BioMarin Pharmaceutical Inc.

Welcome to the BioMarin Pharmaceuticals First Quarter Investor Update Call. Hosting the conference call today from BioMarin is Tracy McCarty, Group Vice President, Investor Relations. Please go ahead, Tracy.

Thank you, Ross, and thank you all for joining us today. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceuticals, 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 filing with the Securities and Exchange Commission, such as 10Q, 10K, and 8K reports. On the call today from Biomarin's management team, our 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 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 today. So we are very pleased with BioBrain's progress in the first quarter as more families gain access to VoxOgo as well as our other essential medicines. Our financial performance in the quarter was strong, especially in light of ongoing macroeconomic challenges across the globe. 15% growth of the top line and 15% non-GAAP income growth on the bottom line puts Biomarine firmly on track to achieving our 2023 financial goals. These results include $88 million in Voxogo revenues and strong Q1 profitability of $51 million on a gap basis. And all this from our fully-owned portfolio of commercial products. With Q1 total revenues coming in at just under $600 million, we are on the path to achieving our 2023 objectives of double-digit revenue growth and significant operating leverage, driving approximately 30% growth in bottom-line profitability in 2023, as communicated in February. We are very pleased with the continued cadence of Voxogo uptake worldwide. Voxogo is now being used in around 1,500 patients in 35 different geographies. And we have seen significant growth of Voxogo in Japan since approval there. And as a result, we are raising, again, our 2023 four-year guidance midpoint by $50 million at the midpoint level based on increasing expectations for the brand. Based on the still very limited market penetration, we believe Voxogo is on its way to become a blockbuster. Turning to Roktavion in Europe, today we have begun working directly with a single national German insurance fund, or GKV, on a final federal German price, and therefore we will not pursue any additional outcome-based agreements with sub-insurance, which are the German, most of them regional SIG funds, at this time. We believe that the highly innovative profile of Roktavion offers an attractive treatment option for those people with severe hemophilia A, interested in an efficacious alternative to chronic therapy. We believe that working directly with a primary health insurance provider in Germany, which we expect will cover Roktavian treatment with a one-time payment and without an outcome-based component, will facilitate access. We also believe the German healthcare system will recognize Roktavian value based on the transformational efficacy observed in a majority of participants across our extensive development program with Roktavian. Our initial interactions with the GKV have been positive and we anticipate a final German reimbursement price that would be representative of the full value Roktavian is delivering to patients, especially based on our recent three-year updates of our phase three trial. Over the long term, we don't expect today's updates to impact our expectations for Roktavian as we continue to hear feedback from German hematologists that they are ready to treat despite some of the challenges Balmain has experienced with German regional stick funds reimbursement in the very short term. We are pleased to share that other markets in Europe and outside of Europe are actively pursuing access to Rokavian, which Jeff will review in a moment. With the US PDUFA action date only two months away, we are optimistic, cautiously of course, for what lies ahead In the second half of the year, the commercial team is working hard to prepare for another successful product launch. And as we communicated during our Q4 conference call a couple months ago, in the United States, roughly 300 patients from the bleeding disorders community have engaged with Biomarine directly to learn more about Roktavion, which is a very positive sign. We believe 2023 is the year of Roktavion, and we are looking forward to continued progress ahead in both Europe, the U.S., and the rest of the world. So, in summary, we are very pleased with Balmarine's performance in the first quarter and our outlook for the remainder of the year. The momentum behind VARSOVA continues, driving record financial results. We are making good progress on the European launch of Roptavian, and we look forward to the outcome of the June 30th PDUFA milestone in the U.S. We are ready. Importantly, we have made the transition to an earnings growth site a unique accomplishment in our industry, and we thank you for your continued support. I will now turn the call over to Jeff to discuss the commercial business updates.

Jeff.

Thank you, JJ.

I'm very pleased with our record-breaking performance in the first quarter, resulting in $596 million in total revenues and representing 15% growth year-over-year, including QVAN, and 19% growth, excluding QVAN. Solid contributions from our enzyme products resulted in year-over-year growth of approximately 5%, which is in line given anticipated seasonality and ordering patterns for certain brands. Overall, the Enzyme product revenue base is tracking as expected, and we anticipate it will provide meaningful contributions to Biomarin's full-year total revenues this year. Turning to Voxogo, as underscored by our guidance increase today, we are very pleased with the continued acceleration of growth. Today, we reached full-year VoxOgo revenue guidance to between $380 and $430 million, a $50 million increase at the midpoint and representing 140% growth over 2022. At the end of the first quarter, approximately 1,500 children with achondroplasia in 35 different markets were being treated with VoxOgo. within the currently approved age ranges. Uptake to date represents 9% penetration of indicated patients in BioMarin's commercial footprint, highlighting the significant growth potential that remains. This includes Europe for children two years old and older, the United States for children five years old and older, and in Japan, where VoxelGo is approved with no age restrictions. Japan was a key driver of growth, due in part to the availability of Voxogo treatment for children of all ages. We also saw significant contributions in the quarter from Europe, the United States, and certain markets in the Latin American region. Looking ahead for the remainder of 2023, we expect growth across markets, with continued uptake in existing markets and expansion into new markets. We do look forward to learning in the coming months if European and U.S. health authorities are supportive of extending access to Voxogo to younger children, which would make it available to more than 1,000 additional children in those markets. Taken together, we continue to believe that Voxogo has the potential to be our first $1 billion brand. Turning now to Roctavian. To remind you, upon European approval of Roctavian late last year, Our plan was to quickly facilitate access for patients in Germany through the use of outcomes-based agreements. At the time of approval, the free pricing window in Germany was 12 months, but was changed to 6 months in January. With a 12-month free pricing window at the time of launch, it made sense to pursue OBAs with the goal of facilitating access to Ractavian prior to final federal reimbursement. Now that we are already working with GKB on a final federal price for Roctavian, we will not pursue additional OBAs, as JJ shared. A reminder, GKB is the umbrella entity that is responsible for health insurance to approximately 90% of the German population, and we believe this path will facilitate the broadest access. While we work to finalize a German price with GKB, Reimbursement for people treated with Roctavian is possible under named patient authorizations through individual insurers. Those sales would be subject to the final price once it has been established. Patients treated under executed OVAs will benefit from the terms of that OVA at least until the German price is finalized. As JJ shared, we expect the GKB negotiations to yield a price for Roctavian that incorporates durability and other benefits that would be paid in a one-time upfront payment and without bespoke outcomes-based agreements. Turning to CDX testing in Germany, we are pleased to see a significant pipeline of patients building as more tests are in motion. As of the most recent data, 18 people had been screened for AAV5 seropositivity and important eligibility criteria for treatment with Roctavian. We expect that our first treated patient in Germany will be sourced from this pool in the second quarter. And while not all patients tested will be eligible and choose treatment with Roctavian, we are encouraged by the level of interest from patients in Germany. Beyond Germany, our applications seeking price and reimbursement approvals, as well as other launch preparation activities, are making progress in both France and Italy, where we expect negotiations to conclude by Q4 of this year. In Italy, we were pleased that Roctavian was recently awarded conditional innovation designation, a positive signal that should facilitate pricing and reimbursement. We are also encouraged by early interest in Roctavian in other markets, including Argentina and Saudi Arabia, where we have the potential to provide access to Roctavian through named patient authorizations. We are aware of 11 completed CDX tests in Argentina and a recent prescription for Roctavian treatment. Taken together, we are pleased with the progress we are seeing outside of the United States, especially noting some key differences in reimbursement and launch dynamics between the U.S. and other markets. Touching briefly on some of the differences, that we believe will positively impact the Roctavian U.S. launch upon potential approval in June. First, we intend to implement a single warranty, which will allow us to offer a uniform agreement to all purchasers in the U.S., avoiding the need to negotiate bespoke contracts. Next, we plan to leverage the value-based assessment from the Institute for Clinical and Economic Review, or ICER, which noted that Roctavian was a dominant treatment with substantial cost savings, along with projected gains in quality-adjusted life years at $2.5 million per one-time treatment. ICER's conclusion of value is consistent with results from payer research conducted recently in the U.S. As in prior launches, we believe it will be possible to navigate reimbursement approvals following approval for individual patients on the basis of medical exception until coverage policies are issued. Finally, in Europe, we are not permitted to promote Roctavian directly to patients, so many people with severe hemophilia A only learn of it during their annual or semiannual check-ins with their hematologist. In the U.S., in contrast, we intend to use all channels available to raise awareness of Roctavian. That is a good segue to our update on U.S. commercial preparedness. Our teams have worked with treatment centers to ensure site readiness, conducted discussions with payers, worked through a refinement of our warranty, and our promotional campaign is ready. The supply of Roctavian to meet demand has been manufactured. We stand ready to go upon potential accruals. We have identified and are focused on a relatively small number of the largest and most capable hemophilia treatment centers to be ready to treat with Roctavian in the U.S. at or shortly after launch. We understand the value of and are committed to hemophilia treatment centers being the site of treatment for Roctavian for the reasons of appropriate patient selection, post-treatment follow-up and monitoring, and more generally due to the complexity of hemophilia management. In conclusion, we are off to a strong start in 2023, delivering record-breaking results in the first quarter, underscores demand for our essential medicines. Based on the challenges faced securing additional OVAs in the quarter, to facilitate patient access to Ractavian and the updated U.S. PDUFA action dates for March to June, We have lowered full-year 2023 Roctavian guidance to between $50 million and $150 million. Thank you for your attention, and I will now turn the call over to Hank to provide an R&D update. Hank?

Thanks, Jeff, and thank you all for joining us today. Biomarin's worldwide R&D organization is gratified to see the enthusiasm from families interested in benefiting from Voxogo treatment for their children with achondroplasia. In the coming months, we look forward to learning the outcome of our request to potentially expand the label, both in Europe and in the United States, to offer the possibility of treatment to children of all ages where VoxOgo is currently available. Also, later in 2023 with VoxOgo, we look forward to results from the investigator-sponsored trial evaluating VoxOgo's potential to treat other genetic forms of short stature, including, for example, hypochondriplasia, mutations in the NPR2 gene, and Noonan syndrome, just to name a few. We were also engaged in active discussions with health authorities concerning the opportunity to leverage VoxOgo, a natural regulator of bone growth, and these other conditions characterized by and paired with bone growth. Moving to Roctavian, as we announced in March, the United States Food and Drug Administration extended their review of the biologics license application for Roctavian. As anticipated, The FDA determined that the submission of the three-year data analysis from the ongoing phase three Generate One study, as requested by the agency, constituted a major amendment due to the substantial amount of additional data and set a new PDUFA target action date of June 30, 2023. We continue to engage with the agency and look forward to our June 30 PDUFA action date. Briefly, on the earlier stage pipeline, we shared a few incremental updates in our press release today. BMN-255 for hyperoxaluria in chronic liver disease, BMN-331 gene therapy for hereditary angioedema, and BMN-349 for alpha-1 antitrypsin deficiency. We look forward to providing updates across our advancing development pipeline at our R&D day in New York on September 12th. Starting with BMN-255, we have concluded the multi-ascending dose in the Healthy Volunteer Study. In January, we shared early data that demonstrate a rapid and potent increase in plasma glycolate following treatment with BMN-255. Oral daily dosing at all tested levels for 14 days was safe and showed sustained elevations in plasma glycolate, which is predicted to have a profound reduction in oxalate excretion in patients. Based on these early signals, we now plan to initiate and enroll an expanded study in patients with chronic liver disease and hyperoxaluria later in 2023. We believe the availability of a potent, orally bioavailable, small molecule like BMN255 may be able to significantly reduce disease and treatment burden in a patient population with significant unmet need. Turning to our next gene therapy, BMN331 for hereditary angioedema, which is like hemophilia in the sense that it poses a chronic, lifelong burden of therapy due to the risk of breakthrough attacks that are extremely burdensome and potentially life-threatening. The disease is due to genetically determined loss of a key protein regulating the inflammatory cascades responsible for these attacks. The available therapies on the market have confirmed the effectiveness of replacement, much like in the case of the replacement factor 8 therapy in hemophilia. We've shown in three studies with BMN331 gene therapy that in mutant mice and in non-human primates that a similar dose to that employed in clinical studies of ractavian can provide ample and constant expression of C1 inhibitor within the therapeutic range in patients. We expect to continuously express levels of proteins will provide improvements in the disease course of hereditary angioedema over existing therapies. In March, the second sentinel patient was dosed safely at 6013 vector genomes for Kilo, following an encouraging response from the first participant, who demonstrated an early increase in C1 esterase inhibitor that may ultimately be therapeutically relevant, and this is exciting. With BMN349 for alpha-1 antitrypsin deficiency, preclinical studies have demonstrated oral bioavailability in a small molecule that potentially sequesters the mutant protein, preventing polymerization in the liver cells that drive progressive liver disease, the liver disease form of the illness. In preclinical studies, BMN349 is titratable to effect with rapid onset and high potency. Preclinical results have strong implications for potential improvement of our current management, particularly for severe liver disease requiring rapid action. IND-enabling studies are underway. And Byron's goal is to submit an IND for BMN349 in the second half of the year. Stay tuned for updates on these, as well as 351 for Duchenne muscular dystrophy and BMN3293 for myosin-binding protein C3 hypertrophic cardiomyopathy at R&D Day in New York in September. Thank you all for your continued support. And I will now turn the call over to Brian to update financial results in the quarter. Brian.

Thank you, Hank. Please refer to today's press release summarizing our financial results for full detail on the first quarter of 2023. Since JJ and Jeff spoke to our revenue performance for the quarter and future revenue outlook, I will primarily focus on the remainder of our P&L and other key financial updates this quarter. As usual, all results will be available in our upcoming Form 10Q, which we are on track to file by the end of this week. We referred to last year as a transformational year for Biomarin. with the growing base business of Enzyme products, plus the successful launch of Voxogo, together with operating expense control, driving meaningful gap net income and a foundation for our financial growth strategy into the future. We are pleased that the strong start of the business in the first quarter of 2023 is supportive of our 2023 and long-term objectives of substantial revenue growth, margin expansion, and increasing earnings. Biomarin's $596 million of total revenue in the first quarter of 2023 is an increase of 15% compared to the first quarter of 2022. Regarding our revenue outlook for the rest of 2023, Jeff commented on the increase to our 2023 Vox Ogo revenue guidance and decrease to our 2023 Vox Tavian revenue guidance, which offset each other in aggregate, resulting in no change to our total revenue guidance for 2023. which is annual growth of 16% at the midpoint. Across the rest of the P&L, Q1 2023 gross margin was 78.8%, which is an improvement of 1.3% as compared to the first quarter of 2022. R&D expense in 2023 started at a moderate rate in the first quarter, which was expected given the planned increase in R&D investment in our early stage pipelines and the lifecycle management development efforts for Raktavian and Voxogo that we expect to ramp up over the course of this year. SG&A expense in the first quarter of 2023 of $223 million increased as compared to $195 million in the first quarter of 2022, which is in line with expectations as we continue to invest in the global Voxogo commercialization, the EU Raktavian launch, and the commercial launch preparations for Raktavian in the U.S. Back to the bottom line, we delivered on our commitment to profitability with the $51 million of GAAP net income in Q1 2023 and $116 million of non-GAAP income, which sets up Bob Moran Well to achieve our full year 2023 profitability objective. GAAP net income decreased in Q1 year over year. However, it is important to note that GAAP net income in the first quarter of last year included the gain on the sale of the priority review voucher received in connection with the U.S. approval of Vox Ogo, which was approximately $89 million after income taxes. Today, we reaffirmed our 2023 GAAP and non-GAAP income guidance of $155 to $205 million and $360 to $410 million, respectively. Total cash and investments in the first quarter of 2023 was close to $1.5 billion, which decreased during the quarter due to some milestone payments, the timing of accounts receivable collection, and known seasonality of operating accrual net paydown. As we believe these cash flow timing events were front-loaded to the beginning of the year, we expect to resume positive cash flows over the course of 2023. In closing, we are pleased to observe this solid start to 2023 and are keenly focused on maximizing the potential of the global Voxogo and European Roctavian commercial launches measured operating expense investments, and the resulting leveraged profitability growth that we anticipate for the full year and beyond. Thank you all for your attention, and we'll now open up the call for your questions. Operator?

If you would like to ask a question, please press star one on your telephone keypad now, and you'll be placed in the queue when you're already received. Please be prepared to ask your question when prompted. In the interest of time, we request that you limit yourself to one question so that everyone in the queue is able to ask their question. Once again, if you would like to ask a question, please press star 1 on your phone now. And our first question comes from Salveen Richter from Goldman Sachs. Please go ahead, Salveen.

Good afternoon. Thanks for taking my question. Can you provide more detail here on how the GKV facilitates discussions on the final price and any impact on this price given that additional OBAs will not be pursued And then in the interim, do you expect patients to actually be treated through either named patient authorizations or the one finalized OBE, or is it really just GKV here?

I'll be happy to take that one on. So the GKV process that we've described here that takes essentially 12 months to get to a final OBE, reimbursement price and and broad reimbursement access um this is normal so this is the same process that we've gone through for all of our previous brands i think 12 months from approval not 12 months from today yeah 12 months from our price listing which was september 15th of last year so we're very familiar with that process And we are pretty deep into that process by now. So we submit a full price and reimbursement dossier. We did in the fall of last year. That takes a while to get processed by the TKB. We've had our first meeting to review that. There's usually a series of four meetings and reviews before we get to a final answer. set up a very favorable tone, including testimony from key physicians in Germany on behalf of Roctavian. So that's kind of the process. What's different with Roctavian than our other brands is our other brands have all entered into a situation where there is no existing standard of care. In the case of hemophilia, we knew that we were launching into a situation where there was an existing standard indeed an evolving standard of care. And so our strategy was to contract with subnational insurer umbrella organizations, what we're calling sub-insurers here, to put outcomes-based agreements in place, get agreement on preliminary price to facilitate rapid uptake of Roctavian. When we launched, we believed that the pre-pricing period in Germany as it has been for years and years would be 12 months. So what changed? The first thing that changed is late last year, there was new legislation that changed the 12-month, the six-month pre-pricing period, and that's new. While some people saw that coming, as we did, what's new about that is nobody really knows how the parties will behave at the end of the six-month period. repricing period and before we have final price and reimbursement approval from GKV. The second thing that changed according to our plan was we saw more reticence than we were expecting from the sub-insurer groups to engage in finding a path forward and defining OBAs, which are new for Rocktadia. So now that we are in well into discussions on a final price and reimbursement arrangement that covers essentially all of Germany. We think it just does not make sense any longer to pursue additional outcomes-based agreements with those so-called sub-national insurers. Instead, we think we've got some patients covered under an existing outcomes-based agreement, covers a part of the population, and we know that that patients can be submitted through their health insurer for essentially a one-off or a named patient approval while we work to get the final price and reimbursement. Sorry for all the detail, but you did ask for it.

And our next question comes from Jeff Meacham from Bank of America. Please go ahead, Jeff.

Afternoon, guys. Thanks for the question. Just had two quick ones on Octavian. So I guess to follow up on Germany. So you have to go back to square one and communication of kind of cost benefit to GKB. And I guess was the six months of OBA negotiation a total waste here? And then secondly, in the U.S., just commercially, you know, what's left to help streamline access and reimbursement? obviously, aside from, you know, from formal FDA approval. Thank you.

Yeah, so thanks for the question, Jeff. To reiterate, right after we submitted our price and got that listed in September 15th of last year, shortly after that, we submitted, as we always do for our brands, to the GKB, a full price and reimbursement dossier. And as I noted in the last question, it takes you know, four, five, six months for TKV to get to the point where they're ready to enter negotiations with us because it is an intensive dossier to review. The work that we did with the so-called subnational insurers was not a complete waste of time. Indeed, we achieved proof of principle with getting one major insurer signed up. So patients under that insurance group have the benefit of that outcomes-based agreement. And so I think that's, you know, as I described also in the previous question, that's where we're at. We're more than six months in. We're well underway with getting to a final federal reimbursement price. And that price, when it's set, will be retroactive to any patients that are treated for March 15th. on when the free pricing period ended. Oh, sorry. U.S. is a completely different situation. So as we've disclosed, we have a warranty agreement that does not require to be negotiated one payer by one payer. It's a uniform agreement that we intend to offer to all purchasers of Roctavian. So that cuts down on the time associated with doing bespoke agreements. That's the first piece. And then the second piece is similar to our other launches in the United States. We know that it is possible to navigate individual payer approvals for patients that are submitted as a part of a medical exception process. And while coverage policies are in process of being issued. And you know because you follow other launches that coverage policies can take anywhere from one to nine or 12 months to get issued variable by payer. So that's how we plan to navigate that process immediately following launch.

And our next question comes from Chris Raymond from Piper Sandler. Please go ahead, Chris.

Hey, thanks. If I can ask another Roktavian question. So just curious, you guys highlighted 18 patients have undergone antibody testing. I think last quarter that number was 10. So it doesn't seem like you're seeing necessarily in Germany anyway an inflection higher or sort of an acceleration. Maybe just talk about that dynamic. Is that also subject to any reimbursement? you know, barriers that you didn't anticipate. And then maybe on the guidance change, you know, changing, cutting top and bottom by 50, it's 50 million. It's, yeah, I know you weren't expecting 50 million in Q1, and I know your original plan didn't hinge on a March U.S. approval, but maybe can you talk about how much of this reduction is driven by, you know, the sort of resistance you're seeing in Germany versus maybe a reassessment of the U.S. opportunity?

So let me start out, and I'll ask Brian or JJ to round out anything I missed, Chris. First, with respect to the CDX test completed, you're right. It was two months ago, actually, that we reported that we had 10 patients that had been submitted for CDX testing. So you could look at that and say, over the past two months, we've seen an additional eight And I can tell you, because I review the situation with the team every week, I already have additional patients in motion this week. So what I'm seeing is the development of a patient pipeline. And it was slow to get started. It was for sure impacted by patient awareness or the lack of patient awareness immediately following approval and our ability to influence patient awareness. in Germany, the cadence of when patients come in to see their hematologist for hemophilia guidance, which is anywhere from, you know, every three months to every 12 months. And that cadence of patient visits to hemophilia treatment centers didn't change just because Rofabian was approved. So I would say that that building of the patient funnel And all the things that are happening underneath the top of that funnel are really encouraging to me. I'm seeing movement literally every week now, and that movement every week that I'm seeing is picking up pace. So I'm pretty encouraged by that. In terms of guidance, guidance was impacted for Rocktavian by the pace of the pace and timing of getting first patient treated, which is different than we were expecting at the beginning of the year, and the change of the PDUFA date in the United States from the end of March to end of June.

That's right. This is Brian. Thanks, Chris. Just a supplement that, you know, we noted that the high end of the previous range accounted for, you know, the current March PDUFA. And just a reminder with what was the March Padufa at the time, just a reminder that while that's a three-month shift with a product like Ractavian that we expect to ramp up in terms of revenue over time, that three-month shift from a revenue standpoint actually causes us to lose what would have been the last quarter of revenue in 2023, and likely the largest quarter ever. And then on the bottom end, you're right, there is a combining effect of the challenges in Germany. So we've tried to account for all scenarios in the revised guidance.

And our next question comes from Phil Bedeau from TD Cohen. Please go ahead, Phil.

Good afternoon. Thanks for taking our questions. One more question on Germany. I guess it's still unclear to us. why those patients who have gone through CDX testing have not gone on therapy. I think you've been very clear about the reimbursement negotiation process, but you've also suggested that there are patients who are covered through 1-O-OBA or named patient use. So for those patients who have gone through CDX testing, why have they not been treated yet. What's the bottleneck there? Is it a concern about time to reimbursement? Do the physicians have some other concern? What's preventing that treatment? And then secondarily, I think you said in your prepared remarks you do expect the first patient to be treated in Q2. What gives you confidence in that, given that no one was treated in Q1? Thanks.

Hi, Phil. I'll start with that one and see if JJ wants to round out any comments. So what's going on between CDX testing and treatment? The first thing is CDX testing is one of a couple of eligibility criteria. So it's an important one, and it's probably the biggest piece to get done. There's also liver health testing that's an eligibility criteria. It is possible, it's likely, highly likely that anybody that's going through the process of CDX testing is interested in potential treatment with Roctavian. As has been described to me by some of the German physicians, the cadence of decision-making may not just hinge on a positive or a negative CDX test. It's possible, but as described to me, patients go back, they confer with their family, Sometimes they have additional questions for their treating physician. Sometimes they come back for additional appointments to discuss and be counseled on Roctavian as a treatment option. So I think it's an important but not the only part in the process of what I might term the purchase decision of a patient for Roctavian. And then the second question, what gives us confidence? in first patient tested in Q2. So in the previous questions, I was describing that we've got a patient funnel now that is 18 and growing. And if you said, well, emergence of a patient at the top of the funnel is defined by sending sample in for CDX testing. And then I just described maybe some of the other steps along the way, additional liver testing, conferring with family, thinking a big decision over, maybe coming back into the clinic for further counseling. Those patients are working down the funnel that leads to the purchase decision. And as I said in the previous question, every week I see updates and movement in Germany and the pace of those movement is picking up all the time. So that's what gives me confidence that we'll have shortly a first or more than one patient coming out of the bottom of that funnel for treatment.

And maybe to add to what Jeff said, I mean, first of all, taking about a year to get your reimbursement in Germany in competitive markets is the norm. So there is nothing that surprising here. Again, we thought with an OBA, we would be able to get usage a little faster, but obviously it's been difficult. So we did sign an OBA agreement mainly with one payer that only represents about 10% of the German covered life. So 10% of 18 patients would be like 148 patients. So it's not that surprising because the other patients basically are not covered by an existing OBA. So for the other patients who are dependent about a different insurance company, in Germany, physicians are personally liable financially for prescribing a treatment or a procedure that is not, where they don't have coverage from their sick folks. And obviously here we're talking about a million dollars or so cost of therapy. So obviously you understand why physicians want to double and triple check that they are, that the health insurance company of the patients will cover the procedure before they move forward. I think all this is being debugged and it's going to be happening. So this is why now based on the growing pipeline of patients that we believe that we're going to get a patient treated at least in the Q2 of this year in Germany, and then there are patients potentially we can talk about in the rest of the world. And then the other thing that Jeff forgot to mention is regarding what happened in the past two months since we gave the previous update about 10 patients that have been screened for 85. In Germany, I understand they take Easter holidays very seriously, so for two weeks in early April, there wasn't much activity going on anywhere in Germany. So that also explains, you know, but it looks like since we passed Easter now, it looks like things are picking up again in terms of AV test screening, so, which is very positive.

And our next question comes from Jessica from JP Morgan. Please go ahead, Jessica.

Hey, guys. Good afternoon. Thanks for taking my question. I have one more on Roctavian and then another on Voxogo. So I think you mentioned you expect the first German patient to get Roctavian in the second quarter. But maybe more broadly, can you just help us understand your expectations for Roctavian uptake in Germany between now and September when you get that final reimbursement? I guess like apart from a patient here and there, does this update about not pursuing OBAs mean that we should expect very modest uptake in Germany until the fall? And then separately on Voxogo, can you share your latest thinking about the most likely path to approval for settings like hypochondriplasia? Thank you.

I'll take the first part of that, Jessica. So relative to the subject of uptake, I started out by saying our plan was to facilitate early and more rapid uptake for Roctavian with these outcomes-based agreements. You know, we tried that, and I think it was a good plan, but things didn't work out according to that plan. So I think we're resetting expectations about the pace of uptake. The time, certainly the timing of first uptake. which I think is likely in Q2 of this year. And as JJ noted in the script, the fact that we're de-emphasizing or de-prioritizing those outcomes-based agreements in favor of the full federal process probably means that we'll have slower uptake until we get that price finalized. Doesn't mean that we won't have any uptake Because we've got one agreement in place, and there is a process for physicians to submit patients that they want to treat to their insurer for individual review. So that's kind of our qualitative expectation there. I'll turn it over to Hank for the VoxOgo question.

Back to hypochondriplasia, other new indications for VoxOgo, pretty exciting. question in time because of Vox Ogo's tremendous activities in natural regulator bone growth and because of the unmet need of individuals who have severe impairments in bone growth resulting in poor health outcomes. And the path includes both generating some additional pilot data, which we've shared a little bit of, but we're generating more of that data to increase our and your confidence in the potential for Vox Ogo to add value deficients with skeletal impairments and also dialogue with health authorities around requirements for registration. As far as our next steps with stakeholders, probably the next, you know, real meaningful update you'll get from us about the back and forth that we're having with health authorities is going to be when we finalize our plans and we can, you know, tell you what the trial is going to look like, when it's going to start, How many patients are going to be involved? What the endpoints are going to be? What, if any, are comparators or concomitant medications in the trial? So, pretty exciting time, and stay tuned.

We're well underway.

And our next question comes from Akash Towari from Jefferies. Please go ahead, Akash.

Yeah. Just on the upcoming Dauber readout, is there a potential the FDA may require you to run a trial head-to-head versus growth hormone? And kind of what's your confidence that the psoriasis efficacy won't drop off as we go to one year and beyond? Obviously, that didn't occur with 800-plasia, but with these new growth-type disorders, that's a question that does come up. And then I also noticed you had 11 patients in Argentina screen for AB5 antibodies. Can you walk us through a reasonable launch timeframe and price expectations for markets outside of the U.S. and EU5? Thanks.

I'll start, Akash.

One question, I've actually had about five subparts, but I may not get them all. But one is, what will be expected of us in regard to durability demonstration for non-acondriplasia indications? And another part of your question is, will the agency require comparators, for example, with growth moment? And I think the answers to both of those questions are you know, a little bit TBD in the sense that we are in discussions with the agency. And as I said, we'll tell you what sort of the resolution of all that is in regard to more specifically the answer to your question by specific type of indication. But I think you also put your finger on the head of the, you know, finger on the actual pulse of what the issues to address are. And I think one of the really exciting things about VoxOgo as a natural regulator of bone growth is that even in a severe skeletal dysplasia, like acontraplasia, we were actually able to demonstrate sufficient durability to satisfy the FDA that at least the changes that we saw in AGV were in fact reasonably likely to predict a long-term accumulation of a clinically meaningful height benefit. So I think that is a good platform. You referenced it. I also think the issue about growth hormone is that outside of growth hormone deficiencies, there isn't great evidence about accumulated benefit of growth hormone As regards, well, there is actually, let me qualify that. There is a lot of evidence about the accumulated height benefit of growth hormone in non-growth hormone deficiency syndromes. It's not very compelling evidence. That is to say, there isn't much of a height gain in regard to what growth hormone can do for children who don't have growth hormone deficiency. So I think you take all that together, and these are going to be the kinds of discussions that we have with the agency to chart the path forward for new indications for VoxEgo. It's not without complications, but I think that for all of this is a medication like Voxogo that has the property of being a natural regulator of bone growth.

Your second question, Akash, about what's the significance or what do we read into those 11 CDX tests in Argentina? I would say in the general sense, name patient sales in the absence of or even just prior to a registration, is an important part of our commercial picture overall. You know, witness, for example, the rapid uptake across our commercial footprint with VoxHugo, some of which, but not all of which, is in markets where we have registrations. We don't tend to talk about those markets a lot in detail because they tend to be smaller and come at a slower pace. than, for example, the major markets in Europe, Japan, or the United States, but they're important overall. And I think Argentina, with early signals of patient movement, a first prescription, is a good representation of what we might expect also in other markets, where we get going one patient at a time on a named patient basis. We also mentioned that Saudi Arabia, which is also usually an early mover like Argentina on an inpatient sales basis, we also are underway and there's interest in Roctavian in that market. So what we're trying to do here is highlight the fact that beyond where we have very specific plans like in Germany, France, and Italy that I've mentioned, there is movement in those other important inpatient sales markets.

And our next question comes from Joseph Schwartz from SBB Securities. Please go ahead, Joseph.

Yeah, hi. I have a question on Roktavian. I'm Julie Dalyan for Joe. How is the process with the single public insurance funds in France and Italy going? And can you provide any more color around your expectations to secure reimbursement and access to Roktavian later in 2023?

Hi, Julie. So the process in each of France and Italy which in our commercial footprint with our kind of capabilities, is always a close follower to Germany in terms of timing and prioritization. Those markets essentially take a year, sometimes longer, to get price and reimbursement approval. And, you know, right, I mentioned, as soon as we got our price listed in Germany, we submitted the full price and reimbursement dossier there and got the process going last fall. Right after we did that with Germany, we were submitting in the fall of last year for France and Italy. So both of those processes are ongoing. There's no guarantee as there is in Germany that you'll conclude in 12 months. But we're on track in both of those markets and we think it's likely that we'll be at the end of that process by the fall of next year. And in, you know, in the script we mentioned this year. Sorry. And we mentioned in the script that in Italy, and this is breaking news, it just happened last week, that we were granted conditionally innovative status for Roctavian, which doesn't confer anything specific, but is in the general sense a positive signal to how IPA is looking at Roktavian in Italy as an example.

And our next question comes from Gina Wang from Barclays. Please go ahead, Gina.

Thank you. I wanted to ask about Roktavian again. For the 18 patients that completed antibody testing, how many of these were eligible? Also in Europe, since now you are pursuing directly with GKV without pursuing outcome-based agreement with the sub-insurance. Does that mean your price will be much lower than the 1.5 million euro that you previously discussed? And then lastly, very quickly, regarding the U.S., can you discuss on hemophilia A patient under 340B program, and how does that mechanism impact the Octavian initial launch?

Thank you, Gina, for those questions. Let me start with the 18 CDX tested and percentage that are eligible. So first thing to note is CDX testing is one eligibility test. Liver health is the second. Relative to the AAV5 seropositive or negative status, The best thing that we can do to guide our expectations on that is the publication from our seroprevalence study in hemophilia A. And in that study, which was published, the overall seropositivity rate for AAV5 in Germany was 35%. So that's guiding our expectations of the percent of patients that would be eligible based on AAP 5 zero negativity. Relative to the GKV price negotiations and what we had guided to as net price of about 1.5 million euros, which was last fall, we think it is likely, based on what the GKV is statutorily allowed to do, we think it's likely that they will not be eligible putting into the agreement an outcomes-based component or a pay over time component. But nothing is certain until we get done with that process. But you're right. In that particular case, we think that the price negotiations with GKV would incorporate all of the aspects of value of Roktavion, including including durability, for example. So we think that the final price would model in how GKB is looking at durability of roctavian over time. And then relative to the 340B question in the United States, in our script remarks, we mentioned that we're committed to this HTC model of treatment and follow-up hemophilia treatment centers or HCCs in the United States are granted 340B eligibility. That's a way of kind of funding the work, the important work that they do to care for hemophilia patients. So we think all or substantially all of our revenue in the United States would be subject to the 340B discount. Thomas, then what's your opinion as to what that's going to do to the launch? So we expect it's positive for us. Yeah, we think that's very positive. So as I mentioned, the reason for being for HTCs to have access to the 340B discount is to have a source of revenue to fund their important operations. And as Roctavian would likely be eligible for those 340B discounts for all or essentially all of their patients, that's revenue that would accrue to those HTCs. to fund their operation, and that revenue would happen at the time of treatment versus, for example, revenue that they might be getting from supplying factor replacement products, which they would see over time. And by the way, important point to note is the HTCs see a revenue component from factor replacement therapy only for a small proportion of their patients on average. So, we think that this is actually maybe a motivating factor for treatment with Roctavian in the U.S.

And our next question comes from Tim Lugo from William Blair. Please go ahead, Tim.

Thanks for taking the question. You mentioned Roctogo is on its way to becoming the first blockbuster for the company. Will these other non-acondylplasia indications add to the market and kind of how much? And can you also update us, maybe I missed this, on converting the accelerated approval to full approval?

Maybe I'll start, and then Jeff can provide more info. I mean, I think as we made in the prepared remarks, I think Jeff's remarks, we only have penetrated about, you know, less than 10% of the market right now for VoxOvo and Chondroplasia worldwide. So, obviously, we can get past it, and we are on the run rate, you know, already of, you know, four, 450 million dollars or so. So obviously in the econ market alone, there's a lot of room to grow and we can easily pass a billion dollars in revenues in econ alone. So obviously other indications are going to make it, you know, the product even larger. But that's kind of my first comment to your questions. Jeff?

Nothing to add to that. Thanks, Shijie. And then there was the question of accelerated default for Uber.

Nothing new to report there. It's, you know, a published post-marketing requirement. And the specifics of the timing for that, we've kept those relatively proprietary. So stay tuned.

And our next question comes from Paul Matase from Stifel. Please go ahead, Paul.

Great. Thanks so much. Surprised it took a long time to get a question on the FDA with Roctavian, but I thought I'd just throw it in there. You should be only a handful of weeks away from labeling discussions. Just curious if you could update us on the cadence of your discussions and how everything's going. And then if you do get approval in June, do you think these reimbursement warranties could be agreed upon and in place quickly enough to generate meaningful revenues for Roctavian in the US in 3Q? Thanks so much.

Thanks, Paul, for the question. I won't get into the specifics of the back and forths, but I would say that as a general matter, the things that we expect to be happening at the stage of the review appear to be happening. And I think that gives us optimism. I think we've also expressed some caution there because we don't have perfect visibility into everything going on in the agency and exactly where senior management and the people who signed the letters are, but we're optimistic.

Relative to the warranty fault, the nature of the warranty is that it is uniform. It is non-negotiable. It is available to all purchasers. And essentially, we don't have to negotiate. The purchaser essentially gets that warranty with purchase. So the timing is relatively trivial.

There's no timing. No timing. Yeah. No delays.

No delay. And our next question comes from Robin Karnowskis from Truist Securities. Please go ahead, Robin.

Great. Thanks for taking my question. So just to clarify, for Ractavian, since you're not doing the OBAs anymore, can you give us some sense of what price we should be using since that's been the fixation of a lot of us for Europe and how to think about that? And second, for VoxDogo, you're averaging now like 400 patients a quarter. You mentioned a lot of expansion, new indications, geographic. Should we think of it more consistent or choppy? Thanks.

Okay.

Let me start off with the price component. We've guided roughly last fall to net price expectations in Europe. How we get there from a gross net process is different whether there's an outcomes-based agreement or no outcomes-based agreement. And that's figured into the value of the durability of which is figured into the value of the upfront price. But where we wind up should not be materially different from either path.

Yes. I mean, that's also one of the reasons why we decided to focus on the GKV and national price because we assume that it's very likely there would not be an OBA with a federal, their German federal government. And then, so the, so the, this price might be a little lower than what we would potentially have had with an OBA, but the net price will be about the same based on the fact that there is no, that we don't, we don't have to reimburse the payers based on reclimate patients going back to proxy therapy after three, four, or five years. So we don't anticipate, and based on our interaction with the GKV so far, it looks pretty promising, and we actually don't anticipate any substantial, as Jeff said, any substantial difference with this approach.

And then relative to your question about the cadence of Botugo patient uptake, it's within kind of a band. It's actually been pretty steady these last few quarters. Underneath that steady uptake, there's a lot of individual market dynamics going on, but it comes on pretty smooth. I would suggest when modeling forward that you work from our revenue guidance that we've updated most recently and acknowledging that we've had a lot of updates to those revenue guidance in a positive direction.

But yeah, I'd fall back to that.

And that is all the time we have for questions today. I would like to turn the call back to Biomarine's CEO, JJ Bien-Aimé, for closing remarks.

So in conclusion, we are very pleased with Biomarine's progress in the first quarter and the continued successful launch of Voxogo around the world. The importance of our medicines to the people who rely on them is clear. And while sometimes the development path forward is not always clear-cut, we will continue to push ahead in the interest of our patients. Thank you for

your support and have a good rest of the day. The host has ended this call. Goodbye.