Welcome to the BioMarin Second Quarter 2022 Financial Results Conference Call. Hosting the conference call today from BioMarin is Traci McCarty, Group Vice President of Investor Relations. Please go ahead, Traci..

Thank you, Rob. Thank you, everyone, for joining us today.

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.

On the call from BioMarin's management team today 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 BioMarin's Chairman and CEO, J.J. Bienaime..

Thank you, Tracy and good afternoon, everyone. Thank you for joining us today on the call. So the first half of '22 is our strongest 6-month results to date with over $1 billion in combined total revenues from our record-breaking first and second quarters.

VOXZOGO revenues of $34 million in the first half -- sorry, $54 million in the first half of the year contributed to these results and they were driven by continued rapid expansion of global commercial access for [indiscernible] achondroplasia.

VOXZOGO growth led to today's increase in top and bottom line guidance for the full year, despite ongoing economic challenges, including considerable foreign currency exchange rate fluctuations and the strength of the dollar. Turning now to some of the key highlights in the second quarter, all of which were first in our industry.

In late June, we were thrilled to have received a positive CHMP opinion for Europe for ROCTAVIAN. We continue to expect European Commission approvals in the third quarter which will be opening access to thousands of people with severe [indiscernible] who are interested in a onetime infusion of ROCTAVIAN gene therapy.

This will be the first gene therapy to treat any hemophilia recommended for approval in Europe. Jeff and his team are ready to launch ROCTAVIAN in the front, potential EC approval later this quarter. And in the U.S., we remain on track to resubmit the BLA by the end of September, the end of next month.

Another first [indiscernible] approval of VOXZOGO in Japan for children of all ages with achondroplasia and no age restriction. This approval represents our largest commercial opportunity today in Japan and we look forward to working closely with the achondroplasia community there.

We also received approval in Australia for children ages 2 years and older. These important additions to the global access footprint are expected to be meaningful cures with revenues throughout Japan beginning later this year.

With BioMarin's financial outlook and robust global launch of VOXZOGO tracking to plan and ROCTAVIAN approval on the horizon in Europe, we are on our way to achieving the goal set forth at the start of the year.

Turning the quarter to sustainable GAAP profitability, ramping up our largest opportunity today with VOXZOGO and then progressing ROCTAVIAN to approval in Europe and pursuing approval in the U.S. and also advancing the broadest early-stage pipeline in our history.

I would add that as compared to where we were a year ago, we have made major progress to substantially reduce regulatory risk for BioMarin with the global approval of VOXZOGO and upcoming approval of ROCTAVIAN in Europe. And we are -- and with our successful launch of VOXZOGO as the commercial which is also significantly reduced.

We will continue to build on this financial, commercial and regulatory momentum in the second half of 2022 and beyond as we make the transition to an earnings call story. Thank you for your continued support and our -- we'll now turn the call over to Jeff to discuss the commercial business update.

Jeff?.

Thank you, J.J. I'm very pleased with our record performance in the second quarter of 2022, resulting in $534 million in total revenues which represents 6% growth year-over-year, including in Kuvan and 13% growth, excluding Kuvan which continues to experience decreasing market share from prophylaxis in the United States.

Year-to-date, all brands marketed by BioMarin, with the exception of Kuvan, experienced revenue growth year-over-year. Starting with VOXZOGO, we are pleased to share that as of June 30, 2022, an estimated 446 children were being treated with commercial VOXZOGO.

This includes 282 children and countries outside of the United States and 164 children within the United States. At the end of the second quarter, VOXZOGO sales were spread across 20 active markets, including sales in new markets that previously reported in Brazil, China, Hong Kong, Qatar and Russia.

Outside of the EU, we are thrilled to have received approvals in Japan and Australia during the second quarter, giving us a strong foothold in the Asia Pacific region with revenue contributions expected to begin later this year from Japan. Turning to launch dynamics in the United States. We continue to see prescription demand ramp up.

We have been able to rapidly convert patient referrals to patient starts. In the quarter, we saw prescriptions mainly from genetics and pediatric endocrinologists. As expected, we are making continued progress in creating the referral pathway to pediatric endocrinologists.

We also see more payer coverage policies published which are largely consistent with our label or our clinical trials criteria and are aligned to our expectations. We also continue to experience patient growth in European markets consistent with what we have seen in the previous quarter, including new patients from new markets as reported.

As a result of the continued strong VOXZOGO ramp, we are increasing full year guidance once again to between $130 million and $160 million for the full year 2022. In summary, for VOXZOGO, we are very pleased with the pace of uptake during the first half of this year and note that we are well into the global launch cascade of logo.

These results underscore the ability of our experienced commercial teams to tap into large market opportunities regardless of location. Launching in the EMEA region, Head of the United States provides the team an important framework for a potential ROCTAVIAN launch on the coming month should the European decision be supportive.

Turning now to our enzyme replacement therapy brands collectively achieved record results in the first half of the year with Q2 sales lower than Q1, due to the volume of large irregular orders placed in Q1 relative to Q2. This is consistent with our experience of uneven quarterly revenue patterns, particularly for Naglazyme and Vimizim.

In 2022, for both brands, we expect a higher concentration of revenues in the first half of the year compared to the second half. Our expectations for the full year are reflected in today's updated guidance where we have narrowed the range for both Vimizim and Naglazyme and increased the top of the range of Naglazyme by $10 million for the full year.

For Brineura, 24% growth year-over-year and revenue of $38 million in the second quarter was driven by 18% growth in commercial patients versus a year ago. Renewal guidance remains unchanged. Moving now to Palynziq. Net product revenues grew 4% to $62 million in the second quarter as compared to the second quarter of 2021.

While we expect meaningful year-over-year growth and saw continued net patient growth in the quarter, Palynziq performances trailed our expectations, resulting in an adjustment to full year guidance downward to between $250 million to $275 million. We expect Palynziq patient trends to continue to grow, albeit at a slower pace than initially expected.

It is clear that the capacity of PKU clinics, particularly in the U.S., to treat adult PKU patients with Palynziq has not recovered the capacity loss due to the pandemic.

As a result, we have an active initiative to identify alternate prescribers in parts of the United States where clinic capacity is at a deficit compared to adult patients that could benefit from Palynziq.

We are targeting endocrinologists for this initiative and our research indicates both an interest in treating PKU and the ability to manage treatment with Palynziq. We are early on in this effort. We have REMS certified a number of new prescribers and we will keep you informed as the impact of this initiative has on our business going forward.

Continuing with the PKU franchise, Kuvan contributed $58 million in revenue in the second quarter of 2022, down slightly from the first quarter of this year. As we have stated previously, as Kuvan nears the end of its life cycle since losing market exclusivity in the U.S.

in October 2020, we are gratified to be able to retain meaningful market share and resulting revenues. However, based on current trends, we are lowering full year 2022 Kuvan revenues guidance to between $210 million and $235 million. Lastly, with the potential positive EMA decision for ROCTAVIAN expected in the near future, we are ready for launch.

Our team is prepared and encouraged that our longer-term data results offer a compelling value proposition and treatment option for adults with severe hemophilia A and we look forward to providing you with more detailed updates upon approval.

In conclusion, in 2022, we anticipate increased demand for all of our commercial brands with the exception of Kuvan as just described. Our NPS products are expected to contribute significantly to revenue growth this year. We also expect VOXZOGO to be a meaningful factor in this ramp here as noted in today's increase in full year revenue guidance.

We believe that robust prescription demand represents the foundation for continued growth, including in new markets throughout 2022. Thank you for your attention. And I will now turn the call over to Hank to provide an R&D update.

Hank?.

Thanks, Jeff and thank you all for joining us today. With the European decision for ROCTAVIAN now on the horizon following the positive CHMP recommendation, we are working fastidiously on the BLA for resubmission by the end of September.

Our belief in the potential for ROCTAVIAN to be transformational for people with severe hemophilia A only strengthens with each passing year.

As we announced in May and also included in an oral presentation at ISTH in July, durable hemostatic efficacy was maintained over 6 years in our ongoing Phase I/II study of ROCTAVIAN in the 6e13 cohort with a mean cumulative annualized bleeding rate of less than 1, substantially below baseline levels on standard of care.

The safety profile from the study remains consistent with previously reported data with no delayed onset treatment-related adverse events. Needless to say, we've been very pleased with the ROCTAVIAN results across the Phase III and Phase I/II programs and look forward to a potential marketing authorization in Europe in the third quarter.

Turning to VOXZOGO, in June, we were pleased to share favorable 52-week results from our global Phase II study in infants and young children with achondroplasia at the Endocrine Society's Annual Meeting. The improvement observed in score and annualized growth velocity observed was consistent with what was observed in children over 5 years of age.

We plan to meet with U.S. health authorities in the second half of the year to discuss expanding access to younger children. Finally, turning to the early-stage pipeline, all of the candidates under development continue to advance with BioMarin 255 which adjusts a subset of chronic renal disease.

We've gotten the go ahead from the Food and Drug Administration to move forward with the multiple ascending dose portion of our Phase I/II study. With BMN 331 for hereditary angioedema, we have dosed patients in the Phase III HARMONY study to evaluate this investigational AAV5-mediated gene therapy for patients with hereditary angioedema.

Concerning BMN 351 for Duchenne muscular dystrophy, we expect to file an IND this winter. Our preclinical studies of BioMarin 349 continue to build our enthusiasm for its potential to dramatically improve liver health in people living with A1AT deficiency.

For BMN 293, formerly referred to as Dana 001, we are on track to be the next gene therapy clinical candidate, in this case, for the treatment of hypertrophic cardiomyopathy caused by mutant mutations in the protein C3 gene. Last in, continue to advance BMN 349 and 293 towards INDs in the second half of 2023.

In the coming weeks, we look forward to the EC's decision for ROCTAVIAN to be followed by resubmission of the BLA in the United States. Thanks for your support and I will now turn the call over to Brian to update financial results in the quarter.

Brian?.

Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the second quarter of 2022. Since Jeff touched on many of the topline results from the commercial business, I will primarily focus on operating expenses, bottom line results and other key financial updates this quarter.

As usual, all results will be available in our upcoming Form 10-Q which we are on track to file over the next couple of days. As we have been highlighting over the course of this year, we believe that 2022 is an exciting and transformational year for BioMarin.

Resuming a cycle of substantial revenue growth and expectations to transition to sustainable GAAP profitability are aspirational milestones that we have been working toward for years. We are pleased to be tracking the plan based on the company's second quarter and first half results provided today.

Total revenue growth of 13% in the second quarter of 2022 as compared to the second quarter of 2021, excluding Kuvan, has put us on a path to achieve our 2022 GAAP and non-GAAP income goals.

One comment on how our planned 2022 revenues are split between the first half and second half of the year is that while Naglazyme and Vimizim order timing were weighted to the first half of the year, as Jeff noted, second half revenues are expected to benefit from growing VOXZOGO and Palynziq revenues compared to the first half of the year, plus the potential for a modest amount of ROCTAVIAN revenue.

As a result, total revenues in the second half of the year are expected to be roughly even with the first half of the year. The strong VOXZOGO launch and consideration of the trends observed across our other brands drove the increase to our full year 2022 total revenue guidance to between $2.06 billion to $2.16 billion.

Also, to comment on the impact of foreign currency exchange rate volatility on revenues, the strong U.S. dollar has impacted many companies' foreign currency-denominated revenue in 2022.

While BioMarin is not immune from the resulting decreases in mostly euro-based revenue, we are pleased to observe that our foreign currency hedging program is providing the intended protection.

Based on current exchange rates, we project that the net impact on our full year 2022 revenues after hedging will be a relatively modest negative effect of approximately $15 million versus our original 2022 guidance expectations which did incorporate some of the exchange rate volatility observed early in the year.

Moving to operating expenses for the second quarter of 2022, both R&D and SG&A expense fell in line with our expectations.

R&D expenses for the second quarter were $158 million, a slight decrease as compared to the second quarter of 2021, reflecting decreased VOXZOGO development efforts after the marketing approvals in the second half of last year which was mostly offset by increased R&D on our early-stage programs.

SG&A expenses for the second quarter of 2022 were approximately -- were $197 million as compared to $184 million in the same period last year with the largest component of the increase being the VOXZOGO global commercial launch efforts and ROCTAVIAN commercial launch preparation cost.

Moving to bottom line results for the second quarter and first half 2022. Just a reminder that during the first quarter of 2022, the company sold the priority review voucher received with the approval of VOXZOGO in the United States.

While the gain on the sale of the PRV remains the largest single contributor to first half GAAP net income, we are pleased to report GAAP net income during the second quarter of 2022, totaling $28 million and $149 million for the first half of the year.

Based on this strong first half 2022 performance, we have slightly improved our full year 2022 GAAP net income guidance range by $10 million to $105 million to $145 million.

While we have improved the full year guidance, we recognize that the full year math in light of $149 million of first half GAAP net income but just that we may recognize a net loss for part of the second half of the year.

This is due to some of the aforementioned revenue timing and some possible larger expense items in the second half of the year and we remain confident in our core business, generating GAAP net income this year and beyond.

With respect to non-GAAP income, Q2 2022 non-GAAP income of $109 million was slightly higher than 2021 second quarter non-GAAP income of $98 million and full year 2022 non-GAAP income guidance remains unchanged at between $350 million to $390 million. Turning to total cash and investment.

We ended the second quarter of 2022 with $1.5 billion flat compared to year-end 2021. The company continues to incur quarterly timing differences in several cash flow categories, mainly working capital timing. However, the business did earn approximately $56 million of operating cash flow during the second quarter of 2022.

In closing, the BioMarin team is pleased to use this midway point of 2022 to both acknowledge the strong business performance through the first half of the year and the promising expectations for the rest of 2022.

We continue to believe that our strategy of substantially growing revenues that drive increasing profitability and positive operating cash flow, while also investing in developing an innovative pipeline are the best financial levers to fuel growth further into this decade.

Thank you for your attention and we will now open up the call to your questions.

Operator?.

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

Two questions here. One is with regards to your outlook for ROCTAVIAN. Are you ready to launch here? And once you have revenue from this product, how are margins and profitability expected to be impacted longer term? And then the second question is just about drug pricing reforms.

As you're looking at the proposed bill here, how will BioMarin be impacted in just orphan drugs in general? Just wondering if they get carved out to a good degree here..

Yes. Thank you, Salveen, for the question, in particular for the outlook for ROCTAVIAN launch in EMEA. Super excited about that. Also have a team in place that's most recently been busy successfully with the VOXZOGO launch. It is largely that team that will be passed with the ROCTAVIAN launch. So a good track record there.

I would say, what's the reason to believe prospectively in ROCTAVIAN success in Europe, if we get the positive approval from the EC. And I'd go back quickly to what we believe are the 5 criteria that should be met to set up a successful commercial gene therapy program, of which ROCTAVIAN satisfies all 5 criteria.

And those include one, disease was a significant remaining unmet need as we've described in hemophilia; two, a material treatment effect size which would include all of clinical effect, quality of life effect in a convenience benefit; three would be a pharmacoeconomic benefit which ROCTAVIAN has clearly set us to deliver and as we've described over and over previously; four would be a material population to treat.

So we believe that a lot of gene therapies that are being developed to treat esoterically small patient populations have limited commercial potential. There's certainly severe -- hemophilia A adults is a significant large population and 5 would be a prepared team on the ground that is experienced and ready to launch.

So as I said, ROCTAVIAN meets all of those criteria. That's the reason to believe in our view..

Yes. Thanks, Salveen. This is Brian. I'll comment on margins. Thanks for the question. I mean, in short, we believe the ROCTAVIAN EU launch is going to be a significant contributor to what was already planned margin improvement into our future. Already today, we're observing that the VOXZOGO launch is a contributor.

When we look at our SG&A, as an example, as a percentage of revenue today at about 40%, that's the global infrastructure we've built to support our 7 approved products today which we sell in over 70 countries. The VOXZOGO contribution alone is getting leverage out of the commercial organization.

And while a ROCTAVIAN severe hemophilia A market launch is going to take incremental investment, it's mostly a leverage story from that commercial infrastructure that Jeff mentioned.

So while it will take some time for ROCTAVIAN revenues to ramp, we expect that the investments in operating expenses along the way to be significantly less which over time is going to contribute to the bottom line and margin improvement. So we look forward to observing that. Jeff, I think -- do you want to go ahead..

Yes. So the drug pricing reform, should that get through the legislation, I think it will be impactful to companies that have large Medicare drugs, in particular, in companies that have a history in a practice of greater price increases that exceed inflation rates in the United States, CPIU in particular.

BioMarin, our portfolio is -- has very limited exposure in Medicare and it's not our practice to raise prices ahead of CPIU. So while we see that it is unfortunate to move forward in the general sense, we don't see a material impact to our business..

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

Congrats on the great quarter. I have a question on VOXZOGO and then ROCTAVIAN. So I was curious if you could talk about whether you're working on any life cycle management strategies to fortify your chondroplasia franchise ahead of potential competition.

Are you still working on long-acting formulations? And can you give us an update on that status? And are you doing anything to improve the administration device or procedure or generate more data to show the real-world value of VOXZOGO so your brand could have more staying power if competition arise?.

Just a few words about [indiscernible] I'll let Hank answer the rest of the question. Yes, so we do have -- we have announced earlier, we do have a pen device in late stage developments which we hope could hit the market around 2024. It will make the administration of the drug even easier.

Actually, maybe Greg Guyer is in charge of this device, if he can say a few words. And then we'll have Hank to answer your question on the long-acting formulation and other life cycle activities.

So Greg, you want to take your word?.

Yes. Thanks, J.J. So yes, so the [indiscernible] well underway. We do believe it will be a step change in terms of convenience for patients and a lot simpler to administer. So that's well underway. We've got some studies we need to do with the pan and then obviously as the approval process. And we hopefully that will hit the market in the U.S.

and in Europe in 2024..

Maybe -- go ahead, Hank. Sorry..

Sorry, Joe. I was going to say, the thing I would add about the -- your question about the life cycle there very robust plans immediately next up those interactions with the Food and Drug Administration around broadening the label in the United States as it is more appropriately represented on a global basis.

As you recall, Japan just approved the product unrestricted in regard to the younger living of age. So that's a key piece of fortifying the franchise. The pen you've heard a lot about, the conversion to full approval on the basis of final adult height very much in motion, very important from a regulatory perspective to fortify the brand.

Lots of emerging information about potential for kid, activity and additional indication work beyond achondroplasia. And maybe the final thing to say is, taking a really long view sort of the pen a step 1 in delighting the population with an easier and simpler approach to administration.

We do have a long-acting program and we're thinking about as we get more experience in this population, what might be even better than that. And so we have a lot of activity going on that will play itself out over a number of years to make VOXZOGO into an even bigger brand than you can see just based on this launch..

And our next question comes from Geoff Meacham from Bank of America..

Congrats on the quarter. I had a couple on ROCTAVIAN. So the first one is, as you approach the European approval, maybe what have you done or can you do to inform the cost benefit analysis. I wasn't sure if there's any extra work that you guys have done as you approach the approval.

Just to talk to some of the payers about the -- obviously, the price tag. And I know, J.J., you did talk about the model shifting away from kind of an annualized kind of model into a single payment.

And then the second question also on ROCTAVIAN is just, Hank, when you look at the potential for retreatment using a different expression vector or viral effect or maybe just give us a status update on anything you're doing there..

Thanks. I'll just start and then I'll have Jeff and then Brian will be on the revenue recognition plan for ROCTAVIAN revenues and then Hank on your last question. So indeed, we are -- as compared to when we were like 2, 3 years ago, where we thought that payers, whether it's in Europe or the U.S., will be interested in pay over time.

They actually are not interested. They're not organized for that because most of them work on an annual budget. So they're difficult is committing to paying over 3, 4, 5 years. We thought before that it would be interesting but it's -- that's not going to work. However, they're extremely interesting in outcome-based agreements.

And Jeff and Brian can explain the mechanics of that.

And also just the only thing I would add here is that I would say, based on the very strong Phase II data that we have that now shows a durability of bidding protection for basically 6 years, we're believing we're in a strong position to put these agreements in place with very little risk to buy on rate and in a sense, eliminate the countries for the payers.

And even on question of durability is basically evaluated with our outcome-based agreements because there is no [indiscernible] the payers in case of durability as low as the anticipator.

So in that preamble, just maybe you can expect exactly when we're speaking about and Brian talk about revenue recognition and then Hank can answer the last question..

Yes. Thanks, J.J. So we've got the outcome-based agreements that we are working towards and that we've discussed in many instances with European payers, notably Germany which will be our first launch. And as J.J. said, we're taking with those agreements the risk of nonresponse and the risk of durability over time off the table for the payers.

So that addresses their uncertainty.

And based on the clinical trial data that we've got, both the Phase III full data set at 2 years early cohort of 3 years and the Phase I/II 6e13 dose data at 6 years, we judge that the risk of nonresponse is very, very low and the risk of going back to prophylaxis which is essentially what we would be needing through a period of time in these agreements is also similarly low.

A relevant public analysis I would refer you back to is the ISO [ph] analysis from 2 years ago which concluded that at the time that ROCTAVIAN was a superior choice to HEMLIBRA [ph] standard of care at a presumed price of $2.5 million, the data behind ROCTAVIAN has materially filled in the ensuing 2 years.

So we expect that, that type of incremental cost effectiveness analysis will still hold and as you know, every payer system in Europe has slightly different unique requirements. And so we prepare such incremental cost effectiveness for analysis and cost benefit analysis bespoke for all of those are systems.

We're getting ready to file in the major EU markets shortly after an anticipated approval. So I think we're ready to go here..

And then Jeff, thanks. This is Brian, briefly on the financials and we'll elaborate more on the details of this at our anticipated launch. But as J.J. noted, we would expect upfront, not just payment but revenue recognition for ROCTAVIAN as we deliver to customers.

And on these outcomes-based agreements, we'll need to recognize the financial exposure from these commitments to customers.

Although, as Jeff noted, because of the real strong response rates and durability in ROCTAVIAN -- and I believe it was only 6 out of 134 patients in the Phase III study that have resumed prophylaxis, that's going to mean that when we estimate what will be balance sheet reserves, the liabilities to capture these commitments, we believe they'll be modest.

And we'll recognize them in our gross to net revenue adjustment and the way we model it thus far, it should fit within what you've observed as sort of normal BioMarin gross to net revenue. So stay tuned for more but that's how we're thinking about..

Hank, do you want to answer the question on retreatment strategy?.

Sure. Sure. Acknowledging the outcome on the 634 patients is suboptimal. We do have research programs underway that are intending to address this.

We have the largest collection of liver biopsy data and it's actually growing and we're learning a lot about mechanisms of attrition of expression which could include both vector loss as well as the DNA being there but RNA expression is diminished.

And so that could encompass and we have research programs that are looking at things like nonviral vector delivery or alternative serotypes or other strategies to, if you will, wake up expression.

But having said that, it's 6 out of 134, we should also take a look at [indiscernible] presentation at ISTH and it goes back to something that Jeff said about how [indiscernible], we had tied the resumption of prophylaxis to being at a sort of 1% Factor VIII level.

But what Johnny showed was that the -- what was -- where there were inflections at 5% and 1% in natural history studies of mutated Factor VIII proteins, these appear to be left shifted to lower factor levels with the transgene protein which is more native in its configuration.

So for all those reasons, I can't say that we view this as a major opportunity right now. So that's why we're in sort of the research phase of exploring the opportunities to either redose or reawaken expression..

Our next question comes from Phil Nadeau from Cowen and Company..

Two from my side, also one on ROCTAVIAN and one on VOXZOGO. On ROCTAVIAN, the press release mentioned a likely 9-month view for the refiling. Or is the standard PDUFA 6 months? So we were curious as to why you believe 9 months is likely.

Is that something that's been communicated to you by the FDA? Or is that your own assessment? And then how would that work? Would you initially get a 6-month PDUFA and then it was extended when you submit the data that you know in the press release? Or is there some other mechanism?.

Hank?.

Yes. I'm -- actually, we're likely review came along.

I think we're really simply just reiterating something that we said back in May which is, we have an awareness of the fact that with the delay as a result of the FDA asking for us for additional information at the time of submission that the review could overlap with the availability of both a 3-year data as well as the corticosteroid data.

We actually do not want to guide you one way or the other two, whether it is likely or it is unlikely. At the time that we were informed by the agency of these additional requests, none of those requests were about those additional studies. So as I say, we don't wish to guide you one way or the other to the likely or unlikely.

However, the purpose of the communication today is to just remind you that the agency can request additional time for reviews based on either major submissions or any other reasons that they feel like they need more time.

And so the way it would work, Phil, is that we would get a new PDUFA date on the acceptance of our response -- the complete response letter. And at some time during the review, if they wanted more time, they would inform us that they want more time and they would extend the PDUFA clock.

As we sit here today, like I said, we're anticipating the initial submission in September and a 6-month PDUFA designation but we are aware that these studies are emerging and we wanted you to be aware, both to reassure you that -- first of all that there will be no surprises if it is to happen and to make that very clear.

And second, to reassure you that we're prepared in either direction. So we'll be ready for a launch if launch happens at the 6-month time clock and we'll be ready to respond quickly to the FDA if they ask for additional data..

That's very helpful. And then on VOXZOGO, the press release notes that there's 164 patients on commercial therapy in the U.S. which implies about 164 patients were added over the first 6 months of the year.

Is that a pace that we should expect to continue in the second half of the year? Were there any reasons for bolus in that number? Or do you think it's possible that it could accelerate in the second half as expert centers get the referral networks up and running?.

It's a great question, Phil. Thank you for paying attention. I would guide towards relative continuity of patient growth.

It probably is true that there were patients located in kind of expert clinic centers those who participated in the clinical trial, other genetic and skeletal dysplasia clinics that have a particular interest in achondroplasia and are treating kids with achondroplasia. And probably we got a fast run on kids from most sources.

More recently -- and as we've guided to and expected to all along, we've been getting more kids referred in from, let's call it, their community position. And as we've guided, we're trying to build that referral network to mainly pediatric endocrinologists that can treat these kids with VOXZOGO on an ongoing basis.

So those things are kind of happening at the same time. Early on, more patients referred from those expert clinics now referrals coming in from the community picking up. Net-net, my expectation is relative continuity of patient growth in the United States..

Our next question comes from Paul Matteis from Stifel..

I wanted to ask a couple of things about ROCTAVIAN uptake in Europe.

Maybe, Jeff, could you frame for us just how attitudes towards prophylaxis therapy and heme A vary across European countries? How that might impact the target population for ROCTAVIAN across different countries? And I guess when we talk to clinicians, just the feedback is really variable on the target population in their mind in terms of early adopters.

How are you thinking about the first wave of patients that are most likely to get this drug? And what proportion of the overall population does that demographic make-up?.

Okay. A lot in there. Yes, there is variability in Europe. It is a particular fact that we are focusing on the major markets in Europe early on. So what we would now call the EU4. Germany, France that I've talked about a lot. Italy and Spain.

So I would say, the main impact on variable adoption in Europe in the first couple of years is going to be our ability to unlock reimbursement in different markets across Europe. So I would say that piece will trump kind of local treatment practices and preferences.

And remember, in Germany, particularly with our ability to get outcomes-based agreements in early -- in the 1-year free pricing period. Germany is the largest market. We think we'll go first there and have been preparing for that eventuality.

France being, let's call it, the second largest market in Europe and where we've guided that we are applying for an early access program. That will give us limited but material access, if approved. During the approximately one year that it will take to gain reimbursement approval fully in France. Spain and Italy with different dynamics.

So I think it's the geographic piece that introduces the most relevant variability in the first couple of years. In terms of target population, we can't specify for competitive reasons exactly our target early adopters. But as noted on the CHMP opinion called, there's a couple of factors at work here. First is, we've seen a lot of adoption of HEMLIBRA.

HEMLIBRA looks like it's working well for patients. That's also given the lie to the previous conventional wisdom that hemophilia patients won't switch their treatment.

So we'll be looking at HEMLIBRA patients that are looking for superior outcomes and we'll be looking at factor patients that are not adequately controlled on their Factor VIII regimen as early adopters. And in terms of what percent, we've got lots and lots of market research but most recently, we went out and tested European and U.S.

physicians and patients and advocacy organizations after the Phase III 2-year data results were released.

And what we heard was, prescribers think that at peak, about 35% of their eligible patients would be on ROCTAVIAN and that 80% of prescribers indicated that they were interested in prescribing for at least 1 patient in the first year following approval. Those are pretty positive signals to go on..

Let me just comment on a lot of numbers flowing around. Docs are being asked off the [indiscernible] patients, they're going to treat with gene therapy. You have to be careful as to how the questions are traded on the context of the question because if the doctor says, I'm going to put 10% [ph] of my patients on gene therapy.

Is that doctor talking about all his or her hemophilia A patients or just a severe or severe over 18. I mean so these questions answers are pretty big. That's where some numbers are all over the place. So if 10% of all [indiscernible] a patient is very a large number.

So I just want to point that out in terms of being able to understand sometimes of discrepancies between the different marketing research..

Our next question comes from Gena Wang from Barclays..

Also 2 questions. The first or is on VOXZOGO. What is the practice like in Japan and Australia? Are patients also concentrate in the big centers? And also, are the prices for Japan and Australia in the range of $250,000? And the second question is regarding ROCTAVIAN.

After your BLA resubmission, when will you know if you will have AdCom? Do you think the FDA decision on whether uniQure will have an AdCom for their hemophilia B program will have a direct read-through for you..

So Jeff, on Japan..

So thank you, Gena. Let's start with Japan. So Japan is a large market and Japan is unique for achondroplasia and that it is the only market in the world where growth hormone is approved to treat achondroplasia. Now I have personally been to Japan and got few investigators and achondroplasia treating pediatric endocrinologists.

And what they've told me is, they know that those hormone doesn't work but anyway, parents are dedicated to getting their kids on treatment and that's an available option. That's actually a really favorable environment than to be bringing VOXZOGO into because there is an established treatment network.

[indiscernible] kids are actively under treatment in a way that they aren't really in the United States or most other markets. And so it's kind of an active market for us to jump into instead of having to build like we're doing and as I've described, for the United States.

It is true then that we have a switch component and a competition component to deal with but we think that net-net, that's pretty favorable. And the way that the Japanese pricing system works with our approval timing there, we've really got a couple of published references. One is the United States and the other is Germany.

So that bodes very well for pricing at a competitive level with Germany and United States when we get that far which will be just another month or so..

Coming to Australia. Australia is also another unique place because we have really active investigation or investigator in Australia. So there's a really active treatment community for achondroplasia and a big appetite for wanting to treat these kids and help them, including throughout the whole VOXZOGO clinical development program.

So we're starting out there with a really enthusiastic and experienced investigator. Australia is a market of 27 million compared to about 125 million [ph] in Spain.

And with the epidemiology of achondroplasia, you would expect that the available market would be -- in Australia would be about 20% besides of Japan and also takes longer to get reimbursement approval in Australia take a year or even longer.

So why is Australia important? Australia is important because by the time we're 2 to 3 years into the global launch cascade when it comes on, it is going to be illustrative of the additional markets in our 78 market footprint that we bring on board over a period of several years or more to keep the growth of the brand being driven.

So think of Australia as being one of those mid to late growth drivers and just illustrative one market of many that we'll be doing that. Thanks for the question..

So Hank, to answer the question regarding [indiscernible]?.

Yes, sure. Yes, Gena, the -- it's a little hard to answer with deliberate specificity. And that's, to some extent, because a resubmission process is not as structured by the FDA as an original submission with a resubmission, they tell you -- with an original submission, they tell you at the day 14 filing letter.

Then you have an early -- you have a mid-cycle meeting and a late-cycle meeting, all of which are formal contact points, all of which is there going to be an AdCom is formally on the agenda so you kind of know to expect to hear from those. And the resubmissions don't have those same milestone dates.

So I think the short answer to your question about whether we'll -- when would we know the -- when they tell us and that's not going to be tied necessarily.

As far as reading off of uniQure and what that means, in general, for all application or whether it have an AdCom, I'd point out that to the best of our understanding, the UniQure PDUFA date is going to be sometime in November which means if there was going to be an AdCom, it would likely be before we submitted.

That's assuming they stay on track for that November PDUFA action date now.

It's hard to handicap that as well for a variety of different reasons, not least of which is just the public comments that are being made by either UniQure CSL or both around working on companion diagnostic and that's the kind of thing that could conceivably show somebody down.

So if that were to happen, than intersections of the applications might be more apparent and then the question will get re-asked about AdCom. But back to your original question, when will we know? We'll know only when they tell us, I'm not at prescribed milestone dates..

Our next question comes from Robyn Karnauskas from Truist Securities..

This is [indiscernible] for Robyn. On ROCTAVIAN, Hank, can you comment on your confidence in U.S.

filing for ROCTAVIAN that you're filing for September is on track? Have you submitted any more data since you last updated? And have there been any more communications with FDA that give you confidence that this is going to be the timeline? And then a question on VOXZOGO growth, really impressive bump in patients quarter-over-quarter.

Was this in line with your expectations? And also maybe still early -- exactly in the U.S.

but any early compliance data points?.

Hank, you want to....

Yes.

The confidence comes from -- we are confident that we will be submitting in the September time frame and the confidence comes from a combination of both informal communications we have with the FDA to just clarify around some specific points about what they're looking for and how they want it presented which all seem straightforward for us and as well just making progress on doing the work and having good line of sight.

So we're reiterating today our confidence that we can get the application on into the FDA by September..

Jeff can elaborate but regarding your question on VOXZOGO. Yes, I mean actually, VOXZOGO launch is doing better than we anticipated. This is what was behind your question here. And regarding compliance, compliance is very, very good.

As far as we can tell, we have only heard of about 2 or 3 patients -- commercial patients that have discontinued today and that has worldwide. And actually, this is kind of different from -- I know that it's one of your competitors that did some [indiscernible] with our U.S.

orthopedic surgeon who claims to have [indiscernible] 2 or 3 patients that discontinued VOXZOGO. We have no evidence that did happen with that doctor.

But Jeff, do you want to add?.

Yes. And just to clarify, the compliance and persistence drop-off, we only have that in the United States. So those figures are relative to our U.S. experience but anecdotally, we haven't heard anything outside of the United States that would be -- would indicate some other experience. Relative to expectations, we've not been shy.

However, about the market opportunity for VOXZOGO in achondroplasia.

And so relative to expectations, I would say that the adoption curve is just happening faster than we had built into our original guidance but we've thought for years that this is likely to be our biggest pediatric opportunity in the portfolio and the early returns are supportive of that kind of thinking..

Our next question comes from Matthew Harrison from Morgan Stanley..

I guess 2 small ones for me. So first, on Palynziq. Outside the treatment center issue, anything else you can do to try and reaccelerate the trajectory there? And then second, just on Dynacor and that asset, what's happened? Because I believe -- I don't know, maybe it was 2 years ago, I think you were close to filing an IND.

So can you tell us what changes you've had to make in that program? And why you feel confident you'll be able to get towards an IND next year?.

I'll start on Palynziq and have Jeff continue with his perspective and then a [indiscernible] the question. But on Palynziq, I think -- Palynziq is an enzyme and like all enzyme, it grows slowly but surely. We can take examples of [indiscernible] that are very substantial drugs now actually even start as faster as VOXZOGO -- as Palynziq.

So Palynziq is to continue to grow and I think we anticipate double-digit growth this year. There's been a challenge with the PKU centers which are basically an office in large genetic centers and because of COVID, indeed, they had a tenancy as they reopen to prioritize patients with severe disorders instead of patients with PKU.

But we do have a plan that is being implemented to actually now start the patients not only outside of the hospital and the PKU centers also use other prescribers beyond Genesis that then Jeff can talk about.

Jeff?.

Yes. Thank you, J.J. Exactly correct. The situation for adult PKU patients is a little unique because historically, all of their carers come from these PKU clinics that are either part of a larger genetics clinic or mixing with a larger genetics clinic at mainly large academic institutions.

And that fact has really had a huge impact on their ability to access live care which is necessary for Palynziq. In contrast, for example, to what we've been experiencing with community-based pediatric endocrinologists, for example, for VOXZOGO, where access is not nearly as impacted.

So we mentioned, the alternative prescriber initiative and the idea there is to tap into adult endocrinologists that are accustomed to dealing with complex therapy. And it's the fact that they haven't historically seen PKU patients doesn't mean that there's not an interest in a natural link there and an ability to deal with Palynziq.

We're just in the early stages of trying to make that one go. In addition, one thing that we did implement over the last year as a begin a home program. So recall under the REMS, Palynziq patients have to take their first injection in the presence of a health care professional.

Historically, that would have meant a trick to the PKU clinic for that first injection. So we're able to remove that barrier for new patients that are starting. That's just an example of some of the things that we're doing to try to get around the impact that the pandemic has had PKU and we'll keep you posted..

Yes. Yes. So I don't know where you got the original impression about the filing timeline. So we're actually pretty optimistic about our current filing time line and feel like it's at or ahead of schedule slightly. Greg Guyer, our Chief Technical Officer, team has done a lot of work on manufacturing the vector.

And our preclinical groups have done a lot of work with Dynacore on human cardiomyocytes as well as doing a lot of work in vivo in animal models of myosin binding quoting C3 deficiency. So we're feeling pretty good that 23 IND is a possibility, along with 349, of course. But I'm pretty pleased with the progress we've made with [indiscernible]..

Our next question comes from Tim Lugo from William Blair..

Congratulations on the strong launch. Can you give us an update on about VOXZOGO for infants? I know you have the investigator study which you have 52-week data next year. You also have the Phase II patients at risk of surgery study ongoing.

Kind of what's just the regulatory strategy for these patients?.

Hank?.

Well, so you mentioned a bunch of different things. So let's talk about children with no other recognized morbidities.

We completed the so-called 206 Phase II study trends in the right direction and I think reasons to believe that, that could lead to a label amendment are, to some extent, based globally on other health authorities acceptance of the data that we've provided so far but also that the biology and the unmet need here are very strongly favorable and the results trending in the right direction could be viewed as meeting the bar.

The reasons not to believe our FDA can get hung up on things like key values and that sort of thing. And then we do have a study in children who have potential risk for -- I believe that is completely enrolled or nearly completely enrolled at this point with the data readout to come. And then finally, we have some work going on with an IST with Dr.

Dauber at Children's in D.C. that's exploring the activity of VOXZOGO in children with mutations other than one that [indiscernible] which is also very encouraging in that we do see signs -- preliminary signs of enhanced growth after a run-in period.

So again, this goes back to a very much earlier question about the things that we're doing to build out the VOXZOGO brand in its life cycle to demonstrate the value across the spectrum of ages -- spectrum of delivery, kinds of considerations of spectrum of potentially a spectrum of indications..

Our next question comes from Akash Tewari from Jefferies..

This is [indiscernible] for Aksah. We have one quick question on VOXZOGO. I know you already touched on this topic during the call but regarding the Phase II data in the 3 indications you presented at PEF earlier this year.

Can you comment on the development timeline? And also how will you further advance these indications? Is there a potential to pursue like accelerated approval for these indications? And when can we expect to hear updates on those?.

Yes. I just mentioned -- yes, I just mentioned that study by Dr. Dauber is still very much in flight and there does need to be a lot of regulatory interaction around the design of clinical trials for VOXZOGO outside of the achondroplasia indication.

I don't want to set a specific timeline of expectation at this point as we're still in the process of strategizing and engaging health authorities. We'll provide updates when we have specific updates to provide but we are very encouraged by the activity that Dr. Dauber has demonstrated in improving height.

This is very much what was predicted biologically well before we completed the Phase III trial of VOXZOGO in achondroplasia. So we do have a great deal of passion to try to find pathways to make this novel natural regulator bone up available to patients with other statural deficiencies besides achondroplasia..

Our next question comes from Debjit Chattopadhyay from Guggenheim Securities..

I've got a couple. On VOXZOGO, what's the net price in ex-U.S.

territories right now? And then on ROCTAVIAN, how should we think about a number of hub centers in Germany initially and then the 3 major markets over the remainder of, say, '23?.

Price ex-U.S.? Jeffery?.

Yes. So far, in VOXZOGO, the listed prices are in Germany and the United States -- we've previously disclosed that. We are close to getting a finalized price and reimbursement post the 1-year repricing period in Germany and that will involve a confidential discount. So we won't be disclosing those confidential discounted prices.

So far, what we've been able to achieve in other name patient sales markets around the world is a price that's reasonably close to what we see in the United States and Germany so far.

Over time, those prices are going to go down as we complete reimbursement deals as we have guided since prior to the launch of VOXZOGO but nothing more particular to report there. And sorry, your question about ROCTAVIAN in Europe in 2022? Sorry, I missed that one..

So I was wondering how should we think about the number of hub centers because I believe it's a hub-and-spoke model that's being talked about in terms of screening patients and identifying patients from the neutralizing antibody perspective.

From a number of hub centers that you would likely need in Germany and in France, Italy and Spain between now and end of 2023..

Great question. So just to put out on the table, that have spoken model was published by the European Hemophilia Community. So you can find more in the May 2020 and late September 2021 publication of hemophilia that describes that initiative more completely. That's not a BioMarin initiative, that is a European Hemophilia Community initiative.

So back to Germany and France, I think low double digits of hub centers in each country which is really nice because it will allow us to focus on relatively small number of centers, get them trained and in service and ready to treat patients.

And then we'll have a relatively small number of centers that are gaining critical experience actually treating those patients. And the hub-and-spoke model would involve essentially the workup of the patients at the spoke hemophilia treatment center, referral in for treatment, referral back out to the spokes for post-treatment follow-up..

Our next question comes from -- that person went out of the queue. Okay. It looks like the call, we run out of time. So we're going to turn the call back to our CEO -- BioMarin CEO, J.J. Bienaime, for closing remarks..

Thank you, operator and thank you all for joining us today. So our results in the first half of the year underscore the strength of our brands and our execution across the organization.

As reported, the addition of VOXZOGO to our commercial part is an important component of our growth story and does pave the way for GAAP profitability this year and beyond. So we look forward to the potential launch of our next significant opportunity with ROCTAVIAN in Europe later this year.

I would say, combined with VOXZOGO, we believe that both of those drugs will drive substantial value for our patients, our employees and our shareholders over the next few years. So thank you all for the opportunity and support and we look forward to seeing you soon..

This concludes today's conference call. Thank you for attending..