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

Thank you, operator. Thank you all for joining us today.

To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development.

Results may differ materially depending on the progress of BioMarin's product 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.

On the call today from BioMarin's management team are J.J.

Bienaime, 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 and 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, J.J. Bienaime..

Thank you, Traci, and good afternoon, everyone. Thank you for joining us on today's call. I'm very pleased with our performance and progress in 2021 and also pleased to share our outlook for the year ahead for 2022. So last year, we laid the foundation for our transition to sustainable GAAP profitability beginning in 2022.

The addition of our seventh commercial product, VOXZOGO is expected to drive a meaningful step-up in revenues beginning this year. As indicated in the increase in full year 2022 VOXZOGO revenue guidance announced today.

$2.1 billion or 14% growth year-over-year represents the midpoint of our 2022 full year guidance and demonstrate in terms of revenues and demonstrates the return to a significant double-digit sales close for BioMarin.

It is important to note that our anticipated top line growth in 2022 is expected despite the reduction improvement contribution since the loss of exclusivity in the United States in late 2020.

This further underscores the strength of our base business and the opportunity that lays ahead with VOXZOGO, especially considering how early we are in the global launch. Jeff will provide more details on the launch in a moment. But also, I guess you noticed in our release that we generated $5.8 million in Q4 for VOXZOGO.

There was a first quarter that the product was in the market, mainly in Europe. And the vast majority of the sales were in Europe, and that does show that once you have the right products, European losses can take off pretty fast.

So beyond the strength of our robust launch of VOXZOGO, the recent two update from our pivotal study with ROCTAVIAN provides further evidence of the transformational nature of geology treatment for people with severe hemophilia A.

The results from our 134 subject pivotal study that we shared in January demonstrated durable, consistently control with annualized billing rates reduced by 85% and with 95% of participants remaining of Factor VIII property through two years. To this pivotal with hemophilia A seeking control that is superior to standard of care prophylaxis.

We believe ROCTAVIAN represents a very attractive treatment option. And based on the results observed in our Phase II and Phase III studies, we believe that this data will provide supportive evidence of efficacy as part of the review currently underway in Europe as well as the BLA we intend to be submitted in the U.S. in June.

To summarize, we have set the stage for transformational growth for the Company and the people we seek to treat.

In 2022, we expect to turn the corner to sustainable GAAP profitability, ramp up our largest pediatric opportunity to date with VOXZOGO, advanced our applications to Europe and the United States with Rotarian and progress and achieve the progress of pipeline in the history of BioMarin.

The financial, commercial and regulatory momentum at BioMarin has never been stronger, and we want to thank you for your continued support throughout our foundation building journey. I especially want to thank our BioMag colleagues for their continued commitment to developing the essential medicines that help so many.

So I will now turn the call over to Jeff to discuss the commercial business update.

Jeff?.

Thank you, J.J. I am pleased with the team's performance across all brands and regions during 2021, and I'm very excited about our uplift for 2022. As noted in today's press release, 2021 VOXZOGO revenues were $5.9 million.

And today, we increased VOXZOGO 2022 full year guidance to between $90 million and $115 million based on strong prescription demand seen so far this year. We continue to believe that VOXZOGO represents our largest brand today. As J.J.

already noted, the underlying demand for our products is expected to drive double-digit sales growth this year with VOXZOGO being an important contributor to the growth story.

On that note and starting with the VOXZOGO launch, we are pleased to share that by February 15, 2022, or midway through Q1, an estimated 210 children were being treated with commercial VOXZOGO across 10 active markets with an estimated additional 54 children in process in the United States.

The active markets include Germany, France, the U.S., Switzerland, Austria, Israel, Singapore, Argentina, Luxembourg and Chile. In Europe, we have been fortunate to have access to the two largest markets, Germany and France. This has resulted in rapid uptake early in the European launch, which we expect will continue through 2022.

As noted in the list of active markets, we are also seeing uptake in smaller individual countries, which collectively will contribute to meaningful revenue uptake also this year.

We are pursuing reimbursement in other material European markets such as Italy and Spain and expect that it will take time to reach price and reimbursement approvals in these markets. Outside of the EU, Russia and Middle East markets are also expected to come online this year.

In the U.S., we have the ability to quickly respond to prescription demand following approval. While U.S. payers are numerous and diverse, we have been successfully navigating the medical exception process to facilitate access to commercial box so go. We have seen the first coverage policies being published by U.S.

payers the details of which are consistent with our expectations. As expected, we are seeing prescriptions mainly from genetics and pediatric endocrinologists, which is a new and targeted call point for VOXZOGO.

In summary, we're very pleased with the pace of uptake during this ramp year for VOXZOGO, launching in the EMEA region ahead of the United States was the first for the dual launches as planned. We look forward with registrations in Japan and Australia later this year as these markets are expected to generate a high level of demand for VOXZOGO.

Turning now to our enzyme replacement therapy brands, Vimizim, Naglazyme and Brineura, we were pleased to have achieved 8% growth year-over-year in 2021 and for these brands in total. Starting with Vimizim, revenues in 2021 were robust as expected and benefited from additional Q4 ordering to end the year at $623 million or 14% growth year-over-year.

As mentioned with Naglazyme, 2021 year-over-year results were impacted by the timing of large orders from Latin America in 2020. We remain encouraged by high compliance rates and year-over-year patient growth of approximately 5% and 1% for Vimizim and Naglazyme, respectively.

For Brineura, 16% revenue growth year-over-year and sales of $128 million represents continued growth in North America and the EMEA regions principally, children on Brineura therapy increased by approximately 18% year-over-year. Moving now to Palynziq.

Net product revenues grew 39% in 2021 as compared to 2020 and reached $238 million for the full year. Sales were driven in the U.S. by a combination of new patient initiations and patients achieving maintenance dosing. Patients on therapy increased approximately 15% in 2021 as compared to 2020. We are seeing the majority of growth from the U.S.

market, which continues to be impacted by reduced PKU clinic bandwidth due to the pandemic. Continuing with the PKU franchise, Kuvan 38% year-over-year compared to full year 2020 and primarily due to the U.S. loss of market exclusivity in October 2020. We continue to expect a material contribution from Kuvan in 2022, as noted in our full year guidance.

Lastly, with the CHMP opinion on ROCTAVIAN expected in the second quarter, launch readiness activities continue to progress. The team is on board and well prepared to launch, assuming regulatory approvals later this year.

We are encouraged that our longer-term data results offer an attractive value proposition and treatment option for those with severe hemophilia A. We look forward to providing you with more detailed updates of launch. In conclusion, in 2022, we anticipate increased demand for all of our commercial brands with the exception of Kuvan.

Our MPS products are expected to contribute significantly to revenue growth this year. We also expect our newest brand, VOXZOGO, to be a meaningful factor in this ramp year. The global launch is on a strong trajectory.

And while it is early days, we believe the robust early prescription demand represents the foundation for continued growth, including new markets through 2022. The commercial team is energized to be in global launch post with VOXZOGO, our largest potential revenue opportunity to date.

And we look forward to keeping you apprised of our progress over the year. So thank you for your attention, and I will now turn the call over to Hank to provide an R&D update.

Hank?.

Thanks, Jeff. We are in the organization echoes your enthusiasm.

I appreciate all the hard work of the commercial team, making available the first-and-only treatment option for children of achondroplasia following VOXZOGO approvals in Europe and the United States last year as well as other territories based on the targeted mechanism of VOXZOGO, which promotes independent bone growth while growth plates are open.

Treatment can have a meaningful and lifelong effect on children with contemplation. For families in Europe seeking treatment, and we're very pleased that health authorities approve VOXZOGO for 12-year ages to an up, underscoring the importance of beginning treatment as early as possible to provide maximum benefit.

Today, we provided a top line update from the Phase II randomized double-blind placebo-controlled VOXZOGO study in infants in children up to five years of age with achondroplasia.

We are encouraged to share that 52 weeks results trended in favor of VOXZOGO compared to placebo on HEIGHT Z score annualized growth velocity and no worsening of proportionality in the overall study population. This is a relatively small Phase II study when one considers the high variability between age cohorts.

Regarding the safety profile was generally consistent with older subjects from the Phase III VOXZOGO-301 study in current label population. Serious adverse events were higher in the placebo of 18% compared to VOXZOGO treated children at 7%.

All serious adverse events, including a fatal event of sudden infant death syndrome in the treatment group were deemed by investigators to be unrelated to treatment. A small increase in events of sleep apnea were reported in the treatment group that were mild or moderate in severity and did not require treatment discontinuation.

These events will be fully assessed when sleep study and MRI data are available. Our next step is to engage with regulatory authorities to discuss next steps regarding efforts to expand access to VOXZOGO treatment for this younger age group.

We plan to share more detailed results at a medical meeting as we receive these data less than 24 hours ago, so please stay tuned. Briefly on ROCTAVIAN as J.J. said, 2022 regulatory milestones are tracking to plan CHMP opinion is expected in the second quarter and resubmission of the biologics license application is planned for this June.

This resubmission will be followed by an expected six-month review procedure should the resubmission satisfy the food and drug administration thresholds and appreciating that there has been inconsistent communication in this field with this novel platform.

Based on the dramatic reductions in bleed rates, factory utilization of Factor VIII infusion rates at year two following treatment with ROCTAVIAN is shared in January and again at EHA earlier in February. We remain confident in ROCTAVIAN's potential to be an important treatment option for those with severe hemophilia A.

Turning now to BMN 307 gene therapy for phenylketonuria. As we announced last week, the FDA has requested data from additional new nonclinical studies to assess oncogenic risk to human participants, which is expected to take several quarters or more.

As a reminder, the hold was based on safety funds from a nonclinical non-GLP pharmacology study in immunodeficient mice. As we said when we announced the clinical hold that we holds true today, the scientists striving to serve patient needs, we remain committed to understanding this fine.

We are in the process of collaborating with the FDA on specific next steps and we'll provide you with an update when we have meaningful information share. Finally, turning to the earlier-stage pipeline at R&D Day last November.

We were very pleased to have shared a detailed overview of the many products currently under year, including BMN 331 gene therapy hereditary angioedema. That trial is currently open for enrollment.

With BMN 351 for Duchenne muscular dystrophy, we expect to file the IND in the first half of this year with the goal of treating the first Duchenne boys in the fourth quarter of this year. We also hope to advance studies following desolation BMN 255BN2 which addresses the subset of chronic renal disease in the second half of the year.

We look forward to keeping you apprised of our progress across the R&D organization throughout the year. Thanks for your support, and I'll now turn the call over to Brian to update on financial results in the quarter.

Brian?.

Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the fourth quarter and full year 2021. Since Jeff touched on many of the top line results from the commercial business, I will primarily focus on operating expenses, bottom line results and our 2022 guidance.

As usual, all results will be available in our upcoming Form 10-K, which we are on track to file over the next few days.

At the beginning of last year, we referred to 2021 as a "hold the line here for our financial performance", meaning that our goal was to navigate a handful of revenue growth headwinds with expense control and a focus on operating performance. We are pleased to have accomplished that objective.

Despite 2021 revenue dynamics that included a decrease in Kuvan revenues of $172 million year-over-year, total revenues were essentially flat in 2021 as compared to 2020.

We and modest 2021 expense growth resulted in a full year GAAP net loss of $64 million, landing at the midpoint of our guidance and full year non-GAAP income of $243 million within the top half of our guidance. BioMarin's strong operating performance in 2021 also translated into substantial cash flow for the year.

Total cash and investments grew by $171 million in 2021, finishing the year with over $1.5 billion, fueled by over $300 million of positive cash flow from operations.

Contributing to those bottom line results were operating expenses that fell in line with our expectations for the fourth quarter and full year 2021 and were mostly consistent with 2020 level. R&D expenses for the fourth quarter and full year 2021 were $161 million and $629 million, respectively.

SG&A expenses for the fourth quarter and full year 2021 were $218 million and $759 million, respectively. SG&A expenses increased in the fourth quarter of 2021 as compared to last year, mostly due to the global launch of VOXZOGO and some year-over-year increases in administrative costs. Now moving to 2022 guidance.

As noted by J.J., the expected continued strong growth of our base business, plus a significant contribution from VOXZOGO in its launch year we expect total revenues in 2022 of between $2.05 billion and $2.15 billion, which at the midpoint represents 14% growth over 2020.

Within that revenue guidance, we observed at our base business marketed brands, except for Kuvan, are growing by 13% year-over-year at the midpoint.

And as Jeff highlighted, we're pleased to improve our 2022 VOXZOGO total revenue guidance from the preliminary guidance that we shared earlier in the year based on our observations of the VOXZOGO launch these first two months of 2022.

And lastly, regarding revenues, given the estimated timing of ROCTAVIAN approvals and launches in the second half of 2022, we anticipate that ROCTAVIAN will be a modest contributor to 2022 revenues. Moving to our expectations for expenses and bottom line in 2022.

Consistent with our plans to increase leverage from the operational foundations built in recent years, our estimated increases to SG&A and R&D expenses in 2022 are at rates significantly lower than our expected revenue growth.

And importantly, as we recognize the importance of fueling our innovation into the future, R&D expenses are increasing at a rate higher than SG&A expenses. This measured growth in expenses is a key component to our transitional GAAP profitability objectives for 2022, where we estimate earning GAAP net income of between $95 million and $135 million.

Noteworthy is that our GAAP profitability expectations for 2022 are expected to benefit from, but are not dependent upon the after-tax gain from the expected sale of our recently obtained priority review voucher announced earlier this month.

With respect to non-GAAP income, we plan to adjust out the gain on the expected sale of the PRV and a further illustration of our journey into P&L leverage in 2022. We expect non-GAAP income for the year of between $350 million to $390 million, which at the midpoint is over 50% growth as compared to 2021.

In closing, while 2022 is expected to be a transitional year into our long-term strategy, we are pleased to see our long-time goals for BioMarin start to materialize, which includes building an enterprise that can support both continued product approval and innovative pipeline growth, while at the same time, generating sustainably increasing profits and positive operating cash flow.

We believe that the strength of our base business, the recent approvals and launches of VOXZOGO and the commercial prospects of ROCTAVIAN after observing the two-year Phase III data represent three strong pillars of near-term growth.

These are followed by the increasing number of opportunities in our early-stage pipeline that have the opportunity to drive BioMarin's growth further into this decade. Thank you for your attention, and we'll now open your questions.

Operator?.

[Operator Instructions] For the first question, we have Salveen Richter of Goldman Sachs. Your line is open..

One on VOXZOGO.

How are you progressing with expansion to the dedicated achondroplasia centers versus the initial targeting of skeletal dysplasia or genetics? And then secondly, on the clinical hold that's playing out with the PKU program, could you just talk about what exactly the FDA is requesting and whether there is something about PKU itself that makes it more of a concern or less amenable to gene therapy?.

Hi, Salveen. I'll take the first question on VOXZOGO. So, what we experienced so far, which is consistent with our expectations are that some, a portion, a minority of achondroplasia children are being seen and followed by genetics, including in skeletal dysplasia clinics.

And this is a prescriber base that we have very good relationships with that are established. What we think is that -- and our experience has been that, that gives us kind of quick access to that group of patients based on our existing relationships.

What we also think is that because the majority of achondroplasia patients particularly in the United States are not being actively managed by that prescriber audience.

We think that driving to a new treatment home with pediatric endocrinology or endocrinologists is an appropriate strategy, pediatric endocrinologists being both the growth disorder specialists and also having capacity that we don't currently see in genetics clinics.

So our early experience has been a lot of children in the United States referred in by geneticists and skeletal dysplasia clinics. That's great.

And other children getting into a referral network and being seen by what will -- what is a new call point for BioMarin, but a very interested and engaged new call point, and that is a relatively small number of pediatric endocrinologists that specialize in growth disorders and are proving to be very interested in treating achondroplasia and prescribing VOXZOGO.

So good news and on both of those fronts..

And then the second part of your question, Salveen. It's a little bit hard to say exactly what the FDA is looking for in so far their letter. It appears that while we satisfied some of their concerns, they appear to be looking for more direct evidence of the mechanism of the underlying cancer causation.

And therefore, they've asked for these additional preclinical experiments. And we'll provide updates when we have more specific updates to provide.

As to the role of PKU in this consideration in general, I think that -- the only thing I can say there is the agency has made no secret of commenting that they consider gene therapy approaches for conditions for which there is available therapy, different from conditions for which there isn't available therapy.

And exactly how that fits into their overall decision-making is not crystal clear to us at this point..

Hank, you might want to comment also on the fact that gene therapy for PKU will be for adults only and adults PKU with -- there's less of a need for treatment in some parts of the world and [indiscernible]..

Yes. And putting this in a positive way, I mean I think the burden of illness is really quite substantial for children with phenylketonuria. And for adults with phenylketonuria, there's less compelling evidence of effectiveness of the products.

But all that said, I think it's hard to dial in exactly how much as a therapeutic indication is contributed to the agency's conservatism around the 307 findings..

Thank you. And then for the next question, we have Cory Kasimov of JPMorgan. Your line is open..

Hank, I was hoping you could provide some more details on the VOXZOGO data in the zero-to five-year olds.

I'm curious, was this powered for statistical significance and then intended to be a registrational Phase II? Or was it too small for that? And on the safety front, it's nice to see overall adverse events lower than placebo, but can you just address the sleep apnea in a single case of SIDS just kind of any description or color around that would be helpful..

Yes. So, we're obviously hoping to get an amazingly great signal out of the 206 study, and we're very encouraged that, in fact, we did see trends. And I think the key lesson learned out of all this is that these different age ranges are a little bit more complicated in regard to both signal and noise. And so we just got these data.

We need to dig into a little further to generate some hypotheses about why we didn't get a gigantic signal of effectiveness. And so, I'd say on that score, stay tuned. We are encouraged by the safety insofar as very low rates of hypotension that was clinically significant, consistent with the older population.

In the older population, by the way, we did not see a meaningful imbalance of sleep apnea. We're reporting this now because these were adverse events that were reported to us, even though we haven't had a chance to fully dig into laboratory or MRI evidence of what's going on for these children in the main.

As I said, and I apologize I might have said it really fast that the events of sleep apnea that occurred were mild to moderate in severity were deemed unrelated by the investigators. And a large part of that has to do with the fact that sleep apnea is not an uncommon occurrence in this patient population, as I mentioned.

Even in the older population, there's a little bit of sleep apnea that's been recorded. So whether this is really drug-related or it's just a bad luck signal, we're going to need to get more information. The good news about it so far as like I said, mild to moderate didn't result in discontinuation deemed unrelated by investigators.

And then the child with the sudden death is a child who, again, the event was deemed unrelated by the investigators, a child who -- these children -- the [indiscernible] mortality rate for children with achondroplasia is like 50x that of an unaffected child. So, these events will happen unfortunately in children.

And I guess at a minimum, you conclude that that I tell you didn't rescue this child, but we'll have to look at the overall pattern of safety that we saw in the trial with a lot more detailed laboratory evidence still yet to come..

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

This is Ally Bratzel on for Chris today. So just on VOXZOGO, could you talk about your expectation for the geographic patient split that's embedded in your 2022 guidance? I think just by our math on VOXZOGO patient numbers, if you include those 54 U.S. patients in process, the split right now is around 20% in U.S., 80% rest of the world.

So should we expect that split to hold up for the full year? And related, I know you talked about Japan actually being a more important country for you with the VOXZOGO launch. Could you sort of talk about what's driving your optimism on the VOXZOGO opportunity there? I guess how you expect launch dynamics there to play out compared to the U.S.

and EU?.

Okay. Good question. So the Q4 revenue that we reported was predominantly from ex-U.S., as you would expect, because we got a U.S. approval late in Q4 whereas we were able to start patients in Q4 in Europe and start driving that revenue. As we begin the year, we're off to a quick start in the United States.

But we're also off to a quick start in Germany and France, which are the two largest markets in Europe. And we've got smaller contributions coming now from a number of smaller countries outside of the United States. And as you noted, we are expecting an approval in Japan around midyear. So the picture is going to be pretty diverse.

I'm not going to help you sort out the specifics of geographic mix. I am going to point you back to our revenue guidance for the year starting out this year.

Relative to Japan specifically, Japan is depending on how you measure it, either the second or the third largest pharmaceutical market in the world and a market where BioMarin has long invested in having capabilities to operate on our own.

It happens that with the rare disease portfolio that we have, we haven't had the right opportunity to have a brand that would be representative of the second or third largest market in the world.

That picture is about to change with VOXZOGO, where we have relatively uniform incidents and prevalence of achondroplasia, means that Japan is a large market -- Japan is a large market with a large population, we expect a large population of achondroplasia kids.

And we know that Japan is developed already for achondroplasia, the only place in the world where growth hormone is approved for the treatment of achondroplasia. I think the prevailing opinion there would be pretty straight from prescribers that growth hormone is not particularly effective, if at all.

And there's a lot of excitement, including from clinical investigators in Japan about VOXZOGO. So that's what's driving our enthusiasm about Japanese opportunity..

Ally, you're right. I mean before the launch, we emphasized the fact that the ex-U.S. market was significantly larger than the U.S. market by 80-20 and even 85-15. So it's very likely that over time, the European -- ex-U.S. sales are going to be greater than the U.S. sales. Also, the U.S. as Jeff said, we only got a pro in the U.S. in very late 2021.

So obviously, the European had almost like a pastor over the U.S. But that being said, the demand and the enthusiasm for -- by the U.S. patient community for VOXZOGO treatment is vague and very similar to ex-U.S..

Your next question is from Phil Nadeau of Cowen. Your line is open..

A couple on ROCTAVIAN. First, you had been guiding to an FDA meeting during the first quarter of this year, pre-submission meeting. Any update on the stats of that meeting, whether it's happened or what's likely to be discussed? And then second, in the recent presentation of the updated Phase I/II data for ROCTAVIAN.

There was a disclosure of one salivary gland cancer, those deemed unrelated to ROCTAVIAN. We're curious to hear more about in that case, how long after dosing and any other information around that patient that you have would be interesting. Thanks..

As far as status of individual interactions with the FDA, we're -- given the ongoing nature of our regulatory interactions, we plan to update you only as a major milestones of submission of the file by us and then of course FDA's action date.

I mean I think at this point, given history of inconsistent communication from agency, I think it would be unwise to provide internal updates because those are so much subject to interpretation and potential as interpretation. So if you can bear with us, we're going to just stick to the basic facts of the U.S. review of submission and U.S. action.

As far as the scientific report at EAHAD of the individual patient, again, this was an individual who had a serious adverse event via occurrence with cancer in the context of the clinical trial, but was deemed by the investigator as unrelated.

We actually undertook an internal review that was really quite extensive in regard to the case, partly because we have a lot more information from preclinical and other sources about potential safety considerations.

We also discussed these cases in this case with our independent data monitoring committee and concluded that out of an abundance of caution and not due to any particular regulatory requirements, we would go ahead and convey our understanding of the case when it occurred, which was, I think, in late November, early December that we communicated with the agencies.

Since then, they've been fully aware of the case. And to remind you, this is an individual who was dosed to more than five years ago and has an isolated salivary gland cancer.

And we plan to undertake genomic analysis of the tumor for all of us in this field, we're going to expect that cancers are going to be observed in individual patients by protocol where possible, we collect tumoral data to try to understand if there is any relationship at a molecular level between the occurrence of the cancer and the presence of the virus of ROCTAVIAN.

And that analysis hasn't been concluded when that analysis is concluded. We'll share that information in a scientific context.

But again, this appears to be an unrelated adverse event that is in an individual that just five years ago and has been under a lot of review by the investigator by -- or independent data monitoring committee by us and by health authorities around the world.

And the important point at this point is that the ROCTAVIAN trials continue to be open for enrollment..

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

Just had a couple on ROCTAVIAN. I know Hank, you obviously don't want to give a play-by-play but just to be clear, are there any other ongoing, say, CMC or preclinical or any other parts of the filing that will be new beyond the second Phase III and the two-year data? And then the second question more commercially.

I know in the past, you guys have talked about COVID still being a bit of a headwind in PKU clinics.

How is that progressing? Do you still see that having a bit of a lingering effect in 2022? Or is that going to generally work itself out as we move to the middle part of the year?.

Yes. So I'll start with the first part. The thing I can say, Jeff, about the submission play in the United States that, again, getting into the blow by blow, what about -- what's between the blow-by-blow, and we're going to update you at submission and FDA reviews, maybe not a whole lot in there.

But what I can say is it's practically March, we're targeting a submission in June. That doesn't leave a lot of time for a whole lot of new studies to be assembled and digested.

I think we feel with -- especially with the two-year efficacy update, we've really got the evidence that we believe would support a positive benefit risk conclusion, and we'll be providing that to the agency in the first half of this year if all goes well..

Greg, do you want to talk about CMC and inspections done already by ....

Yes. The only thing that we would -- from a U.S. standpoint, we would be in we would be expecting an inspection later this year after the filing and before the six-month time period has ended. So that would be probably in the third or early fourth quarter. So, we're prepared for that.

And -- in terms of CMC, as Hank said, the majority of the refile will be clinical. There's some minor things, but nothing of significance from a CMC perspective that we'll be including in the file..

Do you want to remind that we were expected by EU?.

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

Maybe moving over to the question about the pandemic impact on PKU. So if you look at the Palynziq results for 2021. On the one hand, we're really pleased with the growth in revenue, and we have experienced growth of patients on therapy.

On the other hand, that growth of patients on therapy is slower than it otherwise would have been, but for the impact of the pandemic on PKU clinic capacity. I think that earlier on, we were expecting as a pandemic move from some acute phase, post acute phase that we would see further opening of PKU clinics.

As you know, the pandemic has behaved as it has, and we have been disappointed that we haven't seen PKU clinics open back up as much as we had hoped for the treatment of adults with PKU.

Some of that is due to the fact that these genetics, clinics, PKU clinics more specifically, tend to be located in tertiary medical centers and major metropolitan areas. And those facilities have been impacted by the pandemic.

Another part of it probably is that for the clinic bandwidth that does exist, if a geneticist sees desperately ill children and it's likely that PKU adults that require some attention to start Palynziq are not at the top of the priority list.

So having said that, we do expect continued patient growth, and we are taking tactical measures to try to address the bottlenecks in the PKU clinics and help out where we can with tactic to help adult patients -- more adult patients get started on therapy..

So that being said, we reported revenues for Palynziq in '21 of $237.5 million in our guidance. For '22 million it's $280 million to $310 million. So we do anticipate some pretty significant growth here in '22..

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

I have one regarding ROCTAVIAN safety data. So for the PKU program that if we ask you to do the preclinical studies.

Do you have the same data package for hemophilia A? And then the second related question is what is the latest human biopsy data regarding the AAV integration analysis from current patients? Like what is the longest on drug, the data you have from these patients?.

Very complicated question. Let's see if I can help there. As regards to the ROCTAVIAN preclinical data package and its similarity to what the FDA is asking for from 307 since we just got the clinical hold letter from the FDA on 307, and they've requested additional studies, but they haven't specified additional studies.

And as I mentioned, we're going to be working with them to try to understand what those additional studies will likely be. It would be impossible to compare and contrast what's asked for 307 with what's available already for 270.

But I think that a clear picture can be arrived at from just saying that whatever they're asking for 307 is not in the way of enrollment in the ongoing 270 or 331 trial. So this appears to be -- the clinic report appears to be vector-specific in the United States. And then the second part of your question, remind me. It's also....

The AAV integration analysis, the patients say taking ROCTAVIAN, what is the longest data set, how many years you have?.

Yes. Off the top of my head, I want to come back to you, Gena, on more specifics. And Traci and I will do that. But exactly what's been published. I think there's something in the works on the subject, but I don't think it's yet appeared. But here's an important consideration.

It's been known that AAV could be found to be integrated into the genome of all different species. The question is.

What's the relationship between any of those molecular findings in the occurrence of cancer? It's almost impossible to answer that question in the context of human biology because there are no cancers that have been tied to AAV in humans. So at this point, that would be a scientific curiosity of undefined significance.

Now I mentioned that we'll be sequencing this prorated tumor, fully expect to find evidence of AAV and integration, that sort of thing. As to whether that's causal. We don't think it will be, obviously, but that's why we're going to do the additional analysis.

Just to remind you, with uniQure, they did it in a tumor analysis of integrations in the HCC individual they found. And they found pretty much what was expected, which is a non-clonal dominant relatively low-frequency event of integration.

And with those results, the agency lifted the clinical hold for uniQure I suspect, but until we have all these data in hand that our case is going to follow a similar trajectory..

And do you think the FDA will ask you that data? Or do you think other data will be sufficient enough to show there are no concerned?.

Sorry, for 270 or....

Yes -- sorry, that's full ROCTAVIAN for hemophilia?.

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

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

A question on the VOXZOGO launch. First, I know you're doing a lot of patient access early in the launch. Can you help us understand the impact of gross to net in the quarter and how we should think about that as the launch continues? And second, just hoping you could help us with some color on the U.S.

launch and really towards the types of patients that are now on commercial drug and that you're reps and MSLs are hearing from is they're seeking out treatment? Are there any commonalities for instance, based on age or size or disease severity or statute versus normal ranges?.

Kennen, this is Brian. I'll start and answer your gross to net question and then I'll let Jeff answer the second part. So yes, not much color, frankly, to offer behind the gross to net Q4 revenues. While we're pleased with the nearly $6 million in Q4, it's a relatively immaterial sum overall.

So the gross to net is, therefore, even further immaterial, but we have said that we expect VOXZOGO gross to net to be similar to our other products. And in -- perhaps where your question was going is in these territories where you get early access, you set a price and then you negotiate a final price over the course of time.

We do make a best estimate of what that final price will be instead of those reserves. So any of that is going to be included in the net sales we report..

And maybe I can address your question about color on the U.S. launch. I would start by noting that the most striking thing about the U.S. launch is the diversity that we're seeing in patients and prescribers and geographies and payers. So we're seeing patients being referred in by a mix of prescribers and parents.

In the case of patients that get referred in by parents, we have an opportunity to help those families get connected with an appropriate prescriber of VOXZOGO. As I mentioned earlier, we're mainly seeing a mix of geneticists and pediatric endocrinologists in terms of prescribers.

We're also seeing some pediatricians in the terms of age segmentation, I've been a little surprised to see really a variety of age segmentation, including in a gratifying way older patients that are referring and starting on therapy. As for disease severity, that's not something that we have access to, so I can't really comment on that.

And as I said, geographically, we're getting patients from all over the United States. As you might expect, we're seeing some correlation with how population is distributed in the United States. So I would characterize the U.S. as being highly diverse and probably strong in its diversity..

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

This is Robert on for Debjit. Two questions from us today.

Can you provide any details on updated cadence for the earlier stage portfolio, such as BMN 255 or 331? And two, any current thoughts on capital allocation framework now that the Company is clearly on the path to GAAP profitability would be helpful?.

There's a word in the 255 and 331 question that I didn't quite get.

Could you comment?.

Cadence maybe..

So 255 is in human clinical trials, and we're looking to establish a dose to take forward into efficacy trials, which we hope to complete by the dose finding to complete by the end of the year so we can initiate studies of efficacy. And then on 331, that trial is open for enrollment. We haven't guided to a specifically on time line expectation.

As with many of these things, it depends on how many dose level expansions you have to dose level escalations and expansions you have to go through to find your target dose. So we tend not to give specific time line guidance for those kinds of studies. So stay tuned..

Yes. Great. And thanks, Robert, for the question on capital allocation. This is Brian. First of all, it's not great to have a question like that after years of dilutive financing, cash burn and losses. We're talking about profit and positive cash flows now, so great to take that question.

And similar to the journey into our long-term profitability growth and leverage, we're at the early stages of our capital allocation strategy journey as well.

And you can imagine as we grow and we start to generate true free cash flow that we're going to explore all the traditional capital allocation mechanisms that you've seen in our larger profitable peers.

But just a reminder, in the near term, while we're pleased and thrilled to be generating operating cash flow and make this transition to GAAP profitability, we do have over $1 billion of debt on books with our convertible debt maturities coming in '24 and '27.

So those would likely be the top priority, and then we'll think about more strategic alternatives. So thanks for the question..

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

On the new vosoritide data in patients up to five years old, can you comment a little bit more on the efficacy signal you saw? How big was the effect size compared to what you observed in the Phase III study? And do you think it will be convincing to regulators and clinicians? I guess maybe more of a direct way of asking, do you feel like these data are fileable to expand the label in the U.S.?.

Well, I think it's premature to talk about what the impact of the data on health authority response is going to be because we just got the data, and we need to have a next round of interactions with them based on the data.

And as far as the specific data, what I don't want to do is get in the way of scientific investigators presenting their scientific data at medical meetings. So stay tuned to updates from us in terms of where those data can appear. I think when you examine the transcript and you realize you used the word trend.

What that's going to come to mind is sort of a signal and noise. And I mentioned this is a noisy heterogeneous population.

So I think bear that in mind when you're looking at the data and you'll have your own interpretation about how strong and robust the evidence is I think the context of this investigation is people are most importantly, keen to say that there was no cardiovascular excess safety in these very young children. I think we feel really good about that.

And I think most people think that earlier treatment of genetic conditions is warranted. But again, you've got to put the data side-by-side with those questions and beliefs and come to your own conclusions. And for now, it's premature to comment on what health authorities are going to do..

And what I mean for competitive reasons, we don't want to get in to be specific at this time..

Your next question is from Joseph Schwartz of SVB Leerink. Your line is open..

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

Yes, very excited about that. And I think Dr. Andrew Dauber has been a guest of ours in a couple of R&D days. And one of the things he's most excited about is investigating statural deficiencies that are due to other etiologies that just the achondroplasia mutation. I mean his feeling about the conflation mutation.

This is what he said to us before we unblinded the pivotal Phase III trial that led to the approval is common -- that's a strong driver mutation. It may be difficult to overcome that. Maybe you want to be playing in maybe you want to be investigating other scale displays that are not so dominantly driven by a constitutive negative mutation.

Well, when 301 turned out to be positive, his enthusiasm like quadruple because his additive was like, well, wow, if you can make an impact in that, then there's all these other statural conditions that are likely to be genetically mediated likely to be responsive to VOXZOGO. So he initiated the study in genetically defined subsets of patients.

It's really a signal-generating study. He presented at R&D Day in November, just to remind everybody that the trial is ongoing. He's actually been pleased with enrollment. I think he gave the Cheshire Cat grin of -- I haven't really looked at the data.

It's an ongoing study, it's preliminary, but I hope to see you at a medical meeting in the first half of next year where we can talk about the data more definitively. We don't know exactly when those dates are going to appear otherwise, I'd be telling you exactly when they were peer.

I think we need to look at those data and start to develop our own plan.

One of the things that we talk about is do you want to go after specific mutations? Or do you want to go after a more general you go after a more general crowd of stature conditions, we want to be careful that we don't erode the value of the achondroplasia opportunity that we alone have created and now others are slowly awakening to.

But -- so we don't want to erode that value. And at the same time, we recognize that there are a lot of patients who have pretty significant statural deficiencies that could be addressed by a drug like VOXZOGO.

And just to put that in some perspective, if you said that wanted to investigate children who are for standard deviation -- predicted to be core standard deviations deficiency in their stature when they arrive at their final adult high, you'd be talking about something like 0.1% of the incident population.

So talking about fairly large and to put a much more specific quantitative framework around that, I think we're going to have to get into like what are the eligibility of the trial that we would plan to conduct, which is still a bit in front of us. So let's see Dr.

Dauber's data when it's available, and then let's see what the Company's plans are in regard to how to access that opportunity and protect the achondroplasia indication..

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

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

This is Anil on for Akash. Thank you for taking our question. So I have two questions. One is related to ROCTAVIAN. So, is it possible that ROCTAVIAN may have a black box warning around the integration risk on this label? And if so, how much of this commercial impediment would that be? The second question is about achondroplasia and the prototype.

So based on your current data, it looks like over half of the achondroplasia market is ex-U.S. and EU5.

Could you walk us through your plans to commercialize that market? And what is the scope of opportunities in places like EMEA and versus the U.S.?.

Well, just starting with the safety thing, it's a little premature to talk about what the label might look like in any territory given that we're under review. Although what I would say is that so far, we have not observed anything that would warrant a black box warning.

But as to how health authorities process potential uncertainties related to ROCTAVIAN remains to determine at the tail end of the review maybe, Jeff, you want to talk about the other part of the question?.

Yes, happy to. So the question was about the market potential is defined by patients -- achondroplasia patient populations in different markets around the world. And I think more specifically, how about beyond ex-U.S. or the U.S. and you referred to the EU5, I think you meant EU4 now.

And if you recall from our launch call we characterize the available population in the EMEA, or Europe, Middle East, Africa operating region is roughly 3x the size of the North American opportunity. So fortunately, we have -- two things going for us to tap into that opportunity over time.

The first is we have an experienced commercial including medical, regulatory and other functions that support our existing business in those markets. So in short, we are operating in those markets. We have know-how in getting into those markets.

And so it will be a combination of registrations where we require them pursuing the patient sales channels where they are available and having the commercial capabilities to promote VOXZOGO in those markets. We've got all that. it's going to take some time to properly tap into that big opportunity.

But that's consistent with how BioMarin is operated with all of our previous products, which is we capitalize on rapid uptake in the markets like the U.S., Germany, France and others where they exist.

And then the long-term growth is driven by getting penetration into those other markets around the world, which would include markets like Latin America, Brazil, Argentina, Chile, Australia, where we have a file under review and we have a very engaged investigator and Japan, which I've already commented on. So all of those over time..

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

This is Avatar Jones on for Matthew. A couple of questions.

Firstly, not to beat at headquarters, but just to clarify, specifically, has the FDA asked you to investigate cancer risk of valrox? Second, what KPIs do you plan to provide going forward for VOXZOGO? And then finally, how do you see the financial leverage profile of the Company developing in the near term?.

Yes. So, on the first question without getting into specifics of back and forth dialogue with the agencies.

What I can tell you about of ROCTAVIAN and cancer risk is that trials are open for enrollment and the agency apparently is, therefore, happy with the submitted preclinical plan as to what that means in the context of the larger question of regulatory review or a commercial authorization reviews.

Internationally, again, we're not going to comment on that because we're in the middle of the review. The second part of your question..

VOXZOGO KPIs, a reminder, as we noted in the approval call, we are going to report for you in addition to quarterly revenues for six quarters, we will report on the quarter end number of patients on commercial therapy, we will note the number and the identity of active commercial markets, and we will provide other color commentary intended to help you gauge the success of our launch.

And we'll do that. Those additional figures of patients on therapy in active markets will be that for six quarters starting with the Q4 of 2021..

And the last question was on our views on financial leverage going forward. Thanks to touch on a few dynamics there.

So first Important to note, when we talk about the foundations that we've built over the last few years that we're now getting the leverage from, this was our growth, if you think about how we doubled the size of the Company from $1 billion to roughly $2 billion in revenue, with that came the construction of fully end-to-end integrated capabilities, whether it be the early stage research, clinical research, manufacturing through to commercialization.

That same infrastructure that we've built while we'll continue to invest in it is the point of leverage for now these larger market sized opportunity. So the base business is still growing, as I mentioned, VOXZOGO, new, potentially our largest brand opportunity getting leverage from that infrastructure that's already been built.

So a long way of saying revenue to continue substantial growth, we're seeing the return to double-digit growth this year. But importantly, expense is growing at a much slower rate. You look at our SG&A growth in a sort of growth year for BioMarin.

But importantly, it's still growing R&D at about 10% this year because we need to make sure that the R&D engine is sustainable as well.

So the leverage story is a combination of growing revenues faster than expenses, continuing the investment in R&D, which over time is going to create P&L capacity just gets back to capital allocation question earlier. With more P&L capacity, we plan to increase our internal R&D, but it's also going to open us up to external collaboration opportunity.

But again, this first year transitional year relatively modest amount of GAAP profit, but this is how we're going to plan the future..

Your next question is from Robyn Karnauskas of Truist Securities. Your line is open..

This is Nicole on for Robin. So, with -- just like a big picture question here.

So with so many gene therapy companies in the competitive landscape, can you just talk a little bit about your next gen capsid? And how you're going to get -- how you're going to differentiate yourselves from other players? And when will we see those coming into the clinic and [indiscernible]..

I think the short version of our next-gen capsids and even next-gen delivery strategies is we have a lot of research going on in that area. We have some interesting ideas. But we're also a little bit waiting for there to be an unmet need to be addressed. At EAHAD this year, we presented the second year of the post ROCTAVIAN transduction data.

Just to remind you, in year one of 134 dose patients, only two of those patients were returned to prophylactic Factor VIII administration. And so therefore, could even conceivably be eligible for a redosing approach. That number was reexamined at the end of year two.

If it turned out that half the patients have lost control of their bleeding, this might be a much bigger issue and a bigger opportunity. And in fact, the number of patients who returned the prophylaxis two years after a single dose of ROCTAVIAN gene therapy was an additional four people. So there's just not that compelling right now.

The reason we're aware of the potential consideration in the far future, doing a lot of research in that but not pulling the trigger on anything in particular this yet..

Your next question is from Joel Beatty of Baird. Your line is open..

First one is on the recent request from FDA on 307. Earlier in the Q&A, if I heard right, I think it was mentioned that this is a vector-specific concern in the U.S.

Could you elaborate on what you mean by vector-specific? And is it specific to the vector in 301 or more broad to AAV5 vectors? And then the second question is, in the prepared remarks, you mentioned that ROCTAVIAN is expected to be a modest contributor to revenue in 2022.

Can you discuss that, given that the gene therapy and gene therapies may have the opportunity to have front-loaded revenue compared to more traditional drugs?.

So maybe just a little nomenclature. The vector consists of a bunch of packaging parts, promoter, space serves and then the gene of interest. Most of our vectors have different genes of interest in them. So what I meant by vector-specific is their questions pertain to the 307 vector with the gene of interest in coding the phenylalanine hydroxylase.

We think that the questions that they have are vector-specific because the -- because trials of 270 with a gene of interest to hemophilia Factor VIII product and 331 with the gene of interest being C1 esterase inhibitor are ongoing trials that are not on under clinical.

So that's why we think that this is specific to the vector being used in 307 and not to the parts that overlap among other vectors..

And then the second question was related to front loading of revenues. You're right. We are expecting that gene therapy is being a onetime and durable treatment will generate substantial upfront costs, which are not repeatable chronically as we see with our other chronic therapies. So there will be a different revenue pattern associated with them.

And I'll ask Brian if he wants to comment further. But we are similarly expecting that for the most part, we will be recognizing revenue at or around the time of treatment and not recognizing that revenue overtime in some fashion.

So yes, expect a different pattern of revenues from ROCTAVIAN when ROCTAVIAN is approved and we're in the market relative to our base of chronic therapies..

That's right. There is nothing else to add on that specifically. Thanks, Jeff. But it's not like the question you were trying to reconcile that revenue recognition pattern with our comments around 2022 ROCTAVIAN revenue. So those aren't related.

The comment that we made on 2022 expected ROCTAVIAN revenues is mostly due to the timing of the anticipated approvals. I almost look similar to VOXZOGO, if you think about it, a potential second quarter CHMP opinion would mean a third quarter European launch and then end of year U.S.

launch, so modest contribution, but include we are expecting revenues just not mentioning specifics at this point until the product gets approved..

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

This is Larson on for Tim. I was wondering on the VOXZOGO launch in the U.S. You've previously mentioned that most patients are already diagnosed, so identification isn't as much of an issue here as it has been in prior launches.

So I mean, can you talk about how many of these patients or those positions you've actually been able to access so far and what that looks like? And then secondly, just on Kuvan. It seems like it's stabilizing a bit.

Do you think we're reaching a pretty stable level this year? Or would you expect continued erosion in 2023?.

Good questions. I'll start with the question about the VOXZOGO and the U.S. launch. As described on our approval call, the -- one of the issues that we faced with, for example, our anti-replacement therapies is helping patients gain a diagnosis.

We don't really face that challenge with achondroplasia because essentially all kids with achondroplasia are diagnosed peri-birth. And so they and their families know that they've got a diagnosis of achondroplasia.

The challenge in the United States is to connect with the physicians that are caring for these kids and their families because it really isn't, for the most part, a well-established medical home for the treatment of achondroplasia beyond limb lengthening, which is a very specific procedure.

Before VOXZOGO, there was no real standard of care treatment. So you wouldn't expect there would necessarily be a medical home.

So our challenge in the United States, which is a large and diverse country, as you know, is to connect with prescribers, whether that's a pediatrician or E&P dock or orthopedist or even a geneticist that has a patient that's under their care and drive that patient to an appropriate prescriber of VOXZOGO.

And as I've noted, we're doing pretty good so far. I'm really happy with the results that I'm expecting that, that will continue. Unlike with, for example, our enzyme replacement therapies, we don't have -- which enzyme replacement therapies, we would count patients in the dozens or maybe 100 or a couple of hundred.

We don't really have a system in place where we're trying to track patients individually and monitor them over time. This is just a bigger market opportunity that we're not doing that with. And then -- so very good progress so far. I expect that to continue.

With respect to Kuvan and stability, as Brian, noted, we lost a lot of revenue for Kuvan in 2021. And that was following a loss of revenue in Q4 of 2020, all of that essentially being dropped from the U.S. market. So yes, we are expecting the erosion to slow down.

And partially, that's because a lot of the base of business in the United States is already converted over to generics as we would have expected by this point in a generic cycle. And so, it necessarily is slowing down from a higher place going forward. I refer you back to our full year revenue guidance for expectations.

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

Yes. Thank you, operator, and thank you all for joining us today. So we are pleased with our performance last year. We look forward to a year of momentous growth in 2022, especially thanks to the addition of VOXZOGO, which again, we expect will be our largest opportunity today.

And we have transitioned to the development and commercialization of innovative therapies for larger generic conditions. Our R&D engine has never been more productive, and we expect to put forth many early-stage candidates as development advances over the coming quarters. So the financial health of the Company has ever been stronger.

We are turning the quarter to sustainable GAAP profitability in 2022. This is an important achievement and it marks the beginning of the next stage of growth for BioMarin. So, thank you all for your continued support, and we look forward to seeing you soon..

And this concludes today's conference call. Thank you for participating. You may now disconnect. And presenters please stand the line for your post conference..