BMRN - NASDAQ

Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time, I would like to welcome everyone to the BioMarin Pharmaceuticals third quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Traci McCarty, Group Vice President of Investor Relations. You may begin.

Thank you, Operator. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic search 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; Brian Mueller, Executive Vice President, Chief Financial Officer; Cristin Hubbard, Executive Vice President, Chief Commercial Officer; and Greg Friberg, Executive Vice President, Worldwide R&D. I will now turn the call over to BioMarin's President and CEO, Alexander Hardy.

Thank you, Traci, and good afternoon, everyone. Thank you for joining us today for our third quarter 2024 earnings call. The strategic and operational decisions we have made over the last nine months are driving strong performance and I'm pleased to report another quarter of record financial results with revenues reaching $746 million, marking a robust 28% increase compared to the same period in 2023. As outlined at Investor Day, we are implementing our new corporate strategy focused on innovation, growth and value commitment. During the quarter, we made significant progress on each of these pillars resulting in strong performance. We are structuring the company around new business units in skeletal conditions, enzyme therapies, and ROCTAVIAN to drive accountability, deliver stronger revenue growth and improve efficiency while reaching a growing number of patients around the world. We have set this company on the path to stronger performance and these results are evidence of our progress. Today I'm also delighted to welcome Greg Friberg and James Sabry to BioMarin. With Greg and James in roll and the addition of Cristin Hubbard earlier this year, we have incredible strength and depth in our leadership team with the right combination of scientific and business acumen. I'm confident that with these leaders in place, we are positioned to deliver the new strategy and innovate across all aspects of our business. Greg and Cristin will provide their updates on the call in a moment. Moving to the results in the quarter, strong financial performance was driven by a 50% revenue growth in VOX

Thank you, Alexander. Please refer to today's press release summarizing our financial results for full details on the third quarter of 2024, including reconciliations of GAAP to non-GAAP financial measures. All third quarter 2024 results will be available in our upcoming Form 10-Q which we expect to file in the coming days. As Alexander just shared, our record setting performance that generated $746 million of total revenue drove robust growth year-over-year. VOX

Thank you, Brian. As you have heard, we are proud of our commercial performance, demonstrating continued momentum in the third quarter. The VOX

Thank you, Cristin. I'm happy to speak with you on my first quarterly results call since joining the company in September. Since joining as the lead for worldwide R&D, I've been energized by the team's commitment to innovation and their emphasis on execution. I look forward to leading this organization as we target 11 high impact launches by 2034. These include two by 2027, those being VOX

At the 16th Annual International Skeletal Dysplasia Society meeting in September, BioMarin and our external research partners contributed to eight presentations, including four orals, discussing the value of VOX

[Audio Gap] Second on business development, James welcome, congrats on the new position and great article in biocentric over the weekend. I'm curious, based on the presentation you noted you wanted target deals less than $1.5 billion. What phase of development would be ideal for BioMarin at this stage in the pipeline's maturity? Thanks.

Yes, I'll take the first question. Thanks so much for it. So with regard to VOX

Hi Phil. This is Alexander. I'll take the question on business development chain which is not only the Q&A today. With regard to business development, we will be focusing as you say, on transactions less than $1.5 billion in transaction size. We'll have two areas of focus that James will be prioritizing. One is really leveraging our scientific right to win our development, regulatory, manufacturing and commercial footprint across the globe in approximately 80 countries to identify potential deals. He is also working with research in terms of identifying earlier transactions in our pipeline to bolster our early research efforts and pipeline. So those are the two focuses that that James has. He's just into his first -- ending his first month in the role and you'll hear more from him in the future.

Perfect, thanks for taking our questions.

Your next question comes from the line of Salveen Richter with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking our questions. Could you just walk through the development strategy here for BMN 333? And how quickly you can move into other indications beyond achondroplasia with the long-acting CNP? And then separately, with regard to your IP strategy here and in the context of Ascendus and the long-acting CNP? Just help us understand where you stand on your IP and just the strategy on the forward here with regard to your franchise?

Thanks, Salveen. This is Greg Friberg. I'll take the first question. With regard to BMN 333, of course we're quite excited to be able to bring that into patients and we should be entering the clinic early next year. The strategy behind the molecule, of course, is to elongate the half-life and we're confident that the linker technology and the binding technology again are tried and true and we'll be able to do that. What that can afford, of course, is one of two things. The less exciting would be less frequent administration. But the more exciting aspect is the one I just want to focus on for a moment, which is if you can change the PK profile of this near native CNP and you can increase the delivery of that hormone into the body in a safe way, then we could think about actually increasing not only the pharmacokinetic exposure to CNP, but also the Pharmacodynamic effect. And our preclinical models would suggest that there's more to be gained there with regard to activity and bone lengthening. And the first set of data is going to give us a lot of important clues as to whether or not the PK profile is playing out the way that we had anticipated. That's data that we should have in-house next year. The healthy volunteer study is going to give us a good read on that PK profile. Depending upon the results there, we could go in a variety of directions. We do believe, as you point out nicely that this is a pathway that should be able to address genetic skeletal disorders beyond simply achondroplasia and hypochondroplasia, and the teams are working very diligently to come up with scenarios if that profile plays out the way that we believe it may to accelerate that approval, more to come there. But I think you've highlighted very nicely that there are opportunities here to accelerate the program, and we'll be looking for those actively.

And Salveen, with regard to your question around IP, I'm not going to elaborate further on IP beyond what we said on Investor Day, I simply put we're confident in the intellectual property we have, and we plan to vigorously defend our intellectual property.

And your next question comes from the line of Jessica Fye with JPMorgan. Your line is open.

Hey guys good afternoon. Thanks for taking my questions. And first, on the P&L, COGS looks elevated this quarter. The press release makes mention of the impact of ROCTAVIAN inventory reserves. How big was that? And would gross margin have been in line with more recent quarters without that effect? And then maybe following up on Salveen's question for 333, I think you've talked about single ascending dose data in 2025. Is it possible we could get a full dose data next year as well or if not, should we think of that in 2026? Thank you.

Hi, Jess, this is Brian, I'll take the first question on COGS and margin. Good pickup. Cost of goods sold here in Q3 2024 at about 25% of revenue and a 75% gross margin. That is a click down from where we've been trending close to 80%. Two things going on there this quarter. First is that Bolus of ALDURA

This is one or the other?

No, roughly half and half between those two.

Okay. Thank you.

Thanks.

And Jessica, with regard to BMN 333, the single ascending dose study, of course, is in healthy volunteers. Right now, what we're committing to in 2025 is that, that is the PK data that we'll have in-house. Of course, the data we are very eager to gather would be in patients and would be to see dose ranging and multiple ascending doses. As of right now, what we're committed to publicly is the 2025 data point, and we'll keep you updated as we move along.

Your next question comes from the line of Paul Matteis with Stifel. Your line is open.

Great. Thanks very much for taking my question. As it relates to your reiteration of guidance, I think the inference that many analysts and investors have made that if you're willing to or I guess, confident in reiterating your guidance in the face of made some surprising increased competition in achondroplasia. You must have thought originally that your guidance issued at the Investor Day was fairly conservative. Is that the right inference? And if so, on what points did you feel like your initial guidance was conservative? Around what points do you feel like – the Street is missing the big picture on your long-term vision around the size of these markets and your penetration? Thank you.

Thanks, Paul. This is Brian. I'll start and then Alexander has anything more to add. We would not describe the long-term guidance as conservative. What we have said is that when the new competitor data showed up, which was different than what most of us had seen leading up to that announcement. We took that additional data, went back and worked it through our model. We shared on Investor Day that our long-term revenue guidance did already have a competition assumption. We didn't go into detail, but fair to say it was based on data available to the world at the time, which was not that most recent data. And so when we went back and reworked our assumptions around both competitive share as well as, frankly, other levers available to us across the portfolio and within VOX

Thanks very much, Brian. What I would add, Paul, is if you for the period into the longer term, beyond the 2027, we're talking about and we're reaffirming our targeting mid-teen CAGR and the 5 billion potential for skeletal conditions. Obviously, that very much factors in also the tap in these further indications beyond achondroplasia. And just to reiterate, we resumed very modest penetration levels in forecast that underpin that outlook. And additional competitors should they declare a development plan in those indications. They will be contributing to the growth of those markets, which we would share with them in some proportion. And then the last thing I would say is, of course, all of this excludes intellectual property and our confidence in our intellectual property position, which I've already talked it.

Great.

Your next question comes from the line of Eli Merle with UBS. Your line is open.

Hi. Thanks for taking the question. Can you give us a bit more color on what's driving the increase in the ERT business growth? And I guess your confidence that this can continue to grow in the high single digits for years to come. I think you mentioned some initiatives you're working on, if you can maybe elaborate a bit more on what those entail? Thanks.

Hi Eli, thanks for the question, it's Cristin. So yes, great question on our ERT business. So as we had said at Investor Day and stand firm behind we anticipate high single-digit growth for the years to come in that business. And primarily driven right now there are a lot coming from the PALYN

Great.

Your next question comes from the line of Cory Kasimov with Evercore. Your line is open.

Hey, good afternoon guys. Thanks for taking my questions. Just two from me as well. So for VOX

Thanks, Cory. This is Greg. For the first question, we are tracking those patients from the Phase 3 program very vigorously. We're not going to release numbers with regard to how many patients have reached final adult height. Clearly, that is an endpoint that regulators are very interested in, and that is part of our commitment for post-marketing requirements to provide that data at a reasonable time. Part of the challenge, of course, is that these patients reach that final adult height in different timing based on what age they were when they entered the study. But suffice to say, we're, of course, following that very closely and continue to make progress year-to-year. With regard to the Duchenne Muscular Dystrophy program, yes, we're very excited that we will have muscle dystrophin data from the first six patients in-house midyear. We'll be looking at that. And just to take a step back for those who aren't quite as familiar, this is a molecule that's engineered to increase dystrophin levels in the muscle to levels that are dramatically higher than what we've seen with other molecules in the space. And there are a variety of engineering levers that were pulled to try to accomplish that. But the most important of which is addressing a novel binding domain in the nucleic acid that at least the preclinical models results in 30%, 40%, 50% dystrophin levels in the rodent models at a much higher rate than what we've seen with other molecules that we both synthesized and those that are available. So that data from the first cohort is going to give us a line of sight on whether or not we can hit our target. Our target is a 10% level or higher at steady state in the muscle of these boys who are on the study. Now it's important to remember that steady state actually is not at 25 weeks. It may be later than that. But we've done some modeling, and I think with our 13-week data and our 26-week biopsies, we'll have a good read by midyear where we're headed. Depending on what that data is, it may be worthy of release, it may be giving us information that also tells us that we need to adjust the dose but we will certainly be revealing that data when we feel that it's of a sufficient quality and volume that it would be meaningful to release. Beyond that, not much more to add at this point.

Okay. That’s very helpful, Greg. Really appreciate it.

Your next question comes from the line of Kostas Biliouris with BMO Capital Markets. Your line is open.

Hello, everyone. Congrats on the quarter and thanks for taking our questions. Two quick ones from us, one on VOX

Thank you Kostas, this is Greg again. Why don't I take a stab at those two. With respect to VOX

Your next question comes from the line of Joe Schwartz [Leerink Partners]. Your line is open.

Great. Thanks very much. I have a question on 333 and also 390. So at your Investor Day, I think you projected that 333 could come to market in 2030. But since your CNP patent expires in that year, that doesn't seem to give you much time to convert people to your own long-acting before generics arrive and then you'll probably also have a couple of branded competitors by then. So I'm just wondering if you can talk about the practical benefit of 333 is expected to be on the business? And then likewise, you noted there that your next gen PALYN

Thanks, Joe. I'm going to hand it off to Alexander first, and then I'll.

Yes. Thanks very much, Joe. I just wanted to just start off with the first part of your question with regard to 333 and the rationale given the patent on the VOX

Thanks, Alexander. With regard to BMN 390. I would just comment that we're very early in its development. We're pleased that we'll be able to file an IND targeting next year. The dates that you laid out indeed represent similar development time lines to the predecessor molecules. I would think of those as the upper error bar. We're going to be working very diligently not only has the profile reveals itself, but also as we learn more in the marketplace of developing PALYN

Your next question comes from the line of Akash Tewari with Jefferies. Your line is open.

Great. Thanks so much. Can you talk about the dynamics between total patient adds and incremental revs for VOX

Yes. Thanks so much. I'll start with your first question, Akash, about the incremental patient adds and really the question about VOX

Akash, just on your question on IP, I'm afraid I'm not going to elaborate further on our IP strategy or how this might play out. We'll keep you informed as and when we take action. But that is what we can share at this point.

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

Yes. Thanks for taking the question. Just on the clinical premise behind BMN 333, I hear you guys talk about improved PK and PD with a long-acting CNP that could drive better growth metrics. But I get this question from investors. Maybe walk through the differences between 333 and TransCon CNP? And why – if we haven't seen a discernible growth benefit from that asset, why mechanistically would 333 be different? Thanks.

Thanks, Chris. This is Greg. Let me take a stab at that. First and foremost, we are targeting a free CNP level that is higher than not only what VOX

Thank you.

Your next question comes from the line of Mohit Bansal with Wells Fargo. Your line is open.

Great. Thank you very much for taking my questions. Two, if I may ask. So one is – what is your base case assumption around the length of trial for BMN 333 at this point? Is it a two year controlled trial or one year controlled trial? I'm asking because if there's any room to expedite it and then maybe launching before 2030 here. Number two, it does seem like NAGLA

So thanks, Mohit, for the question. For the Phase 3 study, the development plan for BMN 333, of course, there's two variables in play here. Any study, of course, needs to recruit the set of patients and the effect size that we would be targeting would absolutely drive not only the number of patients we need, but the amount of time that we take to recruit those patients. The profile is going to, again, reveal itself incrementally. I think the PK will be the first step. But if we believe that this is a molecule that can deliver much higher CNP exposure in the patients. And if we believe that, that translates into effect sizes, that would indeed change the endpoints that we'd look for in a Phase 3. I – there are far too many permutations to be able to go into additional details at this point of what the Phase 3 study might look like or might not look like. But inherent in your question is, can this be accelerated? I believe there are scenarios where if the profile plays out the way that we're anticipating that we will have the chance to try to accelerate those time frames. No promises today, but it's something we're actively looking at. And urgency to get to patients is one of our absolute core values here at BioMarin. And we understand that if we have a molecule that's delivering something more valuable than even our own product, we would want to bring that as quickly as we can.

Thanks. Mohit, this is Brian. I'll take the NAGLA

Thank you.

And we have reached the end of our call, and this will be our last question from the line of Gena Wang with Barclays.

So I would just ask one question regarding the BMN 333. Greg, you did mention that you wanted to have a higher – better efficacy hopefully, with a better exposure. But based on the VOX

Thanks, Gena. The your questions with regard, why don't I think first Investor Day figure. With a molecule like BMN 333, there are two species, of course, that we need to be talking about when we look at PK. One will be the native molecule. That will include the linker technology, the binding technology and so forth. And I believe that's what was shown in Investor Day, a much higher molecular weight. So again, if you're comparing the units, they will look somewhat differently. From a pull-through, what we, of course, care about is the liberated, the free CNP and we, of course, from our preclinical data in humans will be measuring very closely. That profile of free CNP and we do believe that we can safely and in a way that has a different shape to the PK curve. So it would rather than be a software tooth pattern of a shorter half-life molecule, would be able to increase AUC, again, increased time above threshold we believe not only can we increase the exposure of CNP there, but do so in a way we could see physiologic differences as compared to VOX

And at this time, I will turn the call back over to CEO, Alexander Hardy for closing remarks.

Thank you, operator, and thank you all for joining us today. As you've heard, we have the team in place this quarter now to deliver on our new corporate strategy that you heard about at Investor Day, focused on innovation, growth and value commitment. And we've made significant progress on each of these. Today's strong quarterly performance highlights the ongoing implementation of this strategy under BioMarin's new operational plan to achieve sustained and significant returns for the benefit of all stakeholders. We're looking forward to keeping you apprised as we continue to execute on these plans. Thank you very much for your attention, and good day.