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

Thank you, Ross, and thank you all for joining us today. To remind you, this nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authority, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. On the call today from BioMarin's management team are JJ Bienaimé, Chairman and Chief Executive Officer; Jeff Ajer, Executive Vice President and Chief Commercial Officer; Hank Fuchs, President, Worldwide Research and Development; Greg Guyer, Executive Vice President, Chief Technical Officer; and Brian Mueller, Executive Vice President and Chief Financial Officer. I will now turn the call over to our Chairman and CEO, JJ Bienaimé.

Thank you, Traci, and good afternoon, everyone. Thank you for joining us today. So we are very pleased with BioMarin's progress in the first quarter as more families gain access to VOX

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 KUVAN and 19% growth excluding KUVAN. 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 VOX

Thanks, Jeff, and thank you all for joining us today. BioMarin's worldwide R&D organization has gratified to see the enthusiasm from families interested in benefiting from VOX

Thank you, Hank. Please refer to today's press release summarizing our financial results for full details 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 10-Q, 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 VOX

[Operator Instructions]. And our first question comes from Salveen Richter from Goldman Sachs.

Can you provide more detail here on how the GKV facilitate 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?

Salveen, I will 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 reimbursement price and broad reimbursement access. 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.

Yes, 12 months from our price listing, which was September 15 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 -- with GKV. We've had our first meeting to review that. There's usually a series of 4 meetings and reviews before we get to a final answer. We think that, that first meeting was set up a very favorable tone, including testimony from key positions 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 are launching into a situation where there was an existing, 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 launch, we believe that the prepricing 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 to 6-month prepricing 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 6-month 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 than we were expecting from the sub-insurer groups to engage in finding a path forward and defining OBAs, which are new for ROCTAVIAN. 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 subnational insurers. Instead, we think we've got some patients covered under an existing Outcomes Based Agreements, it covers a part of the population. And we know 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 Geoff Meacham from Bank of America.

Just two quick ones on ROCTAVIAN. So I guess a follow-up on Germany. So you have to go back to square 1 and the communication of kind of cost benefit to GKV. And I guess, was the 6 months of OBA negotiation a total waste here? And then secondly, in the U.S., just commercially, what's left to help streamline access and reimbursement, obviously, aside from formal FDA approval?

Yes. So thanks for the question, Jeff. To reiterate, right after we submitted our price and got that listed in September 15 of last year, shortly after that, we submitted, as we always do for our brands, to the GKV a full price and reimbursement dossier. And as I noted in the last question, it takes 4, 5, 6 months for GKV 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 -- as I described also in the previous question, that's where we're at. We're more than 6 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 from March 15 on when the prepricing period ended. U.S. is a completely different situation. So as we've disclosed, we have a warranty agreement that does not require to be negotiated 1 payer by 1 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 1 to 9 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. .

If I can ask another ROCTAVIAN 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 barriers that you didn't anticipate? And then maybe on the guidance change, changing cutting top and bottom by $50 million, it's -- $50 million, it's -- yes, 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 the sort of the 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 2 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 2 months, we've seen an additional 8. And I can tell you because I review the situation with the team every week 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 hematologists for hemophilia guidance, which is anywhere from every 3 months to every 12 months. And that cadence of patient hemophilia treatment centers didn't change just because ROCTAVIAN 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 ROCTAVIAN by 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 to supplement that. We noted that the high end of the previous range accounted for the current March PDUFA. And just a reminder, with -- what was the March PDUFA at the time. Just a reminder that while that's a 3-month shift with a product like ROCTAVIAN that we expect to ramp up in terms of revenue over time, that 3-month shift from a revenue standpoint actually causes us to what would have been the last quarter of revenue in 2023. So -- and likely the largest quarter. 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.

Our next question comes from Phil Nadeau from TD Cowen.

One more question on Germany. I guess it's still unclear was why those patients who have gone through CDx testing have not gone on therapy. I think you've been very clear about the price or the reimbursement negotiation process, but you've also suggested that there are patients who are covered through OBA -- 1 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? Did the physicians have some other concern kind of what's preventing that for you? And then secondly, 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 pictured in Q1?

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 canceled 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 subscribing 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 describe 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 movements is picking up all the time. So that's what gives me confidence that we'll have shortly a first or more than 1 patient coming out of the bottom of that funnel for treatment.

Maybe I want to add to what Jeff said. I mean, first of all about a year to get in Germany in competitive markets is the norm. So there is nothing that's 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 another year agreement mainly with 1 payer that only represent about 10% of the German covered life. So 10% of 18 patients will be like 1 20 patients. So it's not that surprising because the other patients basically are not covered by at 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 And obviously, here, we're talking about $1 million or so cost of therapy. So obviously, you understand why physicians want to double and triple shacks that the healthy 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 right now based on the growing pipeline of patients that we believe we're going to get a patient treated at least in the Q2 of this year in Germany, and then there are patients potentially 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 few months since we gave the previous update about 10 patients that have been screened In Germany, I understand we take Easter holidays very seriously. So for 2 weeks in early April, there wasn't much activity going on anywhere in the in Germany. So that also explains. But it looks like since we passed Easter and look like things are picking up again in terms of test screening, so which is very positive.

And our next question comes from Jessica Fye from JPMorgan. .

I have one more on ROCTAVIAN and then another on VOX

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. 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 update, which I think is likely in Q2 of this year. And as JJ noted in the script, the fact that we're deemphasizing or deprioritizing 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. It doesn't mean that we won't have any uptake because we've got 1 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 VOX

Path to hypochondroplasia, other new indications for VOX

And our next question comes from Akash Tewari from Jefferies.

Just on the upcoming 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 efficacy won't drop off as we go to 1 year and beyond? Obviously, that didn't occur with achondroplasia, but with these new growth disorders, that's a question that does come up. And then I also noticed you had 11 patients in Argentina screen for AAV5 antibodies. Can you walk us through a reasonable launch time frame and price expectations for markets outside of the U.S. and EU5?

I'll start, Akash. Your one question on I had about 5 subparts, but I may not get them all. But one is what will be expected of us in regard to durability demonstration for non-achondroplasia indications. And another part of your question is, will the agency require comparators, for example, with And I think the answers to both of those questions are 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 -- a figure on the actual pulse of what the issues to address are. And I think one of the really exciting things about VOX

To your second question, Akash, about what's the significance or whether we read into those 11 CDx tests in Argentina. I would say in the general sense, Named Patient sales in the absence of or even prior -- just prior to a registration is an important part of our commercial picture overall. Witness, for example, the rapid uptake across our commercial footprint with VOX

And our next question comes from Joseph Schwartz from SVB Securities.

I have a question on ROCTAVIAN. I'm Joori dialing in 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 ROCTAVIAN later in 2023?

Joori, so the process in each of France and Italy, which in our commercial footprint with our kind of capabilities, it 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 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 the script, we mentioned this year -- 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 as is in the general sense, a positive signal to how the -- how is looking at ROCTAVIAN in Italy as an example.

And our next question comes from Gena Wang from Barclays.

I wanted to ask about ROCTAVIAN again. For the 18 patients that completed the antibody testing, how many of these were eligible? Also in Europe, since now you're pursuing directly with GKV without pursuing Outcomes Based Agreement with the sub-insurance, does that mean your price will be much lower than EUR 1.5 million 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 ROCTAVIAN initial launch?

Thank you, Gena, 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 on the percent of patients that would be eligible based on AAV5 negativity. Relative to the GKV price negotiations and what we had guided to as net price of about EUR 1.5 million, 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 putting into the agreement and outcome space component or a pay overtime 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 ROCTAVIAN, including durability, for example. So we think that the final price would model in how GKV 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, our 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.

What's your what that's going to do to the launch some respects, it's positive for us. .

Yes. We think that's very positive. So as I mentioned, the reason for being for HTC is 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 to fund their operations, 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, an important point to note is the HCC 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.

You mentioned VOX

Tim, I'll start, and then Jeff can provide more echo. I mean as we made in the prepared remarks, I think in Jeff's remarks, we only have penetrated about less than 10% of the market right now for VOX

Nothing to add there. Thanks, JJ. And then there was a question of accelerated the full approval rate.

Nothing new to report there. It's 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 Matteis from Stifel.

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 is 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 U.S. in 3Q?

Thanks, Paul, for the question. I won't get into the specifics of the back and forth. But I would say that as a general matter. The things that we expect to be having 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, Paul, the nature of the warranty is that it is uniform. It is nonnegotiable. 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.

No timing.

No timing, yes.

No delays

No.

And our next question comes from Robyn Karnauskas from Truist Securities.

So just clarify, for ROCTAVIAN, since you're not doing 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 VOX

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 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 the over -- where we wind up should not be materially different from either path.

One of the reasons why we decided to focus on the GKV and national price because we assume that it's very likely there will not be an OBA with federal -- their German federal government. And then so these prices might be a little lower than what we would potentially have had with OBA, but the net price will be about the same based on the fact that there is no -- that we don't have to reimburse the payers based on our patients going back to therapy after 3, 4 or 5 years. So net debt, 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 VOX

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

So in conclusion, we are very pleased with the booming progress in the first quarter and the continued successful launch of VOX