BioMarin Pharmaceutical Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 31, 2023

There are 14 speakers on the call.

Operator

Thank you for joining BioMarine's 2nd quarterly results conference call. Hosting today's call from BioMarine is Tricky McCarthy, Head of Investor Relations at BioMarine. Please go ahead, Tracey.

Speaker 1

Thank you, JP, and thank you, everyone, for joining us today. To remind you, this non confidential presentation contains forward looking statements About the business prospects of BioMarine Pharmaceutical Inc, including expectations regarding BioMarine'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 Vibram'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 BioMarine's filings with the Securities and Exchange Commission, such as 10 Q, 10 ks and 8 ks report. On the call from BioMarine's management team today are JJ Bienaime, Chairman and Chief Executive Officer Jeff Ager, Executive Vice President, Chief Commercial Officer Thanks, Fuchs, President, Worldwide Research and Development Greg Guyer, Executive Vice President, Commercial Chief Technical Officer Brian Mueller, Executive Vice President and Chief Financial Officer. I will now turn the call over to BioMarine's Chairman and CEO, J. J.

Speaker 1

Bienaime.

Speaker 2

Thank you, Tracey, and good afternoon, everyone. Thank you for joining us today on this call. We were very pleased with our Progress in the Q2 as more families around the world gain access to Voxelgo and the highly anticipated FDA approval of Rotaviant The achievement of these two milestones are key components of our growth plans, including Continued VOX OVER expansion and ROCCAPON launch execution. Record revenues of approximately $1,200,000,000 in the first half of the year Represented 13% year over year growth and 16% growth excluding CUVA. Our commitment was demonstrated again this quarter and we were pleased to deliver $56,000,000 in GAAP net income as a result of strong product demand.

Speaker 2

With Q2 total revenues coming in at $595,000,000 including $113,000,000 in barcirgo revenues, We are on a path to achieving our 2023 objectives of double digit revenue growth and significant operating leverage. This is expected to drive more than 30% growth in bottom line profitability in 2023 as communicated earlier this year. We were very pleased to have received FDA's approval of ROCAVI in the quarter as we believe the demonstrated clinical benefits of this one time gene therapy A transformative potential for those living with severe hemophilia and eligible for treatment. With combined U. S.

Speaker 2

And European addressable patient population of nearly 6,000 patients, we are optimistic that OTANIVIO will become the treatment of choice For those seeking alternatives to chronic therapy, the commercial team moved quickly to activate the first phase of launch following FDA's approval, And we have been encouraged by the early signals of interest in Rotavian in the United States. We have also made good progress in Germany and other European countries during the quarter, And Jeff will provide more launch details in a moment. Turning to VoxSOGO, we continue to be impressed by the cadence of uptake worldwide. As a result of continued strong demand, we are raising full year of October guidance for the 2nd time this year to between $400,000,000 $440,000,000 Representing a significant increase from our initial guidance in February of between $330,000,000 $380,000,000 Jeff will provide additional detail on our Voxelgo guidance in a moment. Building on the significant demand for Voxelgo for the We are pleased to announce today and plan to begin our pivotal program with Voxservo for the treatment of hypochondriplasia.

Speaker 2

With over 7 years of efficacy and safety data from our clinical program and maybe 2 years of commercial experience in achondroplasia, With you, Voxel was highly derisked and now on the fast track in its potential second new underserved patient population. Hank will provide more details in a moment, but suffice it to say we are rapidly executing on our expansion plans with Boxovo. In summary, we are very pleased with BioMarine's performance in the Q3, Q2 and year to date. The global demand for VOSTOVO continues to drive record revenue and margin Spansion, supporting our confidence that we will potentially be it will be our 1st blockbuster product. With Rockavian, we're excited about the opportunity ahead and remain focused on launch execution both in the United States and Europe.

Speaker 2

We believe Our ability to raise awareness of our commitment among patients and physicians in U. S. Through a direct outreach to the hemophilia community Will result in meaningful demand over the coming quarters. Thank you for your continued support. And now I will turn the call over to Jeff to discuss The commercial business updates.

Speaker 2

Jeff?

Speaker 3

Thank you, JJ. I'm very pleased with our commercial performance in the 2nd quarter, Resulting in $595,000,000 in total revenues and representing 12% growth year over year including KUVAN And 14% growth excluding KUVAN. Contributions from our enzyme products in the quarter Keep us on track to deliver full year 2023 guidance for this franchise as well as provide significant contributions to BioMarine's full year 2023 total revenues. Turning to Voxogo. Today, we increased full year guidance again As new patient penetration continues to exceed our aggressive expectations, as noted in the press release, Today, we once again raised full year VOXXOGO revenues guidance to between $400,000,000 $440,000,000 representing 150% year over year growth at the midpoint of guidance.

Speaker 3

Appreciating that the run rate for the remainder of the year may seem muted based on BoxSOGO revenues of $201,000,000 in the first Half of the year, we note that we are managing temporarily tight supply into 2024. We are closely managing new growth, including limiting inventory stocking to ensure that we achieve our main goal, Which is to ensure that patients maintain continuity of Voxelgo. Importantly, while we are focusing on inventory levels and new patient starts, Our supply plan provides for hundreds of new patient starts in the second half of this year. We do have ample drug substance on hand, Which we manufacture at our Nevada facility and have sufficient capacity to meet all future demands for achondroplasia and other possible indications. We have secured additional capacity at our fillfinish CMO, which is the constrained element of the process.

Speaker 3

These accelerated steps will ensure that we have ample supply to exceed full year 2024 consensus, currently at $597,000,000 on FactSet and support growth beyond 2024. At the end of the Q2, more than 2,000 children with achondroplasia in 36 different markets were being treated with FOXO2. Update to date represents 12% penetration of indicated patients in BioMarine's commercial footprint, Highlighting the significant growth potential remaining. Turning now to Octavian. We've been very pleased with U.

Speaker 3

S. Launch progress since receiving FDA approval on June 29. Following approval, the team immediately began the outreach campaign, Educating stakeholders, including patients, hemophilia treatment centers or HTCs and payers on the value of RockTavion. In the 4 weeks since approval, we've been pleased with the increasing inflow of patient consent forms, the number of We're in process warranty agreements and the utility of our executed group purchasing agreement contract that we expect will facilitate access and uptake of ROCKTAVIAN at hemophilia treatment centers across the U. S.

Speaker 3

There are many commercial activities ongoing to facilitate access to RockTavian. We are currently in process of working with the largest, Most capable hemophilia treatment centers on-site readiness. On the payer side, our U. S. Market access team has been actively engaging with payers to facilitate patient access and the issuance of coverage policies.

Speaker 3

In advance of coverage policies being issued by payers and once commercial Rockabian is available in the U. S, We have the ability to get approval for individual patients through the medical exception process. In summary, in the U. S, We are actively promoting Rocktavian to the hemophilia community and the sales force has been activated in all key regions. We expect labeled commercial roctivian to be available to ship to pharmacies in August and look forward to updating you of our progress over the coming months.

Speaker 3

As we stated on our June approval call, we expect it could take from 2 to 5 months to complete the Steps necessary before treatment with Rothavian depending on a patient's location, insurer, Cadence of regularly scheduled visits with the HTCs and completion of eligibility testing. Moving briefly to Rockavian updates. In Europe, we continue to make good progress. In Germany, new AAV5 antibody tests in Germany to come through, resulting in a robust funnel of patients preparing for potential treatment with Protavian. While final federal pricing negotiations are ongoing, reimbursement for patients treated with Rockabian is possible Under named patient authorizations

Speaker 2

through individual

Speaker 3

insurers, those sales would be subject to the final price once it has been established. In Italy and France, we are also making good progress. Our applications seeking price and reimbursement approvals As well as other launch preparation activities are moving ahead in both countries where we expect negotiations to conclude By Q4 of this year, we continue to be encouraged by early interest in RockTavian and other markets, Including Argentina and Saudi Arabia, where we have the potential to provide access to Rockavian through named patient authorizations. Taken together, we are pleased with the progress we are seeing in markets outside of the United States. Briefly on full year 2023 Rotelion guidance.

Speaker 3

We maintain our current full year 2023 guidance of between $50,000,000 to $150,000,000 Appreciating that we are at the start of launching a truly pioneering therapy, which has required significant effort to support novel reimbursement arrangements As well as training for those providing roctavian treatment and follow-up, we believe there are a variety of potential outcomes over the next several months. Our confidence in the guidance range is supported by ongoing progress in Europe, requests from patients for CDx testing and treatment, The inflow of patient consent forms and warranties in the U. S. And feedback from physicians globally As well as the one time nature of both Waqpayvian treatment and reimbursement. For perspective, the treatment of slightly more than 50 U.

Speaker 3

S. Patients Achieved the midpoint of current guidance, so stay tuned over the coming months as we track global launch progress. In conclusion, at the midpoint of 2023, we are on track to achieve full year total revenue guidance. The unique one time treatment and reimbursement profile of Octavian lends itself to contributing meaningfully during the second half of the year. Boxogo continues to exceed expectations, resulting in 2 guidance increases so far this year.

Speaker 3

The start of our new pivotal program with Voxogo for the treatment of hypochondriplasia opens the possibility of a new indication opportunity for a marketed product. These opportunities are now layered on top of BioMarine's established base business that delivers nearly $2,000,000,000 annually and growing. Taken together, we are well positioned to achieve financial growth and profitability goals outlined earlier this year. Thank you for your attention. And I will now turn the call over to Henk to provide an R and D update.

Speaker 3

Henk?

Speaker 4

Thanks, Jeff, and thank you all for joining us today. Echoing JJ and Jeff's enthusiasm for the June 29 Food and Drug Administration approval of Octavian, we are extremely gratified that people in the United States living with severe hemophilia A have access to this innovative therapy. Our goal with each of Vibran's therapeutic interventions is improving health outcomes for people with genetic conditions and we believe Lactavian clearly achieves that goal. As we have stated previously, we believe Voxogo has the potential to treat a variety of genetic statral conditions, Many of which represent significant unmet need. As JJ mentioned, we have solidified our plans to begin the pivotal program with OXOZO for the treatment of Hypochondriplasia.

Speaker 4

We estimate the patient population in hyperchondriplasia across BioMarine's global territories to be approximately 15,000 individuals And expect the full spectrum of disease to be elucidated over the course of the study. As a reminder, hypochondriplasia is a genetic skeletal dysplasia Characterized by small stature and disproportionately short arms, legs, hands and feet. As Doctor. Andrew Dawber, who BioMarine Supporting to run the Phase 2 study of oxo go in a multitude of genetic statral conditions has educated us. For Dactaids, Doctors have only one tool to improve outcomes in patients with skeletal diseases and it does not work well outside of growth hormone deficiency.

Speaker 4

As is typical of BioMarine, we look forward to ushering in a new era in improving health outcomes for children with severe impairment in growth, Now beyond thechondroplasia, following our interactions with the FDA and based on the emerging data set from Doctor. Dawber's study, We aligned on a study designed to test BOXOVO in this new indication. Supported by our extensive clinical development program in achondroplasia And profile of BoxOVO as a natural regulator of bone growth, we are pleased to be moving directly into a pivotal program in hypochondriplasia. We plan to begin the 6 month observation of the study later the arm of the study later this year, followed by a 52 week randomized Double blind, placebo controlled, phase of the 80 participant clinical trial. Based on the enthusiasm we have seen with OXOBI for the treatment of We're excited to get started on the first potential treatment option for children with hypochondriplasia.

Speaker 4

Briefly, on the earlier stage pipeline, we've been working to put together an Interesting and informative update across our pipeline programs for our upcoming R and D Day on September 12. This includes our 5 publicly disclosed product candidates as well as other new updates. The agenda includes BMN-two fifty five for hyperoxaluria and BMN-three fifty one for Duchenne Muscular Dystrophy and BMN-two ninety three for myosin binding C3 protein deficiency Causing hypertrophic cardiomyopathy. And some fireside chats with key opinion leaders or key areas of our therapeutic focus for BioMarin Will be an important and interesting part of the R and D day. We look forward to sharing an update on what's been happening in the earlier stage pipeline, And we hope that you'll tune in to learn more about next potential commercial product candidates.

Speaker 4

Thanks for your support, and I'll now turn the call over to Brian to update financial results in the quarter. Over to you, Brian.

Speaker 5

Thank you, Hank. Please refer to today's press release summarizing our Thank you, sir. Thank you, sir. Our first question comes from the line of Jamie McCarthy. Thank you, sir.

Speaker 5

Our first question comes from the line of Jamie McCarthy. Thank you, I'll make just a few more revenue comments, then we'll focus on the remainder of our P and L and other key financial updates this quarter. As usual, all results will be available in our upcoming Form 10 Q, which we are on track to file over the next couple of days. As we have previously noted, we view last year as a transformative year of BioMarine, laying the foundation of our growth strategy driven by Roxogo, Approval of Rockavian in the EU, double digit revenue growth and our important milestone of sustainable full year GAAP profitability in 2022. As we close the first half of twenty twenty three, we're pleased to build on that foundation with the approval of Rockavian in the U.

Speaker 5

S. And strong first half financial performance that aligns to our long term objectives of continued revenue growth and P and L leverage. BioMarine's $595,000,000 of total revenue in the Q2 of 2023 is an increase of 12% compared to the Q2 of 2020 Regarding our revenue outlook, for the rest of 2023, we continue to anticipate strong double digit growth of 16% at the midpoint of our reaffirmed total revenue guidance. As Jeff mentioned earlier, we are pleased with our first half performance of Voxogo And given the first half revenue has come in over $200,000,000 we felt it appropriate to note that the low end Our prior guidance is no longer in line with our expectations. So with that in mind, we have provided an updated view for the year, raising guidance slightly to $400,000,000 $440,000,000 Moving past revenue, Q2 2023 gross margin was 78.5%, Which is an improvement of 1.6% as compared to the Q2 of 2022.

Speaker 5

We are pleased with our gross margin performance over the first half of twenty twenty three It reflects our fundamental objective to improve this metric through cost efficiencies and favorable product mix. R and D expense in Q2 2023 of $177,000,000 and SG and A expense of $215,000,000 Grew 12% 9% versus Q2 2022 respectively and in line with our goal to grow expense base slower than revenue. While we expect operating expense growth on a full year basis to align to that goal, we do anticipate a second half acceleration of expenses As we continue to progress our R and D pipeline, including the new Phase 3 study announced today for hypochondriplasia and investments in the Rocktavian and Voxovol launches. On the bottom line, we continue to deliver on our commitment to profitability with $56,000,000 of GAAP net income in Q2 2023 And $105,000,000 of non GAAP income. This positions us to achieve our stated objective of sustained and growing full year GAAP profitability Going forward, today we also updated our 2023 GAAP and non GAAP income guidance to $165,000,000 to 2 $15,000,000 $370,000,000 to $420,000,000 respectively.

Speaker 2

Similar to

Speaker 5

our Voxogo revenue guidance adjustment, Our updated outlook for the bottom line reflects our strong performance in the first half of the year and continued revenue growth expectations in the back half of twenty twenty three. At the midpoint, we expect more than 30% of net income growth, which represents meaningful leverage versus revenue and is in line with our financial transformation goal. In closing, we are on track to meet our objectives for 2023 and beyond. The recent approval of Octavia in the U. S, Coupled with the strong foundation in place, including the successful Voxogo launch, will further enable our ability to drive revenue growth, Expand the profitability and generate meaningful cash flows over the course of the next several years.

Speaker 5

Thank you for your attention, and we'll now open up the call to your questions. Operator?

Operator

Thank you. Ladies and gentlemen, we will now conduct the question and answer session. BioMarine. Your first question comes from the line of Akash Tewari from Jefferies. Your line is now open.

Speaker 6

Hey, thanks so much. So just any update on the 300 patients you've previously had interactions with regarding RockTabin in the U. S? It sounds like you won't get commercial product into the distribution centers until late August, but I think you've previously mentioned you're going to see some leading indicators in terms of patients who Actually been treated with a companion diagnostic or have actually gone to a treatment center of excellence. So I'd love any update on that number.

Speaker 6

And then I guess number 2 on, hypochondriplasia data. Can you comment a bit on why the EA wouldn't require 2 years of Phase 3 data for Voxogo like they did in hyperchondroplasia? And also maybe what time lines would be for Noonan syndrome, right? I think you have about Five patients worth of data right now. Should we expect that you would need about 25 patients worth of data at the 15 microgram dose in Newnan's to be supportive for Phase 2 approval there?

Speaker 2

Thank you. Yes, you want to start with the first question and then add?

Speaker 3

Yes. Hi, Akash. I'll start with your first question. It's absolutely the case that we started with the U. S.

Speaker 3

Launch with an estimated 300 qualified patient leads. So these are individuals that had been in touch with BioMarine through either one of our digital properties For an in person engagement and had opted in to further information. As noted on our approval call a month ago, That list of 300 is top priority for getting back to in different ways digitally and through our sales force. And I can assure you that the team has been processing those leads in the last month And actively in it. As you noted, we expect and in fact are seeing Small pieces of signals of demand falling into place From responses to those lead engagements to patient consent forms coming in, So things are looking really encouraging on that front.

Speaker 3

Maybe with that, I'd turn it over to Hank on the hypokan and Nandan's questions.

Speaker 4

Thanks, Jeff, and thanks Akash for the inquiry. In terms of the duration of the hypochondriplasia, in contrast to achondroplasia in which The FDA has been very interested in 2 years of data. We've lined up with the FDA that a 1 year study Would be sufficient to support registration and I think that's driven by the comfort level they're gaining on the durability Of Voxogo in disproportionate skeletal dysplasia. And as regards time lines for newness really for further development Beyond achondroplasia and hypochondroplasia, it does make sense that given that BOSOGO is an analog of a natural bone regulator bone growth regulator. It is anticipated that BOSOGO could be effective across A variety of indications, Noonan's and others.

Speaker 4

This is being borne out in Doctor. Dawber's IST evaluating a range of mutations as you noted. He's treated at least 3 patients with Noonan syndrome for at least a year and their growth velocity is maintained above their baseline And importantly, good safety data are being collected in patients with Newnan's. We're in discussions with health authorities now to pin down eligibility, comparators, endpoints and study durations. And as we finalize those study designs, we'll communicate our plans More specifically, as we have just done for hypochondriplasia, but your question really points out the exciting future potential of Voxelgo and other Skeletal abnormalities, based on its great safety record and its activity as a natural regulator of bone growth.

Speaker 7

Next question please.

Operator

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

Speaker 1

Good afternoon. Can you help us to understand the confidence in Octavian guidance for the second half in the context of the U. S. And EU dynamics? Thank you.

Speaker 2

I mean, I'll start and Alex, I'll have Jeff come in. But I think as Jeff said in the prepared remarks, Based on the net price of ROCEIVID in the U. S, which is pretty close to $2,000,000 the midpoint of our guidance, dollars 100,000,000 would be only 50 U. S. Patients.

Speaker 2

We are counting any non U. S. Ex U. S. Patients.

Speaker 2

And also just something that's special about BOXOLO because the gene therapy As compared to any forecast of chronic therapy is that starting a patient early in the year or late in the year makes the difference in terms of revenue Mission, because you know what, like SparkSorvo, for instance, chronic therapy, if you start a patient on December 1, The revenues of this year will be much smaller than if you saw them on February 1. But for Rotavion, if we treat a patient in on August 30 or On December 30, this is the same thing to the revenue. So just keep that in mind. With this introduction, Jeff?

Speaker 3

Yes. Thanks, JJ. I think that's exactly right. And thanks for the question, Salveen. The other couple of things that I would add are, we're now seeing multiple pathways That we expect to open up for Rockavian revenue.

Speaker 3

I mentioned progress in all of Germany, Italy and France, Which are priority European markets for price and reimbursement. Remember, I've Been quoted on numerous occasions saying typically takes 12 to 15 months to get through that process. We're now just a couple of weeks away from 1 year since approval. So we should be getting to the end of the process In some or all of those markets between now and the end of the year, opening up a pathway for Treating patients. Also the name patient market, so I've quoted Saudi Arabia and Argentina that we've been working diligently, But quietly on in the background.

Speaker 3

And finally, the United States where we got our approval at the mid year point Takes a couple of months for product availability and for startup activities, but in the U. S. Our experience has Generally, Ben, that we can get patients treated pretty quickly after approval. So all of those things Add up to channels for being able to treat patients and I think add to the confidence of being in that revenue guidance range.

Speaker 8

Thank you.

Operator

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

Speaker 9

Hey, guys. Thanks for the question. Just had a few. So for RockTavian in Europe, I know it's been a few months since you tweaked the Access strategy in Germany, are there any metrics you can give us either activated centers or diagnostic volumes? I just want to get a sense for The progress since you had a shift in the reimbursement strategy.

Speaker 9

And then on Voxogo, you talked, Hank, about Doctor. Dauber's work I guess the question is as you rolled out globally in achondroplasia commercially, Have you identified hypochondriplasia patients? I wasn't sure if the new Phase 3 was sort of mechanism driven or kind of commercially driven. Thank you.

Speaker 3

Hi, Jeff. Maybe I'll start with the question about Germany and Rothfavian. Yes. As JJ quoted on our approval call, we've actually got a really robust funnel of patients now That are in process for eligibility testing, going through the CDx testing process, Following eligible patients via CDx go through liver health testing and then it's a prescription and reimbursement approvals. So with as JJ quoted a month ago, approximately 60 patients, I view that as a really healthy Patient funnel starting, recall last fall we said we estimated about 40 early adopter patients in Germany.

Speaker 3

So we're at 1.5x that number and that's before we get through the formal federal price and reimbursement process. Those patients are making progress inside of the funnel and I understand it's frustrating not to see them popping out the other side as Treated revenue patients, but I'm confident that they're making progress and that we'll get there, particularly if we can come to an agreement With the federal authorities on price and reimbursement. Maybe I'll turn that over to Hank on the Boxogo question.

Speaker 4

Thanks, Jeff. With a lot of the genetic conditions, when there is no treatment, there tends to be no diagnosis. And Now with achondroplasia gaining so much traction, patients with hypochondroplasia are identifying themselves or families with Patients with hypothroplasia identifying themselves and getting themselves, forwarded to treatment centers For identification and in the case of Doctor. Galber's study referral into his study. And I think a lot of that is driven by the Seeing a typical similarity of achondroplasia and hypochondroplasia to your point about mechanistic similarity.

Speaker 4

And our expectation is that this will begin to extend into other skeletal disorders as More clinicians and more families recognize CNP as a natural regulator of bone growth. And I think this is A process that could lead us to many additional indications. And as I said on the call, stay tuned for further updates on the Regulatory strategy to enable roctavian to the Boxogo to be available for children suffering from Other skeletal abnormalities beyond achondroplasia and hypochondroplasia.

Speaker 10

It's a very exciting time.

Speaker 9

Great. Thank you.

Operator

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

Speaker 4

Hey, thanks. Just a couple

Speaker 11

of questions. First on the Voxogo supply issue. Jeff, I wonder if you could maybe expand a little bit. I think I heard you Say it's why the full year 'twenty three guidance wasn't raised more and it's a supply issue at a CMO. Can you maybe expand on this?

Speaker 11

Like What exactly is the fillfinish bottleneck? And I think you said you have supply to handle 2024 consensus, but just maybe could you put some brackets around the timing And the plan of action to not be supply constrained, like what's the plan to sort of You're going to deal with the situation, so it's no longer an issue. And then maybe for Hank on the pipeline, Just looking at the verbiage on 331, you've got 2 patients now where the expression trajectory is not yet into the therapeutic range. Maybe can you sort of talk about what would drive a gono go decision for this program or just any more color on there Matt, thanks.

Speaker 2

Thanks, Peter. We have a great guy here, our Head of Thank you, the operations here. We're going to answer your remarks over supply question.

Speaker 10

Yes, Chris, thanks for the question. And just maybe to clarify a little bit about what Jeff was talking about is Currently, we're able to supply Voxogo with many hundreds of patients Starts in the second half of this year and have a supply plan that exceeds even the 2024 As said, he mentioned earlier in fact that that supply just remains tight from an inventory perspective. So we thought it was just appropriate just to Escalated to this group, my team is doing everything we can to continue to escalate or accelerate supply from the CMO, which we use. They're a great partner. They're reliable, dependable, high compliance.

Speaker 10

So there's no issue. It's just trying to accelerate The supply availability faster than what we had planned. And that's really a tribute to our commercial team for really getting the type of penetration rates Much faster than we had expected. And so we are working very closely with them to make sure that we can meet that future Demand and also deliver on the full potential of Voxogo long term?

Speaker 2

So again, there is no manufacturing issue. The manufacturing details, the drug substance we manufacture ourselves here in California, The field finish is done by outside supplier. As you know, outside suppliers, there's a lot of lead time When you want to increase the volume and that's what we're facing here because VoxelGrid is doing way, way better than anybody, including yourself. Anticipate in terms of penetration, that's what's creating a little it's a really limiting factor. But again, we believe it's going to ease up In 2024 and then at the end of 2024, into 2025 and beyond, we shouldn't have any problem.

Speaker 2

But and we have Greg, there'll be almost unlimited drug substance capacity. I mean nothing is unlimited, but I would say we can clearly we have You have drug substance capacity to go way above $1,000,000,000 or probably $2,000,000,000 And if we need more down the road, if you need hypokine successful, we can Go further. So it's just a field finished bottleneck, which is temporary. That's a good problem to have. But you're correct in your remark that actually if we did have that bottleneck, we would have increased the guidance for Hi, sir.

Speaker 2

Above what we are we indicated today, but at the same time, the good news is that next year, we have We believe that our plan including what our supplier can do and if you're finished, Franca can allow us to easily beat the current consensus score And after that, it should be much easier. But Jeff, you want to add anything? Yes, well stated. Thanks. There was a many questions for him, Steph?

Speaker 4

Yes. On threethirty one, yes, Chris, we do have very clear criteria for stopping, and Note would be taken that at this stage, one option could be before reaching those top criteria To raise the dose, AAV5 based therapies have a pretty good safety profile. And so we could contemplate raising the dose. Another thing I'll mention is, that new and I'm not going to be very specific about this just yet, but With as much Rocktavian data as we have, we have some new insights about optimizing gene expression in patients I'm treated with gene therapy and we're working very closely with the data monitoring committee and the investigators of the study to incorporate those insights. And if neither of those 2 are successful, of course, we would meet a stop criteria.

Speaker 4

But it's still a little bit early for that program. And As we resume dosing and obtain more data, we'll provide further updates.

Speaker 2

Thank you.

Operator

Your next question comes from the line of Robyn Karnauskas from Tuohy Securities. Your line is now open.

Speaker 7

Hi, thanks. I'll be quick. So three questions. Number 1, we've heard compliance is very high on Voxogo. Can you elaborate?

Speaker 7

And that gets to the competitive landscape and how committed these parents are. Number 2, There's questions around hypoachondroplasia. Like, do you have to do as many studies, long term studies, do you have any insight into that? And then I have one follow-up. Thank you.

Speaker 3

Maybe I'll start with a question on compliance with Voxel Go Robin. And as you know, it's very high. We are not able to measure that explicitly in all markets. So the one market that we Really dial in on that as the United States, and our experience so far in the United States is Very few drop offs and compliance with the daily dosing as we measure it appears To be very high. So, so far so good on the compliance side.

Speaker 3

And maybe I'll turn it over

Speaker 4

Yes. Thanks, Jeff. In regard to the hypochondriplasia question, one study we've Interacted with the Food and Drug Administration and have a pretty clear picture of their requirements, which would be satisfied With one study and the reason for not requiring longer term follow-up as regards randomized placebo controlled period Is their growing satisfaction with durability? In fact, maybe to go even a little further, depending on where achondroplasia is At the time of the regulatory action on hypochondriplasia, even further follow-up may no longer be required for hypochondriplasia. So we had a Great dialogue with the FDA.

Speaker 4

And in so far as there's an excellent safety track record For Boxergo and patients with hypochondriplasia with accumulating excellent efficacy data, these sorts of supplemental new drug applications are not Subject to necessarily the same demand as the M and A. We're pretty excited. And you mentioned you had a follow-up question.

Speaker 7

Yes. One follow-up, sorry. So there's so much fixation on when you'll dose patients in Europe. And I was just curious, like, if you thought about, like, letting us know Earlier or during the Analyst Day, there's so much fixation on that. So maybe give clarity on when you might give us timing of that And how much color you would give?

Speaker 7

Because there's excitement, but we're yet to see the dosing.

Speaker 2

Yes. So actually one hi, Robin. One of your financial analyst competitor had a recent call with a German physician. That German physician announced on that call, but That is scheduled to treat his first patient I think on August 30 or 31. So that looks like this one is probably Given and then there is a possibility that we would treat also our first US patients by the end of August at Barkatil.

Speaker 2

And then after that September should be when we're going to start really getting some real traction on patient treatments and revenues.

Speaker 7

Great. Thank you.

Operator

Your next question comes from the line of Phil Nadeau from TD Cowen. Your line is now open.

Speaker 12

Good afternoon. Thanks for taking our questions as well. A couple more on Rokhavian. JJ, during your prepared remarks, you mentioned the consent forms received in the U. S.

Speaker 12

As adding confidence to the guidance. Can you go into a bit more detail on that comment? Is that simply the 300 patients that you knew of as of the time of approval? Or have there been incremental consent forms received over the last month?

Speaker 2

I'll let Jeff answer that question. Do we I don't believe that we already received 300 Patient consent form, we haven't, but they are starting to roll in and

Speaker 3

but maybe Jeff is right, some

Speaker 2

more color here. Thanks for

Speaker 3

the question, Phil. So these are really independent sets of patients. The 300 patients that we've quoted are Qualified leads means we have a lead, we've qualified that lead to be a hemophilia patient, Not a sales rep, but a competitor company, for example. And we're following up, those patients have opted in for further information. Patient consent forms on the other hand, are our usual vehicle That we use for all of our programs including for Rock Haven in the United States to conduct patient Intake into our case management system.

Speaker 3

So any patient that's come in with a patient consent form Has been in touch with our case management system and has opted in for further services Depending, that patient consent form might be coming in from a hemophilia treatment center along with prescription Or might be coming in independently as patient directed, interest. And in that case, We would connect them with the sales rep for follow-up. So it's a mix, but it's really, really good That we have patient consent forms coming into our case management system. That's how it always begins for us with all of our programs, including our KVM.

Speaker 12

Would you care to disclose how many patient consent forms you have?

Speaker 3

Not at this time. Thanks for the offer though.

Speaker 12

Got it. And then in terms of the centers themselves, what do they need to do in order to make Rockavian available for a patient. In general, is there a formulary committee that has to accept Rockavian as a therapy? Any other committees that you have to talk to or get permission from before a center can bring RockTevian to its patients?

Speaker 3

It's a great and an important question, the notion of site readiness. And unfortunately, there's no kind of simple One size fits all description. Some HTCs are connected to Larger healthcare system, in those cases an HTC might tap into The administrative procedures that you mentioned like formulary, for example, and maybe also pharmacy services from the larger Institution, and in other cases, you have hemophilia treatment centers that are more or less standalone And do all of that on their own. So site readiness looks different depending on What is the size, capability of the HCC and are they connected or not with a larger healthcare institution? Just a reminder that the infusion of Rockkabin is relatively trivial step, The more important things are issues like the administration formulary, for example, navigating payer interactions, Product handling, of a very frozen product that has a high value, for example, Patient eligibility testing and counseling to determine if there's a patient with interest and if Yes, moving them forward in the process.

Speaker 3

And then, the follow-up Following administration, which we talked about on the approval call. So lots going on there. None of those things involve a big hurdle. It's mostly a bunch of smaller things that need to be done And a whole list of them or that is rather be sub for each hemophilia treatment center and our team is on it. Great.

Speaker 12

And then last for my follow-up that you just mentioned, how onerous are the liver enzyme and Factor monitoring requirements, is that something that you can make very easy for the patients?

Speaker 2

Blood tests.

Speaker 3

Liver function tests Our on a panel that probably most of us do once or twice a year. It's a simple blood test. The same time that that simple blood test is being taken, blood can be Used for factor expression

Speaker 2

levels. And is that for

Speaker 3

helping the patients do that, That's right. So for a lot of patients, it's as simple as going to a very nearby, lab Testing facility, in the case of patients that don't have Convenient access to that. We have programs to assist.

Speaker 12

Perfect. Thanks for taking our questions.

Operator

Your next question comes from the line of Joseph Schwartz from Leerink Partners. Your line is now open.

Speaker 9

Great. Thanks so much. Our checks in Germany indicate that there is still some uncertainty about how many and which sites we'll be able to administer Roktavian there. So I was wondering if you could talk about how this rulemaking process works and how you expect it to play out. Is this part of the reimbursement negotiations, which are expected to wrap up in September?

Speaker 9

Or is this something separate? And then in the U. S, our checks underscore the importance of contracting with the sites that the initial ordering and longer term follow-up On patient performance can be done reliably. So I was wondering sort of to follow on to Phil's question, if you can give us any insight into the extent Of contracting that you've been doing with HTCs in the U. S?

Speaker 9

Thank you.

Speaker 3

Hi, John. Let me start with Germany. So you've heard me talk over the last year or even longer about The hub and spoke model for treatment, that the major markets in Europe have been rallying around. And that's the hemophilia treatment community in Europe, not BioMarine is a driver behind that. So the notion is that In Germany, for example, the largest and the most capable hemophilia treatment centers would be hub centers For both screening and testing patients and that there would be smaller, less capable Hemophilia treatment centers that would be spoke centers and those spoke centers would probably do all of the screening And recommending of treatment, the treatment would be done at a hub center and then likely back On the entire list of who's the hub and who's the spoke, but from a practical perspective, We're focused on engaging with all of the significant hemophilia treatment centers in Germany And it doesn't really matter very much from a kind of promotional perspective, which centers do infusions And which centers refer for infusions?

Speaker 3

That's on Germany. You mentioned contracting and I'm not Sure exactly what kind of contracting you're talking about. In the United States, there would certainly Need to be an agreement reached between a treatment center and a payer on the level of reimbursement For Rothavian, which might involve a patient specific contract between a hemophilia treatment center and a payer. We think that that's likely and not a big barrier at all to proceed with the treatment. There might also be contracting between, spoke sites to use the analogy, spoke sites and hub sites in the United States.

Speaker 3

If there is a desire on the part of a hemophilia treatment center to refer one of their patients to a more capable center Or one that's further along in site readiness for treatment of Rock Fabian. All of those things are possible. I haven't Personally heard that there are any barriers to proceeding due to contracting, if you've got something more specific,

Speaker 2

That's good. Sorry, I may add Joe, he has escaped some of our investors and listeners. Basically, all patients in the U. S. Will be treated with rokaryotype in Hemophilia treatment centers are hemophilia treatment centers that are receiving 340B discounts.

Speaker 2

Basically, statutory for the centers. Let's take around it will be initially more than 20% and then it might go down to 17.5% whatever, but it's rounding to 20%. That's 20% of the WACC cost. So our WACC is $3,000,000 a patient. So 20% is $600,000 that would go in the pocket of the HCCs per patient.

Speaker 2

So you might helpful You might have this information you might find this information interesting.

Speaker 9

Very much so. Thanks again.

Operator

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

Speaker 13

Hey, thanks so much for taking my questions. On Voxogo, Jeff, does the supply issue or I guess capacity issue temporarily Impact how you market the drug and how might that impact the way you sort of seek to interact with healthcare providers and patients If and when the label is expanded before the capacity constraint is fully resolved. And then on RockTavian, just in terms of the timing, the 2 to 5 month timing that you spoke to around approval, I think it took around 7 months to dose the first Hemgenx patient. Can you just outline the couple of key reasons in your mind for why you think you can get this done so much faster than CSL did? Thanks so much.

Speaker 2

Yes, good question. I'll start on the October and then Jeff can chip in. Again, when in our prepared remarks And our we said that for 2024, we will have Apple supply to beat the current consensus, which is close to $600,000,000 So For us, that includes potential increase of I mean, label expansion in terms of new patients, New patients are under age of 5 in if that does occur in some cases. That's already included. So It doesn't change anything in the remarks that we made in this respect.

Speaker 2

I mean, Greg, you have anything to add here?

Speaker 10

No. And by the time HypoCon comes, this supply issue will not be 1. We'll have plenty of supply.

Speaker 2

Yes, because we're not going to get HypoCon

Speaker 13

I just met younger patients, but okay, thanks.

Speaker 2

Yes, younger patients, but that's already, I guess, The current consensus is significantly above the top of our guidance for this year of $440,000,000 and we are very comfortable We have enough supply to significantly beat the current 2024 consensus, whatever the patients are. Jeff, do you want to add anything to that?

Speaker 3

Yes, maybe just a couple of metrics to put it into perspective. At the end of Q1, we advised that there were 1500 patients On treatment around the world, the end of Q2, 2,000 patients on treatment around the world. That's a big increase quarter to quarter. And we've guided that our supply plan just through the end of this year allows for 100 Additional patients to gain therapy. So internally how we're looking at this is The overall demand is not a big surprise.

Speaker 3

It's just coming sooner and the uptake Is coming faster in markets that we're gaining access to. So gaining access sooner, faster uptake In those markets than we were planning on, we still need and want that patient base to grow. And so it doesn't fundamentally alter our launch of this drug. This is a really good Growth trajectory for us, we're just bumping into some ceilings in certain places. And where that's happening, We're prioritizing keeping kids that have started or will start to make sure that we've got continuity of supply because What we really don't want to have happen is for kids that have started supply to go off therapy.

Speaker 3

That much on Bakugo. On RockTavian, for RockTavian, we're highly motivated to treat patients in the United Stays as rapidly as possible. On the one hand, we are a new entrant to hemophilia. We've been preparing for this day for a number of years, but it's not like we have an existing therapy But we need to cannibalize with the treatment of our gene therapy. And we've taken steps, for example, Having a group purchasing organization contract signed before we even got approval, We took those steps to facilitate rapid access.

Speaker 3

We're moving as quickly as possible. The warranty. We've got the warranty. So those are differentiating factors. I can't speak for the other manufacturer, But we're moving as rapidly as possible.

Speaker 3

And I think the steps that we've taken so far would be consistent with that desire to move fast.

Speaker 2

And several payers have already signed a warranty contract. That means that I presume they are intending to cover Voxelgo, otherwise there will be no need for them to do that. Thank you.

Operator

Your next question comes from the line of Jaina Wang from Barclays. Your line is now open.

Speaker 8

Thank you for taking my questions. Maybe just follow Paul, comment question and also JJ your comments maybe for, Roktavian 2023 revenue. First, do you expect most revenue from Germany or U. S? And regarding U.

Speaker 8

S. Payers, what is the feedback on one warranty program And how many centers and lives under the coverage that right now are in place? Second question is regarding the VoxSOGO in hyperchondroplasia. So regarding the 6 months observation study, what would you be looking for to help define the pivotal study? And for 52 week Pivotal study, what is the trial assumption and how much you actually learned from Doctor.

Speaker 8

Andrew Dawber's trial?

Speaker 3

Maybe I'll start, Gina, and I'll let JJ fill in. In terms of revenue expectations for Rockcavian and where as I noted in Salveen's question, Part of the confidence in our guidance is not only the U. S. Approval that we received when we did The price that we've named for the United States, but the fact that now almost 12 months From the conditional approval in Europe, we're approaching that period of time Where you would expect we would be able to finish getting through formal price and reimbursement processes at least in the initial Major markets in Europe, that together with what I've described on a couple of occasions to questions as What we think is a rapid start in the United States and even the possibility of named patient sales in other markets, Those channels give different opportunities for patients to get treated and contribute to revenue. In terms of percent coverage and lives, actually we don't have coverage policies Issued in the United States yet, at least that I'm aware of.

Speaker 3

Those policies can take anywhere from 1 to 12 months To issue, I've seen some draft language around coverage policies that have not yet been issued that would indicate that Those coverage policies will be consistent with either a label or clinical trial inclusion criteria, which both of which would be fine. We haven't seen those coverage policies start to be issued yet. So I can't comment on what percent of Covered lives in the United States. And maybe I will turn it over to Hank for the questions on BoxEgo and HypoCon.

Speaker 4

Yes, Gina, the 6 months prospective run-in study is important to document baseline annualized growth rate Prior to randomization into the study, as we've talked about before, one of the things that we observe, in the growth disorder area is that, That knowledge of that baseline growth rate is really important to be able to interpret subsequent changes in growth velocity and is important for Randomization purposes. The study, as I mentioned, is an N of 80 participants, which is a little bit smaller than the study So there will be a contribulation where we are expecting a relatively similar magnitude of effect. Of course, that can be tuned depending on what that baseline AGV run-in is for the baseline population. But just to remind you, in the 110 patient study Of, Boxavo and achondroplasia, the p value is 10 to minus 13. So we don't anticipate needing to power the study Quite as aggressively as we did in achondroplasia.

Speaker 4

And we're reassured about all of this based on the Evolving data that we've seen from Doctor. Dawber as has the FDA been reassured that we can go directly into a Phase 3 clinical trial.

Speaker 2

So thanks for the questions.

Speaker 8

Thank you.

Operator

That concludes the Q and A portion of our conference call. Will turn it back to BioMarine's CEO, J. J. Bienaime for closing remarks.

Speaker 2

Thank you, operator, and thank you all for joining us on the call today. Outstanding execution across our business led to record revenues in the first half of twenty twenty three. We reached more children with Vauxhall around the world As physicians and families start treatments with the only approved medicine targeting the genetic use of cardiogenic neoplasia, And we are well on our way to begin treating patients in the U. S. And Europe with Orkavian over the coming months.

Speaker 2

So for the remainder of 2023, we plan to

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now

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BioMarin Pharmaceutical Q2 2023
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