BioMarin Pharmaceutical Inc (BMRN) 2021 Q2 法說會逐字稿

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

Thank you, Grace, and thank you all for joining us today. To remind you, this nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, including expectations regarding BioMarin's financial performance, commercial products, 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 report.

On the call today from BioMarin management are J.J. Bienaime, Chairman and Chief Executive Officer; Jeff Ajer, Executive Vice President, Chief Commercial Officer; Hank Fuchs, President, Worldwide Research and Development; Greg Guyer, Executive Vice President, Chief Technical Officer; and Brian Mueller, Executive Vice President and Chief Financial Officer. (Operator Instructions) I will now turn the call over to BioMarin's Chairman and CEO, J.J. Bienaime.

Thank you, Traci, and good afternoon, everyone. We hope you and your families are enjoying the summer. And so we had a very strong results in the first half of this year, recording $988 million in total revenues in the first 6 months of the year and $0.5 billion in total revenues in the second quarter [last year], representing a 17% top line year-over-year growth, including Kuvan; and 38% year-over-year growth in Q2, excluding Kuvan, which as you know, has been facing generic competition in the U.S. since October of last year.

These results underscore our ability to execute despite the impact of a global pandemic and, more importantly, our testament to the value of our products represented to patients. Based on this strong performance, we are pleased to be raising our total revenue and bottom line guidance for the year. And Jeff and Brian will provide more details in a moment.

With the commercial business increasing steadily, we look to the next generation of BioMarin products to drive transformational growth in the coming years. With our late-stage products of VOXZOGO and ROCTAVIAN currently under review by health authorities, the R&D organization achieved a number of key goals in the first half of the year.

In this quarter, Hank and his team advanced regulatory progress with both products, setting up for 4 potential U.S. and European approvals beginning with VOXZOGO in Europe in the next few weeks, hopefully, by the end of next month. And actually, we are going to start treating our first commercial VOXZOGO patients in France imminently based on an early access program, which was approved by so-called ATU in France. And Jeff will give some more details in a little while. So we expect EU approval to be followed by potential approval in the U.S. based on the current PDUFA action date on November 21, and discussions with FDA are moving forward.

With ROCTAVIAN, the recent validation of the MAA and then potential CHMP opinion in the first half of 2022 paves the way for a third potential major market approval in the next 12 months upon completion of the 2-year observation from all 134 patients in our pivotal GENEr8-1 study with ROCTAVIAN. This will be the basis of a potential BLA submission next year in the U.S. -- we -- should the data be supportive, as we expect, and then anticipating a fourth major market approval, if possible, potentially in late 2022.

The value proposition of ROCTAVIAN increases with each additional year of bleeding control as demonstrated. As we just shared at the recent ICH meeting from our pivotal GENEr8-1 study, over 90% of the 134 patients had an annualized bleeding rate of 0 or lower than baseline after 4 weeks following treatment with ROCTAVIAN. And this is just with one intravenous infusion of ROCTAVIAN.

Also at ICH from our Phase I/II study following a single infusion of ROCTAVIAN throughout these 5 years, we observed a 95% reduction in mean annualized bleeding rate to less than 1 bleed per year compared to the bleed rates for participants previously treated with standard of care Factor VIII prophylaxis. Again, we're not competing ourselves with placebo here. We compare ourselves to still the standard of care.

So we recognize and it has -- recognizing that it has to be determined how long ROCTAVIAN will demonstrate hemostatic efficacy. But we have reason to believe, based on the current data, that bleeding control may be sustained for at least 5 years and beyond based on the current data. And while the gene therapy is not curative (inaudible) unlikely to be lifetime therapy at this time, the value proposition ROCTAVIAN represents to patients and payers only strengthens with each year of data we are accumulating. To date, based on the 5-year bleed control from our Phase I/II study, at least $3.25 million per patient has been spared for each patient in the clinical trial in the U.S.

This is based on the fact that in the U.S., recombinant Factor VIII prophylactic therapy costs about $650,000 per year. So as you can imagine, payers will understand this kind of math very easily. So we're considering value. We recently learned also from a review of some insurance claims of patients taking Hemlibra in the U.S. that many of them are still using recombinant Factor VIII despite treating with -- being treated with Hemlibra. And this is based on regular insurance claims in the year 2020.

This is -- this still only highlights the ongoing infusion burden with Hemlibra, but the tremendous cost of potential dual therapy. Hemlibra, which is a great therapy, can cost over $700,000 per year per patient in addition to whatever Factor VIII the patients are taking. The bottom line is that the sustained durable hemostatic efficacy observed following treatment with ROCTAVIAN in the longest and largest gene therapy trial ever done in hemophilia A positions ROCTAVIAN in a very attractive -- as a very attractive treatment options to both patients and payers, assuming approval in U.S. and in Europe.

As we shared with you previously from a paper published by Croteau in 2019, the lifetime cost of Factor VIII prophylaxis alone and not including other aspects of the disease management and surgeries that these patients have to undergo on a regular basis, so the lifetime cost of Factor VIII profit alone is estimated in that paper to be, and other papers to be, between $28 million and $31 million. So obviously, if we price our product between $2.5 million and $3 million, we're not pricing our product as a lifetime cure.

But more relevant to the value proposition for ROCTAVIAN, specifically as noted in the ICER report last year, ICER determined that the value proposition for ROCTAVIAN was around $2.5 million. And that was a cost-effective threshold for treatment with ROCTAVIAN. And that was based only on 3 years of efficacy data. Now we have 5 years. So we are thrilled with the dramatic bleed control demonstrated with ROCTAVIAN. And more than ever, we believe that it will be an important treatment choice based on efficacy for patients and cost savings for payers.

As our next potential significant growth drivers, ROCTAVIAN and VOXZOGO have been a key focus and we expect will be transformational to BioMarin upon potential approvals. But it is our next generation of early-stage pipeline products that we look forward to unveiling in more details later this year. The BioMarin value proposition reaches far beyond our strong base business and our near-term opportunities in hemophilia A and achondroplasia. And we're excited to share more details with you at our upcoming R&D Day in November of this year.

So thank you all for your continuous support. And I would like to turn the call over to Jeff to discuss the commercial business update in more details.

Thank you, J.J. I'm very pleased with the team's performance across all brands and all regions during the first half of the year. In the second quarter, we achieved $502 million in total revenues, representing 17% growth in the second quarter of 2021 compared to same period 2020.

Significant growth concentrated in markets where customers placed bolus orders specific to our enzyme replacement therapy brands drove strong sales in the first half of the year. Specifically, in the first and second quarters of 2021, large orders for Naglazyme and Vimizim from such markets as Turkey, Brazil, Egypt, Russia and Saudi Arabia is expected to partially satisfy demand for those products in those regions in the second half of 2021. As a result, we expect a step-down in volume in the second half of 2021 in those markets.

Based on the strength of demand in the first half of the year and expectations for the remainder of 2021, we are raising full year guidance on -- for revenues; increasing Vimizim, Naglazyme and Palynziq guidance; raising the bottom end of the range for Kuvan; and reaffirming previously provided Brineura guidance. The detailed guidance updates are available on Page 4 of today's press release.

Beyond ordering dynamics, patient demand is another key indicator to pay attention to. For both Naglazyme and Vimizim, patient numbers increased more than 10% year-over-year, underscoring the essential nature of these important therapies. For Brineura in the second quarter, patients on therapy increased 33% year-over-year. Moving to Palynziq, where year-over-year growth of 45% translated to $59 million in second quarter revenue, despite continued COVID impact to new patient starts due to PKU clinics closed or not operating at full capacity.

Building on that theme, it is important to note that PKU clinics in the U.S. have not opened up to new patient starts at the rate we anticipated. We are still experiencing net patient growth, noting that new patient starts in the U.S. in the second quarter were lower than we expected. Consistent with expectations, the U.S. was the main contributor of growth in the quarter, driven by U.S. patient increases of approximately 30% year-over-year. And while we remain optimistic about the growth prospects for Palynziq for the balance of 2021, we expect U.S. PKU clinics to increase new patient starts at a slower pace than originally anticipated.

The pandemic impact on Palynziq in the EMEA region remains in effect, where we have experienced delays in price, reimbursement approvals and very little new patient activity. In spite of that, we are making incremental progress, and I continue to expect that we will see more material Palynziq revenue from this region when PKU clinics have more freedom to operate and start additional patients.

Continuing with the PKU franchise, Kuvan contributed $79 million in revenues in the second quarter, an increase compared to the first quarter of this year and reflects 2 factors: first, slower-than-expected erosion to generics; and second, a rebound from the seasonal dip in demand for Kuvan in Q1 that we typically experience. Kuvan net product revenues decreased by 36% year-over-year, primarily due to the U.S. loss of market exclusivity in October 2020 as anticipated. Despite the impact of these challenges, as I mentioned, we are raising the bottom of the range of full year revenue guidance for Kuvan.

And now turning to VOXZOGO, our next potential commercial opportunity and potentially the largest launch to date. As J.J. said, we are so pleased to have received a positive CHMP opinion for treatment of children 2 years old through final adult height, given the importance of starting treatment early in achondroplasia. Additionally, receipt of authorization for use for ATU early access program granted in France allows access to VOXZOGO for those seeking treatment in France. This will give us the ability to get patients started in France imminently.

Consistent with our past practice, we will communicate the price for VOXZOGO once we have an approval. Assuming the upcoming EU decision aligns with the CHMP opinion, which is typically the case, we look forward to potential launch in the third quarter in Europe. Upon that approval, we expect to launch in Germany first, begin the reimbursement process in other large markets and take advantage of named patient sales opportunities in markets where they exist. As we have shared previously, when asked for help modeling VOXZOGO revenue, we are targeting annual net per patient revenue that is more like Palynziq than enzyme replacement therapy like.

Turning to commercial supply. We anticipate the release label finished goods will be ready to ship to customers in key markets such as Germany, France, Italy and the United States within 4 to 8 weeks of an approval. Teams are currently in place and well prepared for what could be BioMarin's largest brand yet. We look forward to sharing more detail on launch plans pending potential approvals over the coming weeks in Europe and in November in the United States.

In conclusion, results in the first half of 2021 exceeded our expectations and reinforced the essential nature of our commercial brands to the people who rely on them. Despite typical uneven ordering patterns, demand for our products in the more than 75 countries where we do business is robust. BioMarin's commercial team continues to execute seamlessly and looks forward to new product launches around the world over the coming quarters, should timing of approvals align with our expectations.

Thank you for your attention, and I will now turn the call over to Hank to provide an R&D update. Hank?

Thanks, Jeff. Beginning with VOXZOGO for the treatment of children with achondroplasia, we were thrilled to announce the positive CHMP opinion in the quarter, paving the way for potential European approval in this quarter. We were also pleased that the positive opinion recommended treatment with VOXZOGO for children ages 2 and above, a broader group than we had anticipated, given the importance of starting treatment as early as possible. We appreciate that European Medicines Agency recognized how important early treatment is, given the window of time when VOXZOGO can provide a clinical benefit.

In the United States, 2 results from a Phase III extension study to supplement the New Drug Applications are under review, and we look forward to the PDUFA target action date of November 20, 2021. VOXZOGO is the first medicine that addresses the root cause of achondroplasia and is potentially the first medicine to be approved for children with achondroplasia. I would like to convey our gratitude to the families, the advocacy groups, investigators and colleagues that supported the development of VOXZOGO. We're on the cusp of the potential approval of another innovative product that addresses the root cause and tremendous unmet need of a significant pediatric condition. We want to thank everyone who contributed to this important moment.

Briefly, on ROCTAVIAN, regulatory milestones are tracking to plan. We recently announced that the European Medicines Agency had validated our Marketing Authorization Application, which could lead to a CHMP opinion in the first half of next year under the accelerated assessment time line. We're very pleased to be tracking towards potential approval next year in Europe, given the breadth of clinical evidence demonstrating dramatic reductions in bleeding rates, Factor VIII utilization, Factor VIII infusion rates [following] with ROCTAVIAN.

In the United States, we expect to resubmit the Biologics License Application for ROCTAVIAN in the second quarter of '22, assuming supportive 2-year data followed by an expected 6-month review procedure. Further supporting the role we believe ROCTAVIAN may play in the treatment of severe hemophilia A. Last week, we're very pleased to have shared 12 presentations at the International Society on Thrombosis and Hemostasis 2021 Virtual Congress.

The 3 oral presentations and 9 posters spanned a variety of relevant gene therapy topics as well as data updates from both our pivotal GENEr8-1 and Phase I/II studies with ROCTAVIAN. As you may have seen in the updates, the largest and longest development program for any gene therapy in hemophilia A, ROCTAVIAN demonstrated continued durable clinical benefit through at least 5 years.

Data from our pivotal GENEr8-1 study demonstrated that over 90% of all 134 participants had an annualized bleed rate of either 0 or lower than it was than their baseline. And a reminder that their baseline was collected while they were on best standard of care Factor VIII prophylaxis therapy. At 5.1 years after receiving a single dose of 6e13 vector genome per kilo dose cohort of the Phase I/II study demonstrated that after week 4, the mean annualized bleed rate was reduced by 95%.

Also of importance to patients when considering the overall benefit from ROCTAVIAN in the pivotal GENEr8-1 study, all but 2 of the 134 participants remain on prophylactic Factor VIII treatment. And in the Phase I/II study for both the 6e and 4e13 dose cohorts, all participants remain on prophylactic Factor VIII therapy through years 5 and 4, respectively. What our investigators are telling us that this is no prophy no bleeds. This status is hugely meaningful outcome for these patients in these studies. We are very encouraged by these results and look forward to the full 2-year readout with all 134 participants in early '22, the basis of our potential U.S. BLA submission in the second quarter of next year.

Lastly, we want to extend our thanks to the community, our investigators and the people who participated in the clinical program. You're making history, and we thank you for your contributions to the body of knowledge in this important new therapy for hemophilia A.

Turning now to our earlier-stage pipeline and beginning with 307 gene therapy for phenylketonuria. The dose escalation portion of the study continues with incoming subjects now receiving a 6e13 vector genome per kilogram dose. Based on encouraging signals from the 2e13 vector genome per kilo dose, we look forward to gathering a meaningful amount of data with the 6e dose before determining next steps. To remind you, we are targeting normal Phe and normal diet, and we look forward to the readouts from additional subjects, given the interest in gene therapy solutions for phenylketonuria.

Behind BMN 307, we've been concurrently moving a number of our next-generation products for it and are pleased to have 2 active INDs to highlight today. Last week, our IND for BMN 331 gene therapy for the treatment of hereditary angioedema, or HAE, was activated in the United States. HAE is characterized by a predictable, painful, recurring and self-limiting acute edematous attacks, which may occur in multiple locations such as the face, extremities, upper airways and the GI tract.

Laryngeal attacks are the most serious manifestation of HAE, and they can cause fatal asphyxiation due to obstruction of the upper airways. And while standard of care has improved over recent years, HAE patients still require chronic therapy, still experience debilitating, unpredictable breakthrough attacks that require rescue medication.

BMN 331 is an AAV5-based gene therapy intended to restore the deficiency in circulating levels of the missing or dysfunctional C1 esterase inhibitor protein, causing HAE with onetime IV infusion, thereby providing a durable preventive effect against HAE attacks without the need for regular prophylactic treatments. This will be the first gene therapy clinical trial for the treatment of HAE in the U.S. and BioMarin's third investigational gene therapy product to the clinic. We're finalizing study protocols and hope to begin dosing participants by the year's end.

We are pleased to share that in addition, BMN 255, our small molecule for the treatment of chronic -- of a subset of chronic renal disease is in the clinic, and we are dosing participants. We've been very productive and somewhat under the radar with these advances as well as a number of other candidates over the last quarters. And we look forward to sharing a deeper dive on the burgeoning next-generation pipeline at our upcoming R&D Day in November.

Thanks for all your support, and I'll 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 2021. As usual, our comprehensive report on the quarter will be available in our upcoming Form 10-Q, which we are on track to file over the next few days.

As J.J. mentioned, the anticipated timing of revenue and expenses over the course of 2021 resulted in a strong start to the year and the upward revision of full year 2021 total revenue guidance, including Vimizim, Naglazyme and Palynziq as well as improved GAAP and non-GAAP guidance.

With respect to revenues, Jeff mentioned some of the specific markets that placed large orders during the first half of the year, in both the first and second quarters. They were concentrated in markets where countries typically place bolus orders, causing unevenness in revenues on a quarterly basis and in 2021 on a first half as compared to a second half basis.

Based on these quarterly timing dynamics, we continue to emphasize our full year guidance as the best metric to measure our performance. While we continue to steadily identify and add new patients to each of our commercial products over time, we anticipate that demand for BioMarin products will continue to increase in the future, notwithstanding global ordering patterns.

Moving to operating expenses. R&D expense for the second quarter was $161 million, which was lower compared to R&D expense of $182 million for the second quarter of 2020, which included an upfront payment to our DiNAQOR -- related to our DiNAQOR collaboration last year. Based on our R&D expense trends through the first half of the year and expectations for the second half of 2021, we have lowered the top end of full year R&D expense guidance by $10 million.

Next, with respect to SG&A expense, Q2 2021 SG&A totaled $184 million, which was slightly higher than SG&A expense of $175 million for the second quarter of 2020. We hope to be launching VOXZOGO globally in the second half of this year, which is driving our SG&A expenses to be weighted to the back half of the year. Of note for 2021 is that our SG&A line this year includes some charges for idle plant time of approximately $25 million, mostly related to maintaining our ROCTAVIAN manufacturing capability during its continued development cycle. Based on these SG&A drivers in 2021, we are narrowing our full year SG&A guidance by $10 million and further note that we're trending towards the higher end of the range for SG&A expense.

Turning to bottom line results. We reported GAAP net income of $13 million in the second quarter of 2021 compared to a GAAP net loss of $29 million in the second quarter of 2020. Non-GAAP income of $98 million in the second quarter of 2021 also grew as compared to non-GAAP income of $57 million in Q2 2020. These bottom line results follow the same circumstances noted earlier. Higher first half 2021 revenues and higher second half 2021 expenses resulted in a strong profit result due to second quarter. If the second half of the year trends that we're expecting hold true, we predict recognizing a GAAP net loss and lower non-GAAP income in the second half of the year.

However, back to the full year 2021, we're very pleased to announce the improvement of full year GAAP and non-GAAP guidance. We've reduced full year GAAP net loss by $20 million to between $110 million and $60 million for 2021. Non-GAAP income full year guidance is now increased to between $190 million and $240 million, representing an increase of $20 million on each side of the range.

That substantial level of non-GAAP income helped generate a continued increase in our total cash and investment, as we ended the second quarter of 2021 with $1.47 billion compared to $1.35 billion at the end of 2020. We set a goal of earning positive operating cash flow in 2021. And while the aforementioned timing dynamics also impact cash flows, the business delivered $83 million of positive cash flows from operations in the second quarter and $196 million on a year-to-date basis in 2021.

This solid cash position, coupled with our strong operating performance through the first half of the year, is a strong foundation from which to look forward to the potential launch of VOXZOGO over the next few months and ROCTAVIAN next year. And the progress of our early-stage pipeline that is leveraging the same R&D organization that developed our portfolio of 6 approved products and 2 large market late-stage programs is an exciting next chapter in BioMarin's potential future growth story.

Thank you for your support, and we'll now turn the call over to your questions. Thank you. Operator?

(Operator Instructions) Your first question is from Cory Kasimov from JPMorgan.

I wanted to ask you about ROCTAVIAN. I'm curious if you've been able to get much physician and also payer feedback coming out of ISTH, just given the virtual nature of it, and the 5-year update, particularly in the context of Factor VIII levels, demonstrating a continued decline despite a still very favorable ABR. So basically wondering if this update impacts how they're thinking about the product and the treatment paradigm in any meaningful way?

Maybe I'll start, and Jeff will take a little bit on the physicians to the payers. Once at Virtual Congress is not quite the same thing, you're right, Cory. But one of the things I was struck by just sort of at a very high level talking to clinicians and their experience with ROCTAVIAN and the patients, they're not very focused on the surrogate markers. They're more focused on the patient right in front of them. And one of the things that struck me was now 5 years later, what's top of mind for this physician was the liberty that ROCTAVIAN afforded their patients.

We think of this as, okay, you just -- like just take a few less doses of this other thing. It's life transformation freedom that these people are experiencing. Now it's 5 years since they have some vague recollection of having this condition called hemophilia. And so I think that's pretty profound. And I think that's what's more on people's mind necessarily than tomorrow is another day. So Jeff, I don't know if you want to add anything from your perspective?

Thanks, Hank. In fact, we haven't had a chance to specifically get out and check in with payers and physicians in any kind of a formal way since ISTH. There just hasn't been enough time. But a couple of observations I would make from some recent prescriber research that we've done in the United States and Germany that follows the availability of the full 301 data set through 1 year, GENEr8-1 data set through 1 year is, a lot of stability in the interest of ROCTAVIAN relative to the last time we went out to do this market research 2 years prior. But a significant interest -- increase in the confidence in the product.

And that's probably due to a combination of the longer data set from the Phase I/II study and the full data set from the GENEr8-1 study being available. So I find that really encouraging. And as you know, Cory, our U.S. team has been out talking to payers for 1.5 years now. And payers appreciate what Hank just mentioned, and a lot pivots on the final durability of this drug with patients.

The 5-year data that we've recently released is certainly supportive of continued durability. And the payers, we continue to work with on mechanisms in the U.S. and in Europe of being able to address risk of durability in managed access agreements or pay-for-performance agreements of one type or another depending on the market. So I'm really confident as we head into this next round.

Besides what Jeff and Hank said, I mean it appears -- I mean they don't measure Factor VIII levels. They don't -- they cannot track them. They don't organize for that. What they look at is how much these patients are costing them every year. And they're costing them north of $800,000 a year. So right now, we have 5 years of efficacy. So it's close to $4 million of savings potential for those payers. That's what we look at.

Your next question is from Robyn Karnauskas from Truist Securities.

Just a question on VOXZOGO. Now that you have the European opinion, you're about to get the U.S. opinion, can you talk a little bit about your latest thoughts on the dynamics amongst the patients and the doctors? Are you seeing patients or children reaching out for interest in getting the drug and trying to see whether appointments are being available? And how are you going to manage that? And then what are you seeing on the awareness side, especially in Europe and United States. Now that you're so close to approval, where are you at there? Sort of a similar question about VOXZOGO that you answered for ROCTAVIAN.

Maybe I'll -- this is Jeff. Maybe I'll take a shot at answering this first and ask Hank and J.J. to round out anything I'm missing. So the first thing I would say is it's really not possible for us in advance of an approval to be engaging with patients and prescribers. So we're very much looking forward to getting to the point where we can do that. As J.J. noted in his remarks, we now have an approved early access program in France. We just got that. And that will allow us to start treating patients. In Germany, we'll be poised to launch right after an approval, should we be so fortunate to get one.

Our market research that we have done to map out kind of the prescriber networks, I would start in Europe with saying, there are expert centers in most markets in Europe, and we're going to be relying on those expert centers as a first wave of prescribing for achondroplasia patients. We would anticipate that patients would migrate from getting started in expert centers, being treated in more local areas and eventually having those more local physicians initiate treatment.

In the United States, we have a team in place today that's been establishing an initial profiling relationship with pediatric endocrinologists, which we expect to be largely the base of prescribers in the U.S. So these would be physicians that are quite accustomed to dealing with and prescribing drugs for growth disorders.

We also know that some patients are in genetics clinics. And we have well-established relationships in those genetic clinics in the United States that we can and will leverage. Our market research indicates a high degree of interest in VOXZOGO on the part of caregivers. So we're looking forward to getting to that next phase where we could begin actually selling and promoting.

Maybe the one thing I would add is 80% of the patients are born to parents normal in stature. And this is not a subtle condition; this is a big health impacting condition. And they're looking forward very much to improved health. And I would say the evidence that interest and awareness is rising, cresting, as Jeff was just describing, just from the EMA's actions in terms of their recommendation, they were willing to extrapolate safety and efficacy data from the pivotal trial in patients older than 5 to making the product available in children other than 5.

I mean we saw this with Brineura with the EMA as well. Sort of their thinking is no child should be left behind. So I think they recognize the urgency of the condition and the importance of giving Jeff's team the tools they need to get this medicine to patients early.

And just to clarify, you said 48 weeks of a delay between like an approval time and time you could get drug to a center. I just want to be clear that, that's true like both for the U.S. and Europe. How do you think about modeling it?

That's right. So that's getting Greg's operations team getting final label product release -- quality release and into a distribution center where we can ship to customers.

So between -- probably between....

4 weeks.

4 weeks and 8 weeks. It's not 48 weeks.

Not a year, that is tragic.

It's not a year.

Although again, we are going to treat our first patient in France in the next few days.

Your next question is from Salveen Richter from Goldman Sachs.

For VOXZOGO, do you feel that the FDA views the overall clinical package for approval similarly to the EMA, just given the 2-year data comment and also with regard to the EMA's recommendation for a broader age group of 2 years of age and older?

Well, as we've talked about, every health authority has their own sort of unique glass on it. In the case of the U.S. FDA, we've been transparent all along, talking about the fact that their original recommendation was a 2-year trial. And of course, we provided them 2 years' worth of controlled data on improvement in height velocity. We think we have a really strong package, and we're getting really close to the finish line.

And as typical for BioMarin, we're going to not get into the sausage making of the later-stage discussions with the health authorities. But we remain very confident in the package that we submitted. And I think the European action speaks good volumes to the results of diligent peer review. The perspective might be ever so slightly different, but I think the main question remains on balance that the benefits exceed the risks here, and we're pretty confident of the coming actions.

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

I had one on ROCTAVIAN, and it sort of parallels another question. So as you guys continue to accumulate long-term data, just bigger and longer follow-up, are there any themes that you can identify for maybe what characteristics could predict stable Factor VIII and longer durability? Or in contrast, what could predict maybe a breakthrough bleed or shorter durability? I'm just trying to get a sense for maybe how you could maybe optimize that looking to the commercial launch?

Yes. Subject of predictability and variability comes up a fair amount. Actually, the fact that 2 out of -- only 2 out of 134 patients that were dosed in the GENEr8-1 trial required relatively quick return to prophylactic therapy, where 132 out of 134 did not require a return to prophylactic therapy and maintained adequate hemostatic efficacy, I think, bodes really well for the predictability of response. Now not everybody is going to respond in the exact same way. And of course, that's a regular routine issue in medicine.

It's relatively easy to manage and monitor in this space in the sense that we don't remove any options for patients. They can always go back to Hemlibra or Factor VIII prophylaxis. There's not any -- the side effect profile, as we understand it today, seems fairly favorable for that to be a choice that patients could make. Of course, all of this is going to be subject of the review of the health authorities for their final decision making at the end of the review cycles that we've talked about for the EUA (sic) [EU] and for the U.S., respectively.

All that said, the durability data that we have gives us confidence that although we don't know exactly where things are going to settle out and when they're going to settle out, it does appear to be a large number of years after initial transduction, which I think gives you the platform of belief around what J.J. was talking about, which is the commercial value of the product; the platform of what Jeff was talking about, which is confidence in a product that can transform the lives of people. And what my doctor colleagues are telling us are sort of a mind-blowing level of difference in the outcome for patients at a clinical level.

And again, as Hank said, we have very few patients that don't respond at all, less than 2% based on our current data. So obviously -- although obviously, it's not great news for those patients, I don't know of any therapy that works in 100% of the patients. I mean given the fantastic COVID vaccine on the market, they have about 90% response rate. And hundreds of millions of patients have been taking them, although 10% of them don't respond.

Your next question is from Debjit Chattopadhyay from Guggenheim Securities.

So on ROCTAVIAN, post approval, how do you think physicians are going to decide on steroids? So would it be prophy or on-demand when close to monitoring for the first 12 to 16 weeks? And secondly, assuming a 7- to 8-year durability, how are you thinking about retreatment, especially on the back of the benign immunogenicity profile of AAV5 vectors?

Yes, it's a little early to talk about the steroid use in the context of post approval because we don't have a label yet. And so we're just in the early stages of prosecuting that with Europe, and we'll begin that process next year with the FDA as we talked about. What I can say about steroids in the post-approval setting is that we have data on both on-demand use of steroids and prophylactic use of steroids in our program. We have data on fairly light touch on-demand steroids and fairly heavy touch on-demand steroids.

What we've learned out of all of that is that you probably don't need to treat people as hard with corticosteroids in the context of gene transfer. And it might be the case that there are simpler regimens, for example, just a prophylactic regimen from the get-go. And in fact, we have an ongoing study that's enrolling quite nicely. Congratulations to the clinical team for that. And we're going to be learning more between now and the eventual product availability that I think will inform in addition, as I started, to the product labels on steroid use.

The other part of your question has now escaped my -- so in the -- get on my binoculars and think about what's going to happen in the many years from now in future when potentially hundreds of patients we don't know when. We're doing a lot of work on a molecular basis of vector loss. And you've heard us talk about in the past, some of this could be liver cell turnover, but some of this could be intrahepatocyte mechanisms that are pretty complicated and tricky.

So the good news is that we're trying to learn, and we are learning quite a bit about that. So that would inform the design of a next-generation vector. And I think it's pretty premature to be thinking about that as a development candidate. I think about this in a more science context, learning and being prepared in the event that there's meaningful loss of vector expression out in the outer years. That's still a long ways away for the vast majority of patients.

Your next question is from Phil Nadeau from Cowen and Company.

The FDA's Cellular, Tissue, and Gene Therapies Advisory Committee recently announced a meeting for early September to discuss the safety of AAV vectors. Hank, I'm curious to get your thoughts on that meeting. And then maybe specifically, has BioMarin been asked to present at the meeting? Or do you have any plans to make a presentation even during the public comments period?

Yes. I think it's terrific that the FDA is reaching out to their experts early in the time course of the development of these therapies. These therapies have obvious transformative potential. But as the community likes to refer to, there are still unknown unknowns. And some of the known unknowns that are the subject of this panel are important therapeutically. Now -- and they've named some of those integration considerations, thrombotic microangiopathy, for example, ALT or infusion or pretty severe hepatic reactions.

We've not been asked to present anything. We're going to be watching the discussion just like everybody else as far as we know as of right now. I mean the thing -- the way I think about that is we don't really have a lot to say on that subject because we haven't experienced the kinds of things that the rest of the field is experienced with different capsids. I think a common thing for us to be thinking about could be, is there any read-through on product or class-specific labeling. I think that's really premature at this point to talk about.

The thing that I think we have done that makes our program unique, important and distinct or unique and important is that we have a fairly large data set. So I think a lot of these things are arising in context of 1 and 2 and 3 patients' worth of events. And I think the accumulation of a large amount of data is really the only formula for advancing knowledge as regards to safety of the AAV gene therapy platform. So we're very pleased to have already dosed 134 patients in our Phase III trial and following now past 1 year of follow-up represents a pretty exuberant body of accumulating knowledge. So we'll watch as interested spectators.

Your next question is from Paul Matteis from Stifel.

I had a couple of questions on vosoritide. I was wondering if you've had any engagement with the FDA on the 2-year data and how important do you think that is for the FDA in determining durability of effect. And then second, I don't know if it's premature, but I guess there's a couple of ways you can think about pricing for this drug in the U.S. One is based on prevalence. And the other is kind of looking at growth hormone, which really isn't kind of in the normal orphan ballpark, and those span a wide range? So I'd be kind of curious at least in your philosophy and if those 2 are the kind of right brackets to be thinking about?

I'll start on the 2-year data, Paul. The -- I mean there's not a lot more to say about that other than that they flagged this as a consideration for discussion at their Advisory Committee. And we believe that we addressed the issue of durability not in the exact way that the FDA wanted, but in a way that is robust scientifically for them to come to their conclusions. But as you know, they reiterated their request. We have provided the data. We are interacting with them about the data, as I mentioned.

We're getting close enough to the finish line now that we won't go into the sausage making of the back and forth. But suffice it to say, with the PDUFA date of November 20, I think we'll all know the answer of the FDA fairly shortly. And we remain confident that, that data package addresses the issues of their consideration. That is to say that VOXZOGO's effect will accumulate over time that, that benefit of the natural regulator of bone growth will facilitate wellbeing in all the endochondral bones of the body, resulting in both stature gain, but ultimately, over time, improvement in their health.

I'll start with the pricing, and then Jeff can tell you about some payer research we've done. I think we stated before and we're reiterating it that we anticipate a pricing here that would be similar to Palynziq, which is around $200,000 a year for patients in the U.S. And that is based on payers' research and the value proposition that we have here.

I would say growth hormone is not a good comparator. Growth hormone insufficiency or the deficiencies are a much, much less severe disorder. You're talking about around 2 standard deviations from normal in terms of final adult height. There's no associated comorbidities. We're talking about 5 to 6 standard deviations from normal in terms of adult height here. So a much more severe disorder, which puts it in the orphan category. And this is supported by peer research that Jeff can talk about.

Yes. Thanks, J.J. I think you largely covered it. The thing about VOXZOGO in the context of the prevalent treatment population, which is relatively small compared to the population of patients that would be eligible for growth hormone, but more importantly, thinking about the unmet medical need in achondroplasia and the potential long-term and lifetime benefits of VOXZOGO for those patients.

We've done a lot of work with payers in both Europe and in the United States to characterize the unmet needs in achondroplasia and to model out what could be benefits from VOXZOGO beyond what will be the significant improvements and durable improvements in growth velocity that are the primary things that we're studying in the Phase II and the Phase III study. And I think we've made a lot of progress with payers in that regard. And so as J.J. noted some much more bullish about the prospects for pricing than in the context of growth hormone pricing.

And also on top of it, here we're going to have no competition for many years to come at least 5 or 6 years, if not more. Growth hormone is a very competitive market, including biosimilars. We're not quite in the same situation here, another dynamic.

Your next question is from Gena Wang from Barclays.

I have one question regarding ROCTAVIAN. Any thoughts on possibility that FDA could ask for longer than 2-year follow-up for submission? And if so, when would you expect to hear back from the FDA?

Well, Gena, the FDA can't ask for anything they want anytime they want. And as you've seen before, they can ask for much longer data even after they've communicated the complete response letter. That's the first communication expectation. I know that's really frustrating for everybody. They have a lot of excuses about that. I think on our side, we can't control what the FDA does, and we can't control COVID and things like that. What we can do is we can generate a lot of data and try to develop the best possible drugs we can with the strongest evidence packages.

And I think that judging by the fact that the European Agency is willing to get their application review started with the 1-year data, knowing full well that the 2-year data is around the corner, again also, I think, bodes well for how a health authority can look at the accumulating package of information even with the uncertainties remaining about longer-term durability. And I think the agency has been fairly clear about the time -- the U.S. FDA has been fairly clear about wanting the 2-year data.

It's not driven so much by any worries they have about the data or what they've seen so far because they've seen the same things you've seen. Well, actually, they haven't gone in probably as much depth on the 1-year data as you have. They just made up their mind they want a 2-year data. So I'm optimistic that, that will get done there in terms of a positive benefit/risk. I think if you step back and say, 2 years ago, I got a single infusion of something, and 2 years later, I'm still not suffering the underlying condition that I was originally diagnosed with, I think, it's reasonably profound. But let's just keep our fingers crossed that, that's the way it holds all the way through the next review cycles.

And also, we haven't had any communication so far with the FDA that would lead us to believe that they are to require more than 2 years. But as Hank said, they can always change their mind.

Okay. I think the reason I'm asking because we saw the recent uniQure can be updated shortly before submission. So just want to make sure similar things will not happen.

uniQure was just planning on submitting 1 year, and I understand they asked for 18 months. So they were still below 24 months for uniQure.

Your next question is from Joseph Schwartz from SVB Leerink.

I'm Joori dialing in for Joe. First question is on VOXZOGO. How confident are you that you understand all the influencers and influences in the achondroplasia market. So for example, the adoption of Kuvan was influenced by dieticians that needed to be convinced of the merits of the drug. So ahead of VOXZOGO's launch, our question is how confident are you that you have a handle and buy-in from all the stakeholders that matter that will be important for widespread adoption of the product?

Well, thank you for that question. That's a good one. In fact, we have a commercial model that includes paying attention to the different stakeholders that are likely to influence the entire range of commercial decisions. We call it our 5 Ps model. And those include patients and advocates, politicians, physicians and payers. And so we pay attention to all of those influencers. In terms of the degree of confidence, each of those groups is not a monolithic thing. There are different individuals. Some are more bullish. Some are more skeptical. Some are early adapters. Some are later adapters.

So there's a variability inside of there as it relates, for example, to patient advocacy organizations. Depending on where you're standing in the world, some are really excited about having a treatment option, others less so. Same thing with payers. So I think that we're reasonably confident in our ability to pull off a strong commercial launch starting in Europe and, hopefully, later this year in the United States. 100% assurance is probably not something that I could promise you.

Yes. I mean, again, I think there is a lot of excitement about the drug in many parts of the world here based on the feedback we're getting from our commercial organization. And as you know, in some countries like Italy and Spain, I think around 80% of patients undergo limb extension surgery, which is dangerous, painful and expensive. So it gives you an idea as to whether they really want to grow faster than they're growing right now if we are willing to do these things. And here, we are offering something that's way more elegant than that limb extension surgery, which only impacts only 2 bones of their body.

So we are not too concerned here. I think the patient demand is going to be there. And also, as Hank said earlier, I think, 80% of achondroplasia patients are born from patients that are -- from parents that are unaffected by the disorder. And a vast majority of them are interested in growth velocity and final adult height for their kids. And indeed, there are a few patients, but it's a minority -- I mean there are a few patients, a few achondroplastic people that might be less interested in the product, but they are not eligible for the product because if -- all of them are adults. So we're not counting them on our forecast statement.

Next question is from Michelle Gilson from Canaccord Genuity.

I have one quick one and one more robust question. I guess the first being, has the FDA seen the 5-year data on Factor VIII activity for Valrox or ROCTAVIAN and reiterated their guidance to you for 2 years data from the GENEr8-1 study to file? And then the second also on ROCTAVIAN. It seems like the first market you'll be launching into Europe. And based on some European KOL feedback we've gotten, it really seems like KOLs overseas are expecting maybe 1 or 2 gene therapies at most for hemophilia A to be reimbursed and for the government to really be the deciding factor in determining which gene therapy is going to be available.

I guess with respect to this dynamic and your experience of marketing in Europe, how important is it to be the first mover there? And maybe if you could comment a bit on your expectations around both the near- and long-term expectations for ROCTAVIAN uptake in the region?

While Jeff is warming up his vocal chords, the 5-year data press release, the FDA is aware of it, and I have no idea whether they went through the presentations actually. But they had reiterated their demand for the 2-year data before the 1-year data was seen. And there was no point in them reiterating their demand after the 5-year. And we know what their request was going to be even if we had asked them. So the 5-year -- the availability of the 5-year data did not change the dialogue that we had.

And maybe circling back then to your question about Europe and payers and preferences for one or more gene therapies. ROCTAVIAN is substantially ahead of competitive -- potential competitive programs. So you're exactly right, having first-mover advantage in Europe and in the United States comes with many, many, many advantages. First, when -- assuming an approval on the kind of time lines that we've been planning, there is no second approved program. There is no viable in-the-wings second program. And if there was, that program would have less durability data. We know they're going to have less robust data sets in terms of numbers of patients.

By the time that happens, BioMarin will be well into life cycle management initiatives, exploring other aspects of the treatment of ROCTAVIAN for hemophilia A. So I think you're exactly on the money thinking that a first-mover advantage is so valuable in so many different ways for ROCTAVIAN. And we're really bullish about the kind of uptake prospects in terms of treating patients that come along with that and noting that once those patients are treated with ROCTAVIAN, they're off the table for potential later entrants to the market. So thanks for shining a light on that.

Yes. So again, once they've been treated with ROCTAVIAN, they cannot be treated with another gene therapy, especially the AAV vector, which is basically all the ones that are in development right now. So that's obviously a major first-mover advantage that we will have as compared to our competitors. So we are, again, pretty excited about it. And also one other aspect, which is important, is that our vector AAV5 has the lowest -- basically the lowest prevalence of any other AAV vectors in terms of preexisting antibodies, which is also an advantage we have against our competitors.

Your next question is from Kennen MacKay from RBC Capital Markets.

Just a quick pipeline question. For BMN-307, wondering if you could sort of give us an update on additional patients that have been dosed here if you dose beyond sort of that lowest dose? And within that program in BMS study, just what you're looking for during dose escalation, essentially with a vector like this, how -- and a disease like this, how do you decide on a go-forward dose when more reduction is better in Phe-lowering?

The -- we are, in fact, at a second dose level. So we've dosed patients at the first entry dose level, the study which was 2e13 vector genomes per kilo. We saw some signs of Phe-lowering efficacy. So it says to us that we're probably on the dose response curve. On the basis of that, we elevated the dose in the next group of patients. We haven't communicated the data, but what we -- from that next group of patients. But what we have communicated is that based on what we've seen in the 2e group and based on what we've seen with ROCTAVIAN, we're encouraged to think that it's possible that the 6e group would be the group that we choose to dose expand.

As regards how do you pick a dose, I mean, the target of therapeutic effectiveness effectively is normal Phe normal diet. So the dose that gives that result in the largest fraction of the population tested is going to be the dose. And as soon as we meet the criteria for dose cohort expansion and move into the registration phase, we'll take you through the data in particular and illustrate why we chose that dose to believe that, that was a dose that was going to give us the right target product profile. So that's very much right in front of us, and we look forward to sharing those data when they're available.

Your next question is from Matthew Harrison from Morgan Stanley.

I was just hoping, Jeff, that maybe you could comment a little bit on, in more detail, some of the PKU center dynamics you were talking about and how much visibility you have into the flow of patients coming back or the flow of patients coming into those centers. And sort of how confident you are in a second half recovery there?

In fact, particularly in the United States, where our biggest -- business is the biggest, we have a lot of visibility into how the different centers are operating to the extent that they're open or not. If they are open, to what percent of their previous capacity, whether or not they're doing work through telemedicine or not, most of them are. And what kind of wait times for patients that are looking to get started on Palynziq therapy. So we've got a lot of intelligence. What I would say is the -- by and large, the PKU clinics are operating to some level, and they are starting new patients. They're just not starting them at the pace that would look like the pace that they were starting new patients prior to the pandemic. So that's our issue.

As we noted, we have really nice year-over-year growth of Palynziq patients on therapy by the end of the second quarter. Had it not been for the pandemic, that rate of growth, I can confidently say, would have been substantially higher. And we know that there is a patient population out there that's interested in getting on to Palynziq. And so we've been optimistic, as the pandemic has kind of slowed in the United States in particular, that these centers would be able to get back up and running.

Degree of confidence in the second half? Well, given developments with the Delta variant and the CDC announcement yesterday, I would say I'm still optimistic, but not really highly confident. In Europe, it's more of a mixed bag depending on the market that we're talking about. Europe has been on a different path. I'm optimistic, but not 100% confident that we'll be able to get more patients started in our key markets in Europe in the second half.

So that being said, Matt, we are raising the guidance of Kuvan and Palynziq by $10 million each.

We have reached the end of the Q&A session, and we will now turn the call back to BioMarin's CEO and Chairman, J.J. Bienaime.

So thank you all for joining us today. So as we described, BioMarin is on the cusp of next significant stage of revenue growth. Our solid cash position, foundational base business, 2 significant market opportunities and with 4 potential approvals on the horizon starting with the potential approval of VOXZOGO -- or likely approval of VOXZOGO in Europe next month and a robust early-stage pipeline that we've been investing steadily over the last quarters, this sets us up for a transformational growth beginning in 2022.

So thank you for your attention today, and we look forward to speaking with you again soon.

Thank you for joining today's conference. You may now disconnect. Have a great day.