BioMarin Pharmaceutical Inc (BMRN) 2002 Q2 法說會逐字稿

Good afternoon and welcome Ladies and Gentlemen, to the BioMarin Pharmaceutical Q2 earnings conference call. At this time I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up from questions and answers after the presentation. This non-confidential presentation contains forward-looking statements about the business process of BioMarin Pharmaceuticals, Inc. including 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 markets and developments by competitors and those factors detailed in BioMarin?s files with the Securities and Exchange Commission such as 10Q, 10K and 8K reports.

I will now turn the conference over to Mr. Frederic Price. Please go ahead Mr. Price.

Thank you very much. What I?d like to do is introduce the three people who are here with me in management. [Amil Packet] M.D., PhD, Senior Vice President of Scientific Affairs; [Louis Repose], our new Vice President and Chief Financial Officer, and [Josh Graft], our new Manager of Financial Investor Relations.

Our remarks today are going to be very short. Hopefully will be done within a minute or two and then we?ll open up for questions.

I?d like to highlight some recent achievements at the company, starting yesterday with the patents that we received on Aldurazme. A few days earlier we discussed our completion of the DLA filing for Aldurazme. About a month ago we reported on positive clinical data on Aldurazme from the Phase III trial and the extension. At the same time, we reported on [indiscernible] and dosing data on Aryplase, another enzyme replacement product. We also recently instituted the Science Advisory Board. We now have three new board members and a new CFO. We?re very excited about the management structure that we have now that?s going to help us go forward.

There are a few upcoming events I?d like to talk about. As we mentioned in the press release recently, we?ll have the decision from the FDA with regard to DLA acceptance in priority review status by the end of September. With regard to Neutralase we?re on track to begin a Phase III trial in Coronary Artery Bypass Grafts in the third quarter of this year.

We have recently signed a significant contract with [Organon], a large Dutch pharmaceutical company for manufacturing for Neutralase and as a result, we are not going to build our own manufacturing plant in Neutralase. This will result in very substantial savings cash over the next few years. To remind you that the manufacturing facility, the multi-plant manufacturing, multi-product, excuse me, manufacturing facility we have for enzyme replacement products costs us over $30m, so on a comparable basis, you could expect a fairly substantial cash savings by not building a plant for Neutralase.

I?d also like to make another comment with regard to Neutralase that our process development group has done a remarkable job in reducing a manufacturing cost of Neutralase. We are today estimating that if we were to be able to launch the product we?d have greater than 80% margins and our goal is greater than 90%. We are quite confident that we?re going to get there. This is remarkable in the short period of time that we?ve had this product.

I?d also like to let you know that within a few days, we will be completing enrollment for the Phase II trial of Aryplase NPS6.

What I would like to do now is to open up the field to questions please.

The question and answer session will begin at this time. If you are using a speakerphone, please pick up the handset before pressing any numbers. Should you have any questions, please press star, one on your push button telephone. If you wish to withdraw your question, please press star, three. Your questions will be taken in the order they are received. Please stand by for your first question.

The first question comes from [Matt Gellor]. Please state your affiliation, followed by your question.

Hi Fred. It?s Matt Gellor from CIBC World Markets.

Hi Matt.

Hi. And congratulations on all the, all the progress you have made in the past few days and all, and it will be appreciated at some point.

Let me ask you a little bit about priority review. To what extent will that decision be based on the data or your filing, as opposed to the just the serious condition, to what extent will that be a comment on the quality of the data and can you just give us some feeling for, you know, where things are going with the FDA in terms of, you know, being satisfied with the data that you?ve submitted at this point. When we have 18 months data, do you think they?ll be interested in that at all? That?s the gist of my question.

Okay. You?ve got a, quite a number of questions Matt and a lot of them have to do with some sort of a subjective response and I wish I could give you a complete object of response to every question, but I?ll try to do as best I can on the subjective side, but, as you know, it?s very difficult if not impossible to predict what?s going to happen with an agency or group of people that you don?t necessarily control.

I can tell you from the Gestalt of the whole issue of discussions with the FDA that it is our belief that we will get a positive acceptance, but we cannot predict this with certainty that we will and it is also our belief that we will get our priority review. Based on, in fact, all the issues that you brought up, and I believe to a greater or lesser degree, all of the issues that you discussed, in fact, do play in anybody?s mind when a decision is made with regard to priority review. I don?t believe that there?s a statutory answer which I could give you which says it?s, the answer on priority review is only related to the following X or Y or Z. I think they have the capability to do interpretation, their own subject as an objective analysis. But we believe it is highly likely that we will get both, but of course, we cannot predict that.

The other question that you asked with regard to 18-month data or any other subsequent kind of data like that, I?ll extend your question and the answer is, as you well know, the FDA can ask for just about anything that they want, so can the European authorities as well.

We are absolutely prepared to give them what they would like, in terms of continuing extension data, if that?s what they like, by either the Phase I or the Phase III trial, and we will continue to collect this data and analyze it and hopefully have it in such form that if they were to ask for additional data, that there wouldn?t be necessarily a delay in giving that data, therefore, not necessarily a delay in any kind of approval process.

Great. Thanks a lot Fred and I hope that I get the opportunity to get this drug as soon as possible.

Thanks Matt. I appreciate that.

Thank you. The next question comes from [Mark Shoenbaum]. Please state your affiliation, followed by your question.

Hello guys. It?s Mark Shoenbaum, also from CIBC. I?m the little Matt Gellor, I guess. Just I want to echo Matt?s congratulation on the confidence of this quarter and at some point hopefully the stock prices will reflect reality. The one question I had is, the two additional trials in the young children [indiscernible] really affected. Genzyme had publicly said, I believe with their analysts they would [indiscernible] would be initiated sometime in the second half of the year. I was wondering if you could make any comments, have those been initiated? Any further color on those [indiscernible] design. Have you met with FDA to work out protocol, etcetera, etcetera.

[Amil Canfeld]: Hi. This is Amil Canfeld. I?ll respond to the questions. We are on track to start the protocols later in the year as Jim then has stated. We have had discussions with FDA regarding those, as well as European authorities and so we?re working through the process. With that?

I?m sorry. Did you say, I?m sorry Amil. Did you say you had started the trials or?

No, no. We are working through the process of the protocols and we are on track to start them in the later half of the year. We can?t give you more precise timing, but we?re working on the protocols and are fairly advanced along, but we?re expecting to be on track to start.

Are you prepared to make any comments at this point about some of the designs that you or the FDA has proposed for these trials?

Well, we can?t talk about specifically the design, but the under five studies to help expand the label and to make sure we?ve actually looked at children under five, since all the prior data was over five. In the advanced trials we?ll look at some of the more advanced manifestations invasions and also will help support some of our long-term [indiscernible] claims and our label. So that?s what are goals for those two programs, but we?re not talking about the protocols at this point.

Great. Thanks a lot. I really appreciate it.

Thank you. Once again, Ladies and Gentleman, if you should have a question at this time, please press star, one on your push button telephone.

The next question comes from Rachel [McMin]. Please state your affiliation, followed by your question.

Hi, it?s Rachel McMin from [Pepper Jeffrey]. Two questions for you. One is, does [Jenplen] have a patient registry of NPS1 patients and if so, how many patients are currently enrolled in that registry?

Well, this is Fred. Hi Rachel.

Hey.

With regard to registry, it?s, whether it?s actually called a registry and it?s an official list of patients or not, there?s every effort is being made to track patients and to track the physicians who treat those patients both in, in all the markets in which the product will be launched. We?ve not revealed the extent of a registry, even if it?s not called a registry, other than to say it is clearly one of the highest priorities of what we have to do because, if I can just take the logical extension of your question, the completion of such a list would enable a faster launch and a better take off of the product which is in everybody?s best interest; patients, physicians and the two companies.

Sure. I guess just a follow-up on that. Even if we don?t talk about exact numbers, do you get the sense that the actual market is a similar size to, I guess what you thought before or like I guess in the middle of the trials while you were doing earlier work?

That?s a very good question. There?s absolutely no reason for us to believe to change in numbers that are in our registration statement that deal with the size of the market and had we determined that based on studies and surveys, etcetera, that there was a material change we would absolutely have had to put that in as a change in the risk factor and I think you can infer from the fact that this does not be changed, that we believe the numbers that we have in there, which I don?t have in front of me, but I believe are something such as about 3,500 on a worldwide basis [indiscernible] have not changed. There may in fact be a number in one of the registration statements that gives a range of between 3-4,000 patients. Those numbers have not changed.

Okay. Well that?s really helpful. That?s great. My second question actually relates to the receipt of your recent patent and it?s great news to hear about that. What I?m curious about is how your patents differ from the two patents licensed to TKT. Maybe you could clarify that for us.

Okay. First, what I wanted to say is a preface to that was the, patent coverage, the molecule of the protein that we have actually used in the Phase III trials so, and the product that we make. So it?s not a theoretical patient, but it?s an actual patent.

Probably the best way for you Rachel, and for anyone to get at this is to pull down the three patents that TKT has and the one that we have and to do kind of a comparison, and I believe in general, what you will see is, and I?m not making a legal representation. I did not go to law school, is that the two TKT patents, the first relates to a composition of matter and the second relates to the use of alpha [alides] arising in treating MPS1 and our patent relates to compositions regarding the manufacturing and the purification process of the protein.

As in the past, we have, as you can see by the press release that we put out, in which we put almost no information in there other than the patent number and the fact that we [indiscernible] the title of it, we believe strongly that issues of patents should not be discussed in the public domain other than kind of what we call the Dragnet strategy, which is, you know, just the facts and that any discussion of patents would be handled privately outside of the press and the public by the companies themselves.

Okay. Okay, that?s great. Now actually I do have one more question, concerning?

Sure.

?concerning Neutralase, if you wouldn?t mind talking about that.

Not at all.

Just, could you run down just the overview of the details of the Phase III trial in terms of endpoints, size, duration, when we would expect data? That kind of information.

Yes, this is Amil Canfield. I can answer that for you. The Phase III Neutralase trials expected to enroll approximately 600 patients and will be a double blind, double gummy format, comparing Neutralase to [Protomine]. The primary endpoint a non-inferiority of chest two drainage and the patients will be enrolled will be primary to the Coronary Artery Bypass Graft patients and they will be randomized between those two groups. It will also include off pump patients, as well as on pump patients and we worked through this protocol and all the information required for it and are moving ahead with that promptly so with [indiscernible].

I assume this protocol has been presented to the FDA and you?re, I guess in agreement with the FDA?

We will be presenting the protocol shortly and getting the review before we proceed.

Sure. Okay. Well that?s great. That answers my question. Thanks so much.

Thank you. The next question comes from [Joy Michelle]. Please state your affiliation, followed by your question.

Yes, this is Joy Michelle from CCL Partners. Just wondering, on the MPS6 trial, the Phase II that you?re going to complete enrollment very shortly I believe, when we might see data from that and then my second question is just regarding your cash burn for this year. What your estimate is for this year?

From the [indiscernible] program, this is Amil Canfield; I can help with that question. We?re hoping to complete enrollment, we expect to complete shortly and the trial interval period is a six-month trial and therefore, we?d be expecting to have six-month data sometime in early 2003. It?s an open label trial. We will collect some data and we?ll know how it is working, but it?s the six-month data, is the data we would[indiscernible].

And just a follow-up, how many patients are in that trial?

The trial is 10 patients at a single dose, one that [indiscernible], in two sites in the U.S. [indiscernible].

Okay.

Joy with [indiscernible] as you may recall, last year in the fall the company gave guidance that our burn for 2002 would be approximately $60m or less. For the first half of 2002 we were right on that mark at $30m and for the remainder of this year, I?m expecting that our burn will remain about the same, possibly less.

Okay, great. Thank you.

Thank you. Once again, Ladies and Gentlemen, as another reminder, if you should have any questions at this time, please press star, followed by one, on your push button telephones.

We do have another question from Joy Michelle. Please state your question.

Hi, yes, sorry. Just to follow-up on another caller?s question, regarding TKT?s patent, does TKT have a product in development for MPS1?

I think you?d have to call TKT and ask about that.

Okay, thanks.

Thank you. The next question comes from Mark Shoenbaum. Please state your question.

Hi guys. Just a quick follow-up. Can you please remind us about the approximate patient split for MPS1 between Europe and the U.S. Make any comments about how about the Europeans admissions going with the milestones. Are they going forward and also review upcoming data presentations this year?

Mark, it?s Fred. I?ll take some of those. We have estimated that in general, and it?s hard to get a very specific number of those that European, numbers of patients is a little more than twice what the U.S. is and there are also smaller markets throughout the world that can?t be ignored in Latin America and in the Far East. But it?s generally approximately two to one from Europe to the U.S.

If Mark, you could give me the other question. I know one was about just a review in the European submission, we submitted on March 1st, and on the 21st they gave their equivalent of what the U.S. FDA gives in terms of an acceptance and so that was March 22nd and then we can expect either late this year or early next year some sort of a response back from them with regard to approvability-?I want to be very careful with words, because different jurisdictions use different words, so. Some it?s opinion, others it?s approvability, but we would expect something nine to 12 months past the March 22nd date.

So that could actually come part of year-end?

Yes, it could, I?m not making a represented?

I understand.

?that it will, but it could.

I see.

And there was another question I believe about scientific symposia.

Yeah.

And I?m looking at Amil now and I?ll ask him. I don?t know that we have any firm date for, when I see we, I mean [indiscernible] LLC has published yet additional dates on which we?re going to be discussing more data. I would say if my recollection is correct, and we don?t have an actual date, than we are going to be presenting at the American Science of Human Genetics in Baltimore, I just don?t have the dates in front of me. Amil, do you know what the date of that is?

I believe it?s October 15th or 19th. But I?m not [indiscernible].

And I can?t say today Mark exactly what the paper would be or the presentation or the poster what date, but we will be presenting at ASHG.

But that states an extension, further extension date on the dates they are [indiscernible] as well as the [indiscernible].

Okay great. And then one financial question. How much is the roughly would you estimate the Phase III trial on Neutralase is going to cost?

As an order of magnitude, I would say anywhere between $6-10m, but that is fairly complete cost. That is not a partial cost for that, so that?

That would be spread out between 2003 and 2004?

Yes. I would say that it?s probably, well, it?s going to start, this year. You?re talking about the first phase trip, is going to start this year, of course.

Right, right.

The lion?s share of that, probably more than 75% will actually hit next year. We?re going to give you guidance in about two or three months with regard to our cash burn for next year. Lou is working on this. He has been here for about seven hours already and has done a remarkable job. But I am not quite sure if he?s ready to give a forecast for the cash burn for next year. Having said that, and with all seriousness, we are looking to reduce the cash that the company will consume next year. Despite the intense movement in a positive sense of putting more products deeper into the clinic, as we think we found some fairly substantial efficiencies in economies as we grow and learn and become more productive, so I would not expect to see a $60m number in a few months, but we?ll give you guidance probably two to three months from now.

Great, and one kind of strange question, but I?ve had some interest in this question. If assuming that you go in front of a panel sometime in 2002?

2003.

In front of, I?m sorry. In front of an FDA panel sometime before approval, who would actually run that panel? Would BioMarin run the presentation to the panel or would Genzyme? Who do you envision being the primary presenter there?

Well we would probably do it as a joint presentation with Genzyme. We both have contributions to the program and we would expect to probably combine our efforts in that presentation.

Great. Thanks a lot guys. I won?t get back in the queue, I promise.

That?s okay. It?s not a strange question [indiscernible].

Thank you. The next question comes again from Rachel McMin. Please state your question.

Hey guys. Just one more follow-up on Neutralase.

Rachel, you faded and we cannot hear you.

Can you hear me now?

No.

No. All right. Hold on a second. Can you hear me now?

Yes we can, very nicely.

Okay. I took my headset off. Maybe it?s falling apart there. One follow-up question on Neutralase. Was wondering if you guys are in discussions at all with partners for Phase III development or if you anticipate running the Phase III trial completely on your own?

Excellent question. We have discussed with people on the buy and sell side our intention is to, at some point in time, find a partner for Neutralase. The program is an extensive one. Amil mentioned the CABG trial, Coronary Artery Bypass Graft. There are also indications for angioplasty in use as a, [indiscernible] and [indiscernible]. And the extent of this program to all carry it out, even over time, would be considerable. And it?s our view that having a larger company partnered with us does a variety of things and most important I think, gets us a larger, stronger organization with great experience in cardiac care units on our side. It does the obvious things by cutting down our burn rate and reducing our obligations that we?ll be having. We?re stretched fairly thinly as it is. But also we believe we would end up with stronger clinical program and a faster time to market. So it has been our intent to grab up a partner and the only thing we can say with regard to this question, is we?re gratified by the number of companies who want to talk to about Neutralase, who are talking to us about the program and as a possible kinds of configurations that we would have. I obviously can?t make a prediction with regard to this because as we all know, deals can break down the last five seconds. But it?s our intent and I can tell you that we are working very, very hard from a strategic corporate point of view. It?s among the highest priorities we have.

Now the concern I have is that you?ll all take that and say we?re going to get a partner and then if we don?t get one you?re going to be very disappointed. Our view is, quite frankly, that we will get a partner when it makes sense and we believe that the people we?re talking to would all be capable of doing something that does make sense, but if it doesn?t make sense for you as shareholders, then we?re not going to rush into a deal just to do a deal.

The nice thing is, we do have $100m in cash and it gives us a little bit of breathing space.

That?s really helpful. Well, good luck with all of that. Thanks so much.

Thank you Rachel.

Thank you. The next question comes from Seth [Teach]. Please state your affiliation, followed by your question.

My question?s been answered. Thank you.

Thank you. Once again, Ladies and Gentlemen, as a final reminder, if you should have any questions at this time, please press star, one on your push button telephone.

If there are no further questions at this time, I will now turn the conference back to Mr. Price for final remarks.

I simply look forward to having additional discussions with you of a candid nature, both personally and over these kinds of conference calls as we make additional progress with the company. Thank you all very much.

Ladies and Gentlemen, this concludes your conference for today. Thank you all for participating, and have a nice day. All parties may now disconnect.