BMRN - NASDAQ

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the BioMarin Pharmaceutical First Quarter 2024 Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Traci McCarty, Group Vice President, Investor Relations. Please go ahead.

To remind you, this nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. In addition, we will use non-GAAP financial measures as defined in Regulation G during the call today. These non-GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with U.S. GAAP, and you can find the related reconciliations to U.S. GAAP in the earnings release and earnings presentation, both of which are available in the Investor Relations section of our website. On the call from BioMarin management today are Alexander Hardy, President and Chief Executive Officer; Hank Fuchs, President of Worldwide R&D; and Bert Brian Mueller, Executive Vice President, Chief Financial Officer. Jeff Ajer, Executive Vice President, Chief Commercial Officer; and Greg Guyer, Executive Vice President, Chief Technical Officer, are here with us to answer questions during the Q&A portion of the call. I will now turn the call over to BioMarin's President and CEO, Alexander Hardy.

Thank you, Traci, and good afternoon, everyone. Thank you all for joining us today. In addition to strong financial results, we made significant progress in the quarter developing the components of BioMarin's new corporate vision and strategy, all in the interest of positively impacting patients' lives while creating value for shareholders, and with a number of strategic initiatives ongoing to finalize these components to be communicated at Investor Day, which we have now set for September 4. We are pleased to share the first chapter update today, the results from our strategic assessment BioMarin's R&D portfolio. As innovation is fueled BioMarin's success to date, we undertook a prioritization of our overall portfolio from early to life cycle stage assets. The goal of this assessment was to accelerate the delivery of those assets, which add the greatest value to all of our stakeholders and align with the time lines for our strategic growth plans. We added a commercial lens early in the portfolio review process to ensure that return on investment, resource allocation, patient impact were all thoroughly considered. As a result, we chose to accelerate 3 assets that we believe offer the most transformative potential for patients and value creation for shareholders. We are also discontinuing 4 programs that did not meet our new higher bar for continued development. Moving briefly to progress made in the quarter on our 4 strategic priorities outlined in January. Beginning with our opportunity to accelerate and maximize our Voxzogo, we made significant progress during the quarter with 74% revenue growth year-over-year and more than 500 additional children receiving therapy in the first quarter. Voxzogo in achondroplasia continues towards blockbuster status. The majority of new U.S. prescriptions in the quarter were for children under the age of 5, an important trend since FDA's age expansion approval last quarter, albeit we continue to see expansion in the over 5 population as well. Global access to Voxzogo from infancy is having a significant impact on rapid uptake as families pursue maximum therapeutic benefit by starting treatment early. In the United States, we continue to observe an increase in the breadth and depth of our prescriber base as real world experience drives confidence in Voxzogo's extensive safety and efficacy profile. Leveraging our established leadership in achondroplasia, we also made important strides in our plans to expand the multiple other growth-related conditions. Our pivotal program with Voxzogo for the treatment of children with hypochondroplasia will begin the treatment study midyear with a target of completing enrollment by the first half of 2025. Based on ongoing discussions with global health authorities on study protocols with Voxzogo, idiopathic short stature and multiple genetic short stature pathway conditions. We expect to begin enrollment in these programs later this year. The momentum we are seeing with Voxzogo in achondroplasia supports our belief that CNP can potentially unlock clinical benefit for children across a number of growth-related conditions for many years to come. Hank will share a perspective on the opportunities ahead with Voxzogo based on strong proof-of-concept in indications beyond achondroplasia as well as the potential for longer-acting formulations. The second priority, establishing the Roctavian opportunity continues to be complex. With pricing and reimbursement established in the United States, Germany and Italy, aligning the required steps leading to patient treatment continues to pose different challenges. For example, while the Roctavian National German price was established and published in December, the sub insurers have inserted new barriers to reimbursement. In the U.S., the complexity of local site reimbursement contracting continues to be an obstacle. We remain confident in the clinical profile of Roctavian and we're pleased with the Roctavian update at the TH SNA meeting, showing durable hemostatic efficacy, improved quality of life and no safety signals at 4 years. With respect to the additional Roctavian development programs, we are proceeding with Roctavian development in Japan and in the prior inhibitor population and of course, other programs until we observe more meaningful Roctavian commercial uptake. We recognize the importance of allocating our resources to the highest value-creating opportunities. And with the current levels of Roctavian investments and continued challenges with commercial uptake, we plan to communicate our evaluation criteria for Roctavian in terms of its place in our portfolio and related timing for potential next steps at the Investor Day in September. The third priority is our focus on the most productive R&D assets. And as already mentioned, I'm pleased we have completed the initial chapter of that work. Beyond our refresh pipeline, centered around 3 key assets to be accelerated, we're in a strong position to leverage external innovation in conjunction with our internal capabilities to fortify our mid- and longer-term pipeline. At Investor Day, we will also share more about our innovation strategy and plans and how they fit into our capital allocation and internal external portfolio innovation strategies. Lastly, our fourth priority to increase profitability faster than originally planned. As demonstrated by our first quarter results, we're tracking well towards achieving this priority. As I complete my first quarter as CEO, I hope it's evident that we're taking decisive and thoughtful action to realize our priorities, all designed to align with our broader operational and cost transformation strategies to be shared at Investor Day. Our full year 2024 guidance reflects double-digit revenue growth non-GAAP operating margin expansion and non-GAAP earnings per share growing faster than revenues. These full year guidance items allow you to track our financial progress as we transform BioMarin's operating model to produce the best outcomes for the patients we serve, our employees and our shareholders. So in summary, we are making tangible progress across the enterprise to reshape BioMarin's corporate vision and strategy. This is an enormous body of work that remains in process. But as you can see from our first quarter updates, we're working with a sense of urgency on this, and we are making definitive progress. We're excited to continue this work over the coming months with the goal of sharing our vision for a successful future with you at Investor Day on September 4 in New York. Thank you for your attention. I will now turn the call over to Hank to provide an update on key R&D highlights.

Thank you, Alexander, and good afternoon, everyone. The R&D team is energized by the more focused approach, decisions and clarity on the path forward to advancing the highest potential programs following our portfolio review. As a leading innovative and scaled biopharma company is more important than ever that we invest R&D resources in medicines that benefit the greatest number of patients. We move forward with an evaluation framework that will provide a high bar for consistent assessment of programs to determine if they fit in our burgeoning portfolio strategy. Briefly on the 3 programs that we chose to accelerate and starting with BMN 351 for the treatment of Duchenne muscular dystrophy. BNM 351 is the potential best-in-class antisense oligonucleotides designed to restore full-length dystrophin expression to more than 10% of normal at steady state. The next-generation skipping oligo -- this next-generation skipping oligo has the potential to convert patients phenotypes from progressive functional loss to durably preserve strength and function if data are supportive. BMN 351 is differentiated from other antisense oligos based on optimized chemistry and a unique slice enhancer target site, which together result in significantly improved potency for restoring dystrophin expression. It is also differentiated from gene therapy as BMN 351 produces near full-length dystrophin rather than the truncated microdystrophin produced via gene therapy. And BMN 351 can be administered chronically. For this reason, we believe the potential clinical benefit of BMN 351 over currently approved gene therapies and other treatments represents high value to patients and families living with this debilitating condition. The 52-week clinical proof-of-concept study with BMN 351 is actively recruiting patients and will include 18 boys with Duchenne muscular dystrophy with the potential to expand enrollment as needed and is designed to assess both dystrophin levels and functional measures. Also accelerating BMN 349 is a potential first oral therapeutic for the treatment of alpha-1 antitrypsin deficiency liver disease with the ability to address genotypes beyond Pi

Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the first quarter of 2024, including reconciliations of GAAP to non-GAAP financial measures. All first quarter 2024 results will be available in our upcoming Form 10-Q, which we expect to file in the coming days. In the first quarter of 2024, BioMarin generated record total revenue of $649 million, representing 9% year-over-year growth, 13% on a constant currency basis driven by continued strong demand for Voxzogo. Our base portfolio of products, including Kuvan, contributed $484 million of net product revenues in the first quarter. Looking more closely at net product revenue in the first quarter, Voxzogo revenues of $153 million represented 74% year-over-year growth. That level of growth was despite the supply constraint on Voxzogo discussed last year and expected to continue through the second quarter of this year. Our plan for supply to satisfy the forecasted commercial demand around the middle of this year remains intact. 21% revenue growth of Palynziq in the first quarter demonstrated continued momentum for the only biologic approved for the treatment of PKU, offset by lower Kuvan revenues as expected. And within Naglazyme and Aldurazyme contributions in the first quarter, we're not surprising given the usual variable global ordering patterns for those brands. Importantly, we continue to observe commercial patient growth in these brands that we expect will drive sustainable revenue growth over time despite the quarterly order timing. GAAP R&D expenses in the first quarter were $205 million, an increase of $33 million year-over-year primarily due to increased early-stage research activities as well as increased activity in our clinical programs. GAAP SG&A expense in the first quarter was $226 million, representing a year-over-year increase of $15 million, driven by the continued support of the global Voxzogo market expansion as well as corporate expenses in the quarter. This financial performance in Q1 drove an operating margin of 13.6% on a GAAP basis and 23.8% on a non-GAAP basis. Moving to the bottom line. GAAP net income for the first quarter was $89 million, an increase of $38 million year-over-year and representing GAAP diluted earnings per share of $0.47. Non-GAAP income for the first quarter was $140 million, representing non-GAAP diluted earnings per share of $0.71 and growth of 18% over the same period in 2023. The R&D prioritization decisions made in the first quarter will positively impact non-GAAP diluted earnings per share in 2024 due to now lower levels of expected R&D expense in the second half of 2024 versus prior guidance. We estimate that the discontinuation of the 4 programs announced today will result in a reduction of between $50 million to $60 million in R&D expense in 2024. And as Alexander and Hank mentioned, we are prioritizing 3 of our pipeline assets as well as the Voxzogo indication expansion. And we identified opportunities to accelerate the development of those assets this year. Therefore, there is a planned offsetting increase in 2024 R&D expenses of approximately $15 million to $20 million, which together with the planned reductions, we extract will result in lower projected R&D expense for the full year of between $35 million to $40 million. Those anticipated net R&D spend reductions in 2024 are driving an expected increase to our non-GAAP operating margin guidance to 24% to 25%. And an increase to our full year non-GAAP diluted earnings per share guidance to between $2.75 to $2.95 per share. Noteworthy is that we are maintaining our prior projections for the full year, except for the changes in R&D, including total revenue guidance, which remains the same as communicated in February. Also, this update does not include the impact of any further potential strategic business decisions and potential future cost efficiencies to be discussed at Investor Day. As we look forward to Q2 2024, we continue to anticipate limited revenue growth in Q2 versus Q1 due to the timing orders -- timing of orders for the enzyme products and similarly for Voxzogo, while we manage through the supply constraint. We expect higher operating expenses in Q2 versus Q1 due to normal quarterly business dynamics, our various 2024 strategic initiatives and the timing of expenses. With all this in mind, we expect limited total revenue growth in Q2 versus Q1, and we expect non-GAAP operating margin and EPS to be lower in Q2 than in Q1. In the second half of '24, we anticipate more meaningful revenue growth as we expect of Voxzogo supply constraints to be resolved. From an expense point of view, we expect all of the reduced R&D for the discontinued programs announced today to begin to be realized in the beginning of Q3 through the end of the year. Lastly, while we plan to share our updated capital allocation strategy at Investor Day regarding our $495 million of convertible notes maturing in August of this year, we plan to leverage our strong cash position and expected operating cash flow to repay the notes with available cash. Furthermore, given the settlement structure of the notes, we are planning for a share neutral outcome should the notes be in the money at maturity with the goal of returning value to shareholders by avoiding the potential dilution associated with the 4 million underlying shares. As we move into our next chapter of BioMarin, we are executing on our growth strategy with impressive performance driven by Voxzogo in achondroplasia in our pursuit of new indications, a durable and growing enzyme products business and an increased focus on streamlining the business through cost structure transformation and operating model efficiencies. Together, this presents an opportunity to drive meaningful improvements in our financial performance and sustainable shareholder value creation. Thank you for your continued support, and we will now open up the call to your questions. Operator?

[Operator Instructions] We'll go first to Phil Nadeau at TD Cowen.

Just wanted to follow up on your comments on Roctavian. Can you give us some sense of what you need to see to support continued investment in the Roctavian program? Or maybe asked another way, what would you have to see over the next several months in order to decide to out-license Roctavian or curtailed future investments there?

Thanks very much for the question, Phil. As you heard today, our focus from the R&D side is to allocate assets to the highest value and clearly, we have a high level of current of Roctavian investments and continued challenges with commercial uptake. What we're saying today is that at Investor Day, we will communicate our evaluation criteria, and the timing for that evaluation criteria at Investor Day on the fourth of September. The possible outcomes of that, I'll just elucidate; one would be that we see the uptake, the ramp starting to happen in a meaningful way, and that would be a state of course approach would be the outcome. The second would be, we see a lower potential for the asset and a path towards a reasonable return on investment by rightsizing the level of investment across the organization from an R&D, medical affairs and commercial standpoint. And thirdly, the third possible outcome would be, we remove it from our portfolio, and we divest the asset. So we're not ready yet to share the evaluation criteria or when valuation criteria timing would be, but we will provide more information on this at Investor Day. I just wanted to also highlight that even as we speak right now, we've really focused our strategy and execution with Roctavian. We're focused on the site level pull-through of the patients in the 3 major commercial markets where reimbursement established, United States, Germany and Italy. We have focused our life cycle management activities. So the ongoing studies, ones where we feel that there is a high potential, which is the prior inhibitor population, the registration in Japan. And we will continue to drive towards an evaluation and communicate more at Investor Day. Thank you, Phil.

We'll go next to Geoff Meacham at Bank of America.

I know you've talked about label expansion for Voxzogo being of the highest important strategically. I guess the question is, in the near term, what are the next steps in optimizing the current formulation for Voxzogo? I wasn't sure what the cadence of data coming up is for that.

Yes. Geoff, Hank here. So big picture, absolutely, your question started in the right direction, which is all of the activities that are underway to expand our CNP franchise into as many areas where there's potentially transformative medical benefit for children with statural impairments, not least of which is entering into a Phase III registration-enabling trial in hypochondroplasia and as I delineated we're now well underway in terms of idiopathic short stature. And we're really making great progress with our long-acting formulation. So in the category of additional presentations to delight patients, we have a lot of stuff that's also going on internally that for proprietary reasons, we won't detail until we're ready to get a little further along. But suffice it to say that we have a lot of confidence in the future of the CNP franchise, a number of different opportunities for treating and transforming the lives of patients and a number of different approaches to take to give families as many good choices they can have for treating their children.

We'll move next to Salveen Richter at Goldman Sachs.

On the strategic review here across the pipeline [indiscernible] levers for lowering OpEx from this line? And how are you thinking separately about the mid- to late-stage pipeline in this context? And be the that may need to be done to sort of essentially add to the revenue pipeline on the board.

Salveen, this is Brian. You broke up for just a second when you mentioned the line item you were asking about. Would you mind repeating which one?

Sure. The R&D line item.

Yes, R&D, thanks. So as you noted, starting with your question, thank you, by the way. The strategic review is looking at both strategy and operations and efficiency, and we'll be eager to share details at Investor Day. But big picture, similar to the margin expansion narrative just enhanced now that we talked about in the past. It starts with a bit of core leverage of what we've built over the last many years, specific to R&D, full end-to-end, early-stage research, clinical regulatory to medical affairs, leveraging that engine, and then next, we'll be streamlining the business and cost transformation. So doing that same work but more efficiently. And then third, as you're seeing today is prioritizing the work on the right assets. So those 3 things, we believe, will provide leverage. We'll share more details on what the specific levers are and the tools around cost transformation and business efficiency at Investor Day, but those are the 3 big levers. I'll hand it over to Hank on the pipeline question.

Yes, Salveen, the portfolio evaluation that we undertook was actually it started as a planned activity. But I think what's new this year because we've been doing it annually every -- so every -- for the last several years. But what was new, I think, this year was a higher degree of rigor and a higher bar set and a tighter commercial input, as Alexander mentioned, as well. And I have to comment that I'm very pleased about that tighter commercial connection starting under Jeff and looking forward to Kristin joining, where we'll really be able to have the opportunity to look at assets which are both important and transformational to patients, but also valuable to BioMarin as an organization. What didn't change in any of this review is this notion that we're going to do what we can to make a big difference in people's lives. We're going to leverage good biology to find those assets that we believe are highly likely to work. Increasingly, what we've been doing is tying the timing considerations of our portfolio to our emerging growth strategy, which kind of leaves on the last piece of your question over -- I'll turn it over to Alexander to talk about your comments about the rest of the pipeline and potentially making room for later stage or other assets.

Yes. Thanks very much, Hank. Thank you, Salveen, for the question. Yes, I mean, we are -- we have a real commitment to innovation at BioMarin, and we're excited about what we see in our early pipeline. We're excited about the 3 assets that we are advertising to accelerate and we're extremely excited about the Voxzogo life cycle management, which we're really excited at this call to be able to share some really significant progress, I think, as you heard in Hank's comments. But we also see that going forward, in terms of meeting our ambitions for sustained growth into the long, long term, we see a role for external innovation. In the past, that's been very successful for us from an early research standpoint. We now see that there's an opportunity by dialing in on assets that could augment our existing portfolio that leverage our distinctiveness, i.e., what we know and we know we do well, better than others, that we should be more open to those sorts of opportunities. I would just stress that our guidance at the moment for this year does not reflect any incremental BD activity. We will share more -- and you'll have to keep history of saying this, we'll share more at Investor Day about our plans in the space. But in the interim, we've got no plans right now to transact major BD but we do see a growing role for this in the future.

We'll take our next question from Chris Raymond at Piper Sandler.

So just on the leverage you guys highlighted here. The focus today is all on the R&D pipeline. But I guess I wanted to ask on another important line item, which is SG&A. BioMarin's historical spending as a percent of revenue has been pretty meaningfully above that of your large-cap peers. And I know the last few, if you hasn't dropped yet with respect to all the transformation you're affecting here, Alexander. But any sort of thoughts there in terms of the potential in terms of having maybe a more in-line SG&A line item.

Chris, this is Brian Mueller. Thank you for the question. I'll start just to give you a little more color on the line item. And then maybe hand it over to Alexander as he thinks about the opportunity. So I might reference back to the comments I gave in response to Salveen's question on R&D, it does start with leverage. So importantly, as you know, in order for us to get to the $2 billion plus in revenue, mostly through the base enzyme products business where we sell in almost 80 markets, very diverse, complicated global sales and marketing, supply chain and related supporting infrastructure. That's the level of operational capability that we built over the last decade. And basically, over the last couple of years and now going forward, we're growing into it and making that machine work. It's that same infrastructure that's launching Voxzogo that's driving a lot of the margin improvement that you're seeing last year and this year. It will be that same infrastructure that launches future products [indiscernible] grows the business from here. So it does start with leveraging what we built, recognizing that, that was a significant investment in the last few years. And then next, what we're doing is streamlining it. Again, our focus over the last several years has been that organic capability growth. We're now focused on optimizing the business and prioritizing. We're also making sure we're reallocating resources, not just to the right places organizationally and globally but in the right brands. Voxzogo with this growth we've seen and its future potential deserves more resource allocation. How can we continue to sustain this robust launch? And for the mature brands, is there an opportunity to be more efficient there and recognize that while they're still growing, they may not require the same level of investment that they did over the years. So that's the approach. Alexander, you comment on the opportunity?

Yes. Thanks very much, Brian. Thanks for the question, Chris. Yes. I mean I've been really impressed by the potential leverage we have with our footprint in 70 countries and the capabilities we have globally. So building off the leverage, just like we've done with R&D, we're considering how to really leverage the capabilities we've got to have a greater impact and to be more efficient. And that's one of the work streams that we have is cost transformation. It's looking at all the line items on our P&L to say how can we now optimize that. So you can expect to hear more from us at an Investor Day about our specific plans on the G&A line, on the on the sales and marketing line and additional efficiency in how we do research and development. This will all be rolled up into the long-term guidance that we'll be providing and our path to significantly improved margins, which, as we've said, at the start of this year was one of our priorities. So more details to come, but it's certainly one of the areas of focus for us.

We'll take our next question from Akash Tewari at Jefferies.

This is Amy on for Akash. So first, what's driving the difference between the reported Voxzogo demand increase and the revenue increase from the numbers? It seems like the demand is up more than sales from a quarter-over-quarter basis, would really appreciate any color on how to reconciliate this? And then also, if we can sneak in one more. Is there an increased appetite to divest the gene therapy franchise? And can you outline how much spend this makes up currently on OpEx?

Thanks for the question, Amy. This is Brian. I'll start and Jeff has any other color to add. I think what you're starting to see on the Voxzogo line is consequences of its robust growth globally and a number of significant markets now online. Whereby we've got two things going on. One, some order timing. We've seen that trend over the years with the enzyme business. We're seeing a bit of larger for those for those markets that place less frequent, larger orders. We're seeing some Voxzogo revenue impacted by basic order timing. Two is the timing of patient additions any -- at being a chronic therapy any new patient additions for Voxzogo, especially in, say, the second half of the quarter are going to be less revenue generating than patients that were on drug the entire quarter. So that's another dynamic that could just draw the disconnect that you mentioned. And then perhaps to the first point, there's some unique aspects right now with the supply constraint. We are managing through the supply constraint by managing orders at the specific market and SKU level. And that's going to throw the trends off a little bit. You might recall back in Q4 where we reported revenues over our guidance, not because we overperformed on patient additions but because some additional supply became available, and so we shipped it into the market. So we'll ask you to stay tuned. We're trying to provide the right metrics in terms of patients and ask you to follow revenues to watch those trends. It's a great question but it is dynamic. And Jeff give me a thumbs up, so we're covered. And gene -- there was a gene therapy question, whether the divestiture is an option.

Yes. Thanks for the question on Roctavian divestment. As I mentioned before, our focus right now is making sure that we really establish what the Roctavian opportunity is, and we really focused our strategy around that. I talked already about the possible outcomes of our assessment. And one of them could be that we remove it from the portfolio and divest, that is not our focus right now. We are not engaging with people around the divestment of Roctavian. Our focus is really on establishing the opportunity right now. But should we remove it from the portfolio we will absolutely look at the options around divesting it.

We'll go next to Jessica Fye at JPMorgan.

On the pipeline, can you talk a little more about the long-acting CNP product you're prioritizing? What's the half-life there and the dosing frequency you're contemplating? And then just a quick one on BMN 293, the gene therapy for hypertrophic cardiomyopathy. Is that one staying or going, I don't know if I caught it in the list?

Jess, long-acting, we have every reason to believe that the dosing interval there could be as long as weekly. But obviously, that's going to be informed by early human clinical trials to actually measure what that dosing frequency is going to be. On 293, that's a program we want to gather a little bit more information. We recently learned that there is a population of patients with C3 deficiency in hypertrophic cardiomyopathy who are very severely affected with really poor outcomes as measured, for example, by short time to left ventricular assist devices or mortality. And we are actively working with investigators to understand better how findable those patients are and how interested and motivated those patients are. And finally, whether there's a regulatory pathway to a faster approval by virtue of the severity of their condition. As we learned, the more significant the medical, the unmet need is, the more motivation there can be for the uptake of these novel disruptive types of therapy. So that's the additional information we're gathering and we'll keep you informed as to decisions that we make about further advancement of 293.

We'll go next to Joseph Schwartz at Leerink Partners.

I was wondering, can we infer anything from the amount of savings that you expect to realize as a result of the strategic portfolio assessment of R&D programs, which you announced today about the amount of operating expense savings, which might be realized as a result of the remainder of the strategic and operating assessment, which is ongoing. Can you give us any insight into the relative degree of operating expense savings, which might remain to be realized relative to what you announced today, even if it's just a general order of magnitude?

Yes. Thanks a lot, Joe. It's a really good question. Given we talked today about the financial impact of what was a discrete clear eye view on the portfolio. The financial repercussions and the net reduced R&D were a consequence of that portfolio review, not the purpose. And that -- and -- from there, I would not make an inference on what the future potential savings are for 2 reasons. This was a review, top to bottom of the current portfolio. And again, a consequence but also the strategic review and the remaining optimization of the business is work in process. So we'll have to put that latter part in the category of stay tuned for Investor Day to hear both the strategy, both top-level business strategy, operational excellent strategy, long-term guidance. And we'll get color on all the line items, how we'll plan to be more efficient on cost. But the heart of your question, I would not make that influence today.

Our next question comes from Gena Wang at Barclays.

I have one regarding Roctavian revenue of $0.8 million in the quarter. We also, together with, I believe, many investors did due diligence regarding exactly how many patients got treated in the first quarter. So based on our due diligence, we understand that Germany actually there's no patient got treated and as some investors they are due diligent believe there a few patients got treated in the U.S. So the question here is $0.8 million, can you remind us where that revenue is from? And also at what point the timing for you to recognize revenue as well as pay for performance, the warrant at what point you booked this? My understanding previously was gross to net but I just want to make sure.

Gena, jeff here. Yes, we are aware and have heard of some survey or due diligence work by yourself and others, but without knowing the methodology and so forth of the survey results we can't really speak to them specifically. We can speak to our revenues. So in the press release, it was noted that first patient was treated in Italy, and the revenue that you see in Q1 is tied to that first patient in Italy. Revenue recognition varies a little bit by market. But essentially, Gena, we can tell when product is shipped to patients, we're scoring revenue right around that treatment of patients. And so if your question is, is it likely that there's been a bunch of patients treated, and we're not seeing that in our prepared remarks or revenue, I think the answer is no. And maybe Brian could make some further remarks about revenue recognition.

Yes, I think you've got it right, Jeff. Thank you. maybe just noting the nuance in Italy is that Italy happens to be a market where title transfer and revenue recognition occurs before the actual dosing of the patient. Hence, the March revenue and the first week of April treatment. I'll share that in other key markets like the U.S. and Germany, the revenue recognition and title transfer is much closer, if not at the point of infusion.

We'll go next to Ellie Merle at UBS.

Can you help us understand how you're thinking about the relative size of the opportunities between ISS and genetic short stature pathways? And also as well as the level of clinical risk or clinical validation from the data that you've seen from these the date between the two of these planned studies and just help us understand how you're thinking about the biology and confidence in activity in ISS as well as the genetic for factor pathways?

Maybe I'll start on the R&D science piece and then I'll look for help from Alexander on the market sizing kinds of pieces. Although I can say a little bit about things like epidemiology. But from an R&D perspective, our confidence that CNP is going to work in conditions beyond hypochondroplasia is driven by genetics, and we've talked about where patients who had humans who have gain of function mutations in the CNP pathway or taller than their predicted final adult it would be in patients who have negative mutations are shorter. So these are human, if you will, proof of concepts about exposure. There are also individuals who are extremely toll to have gain-of-function mutations in NPR2 or who are -- or in its receptor. So a lot of biological data but what's new now is we're days away from Dr. Dauber presenting his first 12-month cohort of using Voxzogo to treat patients with either pathway conditions, in his case, Noonan syndrome or with things that were formerly known as idiopathic short stature because that term got coined before sequencing helped us to understand that specific mutations could be accountable for what was formerly known as idiopathic short stature and had an opportunity as has the Food and Drug Administration to review those emerging data, which led them and us to conclude that there is a great prospect for benefit with vosoritide and the treatment of these relatively more common conditions. So you've heard me talk about idiopathic short stature in terms of the volume of people who are available. It's something like 2 standard deviations below average stature encompasses 2.5% of the basically the human population. So we're talking about some is a fairly large potential indication. I don't know if Alexander you want to add anything more about that.

In terms of the size of the future indications. JPMorgan, we talked about how the indications beyond achondroplasia, so hypochondroplasia, ISS, Noonan's, Turner's, SHOX, in total, represent about 600,000 patients compared to the total global addressable population for any achondroplasia of 21,000. We're obviously going to be and I just want to highlight this that we're going to be going for a more severe patient population in, for example, idiopathic short stature editions. And you'll see -- if you go on clinical trials it's actually posted today, you'll see the design of our Phase II study in ISS. So we'll share more at Investor Day about the TAMs for all the different indications. They represent significant multiyear growth potentials for Voxzogo. And it's really exciting to see and being able to share today not just the R&D prioritization but the progress we're making with Voxzogo, not just the uptake, which is really exciting to see in achondroplasia globally with growth accelerating, but we've had really productive conversations with regulatory authorities. We have definite plans now solidified, heard from the feedback from the FDA on ISS. We have clarity now of the duration of the study, endpoints comparator. We have a very clear path forward in multiple of these indications and an opportunity to bring Voxzogo to so many more patients around the world.

We'll go next to Paul Matteis at Stifel.

I was curious what the management team's current thinking is on the various competitors are in achondroplasia given that we're going to get data from a couple this year. And as you think about potentially -- and I don't know if it's exactly potentially giving margins guidance or commentary aspirations at the Investor Day, it feels like whether or not there is competition in achondroplasia is a key variable. So I would love your perspective on that.

Yes. Thanks very much for the question. Paul, I really do appreciate it. Overall, we're feeling very good about where we are in achondroplasia and now with the path forward in all these other indications starting to become really quite clear from us -- for us. Demand and the feedback from families is excellent. We see really good assistance and adherence to Voxzogo. And we're really -- every day that we're on the market, clearly, we now have over 3,000 patients now on Voxzogo. We're really establishing a safety and efficacy profile that gives a lot of confidence to physicians to prescribe the product and also family members and parents, children, now infants beginning treatment. I think from our perspective, we've done extensive market research, we really understand these disease states. And it's really very clear that the most important thing for patients and caregivers and equivocally is safety and efficacy, and they will not sacrifice that for convenience. I was reviewing with the team, some of the market research, and I'll just give you a couple of examples. A caregiver said, weekly or oral would need to be within 5% or less the efficacy of Voxzogo, where I wouldn't consider it. Safety is an absolute and the physician said, my #1 priority for novel therapy is safety and efficacy that won't be sacrificed for something more convenient. So whilst we believe with BMN 333, we're excited about it. The TPP for that is for it to be at least as effective and safe as Voxzogo with the potential for, as Hank mentioned, more convenient dosing. But we believe that Voxzogo is well set up to be a very robust competitor to any potential new entrants.

Our next question comes from Mohit Bansal at Wells Fargo.

And staying on the competitive theme, I think one of your competitors is also testing a longer-acting CNP in combination with growth hormones in achondroplasia. How do you think about the rationale there? And do you think you could do something like something similar for Voxzogo? And then the related question is, in the ISS trial that has been posted, it seems like you are testing against growth hormones. Is there a rationale to test it in combination with growth hormones as well in that indication?

Yes, Mohit. The efficacy of Voxzogo in achondroplasia restores growth to a fairly physiologic level, over 90% of average stature growth. So it's hard to beat that in terms of efficacy. And so a little tough to rationalize combination therapy to do better than basically normal. I think the most important thing to be doing with Voxzogo as regards to improving long-term outcomes is to start therapy earlier, which was why we were so keen to have label extension into almost every market in the world where Voxzogo is available to almost from infancy because that's where you can make a big difference in the overall outcome. And again, probably doesn't necessarily warrant the addition of another therapy, it warrants starting therapy as soon as the condition is understood. And I think same story for ISS. We need to look at the data that comes out next month from Dr. Dauber to gauge how much of a stature of improvement we get and whether there is any room for improvement, but I wouldn't anticipate that being a key consideration. Finally, in the Phase II study you mentioned, the inclusion of the growth hormone arm is really purely for internal reference so that we have a sense of through randomization, what the sort of apples-to-apples comparison might be. As Alexander just mentioned and I believe I steered us in the direction of, we do have agreement from the Food and Drug Administration on some really cardinally -- cardinal important points of the design of the Phase III program, just to recapitulate them, we've agreed on the target patient population that is growth hormone naive. We've agreed on the endpoint, 52 weeks annualized growth velocity as improvement. And most importantly, we've agreed with the agency that placebo can be an appropriate comparator for the registration. So we're well underway. We don't believe that we need to add other therapies into the armamentarium to augment the effect of vosoritide because it's doing just fine by itself.

We'll go next to Vikram Purohit at Morgan Stanley.

So we had a follow-up on Roctavian. So you obviously discussed some of the reimbursement and market access challenges. The product is seen here to date. But looking forward, could you speak about some of the strategies you're putting in place now to help with the -- I guess, the operational lift of the franchise? And how many months or quarters would you expect it to take for some of the challenges to be a bit less of a variable in the product trajectory, assuming the franchise stays in-house with BioMarin?

Thank you for the question. This is Jeff. I'll field that one. As Alexander mentioned earlier, we're really focused on patient pull-through in the markets where we have reimbursement approvals. So a reminder, that's the U.S., Germany and Italy. Patient pull-through is really the last mile but we've experienced the challenges with. So we think that establishing proof-of-concept in pulling those patients through that last mile and getting them treated is what we need to do on a going-forward basis. How long that will take undetermined. Alexander already mentioned that at Investor Day early September, criteria will be laid out for what that looks like. And the other thing I would comment on is, in Europe, in most cases, the commercialization starts with the price and reimbursement approval. We got the GBA approval listed in December of last year, 4 months ago. In Italy, that was 3 months ago. So one way of looking at the situation, at least in Europe, as I say, perhaps the clock started ticking 3 to 4 months ago in those 2 target markets and -- so thinking about how long that might take during the course of this year could be instructive.

We'll move next to Tim Lugo at William Blair.

This is Lachlan on for Tim. So you've identified Voxzogo as a strategic priority and have obviously made a lot of progress on the development front in new indications. But is there anything you're doing on the commercial front there, too? Because I noticed you obviously added a much larger number of patients this quarter than last quarter. So I was curious if that's sort of a result of any direct initiatives or actions you've taken or just the maturing markets and increasing supply.

Yes, we're very -- thanks very much for the question. We're really happy with the progress on Voxzogo. I mean it is one of the priorities we set out we described has tremendous potential in achondroplasia as we talked about extensively in other diseases. So right now, it's in achondroplasia and that ramp is accelerated. We added 500 patients in the first quarter compared to adding 300 patients in the fourth quarter of last year. So we're seeing that growth actually accelerating. This is driven very much by the 0 to 5 [indiscernible] to use the product from birth, which is now in many, many geographies around the world. And it's good to see that, that growth is actually consistent across the major markets. The U.S. actually driving the most growth, which is great to see because this is where we didn't have the same ramp. We're now seeing that. And I think the 0 to 5 and the team is really focused on that as well as the other things that we've been doing, we're seeing bearing fruit, which is really focusing on the pediatric. Analogist making sure we've got referral pathways, the setting up the skeletal dysplasia clinics, which are going to be very important, not just for achondroplasia but also for the subsequent indications. So the team is really driving on all cylinders in more geographies. It's one thing that actually I do want to say, which is with regard to supply, we mentioned in our prepared remarks that we will be hitting supply levels, which we'll be able to meet demand in the middle of this year but we have really good news to share with regard to the maximum supply available this year. So in January at the JPMorgan conference, we shared our supply plan for Voxzogo, which is obviously very, very critical, especially as we accelerate our life cycle funds and ambitions for this product. We are now going to be able to supply by the end of this year, 8,000 patients supplies work of Voxzogo. If you remember from January, that's what we said that we would achieve by the end of 2025. So the team here in manufacturing has moved this us up by 1 year and this continues to give us confidence that even as we ramp up demand for Voxzogo, by the end of this year, we're going to be able to meet that demand.

And that is all the time we have for Q&A today. I will turn it back to Alexander Hardy.

Well, thank you all for joining us today. I hope you've heard and it came across that how hard this team and all the teams across BioMarin are working right now to shape the future corporate and R&D strategy for BioMarin. We're setting very ambitious long-term financial targets and we're starting to deliver on them. We've got a real sense of urgency. I think that comes across and we're really looking forward to sharing our vision with you and our full plans with you all in New York Investor Day on September 4. Meantime, thank you very much for your attention. I wish you all a wonderful evening. Take care.