's an important consideration here. It's been known that AAV can be found to be integrated into the genome of all different species. The question is, what's the relationship between any of those molecular findings and the occurrence of cancer? It's almost impossible to answer that question in the context of human biology because there are no cancers that have been tied to AAV in humans. So, at this point, that would be a scientific curiosity of undefined significance. I mentioned that we'll be sequencing this parotid tumor, fully expect to find evidence of AAV and integration, that sort of thing. As to whether that's causal, we don't think it will be, obviously, but that's why we're going to do the additional analysis. Just to remind you, with Unicure, they did a tumor analysis of integrations in the HCC individual they found, and they found pretty much what was expected, which is a non-clonally dominant, relatively low-frequency event of of integration, and with those results, the agency lifted the clinical hold for Unicure. I suspect, but, you know, until we have all these data in hand, that our case is going to follow a similar trajectory.

Henry, do you think the FDA will ask you that data, or do you think other data will be sufficient enough to show there are no concerns?

Are you talking about the 270?

Yeah, sorry, that's for Roktavion. for hemophilia?

Well, as I said, you know, we're about, we're in the regulatory cycles right now, and any individual question could easily be misinterpreted. So, as regards U.S. submission process, I'm just going to stick with submit in June, six months review.

Okay, that's fair. Thank you.

Your next question is from Canon MacKay of RBC Capital Markets. Your line is open.

Hey, thanks for taking the question. A question on the Voxogo launch. First, I know you're doing a lot of patient access early in the launch. Can you help us understand the impact of gross to net in the quarter and how we should think about that as the launch continues? And second, just hoping you could help us with some color on the U.S. launch and really towards the types of patients that are now on commercial drug and that your reps and MSLs are hearing from as they're seeking out treatment. Are there any commonalities, for instance, based on age or size or disease severity or statue versus normal ranges? Thanks so much.

Hey, Kenneth, this is Brian. I'll start and answer your gross to net question, and then I'll let Jeff answer the second part. So, yeah, not much color, frankly, to offer behind the gross to net on Q4 revenues. While we're pleased with the nearly $6 million in Q4, you know, it's a relatively immaterial sum overall, so the gross to net is, therefore, even further immaterial. But we have said that we expect Vox Ogo gross to net to be similar to our other products. And in, you know, perhaps where your question was going is in these territories You get early access, you set a price, and then you negotiate a final price over the course of time. We do make a best estimate of what that final price will be and set up those reserves. So any of that is going to be included in the net sales we report.

And maybe kind of to address your question about color on the U.S. launch, I would start by noting that the most striking thing about the U.S. launch is the diversity that we're seeing in patients and prescribers and geographies and payers. So we're seeing patients being referred in by a mix of prescribers and parents. In the case of patients that get referred in by parents, we have an opportunity to help those families get connected with an appropriate prescriber of Voxogo. As I mentioned earlier, we're mainly seeing a mix of geneticists and pediatric endocrinologists in terms of prescribers. We're also seeing some pediatricians in the United States, which is not unexpected. In terms of age segmentation, I've been a little surprised to see really a variety of age segmentation. including, in a gratifying way, older patients that are referring and starting on therapy. As for disease severity, that's not something that we have access to, so I can't really comment on that. And as I said, geographically, we're getting patients from all over the United States. As you might expect, we're seeing some correlation with how population is distributed in the United States. So I would characterize the U.S. as being highly diverse and probably strong in its diversity.

Your next question is from Devjit Chattopadhyay of Guggenheim Securities. Your line is open.

Hi, good afternoon. This is Robert. Thanks for taking our questions. Two questions from us today. Can you provide any details on updated cadence for the earlier stage portfolio such as BMN 255 or 331? And two, any current thoughts on capital allocation framework now that the company is clearly on a path to gap profitability would be helpful. Thanks, Tim.

Yeah, there was a word in the 255 and 331 question that I didn't quite get. Can you comment? Cadence, maybe. Cadence. So 255 is in human clinical trials, and we're looking to establish a dose to take forward into efficacy trials, which we hope to complete by the dose finding to complete by the end of the year so we can initiate studies of efficacy. And then on 331, that trial is open for enrollment we haven't guided to a specific enrollment timeline expectation you know as with many of these things it depends on how many dose level expansions you have to dose level escalations and expansions you have to go through to find your target dose so we tend not to give specific timeline guidance uh for those kinds of studies so stay tuned yeah great thank you thanks robert for the question on capital allocation this is brian you know

First of all, it's great to have a question like that. After years of diluted financing, cash burn and losses, we're talking about profits and positive cash flows now. So great to take that question. And similar to the journey into our long-term profitability growth and leverage, we're at the early stages of our capital allocation strategy journey as well. And you can imagine as we grow and we start to generate you know, true free cash flow that we're going to explore all the traditional, you know, capital allocation mechanisms that you've seen in our larger profitable peers. But just a reminder in the air term, you know, while we're pleased and thrilled to be generating operating cash flow and make this transition to gap profitability, we do have over a billion dollars of debt on the books. with our convertible debt maturities coming in 24 and 27. So those would, you know, likely be the top priority. And then we'll, you know, think about more strategic alternatives. So thanks for the question.

Excellent. Thanks, Dean.

Your next question is from Paul Matys of Stifel. Your line is open.

Thanks so much for taking my question. Appreciate it. On the new visorotide data in patients up to five years old, can you comment a little bit more on the efficacy signal you saw? How big was the effect size compared to what you observed in the Phase 3 study, and do you think it will be convincing to regulators and clinicians? I guess maybe more of a direct way of asking, do you feel like these data are viable to expand the label in the U.S.? Thanks. Thanks.

Well, I think it's premature to talk about what the impact of the data on health authority response is going to be because we just got the data and we need to have a next round of interactions with them based on the data. And as far as the specific data, what I don't want to do is get in the way of scientific investigators presenting their scientific data at medical meetings. So stay tuned to updates from us in terms of where those data can appear. I think when you examine the transcript and you realize you used the word trend, what that's going to come to mind is sort of a signal and a noise. And I mentioned this is a noisy heterogeneous population. So I think bear that in mind when you're looking at the data and you'll come to your own interpretation about how strong and robust the evidence is. I think, you know, the context of this investigation is people are Most importantly, keen to see that there was no cardiovascular access safety in these very young children. I think we feel really good about that. And I think most people think that earlier treatment of genetic conditions is warranted. But again, you've got to put the data side by side with those questions and beliefs and come to your own conclusions. And for now, it's premature to comment on what health authorities are going to do.

And I think, I mean, for competitive reasons, we don't want to get into too many specifics at this time.

All right, thank you.

Your next question is from Joseph Schwartz of SBV Link. Your line is open.

Hi, thanks very much. When do you think we might see data for Voxogo in other non-achondroplasia statural conditions, and how much more of a patient population could that represent relative to achondroplasia? Can you talk about your plans for Voxogo outside of achondroplasia?

Yeah, I was very excited about that. And I think Dr. Andrew Dauber has been a guest of ours in a couple of R&D days. And one of the things he's most excited about is investigating statural deficiencies that are due to other etiologies than just the achondroplasia mutation. I mean, his feeling about the achondroplasia mutation, this is what he said to us before we unblinded the pivotal phase three trial that led to the approval. His comment was, boy, that's a strong driver mutation. It may be difficult to overcome that. Maybe you want to be playing in, maybe you want to be investigating other skeletal dysplasias that are not so dominantly driven by a constitutive negative mutation. Well, when 301 turned out to be positive, you know, his enthusiasm like quadrupled because his attitude was like, well, wow, if you can, if you can make an impact in that, then there's all these other central conditions that are likely to be genetically mediated, likely to be responsive to Vox Ogo. So he initiated this study and, genetically defined subsets of patients. It's really a signal-generating study. He presented at R&D Day in November, just to remind everybody that that trial's ongoing. He's actually been pleased with enrollment. I think he gave the Cheshire Cat grin of, you know, I haven't really looked at the data. It's an ongoing study. It's preliminary, but I hope to see you at a medical meeting in the first half of next year where we can talk about, you know, the data more definitively. We don't know exactly when those data are going to appear. Otherwise, I would be telling you exactly when they would appear. I think we need to look at those data and start to develop our own plan. You know, one of the things that we talk about is, do you want to go after specific mutations, or do you want to go after a more general crowd? If you go after a more general crowd of statural conditions, we want to be careful that we don't erode the value of the contraplasia opportunity that we alone have created. and now others are slowly awakening to. But so we don't want to erode that value. And at the same time, we recognize that there are a lot of patients who have pretty significant statural deficiencies that could be addressed by a drug like Voxovoid. Just to put that into perspective, if you said that you wanted to investigate children who are predicted to be poor standard deviations of deficiency in their stature when they arrive at their final adult height, you'd be talking about something like 0.1% of the incident population. So talking about fairly large. And, you know, to put a much more specific quantitative framework around that, I think we're going to have to get into, like, what are the eligibility of the trial that we would plan to conduct, which is still a bit in front of us. So let's see Dr. Dauber's data, when it's available, and then let's see what the company's plans are in regard to how to access that opportunity and you know, protect the achondroplasia indication.

Joe, it's likely that Dr. Dobbers will present his data at a medical meeting in Q2.

Very helpful. Thanks for all the color.

Your next question is from Akash Devari of Jefferies. Your line is open.

Hi, this is Leo for Akash. Thank you for taking our question. I have two questions. One is related to Octavian. So is it possible that Ractavia may have a black box warning around the integration risk on its label? And if so, how much of this commercial impediment would that be? The second question is about aconjuration of orthotite. So based on your current data, it looks like over half of the aconjuration market is ex-US and EU5. Could you walk us through your plans to commercialize that market? and what is the scope of opportunities in places like EMA versus the U.S.? Thank you.

Well, just starting with the safety thing, it's a little premature to talk about what the label might look like in any territory given that we're under review, although what I would say is that so far we've not observed anything that would warrant a black box warning. But as to how health authorities process potential uncertainties related to Roctavia and to determine at the tail end of review cycles. Maybe, Jeff, you want to talk about the other part of the question?

Yeah, happy to. So the question was about the market potential as defined by patient, achondroplasia, patient populations in different markets around the world. And I think the more specifically, how about beyond ex-U.S. or the U.S., and you referred to EU5. I think you meant EU4 now. And if you recall from our launch call, we characterized the available population in the EMEA, our Europe, Middle East, Africa operating region, as roughly three times the size of the North American opportunity. So fortunately, we have two things going for us to tap into that. opportunity over time. The first is we have an experienced commercial, including medical, regulatory, and other functions that support our existing business in those markets. So in short, we are operating in those markets. We have know-how in getting into those markets. And so it'll be a combination of registrations where we require them, pursuing the inpatient sales channels where they are available and having the commercial capabilities to promote VoxOgo in those markets. We've got all that. It's going to take some time to properly tap into that big opportunity, but that's consistent with how BioMoran has operated with all of our previous products, which is to capitalize on rapid uptake in the markets like the US, Germany, France, and others where they exist. And then the long-term growth is driven by getting penetration into those other markets around the world, which would include markets like Latin America, Brazil, Argentina, Chile, Australia, where we have a file under review and we have a very engaged investigator, and Japan, which I've already commented on. So all of those over time. Thank you.

Your next question is from Matthew Harrison of Morgan Stanley. Your line is open.

Hi, this is Avatar Jones on for Matthew. A couple questions. Firstly, not to beat a head horse, but just to clarify, Specifically, has the FDA asked you to investigate cancer risk of Valrox? Second, what KPIs do you plan to provide going forward for VoxOgo? And then finally, how do you see the financial leverage profile of the company developing in the near term?

Yeah, so on the first question, you know, without getting into the specifics of back and forth dialogue with the agencies, what I can tell you about VoxOgo, about Valrox, Davey, and and cancer risk is that trials are open for enrollment and the agency apparently is therefore happy with the submitted preclinical plan. As to what that means in the context of the larger question of regulatory review or, you know, commercial authorization reviews internationally, again, we're not going to comment on that because we're in the middle of the review.

The second part of your question? A reminder, as we noted in the approval call, We are going to report for you in addition to quarterly revenues. For six quarters, we will report on the quarter end number of patients on commercial therapy. We will note the number and the identity of active commercial markets. And we will provide other color commentary intended to help you gauge the success of our launch. And we'll do that, those additional figures of patients on therapy and active markets, we'll do that for six quarters, starting with the Q4 of 2021.

And the last question was on our views on financial leverage going forward. Thanks. It touched on a few dynamics there. So, you know, first, important to note when we talk about the foundations that we've built over the last few years, that we're now getting the leverage from. You know, this was our growth, if you think about how we doubled the size of the company from $1 billion to roughly $2 billion in revenue. With that came the construction of fully end-to-end integrated capabilities, whether it be the early stage research, clinical research, manufacturing, through to commercialization. That same infrastructure that we've built, while we'll continue to invest in it, is the point of leverage for now these larger market size opportunities. So the base business still growing, as I mentioned, Boxogo, you know, new, potentially our largest brand opportunity, getting leverage from that infrastructure that's already been built. So long way of saying revenue to continue substantial growth. We're seeing that, you know, return to double digit growth this year, but importantly, expenses growing at a much slower rate. If you look at our SG&A growth as an example over the years, with the exception of last year, that hold the line year, this is the lowest percentage increase of SG&A growth in a sort of growth year for BioMarin. But importantly, still growing R&D at about 10% this year because we need to make sure that the R&D engine is sustainable as well. So the leverage story is a combination of growing revenues faster than expenses, continuing the investment in R&D, which over time is going to create P&L capacity. This gets back to the capital allocation question earlier. With more P&L capacity, you know, we plan to increase our internal R&D, but it's also going to open us up to external collaboration opportunities. But, again, this first year, transitional year, relatively modest amount of gap profits, but, you know, this is how we're going to plan the future.

Thank you. Your next question is from Robin Karnowskis of Thruva Securities. Your line is open. Hi, good evening, guys.

Thanks for taking our question. This is Nicole on for Robin. So just like a big picture question here. So with so many gene therapy companies in the competitive landscape, can you just talk a little bit about your next-gen cathed and how you're going to differentiate yourselves from other players? And when will we see those coming into the clinic and in the pipeline?

I think the short version of our next-gen capsids and even next-gen delivery strategies is we have a lot of research going on in that area. We have some interesting ideas, but we're also a little bit waiting for there to be an unmet need to be addressed. At EHAB this year, we presented the second year of the post-roctavian transduction data Just to remind you, in year one of 134-dose patients, only two of those patients returned to prophylactic factor VIII administration, and so therefore could even conceivably be eligible for a redosing approach. That number was reexamined at the end of year two. You know, if it turned out that, you know, half the patients had lost control of their bleeding, this might be a much bigger issue and a bigger opportunity. And in fact, the number of patients who returned to prophylaxis two years after a single dose of rotavian gene therapy was an additional four people. So there's just not that compelling right now a reason. We're aware of the potential consideration in the far future, doing a lot of research about it, but not pulling the trigger on anything in particular just yet.

Great. Thank you. Your next question is from Joel Bayte of Baird. Your line is open.

Hi, thanks for taking the question. The first one is on the recent request from FDA on 307. Earlier in the Q&A, if I heard right, I think it was mentioned that this is a vector-specific concern in the U.S. Could you elaborate on what you mean by vector-specific? And is it specific to the vector in 301 or more broad to the AAV5 vectors? And the second question is, in the prepared remarks, you mentioned that Octavian is expected to be a modest contributor to revenue in 2022. Can you discuss that, you know, given that it's a gene therapy and gene therapies, you know, may have the opportunity to have front-loaded revenue compared to more traditional drugs?

So maybe it's just a little nomenclature. You know, the vector consists of a bunch of, you know, packaging parts, promoter, spacers, and then the gene of interest. Most of our vectors have different genes of interest in them, so what I meant by vector-specific is their questions pertain to the 307 vector with the gene of interest encoding the phenylalanine hydroxylase. We think that the questions that they have are vector-specific because trials of 270 with the gene of interest to hemophilia, factor VIII product, and 331 with the gene of interest being CYS-series inhibitor are ongoing trials that are not on clinical. So that's why we think that this is specific to the vector being used in 307 and not to the parts that overlap among other vectors.

And the second question was related to front-loading of revenues. You're right. We are expecting that gene therapies being a one-time and durable treatment will generate substantial upfront costs, which are not repeatable chronically as we see with our other chronic therapies. So, there will be a different revenue pattern associated with them. And I'll ask Brian if he wants to comment further, but we are similarly expecting that for the most part we will be recognizing revenue at or around the time of treatment and not recognizing that revenue over time in some fashion. So yes, expect a different pattern of revenues from Roctavian when Roctavian is approved and we're in the market relative to our base of chronic therapies. That's right. Nothing else to add on that specifically.

Thanks, Jeff. But it sounded like the question you were trying to reconcile that revenue recognition pattern with our comments around 2022 rock-caving revenues. So, those aren't related. The comment that we made on 2022 expected rock-caving revenues is mostly due to the timing of the anticipated approvals. It almost looks similar to if you think about it, a potential, you know, second quarter CHMP opinion would mean a third quarter European launch, and then an end-of-year U.S. launch. So, you know, modest, contribution, but included, you know, we are expecting revenues, just not mentioning specifics at this point until the product gets approved.

Great. Thank you.

Your next question is from Tim Lugo of William Blair. Your line is open.

Hey, this is Lufthansa, Tim. Thanks for taking the questions. I was wondering, on the VoxOgo launch in the U.S., You've previously mentioned that most patients are already diagnosed, so identification isn't as much of an issue here as it has been in prior launches. So, I mean, can you talk about how many of these patients or their positions you've actually been able to access so far and what that looks like? And then secondly, just on Kuvan, it seems like it's stabilizing a bit. Do you think we're reaching a pretty stable level this year or would you expect continued erosion? Yeah, 2023.

Good question. Thank you. I'll start with the question about the Voxogo and the U.S. launch. As described on our approval call, one of the issues that we face with, for example, our anti-replacement therapies is helping patients gain a diagnosis. We don't really face that challenge with achondroplasia because Essentially, all kids with achondroplasia are diagnosed peri-birth, and so they and their families know that they've got a diagnosis of achondroplasia. The challenge in the United States is to connect with the physicians that are caring for these kids and their families because there really isn't, for the most part, a well-established medical home for the treatment of achondroplasia. Beyond limb lengthening, which is a very specific procedure, before Vox Sogo, there was no real standard of care treatment. So you wouldn't expect there would necessarily be a medical home. So our challenge in the United States, which is a large and diverse country, as you know, is to connect with... prescribers, whether that's a pediatrician or an ENT doc or an orthopedist or even a geneticist that has a patient that's under their care and drives that patient to an appropriate prescriber at VoxHugo. And as I've noted, we're doing pretty good so far. I'm really happy with the results, and I'm expecting that that will continue Unlike with, for example, our enzyme replacement therapies, we don't have which enzyme replacement therapies we would count patients in the dozens or maybe 100 or a couple hundred. We don't really have a system in place where we're trying to track patients individually and monitor them over time. This is just a bigger market opportunity that we're not doing that with. And then, so very good progress so far. Expect that to continue. With respect to Kuban and stability, as Brian noted, we lost a lot of revenue for Kuban in 2021. And that was following a loss of revenue in Q4 of 2020. All of that essentially being dropped from the U.S. market. So yes, we are expecting the erosion to slow down, and partially that's because a lot of the base of business in the United States has already converted over to generics, as we would have expected by this point in a generic cycle. And so, it necessarily is slowing down from, you know, a higher place going forward. I refer you back to our full-year revenue guidance for expectations.

And no further questions. I would like to turn the call back to JJB anime for final remarks.

Yeah, thank you, operator. And thank you all for joining us today. So we're pleased with our performance last year. We look forward to a year of momentous growth in 2022. Thanks to the addition of Voxogo, which again, we expect will be our largest opportunity today. And we have transitioned to the development and commercialization of You know, the therapies for larger genetic conditions are on the engine has never been more productive and we expect to put forth many early stage candidates as development advances over the coming quarters. So the financial health of the company has ever been stronger. We're turning the corner to sustainable gap profitability in 2022. This is an important achievement and it marks the beginning of the next stage of growth for Bahrain. Thank you all for your continued support and we look forward to seeing you soon.