Q4 2019 Earnings Call

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Thank you Sarah and welcome everyone to remind you today just not confidential presentation contain forward looking statements about the business prospects vibrant pharmaceutical inc., including expectations regarding vibrant financial performance commercial product and potential future product in different areas therapeutic research and development.

May differ materially depending on the progress vibrant product programs actions of regulatory authorities availability of capital future actions in the pharmaceutical market and development by competitors and those factors detailed and vibrant filings with Securities and Exchange Commission <unk> 10-Q, 10-K, an 8-K reports.

On the call from vibrant management today, our JV enemy, Chairman and Chief Executive Officer, Jeff age or Executive Vice President Chief Commercial Officer, Robert Baffi, President Global manufacturing and technical operations. Thank you President worldwide research and development and Brian Mueller acting Chief Financial Officer.

We tend to keep this calls one hour. So please reach out to me if we don't get your question now I'd like to turn the call over to Byron's, Chairman and CEO Jay the enemy.

Thank you Tracy and good afternoon, and thank you for joining us on today's call.

So you know the press release, we delivered record results for the full year 2019.

They must trading our continued operational excellence in parallel.

Oh productive.

The next wave of products expected to contribute significant.

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In the coming years.

We began the new decade.

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Turning to our national strike.

We expect to turn profitable.

On a GAAP you did.

20, <unk> the first I'm.

In the history of the company.

Revenue growth.

And improvement in profitability is also increasing our operating cash.

Our total cash and investment.

[music].

Second street or feature from last year.

On the development and commercialization size business.

Eventually pipeline focused on larger rare indication.

Blockbusters on the Horizon <unk>.

He's already delivering strong results.

And it all comes I expect it to drive.

For our stakeholders the next few years.

Hi, I lost you got fewer severe hemophilia a as reported last week.

Thank you very when you are building.

Yes, you could do for action date.

21st So this year and no Advisory Committee meeting schedule, but yeah. This time.

Oh perspective, not 12.

Yeah.

Where necessary.

As for expedited review in the U.S. and Europe.

We submitted on were granted accepted those applications.

We then I will not be little piece, we study and we produce material from our GMP facility to prepare for the commercial launch later this year. We ask you already have even though we did she did by 500 patients.

Alex this year.

These exceptional execution across the organization underscores biomarin commitment to our key to GE Prairie significant I'm sustainable long term topic.

My role.

We expect sidewalks would be important computer.

In a moment, Jeff we spent on some of our assumptions.

As we prepare for any potential launch later this year.

Although interest all 19 was always.

Yeah.

He is to have shared decided she goes you did you guys. One year results from our pivotal phase three trial, demonstrating its strong increasing course gloss and he across a lot of 21 children age 514, what you see better in the trial.

Let's move on Washington, you pay the highly innovative attributes of Missouri side, we'll do we will drive uptick from patients and meaningful contributions.

That's about catastrophe losses.

Every day tremendous unmet medical need.

Patient population and timing.

Orphan indication treatment option on every your gross losses off the kids.

Hi, good outside next steps along the path to approval.

Alright.

The next views represents a tremendous opportunity for value creation based on the following.

[music] potential blockbuster losses in got off to the Missouri died continued expansion of RPQ franchise, we have trouble, probably they penetration and you should that be in future.

Before AG it was always side no.

Thanks, Noriega stick on indication for dominantly, having to shore stature beyond a couple of page.

I didn't catch reserves corny on manufacturing enviable footprint.

Very well positioned for dramatic and sustainable growth and profitability in the future.

Critical growth drivers of the long term aren't they said, we'd be able to anybody <unk> results for all our stakeholders.

In conclusion put his introductory remarks.

We are pleased with our achievements in 2019 and what our anticipation for what lies ahead in 2020 and beyond.

As we begin a decade I think you'll be strong base business transition our pipeline to address larger rare indication laid the foundation for significant properly.

And it was always kind of cool.

Thanks, Chris you find risk position ourselves for substantial success, both near term and then also.

Thank you for your continued support and I will now turn the call over to Jeff for discussion of our commercial business just like your JJ and of course, there acceptance of the B.L.A.'s a significant milestone for the commercial organization as we prepare for potential launch later this year. So I will quickly review of the results before sharing our thinking.

I'm about rocks value proposition.

The fourth quarter Barca strong finish to a year, where all brands contributed a total bio marine revenues of $1.7 billion, a 14% increase over 2018 total revenues a notable milestone was achieved with members and becoming the first biomarin brand to reach.

And surpass $500 million an annual sales.

Combined growth from our two newest brands problems Eikenberg Nora was a material factor in this solid performance.

Going instability in certain markets, including Turkey, Iran. In Argentina presented challenges throughout the year, but I'm very pleased with the overall results delivered by my team and the quarter and full year.

Looking more specifically as a quarterly results revenues in Q4 totaled $454 million, representing 29% increase year over year.

Recall that in Q3 2019, we detailed for you. The first installment of a new 12 month supply agreement with the Brazil Ministry of Health and reported $45 million and sales were naglazyme and doesn't combined.

As expected corresponding revenues in the fourth quarter last year were lower that effect was offset by higher revenues propellant. They can bring nora resulting in flat quarter over quarter revenues.

Focusing specifically on Palin think we're reporting $32 million in revenue for the fourth quarter, 32% increase over the third quarter to quarter of last year.

Majority of that revenue came from the U.S., where the launch continues on a successful trajectory.

Revenue met our expectations, despite an anticipated seasonal slowdown and enrollment and patient starts late in the year.

At the end of Q4, there were over 900 adult Teekay you patients that either already we're being treated with commercial Palin Z or preparing for their first rate.

Specifically 762 patients one pounds, a commercial therapy, including 625, formerly naive to balance IEC and 137 from clinical studies with an additional 143 and rolled naive patients who had not yet received their first the spot.

Another marker of the continued growth we're seeing 18 months suppose slot is the continued increase in active treatment sites, which grew to 97 clinics in Q4 versus 93 in the previous quarter.

Finally, our teams have been focused in the U.S. on transitioning patients currently young ku band, but who do not achieve optimal decontrol Palin see these efforts are going quite well and since launch 40% of Nonclinical enrollments were previously active coupon patients.

This marks the sixth.

Second quarter, where we have shared these metrics consistent with the commitment we made on the call following FDA approval.

I don't think now is moving from launch phase in the U.S. to a steady growth phase over time, we will focus our attention and yours on revenue growth moving forward.

In Europe multiple clinics across Germany are now actively treating patients with balance sheet and early uptake signals are encouraging.

Similar to our experience in the U.S. meaningful revenues will be driven by patients, reaching maintenance dosing, which follows the patient specific and variable induction integration period.

We continue to expect material sales in Europe, and 2020 as many of you know finalizing the German price is first step before negotiating reimbursement approvals in most other European markets without the benefit of clinical trial patients and named patient sales channels in Europe, we progressed.

On a more traditional pharmaceutical launch trajectory, where we will pursue opportunities market by market.

In summary, there's a lot of interest and enthusiasm propelling the.

I'll sort of experience in Germany is created a helpful precedent as we look to expand pellens IEC into other countries.

Turning to bow rocks, having recently received priority review of the base delay from FDA as well as validation of the M&A from Europe and December Interestingly building ahead of the potential launch of the first gene therapy product to treat severe hemophilia a.

In contemplating the commercial value our up it is necessary to understand and acknowledge the significant burden and cost of severe hemophilia a given the current standard of care product prophylactic factory replacement therapy.

As a single infusion with ongoing effect, so Rob has the potential to dramatically change the treatment paradigm and how we think about managing severe hemophilia hey.

The growing body of data from our clinical trial suggest the potential benefits of treating patients with dollar October product <unk> prophylactic factory therapy could be transformational.

A recent publication has estimated that the average annual cost the proper black they've backed rate to be between 700 and $750000 per year.

Modeling these annual cost forward for an adult male and 18 year old with life expectancy. The 71 years could utilize $38 million back to replacement at today's cost in the context of these high costs under the presume price in line with other.

Recently approved gene therapy product cost effectiveness of Bauer.

Would be expected in a relatively short period of time.

As an element of commercial readiness, we've done extensive work to understand the payer perspective in the U.S. and key international markets.

The first thing to note is that hemophilia is a large line item and these payers budgets and has their attention.

Payers are interested in the potential of improved clinical outcomes and quality of life benefit and they expect savings over time.

Additionally pairs are interested in managing the risk patients achieving a full response and the durability of that response.

Those variables could possibly be addressed by outcomes based agreements and some payers have also expressed an interest in payment overtime models. We are working to develop payment models that fit the needs and desires of payers, noting there are currently limitations to the agreement that can be implemented.

In the United States.

And there are varying preferences affairs in international markets.

A key element of commercial readiness is to be prepared with payment models that will facilitate patients getting access to fall Rob if approved.

As Jay said, we expect to hear about potential approval abele rocks in the second half of this year and as usual we wouldn't expect to have more information on pricing at that time in the meantime, we continue to prepare for potential launch and the latter half of this year with great anticipation and excitement.

Thank you and now I would like to turn by turn call over to Hank.

Thanks, Jeff.

Let's start by echoing Jeff sentiment about the sense of excitement as Biomarin as we start this new decades with the potential approval of Alex on the Horizon later this year.

I'm preclinical assets through applications under review the breadth of our development pipeline has never been as diverse or de risk.

No rocks and roughly four years, we have gone from the first administration in humans to having a marketing applications under review on an expedited basis and both the United States in Europe.

Efficiency of the Valorized development programs that achievement in of itself the potential for Val Rocky completely changed treatment paradigm for hemophilia isn't even greater feet. We want to thank you hemophilia community for providing biomarin opportunity in support to successfully developed Alex a major part of the support comes from the dedication and commitment of key opinion leaders in the.

Feel.

Earlier in the year, we're honored to see valorous recognized for the second time in the known internal medicine with the publication of a multi your follow up of our phase two program.

Remind you of the data three years after infusion. The median number of annualize treated bleeding events was reduced from 16 well patients were on June three times weekly purple access to zero.

Yeah, and accordingly, the median used to exercise the specter eight was reduced from 138 and a half infusions to zero infusions.

Leading it all target joints in this cohort result, given these data and in reference to just previous remarks on experiencing cost effectiveness and a reasonably short period of time, we now have supportive evidence of such a possibility.

These impressive data, we're not only the basis for the publication inaugural medicine, but also where the basis of a recent independent academic research paper modeling the benefit that gene therapy. They offer as an alternative to prophylactic exogenous factory infusions. The findings projected the Dol rotce would be the dominant treatment choice.

Being both cost saving and producing superior patient health outcomes with at least 2.4 years of durable response. This is based on potential reduction in factory use direct medical cost lifetime bleeds and accumulated dot joint damage.

Needless to say the increasing body of data supporting durability of response or with Alex as outlined in their internal medicine and potentially at the upcoming for your durability, Mark gives us increasing confidence in the benefits of Dallas to patients and to health care system.

The next steps towards about Rox's approval. This year are the C. H M P and committee in a dance therapeutics opinion coming due in the second half a year and the PDUFA action goal date of August 21st 2020, following priority review designation.

During this time, we'll be working closely with helped parties to facilitate the expeditious reviews. So we can make bell rotce available as quickly as possible patients.

Just for this for the ongoing phase two study, we intend to share where your update with 60 13 dose as well as a three year update with the 40 turret 13 dose at a male conference in June or July.

The importance of Alex for your update and continued durability oblique control is a key focus and we hope to see results consistent with what does it has been observed through your three stay tuned.

Turning now to soar tied for the treatment of the condra plays.

We're now nearing the finish line, we're very pleased to shoot a highly statistically statistically significant results from our phase three program last December a P value of less than 0.0001 and annualized growth velocity of 1.6 centimeter gain over a one year of observation on top.

At R&D day, we shared pace to 54 month results demonstrating nine centimeters a cumulative growth improvement compared to untreated patients in natural history.

Because our global multi prong program has been designed to demonstrate clinical benefit for infants and children with the contract Malaysia.

Another key component is the phase two study in zero to five year olds, you have nearly completed enrollment in the first cohort of the first two cohorts of the study which includes children from six months of base to five years old and the last quarter. The heart, which includes newborns through six months of all this expected to complete enrollment thereafter.

Needless to say the level of interest from families seeking treatment for their very young children is consistent with our belief and starting treatment as early as possible.

We're thrilled with the clinical results today with the store tied to have plans to conduct pre submission meeting with health authorities to determine the scope and therefore, the timing of the marketing application authorization in Europe, and the new drug application in the United States, which we anticipate leader in here.

Turning now to be M. N three a seven our investigational gene therapy for federal keeping area, we expect to start enrolling patients in the Fearless phase two study, which is a dose escalation dose selection see later this quarter with us expansion arm expected in the second half of the year.

This study could potentially be registration, enabling past that expansion as we're conducting here with material manufactured using a commercial ready process to de risk. This program facilitate rapid clinical development and registration.

We are excited about the prospect of being in three to seven as it represents a potential third treatment for federal keeping your it in our franchise and a second gene therapy development program, leveraging our learnings from capabilities from Alex that's for data updates will provide a data update on the study once we have chosen a dose in the start of the registration enabling part of the study.

Finally, our earlier stage pipeline includes the Min 331 gene therapy for hereditary angioedema and the serotype predominantly inherited short stature and both of these programs are moving forward nicely. We're completing preclinical work would be in on 331 and expect phase one two with the Seretide predominately in her.

To trust stature to start later this year as part of a research collaboration with children's Hospital.

Your R&D organization is energized as we look towards 2020 unfolding as we prepare for Dow rocks approval application submissions sort tide and enrollment of our phase two study would be even three our seventh teekay Eugene therapy. The 331 gene therapy for HIV and indication expansion underway for the short time look forward to speaking.

You since these events progressed and thank you for your continued support and I'll now turn the call over to Brian to review the financials in the board Brian.

Thank you Eric please refer to today's press release summarizing our financial results for full detail that fourth quarter at its full years 29.

It's just touched on many of the topline results from the commercial business I will focus on the bottom line result.

Operating expenses in our 2020 guidance as usual our results will be available at our upcoming form 10-K, which we are on track to file over the next couple of days.

And just comments about our revenue momentum we're pleased to announce total revenue guidance for 2020 of between 1.95 billion to $2.05 billion.

If we are able to achieve $2 billion in revenue in 2020 that would represent 17% growth over 29 team.

Unknown Executive: BF-WATCH TV 2021 The Bulletproof Executive 2013, [inaudible] BF-WATCH TV 2021, Welcome to the Biomarin 4th Quarter and Full Year 2019 Financial Results Conference Call. Hosting the conference call today from Biomarin is Traci McCarty, Vice President of Investor Relations. Please go ahead, Traci. Thank you, Sarah, and welcome everyone.

In terms of the bottom line for the full year 29 team, we provided guidance of a GAAP net loss between 45 million $65 million and it reported a better than guidance GAAP net loss of $24 million for the year.

Unknown Executive: To remind you today, this non-confidential presentation contains four forward-looking statements about the business prospects of Biomarin Pharmaceutical Inc., including expectations regarding Biomarin's financial performance, commercial products, and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of Biomarin's product programs, the actions of regulatory authorities, the availability of capital, future actions in the pharmaceutical market, and developments by competitors, and those factors detailed in Biomarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K, and 8-K reports. On the call from Biomarin Management today are JJ Bien-Aimé, Chairman and Chief Executive Officer, Jeff Ajer, Executive Vice President, Chief Commercial Officer, Robert Maffie, President, Global Manufacturing and Technical Operations, Hank Fuchs, President, Worldwide Research and Development, and Brian Mueller, Acting Chief Financial Officer. We intend to keep this call to one hour, so please reach out to me if we don't get to your questions.

This improvement GAAP net loss in 2019 over 2018, particularly in the second half of the year driven by a growing revenues and operating leverage gives us comfort guiding to GAAP net income on a full year basis for the first time in company history.

For the full year 2020, we expect GAAP net income of between 20 million to $80 million, depending on the contribution from Bell Rob.

In our press release, we also noted that our guidance does not reflect a potential tax benefit that we may recognize and 2020 I will elaborate on that in a moment.

Turning to non-GAAP income, we delivered $167 million for the full year 2019, and $46 million in the fourth quarter of 29 team driven by strong topline results across the commercial portfolio.

Non-GAAP income for the full year 2019 with over 80% higher than non-GAAP income for the full year 2018 and sets us up for further non cat non-GAAP profitability growth and 2020.

For the full year 2020, we anticipate non-GAAP income of between 260 million and $310 million, the midpoint of which is growth of more than $100 million and over 70% increase over 29 team.

Unknown Executive: and CEO, JJ Bien-Aimé.

JJ Bien-Aime: Thank you, Traci. Good afternoon.

This anticipated growth in non-GAAP income insubstantial with the midpoint of a 2020 guidance being three times, our GAAP net income from two years ago and 28.

JJ Bien-Aime: Thank you all. As you saw in our first release, we delivered record results for the full year 2019, demonstrating our continued operational excellence in parallel. Our productive R&D engine advances to the next wave of products expected to contribute significantly to top-line growth in the coming years. We begin the new decade with an established business that is foundational to our financial strength. We expect to turn profitable on a gap basis. In 2020, for the first time in the history of the company, our revenue growth and improvements in profitability will also increase our operating cash flows as our total cash and investment drew for the second straight quarter in Q4 of last year on the development and commercialization

Moving to operating expenses, both R&D and <unk> expenses in the fourth quarter of 19, roughly tracked with recent trends and within our 2019 guidance range.

R&D expenses were flat year over year at 173 million and for the full year 2019 were $715 million.

In the fourth quarter R&D expenses reflected continue enrollment of additional patients in the Bell rock global phase three generate one study manufacturing a BMN threeo seven or PK you gene therapy product ahead of clinical trials this year and the zero to five year old study with the store tight for a contemplation.

The full year 2020, we expect R&D expenses of between 675 million $725 million represent a steady state R&D spending and balancing the completion of the bell rocks and the source height large scale phase three studies with the started at the mm 372, Eugene therapy clinical program preclinical studies.

JJ Bien-Aime: Presenting Pipelines Focused on Larger Rare Indications. Three potential blockbusters on the horizon or launch, Parenzig is already delivering strong results, and all of those are expected to drive meaningful growth for our stakeholders over the next few years. Starting with viral oxygen therapy for severe hemophilia A, as reported last week.

Mm 331 for HD and the completion of a store died phase two study in zero to five euro.

As gene expenses for the quarter and full year, 2019 were 188 million and $681 million respectively.

JJ Bien-Aime: from the FDA with a PDUFA action date of August 21st of this year and no advisory committee meeting scheduled by the FDA at this time. For a little perspective, in the last 12 months, we've made the criteria necessary to submit applications for expedited review in the U.S. and Europe. We submitted them, and we were granted acceptance of both applications.

More than 2018, reflecting the continued expansion of our sales and marketing capabilities for the margin LNG in Europe, and I was going preparations for bell Roxanne bizarre tight approval that much.

Full year 2020, we expect that generics that are between 780 million and 830 million in preparation for the global launch of Bell rocks and ongoing commercialization of pounds eat in Europe.

JJ Bien-Aime: [inaudible] To prepare for the commercial launch later this year, we actually already have inventory to treat about 500 patients. The BibleDocs this year. This exceptional execution across the organization underscores Biomarin's commitment to our key strategic priority, significant and sustainable long-term top and bottom line growth. We expect BattleBox to be an important contributor, and in a moment Jeff will expand on some of our assumptions as we prepare for a potential launch later this year. Also in 2019, with Rosario Tetrachorne and Euclidia.

In terms of cash and cash equivalent the investment.

As of December 31st 29 team, we had 1.17 billion as compared to 1.32 billion.

On December 31st 2018.

Our revenue growth improving profitability is also translating to our operating cash flow is our cash and investments in increased at the end of 29 team for the second straight quarter.

Now back to the potential tax transaction that I mentioned earlier as noted in our press release full year 2020, GAAP net income guidance of $20 million to $80 million does not reflect the potential impact associated with intra entity intangible asset transfers between biomarin entities that may occur in the second half of 2020.

JJ Bien-Aime: We are pleased to have shared the highly statistically significant one-year results from our pivotal phase 3 trial, demonstrating a strong increase in growth velocity across 121 children aged 5 to 14 who participated in the trial. As with Virox, we anticipate the highly innovative attributes of Rosoritide will drive uptake from patients and meaningful contribution to the business upon potential approval and launch. There is a tremendous unmet medical need in this patient population, and time is of the essence for approval and indication treatment options as every year of growth is lost to the kids. In a moment, Hank will outline the next steps along the path to... (inaudible) The next videos represent a tremendous opportunity for value creation based on the following. Two potential bug buster launches in Valrox and Vazoritide, continued expansion of our PKU franchise with global policy penetration, and PKU gene therapy in the future.

If these transactions occur we estimate that the tax effect could be a onetime noncash income tax benefit of greater than $500 million.

You may have seen similar tax gains recognized by some of our peers in the fourth quarter of 2019, and we wanted to make sure you were both aware the potential transaction and the financial reporting, which again noncash GAAP income tax benefit with no anticipated impact on our operations or cash flows in 2020.

In closing 2020 is here that we expect bomber end to become GAAP profitable based on the expectation that total revenues will be $2 billion roughly for the year [noise].

Over the next 18 months, we also expect accelerate in the next phase of higher revenue and profitability broke through the potential approval and launch is about rocks in the store attack. Thank you for your support and we will now open up the call to your question [noise].

Ladies and gentlemen ask the question you want me to press Star one on your telephone to withdraw your question press the pound for hash key.

Henry J. Fuchs: Ph. D. for H.E. and Rosario Tide now.

JJ Bien-Aime: Exploring a Second Indication for Dominantly Inherited Short Stature Beyond Achondrophagia, Abundant Cash Reserves, Corleone Manufacturing, and Global Footprints, to be very well-positioned for dramatic Sustainable Growth and Profitability. Critical Role Drivers for the Long Term are in place, and we believe we will deliver unprecedented results for all our stakeholders. In conclusion, for these introductory remarks... We are pleased with our achievements in 2019 and full of anticipation for what lies ahead in 2020 and beyond. As we begin a new decade having built a strong base business, transition our pipeline to address larger, rare indications, lay the foundation, We are diversified risk and position ourselves for substantial success. Thank you for your continued support, and I will now turn the call over to Jeff.

Thank you. Our first question comes from line of Phil Nadeau from Cowen and company. Please go ahead.

Good afternoon, Thanks for taking my questions and congrats on progress just a two part question on Bell rocks [laughter] first we've heard from some physicians if there's a pool of early adopters out there who want to trade gene therapy close to the time of the launch, but it's hard to quantify how many of those patients are out there do you have any data either from your market research or your clinical studies.

As to how big that population could be.

And then the second part of question is just.

Alright, and called out in your 2020 revenue guidance does your guidance include any contribution from it. Thanks.

Oh, sorry, we.

I see okay.

So dumb enough for early adopters.

I mean, there is definitely.

Great significant interest.

In the drug I mean, maybe the best way too.

Jeff: Thank you, Jeff.

JJ Bien-Aime: Thank you for joining us for a discussion of our commercial business.

Correct rise in the U.S. So we've done a lot we did not have educational programs on gene therapy in general geographies, we would be a so we as we have some additional problems websites whereby.

Jeffrey Robert Ajer: Thank you, JJ. Of course, the acceptance of the BLA is a significant milestone for the commercial organization as we prepare for a potential launch later this year.

Jeffrey Robert Ajer: So, I will quickly review the results before sharing our thinking on the Valrocks Value Proposition. The fourth quarter marked a strong finish to a year where all brands contributed to total Biomarin revenues of $1.7 billion, a 14% increase over 2018. A notable milestone was achieved with Mimizem becoming the first Biomarin brand to reach and surpass $500 million in annual sales. Combined growth from our two newest brands, Palantik and Vernura, was a material factor in the solid performance. Ongoing instability in certain markets, including Turkey, Iran, and Argentina, presented challenges throughout the year, but I'm very pleased with the overall results delivered by my team in the quarter and full year. Looking more specifically at the quarterly results, revenues in Q4 totaled $454 million, representing a 29% increase year-over-year.

The patients can update to receive so they can provide us with some.

First of information to opting to receive information about Ross.

And ER as of a couple of days ago I see we had already 400 pieces in the U.S. alone. That's shown interest you receiving information about rocks.

I presume the spaces are I mean, it's unlikely that all that will actually want to move forward, but I think a large number of them well and then.

All of them, it's unlikely that all of that will be eligible for therapy, but there's definitely interested it then ill. So there's some ARPU research says we have to be talking about that show that you didn't take isn't pieces of age for studying the drug.

Oh second cushions and better work, so I mean, a in the guidance, yes, I like crazy, giving the guidance.

In terms of topline.

Bottom line.

So the issue is not a lucky here in terms of Oh, we don't want to give you get involved not rocks guy as he actually we really do it went anywhere you all in the last year for any product.

He got its highly depended upon the timing of the approval at the new vintages the August but.

Jeffrey Robert Ajer: Recall that in Q3 2019, we detailed for you the first installment of a new 12-month supply agreement with the Brazil Ministry of Health and reported $45 million in sales for Naglozyme and Vimazum combined. As expected, corresponding revenues in the fourth quarter of last year were lower, but that effect was offset by higher revenues from Palantik and Bernoura, resulting in flat quarter-over-quarter revenues.

You never know you haven't and.

Obviously late August and it should be much easier to generate some significant revenues I need it happens in October and November and this is a little bit as of today beyond our control.

Same same for Europe.

If we stay on the et cetera assessment pathway, we should get approval in the summer, but it could be later, but then they even after approval I mean, we because she's just want a pretty quickly but we.

Jeffrey Robert Ajer: Focusing specifically on Palantir, we are reporting $32 million in revenue for the fourth quarter, a 32% increase over the third quarter of last year. The majority of that revenue came from the U.S., where the launch continues on a successful trajectory. Revenue met our expectations.

Okay for works just even in the U.S. you get the patients started.

I'd be reimbursed and then remember we've got a need to get the pieces to do the.

85 antibody test I should be some of them, we get a line them up to do it you know as soon as possible after launch so Steve Mecke too difficult to give you a.

A tight sidewalks only guidance for this year, but when do it for next year.

Jeffrey Robert Ajer: Despite an anticipated seasonal slowdown in enrollments and patient starts late in the year, at the end of Q4, there were over 900 adult TKU patients that either already were being treated with commercial Palantik or preparing for their first treatment. Specifically, 762 patients were on commercial Palantik therapy, including 625 formerly nave to Palantik and 137 from clinical studies, with an additional 143 enrolled nave patients Another marker of the continued growth we are seeing, 18 months post-launch, is the continued increase in active treatment sites, which grew to 97 clinics in Q4 versus 93 in the previous quarter. Finally, our teams have been focused in the U.S. on transitioning patients currently on QVAN but who do not achieve optimal fee control, PAL, and ZEKE. These efforts are going quite well, and since launch, 40% of non-clinical enrollments have been previously active QVAN. This marks the sixth...

Thank you said Oh, Jeff could you, yet well stated JJ and actually the add on [laughter] [noise].

Okay next question.

Your next question comes from the line of Levine Richard from Goldman Sachs. Your line is open.

Great. Thanks for taking my question Andrew onto something I need some question for John.

[laughter] decided just what kind of registry that's informed I'm talking about your PC outreach and help us understand how eligible patients are being identified essentially come back without back on on the launch later this year. Thank you.

So that Jay mentioned, an opt in mechanisms. So there's not a formal registry for say a these our promotional nonbranded promotional.

Efforts that we can dive to relative to gene therapy education in general to introduce Biomarin to be community and there is a mechanism for patients and to opt in for further contact from Biomarin and other information.

Jeffrey Robert Ajer: This is the second quarter where we have shared these metrics consistent with the commitment we made on the call following FDA approval. As Palantik now is moving from the launch phase in the U.S. to a steady growth phase over time, we will focus our attention, and yours, on revenue growth moving forward. In Europe, multiple clinics across Germany are now actively treating patients with palliative care, and Early Uptake Signals Are Encouraging. Similar to our experience in the U.S., meaningful revenues will be driven by patients reaching maintenance dosing, which follows a patient-specific and variable induction and titration period. We continue to expect materials sales in Europe in 2020. As many of you know, finalizing the German price is the first step before negotiating reimbursement approvals in most other European markets. Without the benefit of clinical trial patients and named patient sales, we have progressed on a more traditional pharmaceutical launch trajectory where we will pursue opportunities market by market. In summary, there is a lot of interest and enthusiasm for Palantir. The positive experience in Germany has created a helpful precedent as we look to expand Palantir into other countries.

Becomes available so.

That's really an official mechanism and we we we don't really have anything Hank to note at this point about expectations about more formal registration. Other then we'll do a post pribble registry, if that's required from a regulatory perspective, although obviously documenting long term outcomes.

For patients treated with Alex it's going to be a prime interest of the medical community over time.

Like that data. So there's been a guess subsidiary are we going to gear up to beat the pieces that have shown interest up in that uptick program you have to to get to stations test said with the.

85 antibody test.

Students basketball after approval.

Generate the first revenues.

Got it thanks, so much.

Your next question comes from line other Cory Kasimov from JP Morgan. Please go ahead.

Hey, guys. Thanks for taking my questions I've got two as well I guess the first one on for store tied I'm just curious what the gating factors would be to submitting the B.L.A. outside of your meeting with regulators is there anything left to do on the C.M.C. fraud or things like that and then secondly on Val rocks.

When you're having those reimbursement discussions on the product and sounds like you're having a lot of how much are payers waiting on that data from your for your update to further informed potential durability of the product. Thanks.

Jeffrey Robert Ajer: Having recently received priority review of the BLA from FDA, as well as validation of the MAA from Europe in December, interest is building ahead of the potential launch of the first sheen therapy product to treat severe hemophilia A. In contemplating the commercial value of Felrath, it is necessary to understand and acknowledge the significant burden and cost of severe hemophilia A given the current standard of care, chronic prophylactic factory replacement therapy. As a single infusion with ongoing effects, Salrox has the potential to dramatically change the paradigm and how we think about Managing Severe Hemophilia.

Hi, sorry.

Over the first one on game titles for the search I know, where you already I want to sort of maybe Robert you know so.

Yes.

So there's a certain including consideration of CMC. So as we've said before that and it was nicely demonstrated by the 2018 Advisory Committee that the FDA help really are for principal components to the sort type development program randomized double blind placebo controlled pivotal trial P value of 10 of the minus 13.

In check check check.

Two of five study long term data treating patients without the sort of tied for a four and a half years demonstrating a growth velocity that is sustainably increased over pretreatment baseline levels.

Jeffrey Robert Ajer: The growing body of data from our clinical trials suggests that the potential benefits of treating patients with Valrox over chronic prophylactic antibiotic therapy could be transformational. A recent publication has estimated the average annual cost of prophylactic factor VIII to be between $700,000 and $750,000 per year. Modeling these annual costs forward for an adult male, an 18-year-old with life expectancy to 71 years could utilize $38 million as factor replacement at today's cost. In the context of these high costs, and at a presumed price in line with other recently approved gene therapy products, cost effectiveness of Valrox could be expected in a relatively short period of time. As an element of commercial readiness, we have done extensive work to understand the payer perspective in the U.S. and key international markets. The first thing to note is that hemophilia is a large line item on these payers'

In spite of declining gross loss of the in untreated patients.

Temporariness natural history study that we showed you four and a half years of comparison at R&D day, demonstrating that compared to patients who were not treated with the source I age and gender matched patients.

Gained at least nine centimeters more well being treated with sorted than they would have gain if they were not treated and ongoing study in patients under five so we're check check check or as you say the but the next gating step is to have the meeting as you may know from the Advisory Committee there were some question about.

The length of the placebo controlled study we believe we have strong arguments to make about why this package checks all the boxes and Robert you want to comment on any CMC issues, we need to address between now and submission no. So thank you. Good question encouraged certainly we have been tracking to the clinical development timeline and in fact, we did complete the process.

Those qualification campaigns in 2019 collected data from those campaigns, all well and put a process of writing up the documentation for the B.L.A. tracking along with Hank and his team or to a filing a later on this year and.

Jeffrey Robert Ajer: Payers are interested in the potential for improved clinical outcomes and quality of life benefits, and they expect savings over time. Additionally, payers are interested in managing risk.

Our.

Jeffrey Robert Ajer: Response and the durability of that response. Those variables could possibly be addressed by outcomes-based agreements. Some payers have also expressed an interest in payment over time models. We are working to develop payment models that fit the needs and desires of payers, noting there are currently limitations to the agreements that can be implemented in the United States, and there are varying preferences of payers in international markets. A key element of commercial readiness is to be prepared with payment models that will facilitate patients gaining access to Valrocks if approved. As J.J. said, we expect to hear about the potential approval of BALROCs in the second half of this year, and, as usual, we would expect to have more information on pricing at that time. In the meantime, we continue to prepare for potential launch in the latter half of this year with great anticipation and excitement. Thank you, and now I would like to turn the call over to Hank.

All systems go in terms of the CMC activities are currently anticipated from a regulatory or you perspective, having met with the agency several times during the program the outline our Samsung strategy.

And you had a question on a two years.

What I'm talking about happy to do that so great point, a great question Corey the commercial audiences, including pairs in general I would characterize the sentiment of durability looking something like this and expectation.

Have a continued durability based on the data demonstrated so far and based on kind of the biological mechanism of action here with a healthy respect the risk of loss of durability at some point in in a future window.

And as I mentioned in my remarks, I think that translates into a desire to try to manage that risk, which is something that we can potentially do with outcomes based agreements and and I might characterize that that's a very different sentiment then.

Henry J. Fuchs: Thanks, Jeff.

Henry J. Fuchs: I'd like to start by echoing Jeff's sentiment about the sense of excitement at Biomarin as we start this new decade with the potential approval of Valrox on the horizon later this year. From preclinical assets to applications under review, the breadth of our development pipeline has never been as diverse or de-risked. The Valrocks, in roughly four years, we have...

And not believing in durability until we see that data.

Unknown Executive: U.S. Administration and Human Rights

Reported on of course, having for your data mid this year will be a very helpful.

Henry J. Fuchs: Thank you all for joining us today. The potential for Valrox to completely change the treatment paradigm for hemophilia is even greater... We want to thank the hemophilia community for providing Biomarin with the opportunity and support to successfully develop Valrox. A major part of this support comes from the dedication and commitment of key opinion leaders in the field. Earlier in the year, we were honored to see Valrox recognized for the second time in the New England Journal of Medicine with the publication of a multi-year follow-up of our Phase II program. To remind you of the data, three years after infusion, the median number of annualized treated bleeding events was reduced from 16 while patients were on two to three times weekly prophylaxis to zero.

Data point, we look forward to having having that I know they so it's not we've never we don't just.

Yes people, Jeff It myself as you mentioned the appeals are ready yet there is though there was never heard appears they Wally.

Works at three but that said, we already do get four we don't I mean, there's the threshold that's not the way they function a medium of actually because either they need to have to pay for the product.

But when do we look because the expected usage.

And as we have no, but I see Hank mentioned the most recent you even tell him as he.

Occasion, so we basically almost did you mean, even entirely factories usage through you have to treatment than we do Q4, two showing some bidding control and before you update.

Henry J. Fuchs: And, accordingly, the median use of exogenous factor VIII was reduced from 138.5 infusions to Zero Infusion. Bleeding in all target joints in this cohort resolved. Given these data, and in reference to Jeff's previous remarks on experiencing cost-effectiveness, in a reasonably short period of time, we now have supportive evidence of such a possibility. These impressive data were not only the basis of the publication in the New England Journal of Medicine, but also were the basis of a recent independent academic research paper modeling the benefit that gene therapy may offer as an alternative to prophylactic exogenous factor VIII infusion. The findings projected that Valrox would be the dominant treatment choice, being both cost-saving and producing superior patient health outcomes with at least 2.4 years of durable response. This is based on potential reduction in factory use, direct medical costs, lifetime bleeds, and accumulated joint damage.

Okay very helpful. Thank you guys.

Your next question comes from line that Chris framing from Piper Jaffray. Please go ahead.

Hey, Thanks, I've got just a couple of questions too. So I guess guys. I know you kind of answered the question a little bit win win win fill asked it but if I can pro maybe a little deeper just done on fell rocks his role in the guidance. It just by my math, if you add up all the components and even taking into account.

Oh, there is am royalties theres about 125 million dollar so gap.

Midpoint to midpoint so.

Yeah, I'm not sure begin to answer this but are you, saying simplicity.

Great.

Yep.

In the guidance, obviously, if we had some revenue easier to meet the guidance then they've now got it. Okay. So that's okay and then maybe just a broader question and on the pricing JJ specifically I.

Henry J. Fuchs: Needless to say, the increasing body of data supporting durability of response with Valrox, as outlined in the New England Journal of Medicine and potentially at the upcoming four-year durability mark, gives us increasing confidence in the benefits of Valrox for patients and for healthcare providers. The next steps towards Valrocks' approval this year are the CHMP and Committee on Advanced Therapeutics opinions coming due in the second half of the year, and the PDUFA action goal date of August 21, 2020, following priority review. During this time, we'll be working closely with health authorities to facilitate this expeditious review so we can make Valrocks available as quickly as possible. As for the ongoing Phase 2 study, we intend to share a 4-year update on the 6E13 dose, as well as a 3-year update on the 4E13 dose, at a mail-in conference in June or July. The importance of the Valaroc's four-year update and continued durability of bleed control is a key focus, and we hope to see results consistent with what has been observed through year three. Stay tuned.

So I think we all appreciate the cost avoidance I'm sure payers as well and not just on in factor, but but others other stuff that offers but.

Im just kinda talk a little bit about this is a relatively politically charged time with respect to drug prices I think you've already you know attracted the attention of at least one presidential candidate on this.

Just talk JJ little bit about how this is factoring into your pricing calculus them if at all.

Thanks.

No.

I mean like.

We didn't factors of course, you know well enter into our final decision.

So that we have a little time before deciding we'll see where we kind of where do we have to price to drive you know sometime this summer and on the summer.

Oh, but I see is already.

Oh, the cost up there so in a pretty significant stories for it appears.

They know how by suspicious cost and you just gave you some metrics we have a study from Joe Let me call Economics. There was that was are we keep always does that does show that dramatic potential reduction in cities.

Henry J. Fuchs: Turning out of a sore tide for the treatment of achondroplasia, we are now nearing the finish line. We are very pleased to share the highly statistically significant results from our Phase 3 program last December. A p-value of less than 0.0...

Henry J. Fuchs: ...

Because I don't know whats whatever price I mean, it of course, there is a TV tonnage and price it but.

Henry J. Fuchs: Annualized Growth Velocity of 1.6 cm gain over 1 year of observation. On top of that, at R&D Day, we shared Phase 2, 54-month results demonstrating 9 centimeters of cumulative growth improvement compared to untreated patients in natural history. Because our global, multi-pronged program has been designed to demonstrate clinical benefit for infants and children with achondroplasia, another key component is the Phase II study in 0-5-year-olds. We have nearly completed enrollment in the first two cohorts of the study, which includes children from six months of age to five years old. And the last cohort, which includes newborns through six months of age, is expected to complete enrollment thereafter. Needless to say, the level of interest in families seeking treatment for their very young children is consistent with our belief in starting treatment as early as possible.

Regarding what anticipated.

The saving the parents to the healthcare system in the U.S, they're going to be pretty eye. So it seems to comply teases might need to be educated about.

The market that we are entering into end to end the cost of treating.

People figure in General also I series doing an analysis or we should be available sometime this summer, which would allow hill, which we'd be another variable as to what we can do here.

And and I think you of course, the headlines are the headlines for the same Tom see how we communicate on price.

We will try to highlight the price per per year of document I think as he would show a whatever price with this I'm going to tell you is going to be much more then.

Many other therapies that are approved today, so that's definitely the variable but.

And also I just want to either so we don't sell a service. So we're not going to sell he's a service in what's the price remember we going to sell Myles.

Henry J. Fuchs: We're thrilled with the clinical results to date with Soratide and have plans to conduct pre-submission meetings with health authorities to determine the scope and, therefore, the timing of the marketing authorization in Europe and the new drug application in the United States, which we anticipate later in the year. Turning now to BMN 307, our investigational gene therapy for phenylketonuria, we expect to start enrolling patients in the FEARLESS Phase 2 study, which is a dose escalation and dose selection study later this quarter, with an expansion arm expected in the second half of the year. This study could potentially be registration enabling past that expansion as we're conducting it with material manufactured using a commercial ready process to de-risk this program and facilitate rapid clinical development and registration.

Right.

And actually the product is going to be dosed based on weight.

Especially the phase of the price gonna be variable from a patient to patient depending on their weight for one.

And and also there is a something is that related to the fact that a lot or probably the majority of the pieces I need to U.S.

We'll be treated in a few 40 be hospitals.

Whereby they will be a mandatory discount that would be applied.

Remains to be see whether it's going to be 723% between 30 and when he was that this is the general manager with these companies what do you see precise but factor we piece that actually we said that you Libra got like some kind of a exemptions and he's that's the only 17% for hemophilia, we and we hope to get the same exemption and I was 17%.

Henry J. Fuchs: We are excited about the prospect of BMN-307, as it represents a potential third treatment for phenylketonuria in our franchise and a second gene therapy development program, leveraging our learnings and capabilities from Valrox. As for data updates, we'll provide a data update on the study once we have chosen the dose and have started the registration-enabling part of the study. Finally, our earlier stage pipeline includes BMN-331, Gene Therapy for Hereditary Angioedema, and Sorotide, Predominantly Inherited Short Stature, and both of these programs are moving forward nicely. We're completing preclinical work with BMN-331 and expect Phase 1-2 with Sorotide Predominantly Inherited Short Stature to start later this year as part of a research The R&D organization is energized as we look towards 2020 unfolding, as we prepare for Valrock's approval, application submissions for Vasorotide, and enrollment of our Phase II study with BMN 307.

On discount though.

Maybe to the fact that we certainly need different number about different way you for discounts will provide all this.

And you show that you were very good in mass I'm sure you'll see your office.

That's cool thanks, so much.

[music].

[noise] and your next question comes from the line of Robyn Karnauskas from Suntrust Robinson. Your line is open.

Hi, guys. Thanks for taking my question I guess I have another valorous, especially and of course, so when you're thinking I guess two quick ones just to be clear. So the for your data I think you can see you just a reduction of leads will that affect the price point or you. It's just it's a price what roughly been decided already or is there any more moving.

Part and then second question you noted there is four to people you've identified so far it really want it right out of the gate what are you identifying and your market research that points you what people want to see or what other patients want to see before getting the gene therapy, what what trends should we be looking for Q.

Brian R. Mueller: Gene Therapy with 331 Gene Therapy for HAE and Indication Expansion underway for Vasorotide. We look forward to speaking with you soon as these events progress, and thank you for your continued support. I'll now turn the call over to Brian to review financials during the quarter.

Brian R. Mueller: Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the fourth quarter and full year 2019. Since Jeff touched on many of the top-line results from the commercial business, I will focus on the bottom-line results, operating expenses, and our 2020 guidance. As usual, all results will be available in our upcoming Form 10-K, which we are on track to file over the next couple of days.

Besides believes just want to get it right out of the game thing.

Let's start with the first question that Jeff answer I mean second one and maybe also part of a threat.

So the pointed out we have three year, we have already document a three year I think it's of course four year up will be additional data will enter into the picture mainly to actually calculate the cost offset more than anything else or document. It goes up that he said is gonna be another variable or let's say, it's a available with the continuum of the reimbursement discuss.

Brian R. Mueller: Therefore, I just want to comment on...

And it's not we got two patent certain hurdle.

But he will be there I don't know Oh, so the cost of that just calculated based on.

On the cost of M.D., Rob I say EDI, Ron and recovered in fact to a prophylactic into you asked about the same price by now, but I'd walk it's about $770 a year.

Brian R. Mueller: of between $1.95 billion and $2.05 billion. If we are able to achieve $2 billion in revenue in 2020, that would represent 17% growth over. In terms of the bottom line, for the full year 2019, we provided guidance of a GAAP net loss between $45 million and $65 million and have reported a better-than-guidance GAAP net loss of $24 million for the year. This improvement in Gap Net Loss in 2019 over 2018, particularly in the second half of the year, driven by our growing revenues and operating leverage, gives us comfort to guiding to GAAP Net Income on a full-year basis for the first time in company history. For the full year 2020, we expect GAAP net income of between $20 million and $80 million, depending on the contribution from FALROC. In our press release, we also noted that our guidance does not reflect a potential tax benefit that we may recognize in 2020. I will elaborate on that in a minute.

A year Oh.

And but there are many other offsets and values. Iraq's you know pieces of it is safe they need to go who get intravenous infusions or.

The equipment that supply then you need for that piece is based on our on data I know they still have significant beating MP those visits to the Miss you rooms need for surgery. She it it's been it's humid and I think in some papers that wherever we can be probably said the cost of treating a being easily the U.S.

50000 doors for being able to those going centers into the pictures and these are the metrics that appears no about it will take into account in negotiating a price we use up we that sorry, John you go, particularly for you than then talk about the what kinda people pieces wants to whatever thanks, JJ I think you've stated it for the for your day then.

Brian R. Mueller: During non-GAAP income, we delivered $167 million for the full year 2019, and $46 million in the fourth quarter of 2019, driven by strong top-line results across the commercial portfolio. Non-GAAP income for the full year 2019 was over 80% higher than non-GAAP income for the full year 2018, setting us up for further non-GAAP profitability growth in 2020. For the full year 2020, we anticipate non-GAAP income of between $260 million and $310 million, the midpoint of which is growth of more than $100 million and over 70% increase over 2019. This anticipated growth in non-GAAP income is substantial, with the midpoint of our 2020 guidance being three times our GAAP net income from two years ago in 2020. Moving to operating expenses, both R&D and SG&A expenses in the fourth quarter of 2019, roughly tracked recent trends and within our 2019 guidance ranges.

Right, maybe in terms of kind of early adopters.

We've noted this kind of often mechanism, which has a really really helpful way of connecting early with patients and caregivers that want to receive more information and ER and as Jay said well have an opportunity we hope.

Right after launch to help facilitate for example in the five several positivity testing, which would be one.

Dimension of eligibility criteria. So they are.

Our expectation of bow rocket launch is that a minority of hemophilia patients a wouldn't be eligible for treatment with with bell rocks based on dimensions or variables, such as age whether or not there on adult a degree of severity.

Brian R. Mueller: R&D expenses were flat year-over-year at $173 million, and for the full year 2019, they were $715 million. In the fourth quarter, R&D expenses reflected continued enrollment of additional patients in the Bell Rock Global Phase III Generate One Study. Manufacturing CMN-307, our PK Eugene therapy product, ahead of clinical trials and the zero to five-year-old study with basorotide for a condom. For the full year 2020, we expect R&D expenses of between $600,000 and $750,000. $725,000,000, representing steady-state R&D spending and balancing the completion of the Bellrox and Vasoratide large-scale Phase III studies with the start of the BMN-307 PK Eugene Therapy Clinical Program, preclinical studies with BMN-331 for HAE, and the completion of the Vasoratide Phase II study in 0 to 5 years. SG&A expenses for the quarter and full year 2019 were $188, And we're higher than 2018, reflecting the continued expansion of our sales and marketing capabilities for the launch of Palantik in Europe and ongoing preparations for Valrox and Visorotide approval.

Hemophilia a.

And and others.

So it's not exactly I wouldn't want to set the expectation that all of those patients are going to be jumping in the first month, a and b treated.

In terms of of identifying early patients the target launch you won't be surprised to hear that we've been conducting market research to identify both.

With patients that are identifying as early adopters and what their profiles look like and also physicians that are eager to treat than what they do you is an ideal early candidate for treatment and because we're operating in a highly competitive environment I probably wouldn't have anything.

Anymore, so to say on that subject.

For for an hour, except to say that were obviously doing doing work.

Okay. Thank you.

Your next question comes from the line of Geoff Meacham from Bank of America. Please go ahead.

Hey, guys. It that's been on for Jeff. Thanks for taking my questions I'm, just a couple of quick ones on about Iraq, and then one on guidance.

Brian R. Mueller: For the full year 2020, we expect SG&A expenses of between $780 million and $830 million in preparation for the global launch of Bell Rocks and ongoing commercialization of Pound Zeke in Europe. In terms of cash and cash equivalents, and investments, as of December 31, 2019, we had $1.17 billion, as compared to $1.32 billion on December 31, 2018.

The first one on the outcome decision or is this more of the up they just not having sketch one yet or or that they actually slightly kind of expressed that they they don't think it'll be necessary and then.

Beyond the companion diagnostic any other plans to help make diagnosis and treatment estimate as possible and sorry, one last one on fitness in guidance. It looks like the midpoint is implying but at a slowdown in growth than what we've seen over the past couple of years.

Brian R. Mueller: Our revenue growth and improvement in profitability is also translating to our operating cash flow, as our cash and investments have increased at the end of 2019 for the second straight quarter. Now, back to the potential tax transaction that I mentioned earlier. As noted in our press release, full year 2020 gap net income guidance of $20 to $80 million does not reflect the potential impact associated with intra-entity and tangible asset transfers between Biomarin entities that may occur in the second half of 2020. If these transactions occur, we estimate that the tax effects could be a one-time non-cash income tax benefit of greater than $500 million. You may have seen similar tax gains recognized by some of our peers in the fourth quarter of 2019.

Could you help us understand the dynamics going into the guidance there. Thanks.

Uh huh.

I'm not necessary not scheduled later or the reason, we say not necessary is because what they read to US is at this time, we don't believe that an outcome will be necessary, that's pretty definitive for them and all discussions that we've had with them they've never signal interested in AD com and there really are any because weve talked about before.

And our pre deal a meeting where they had a lot of opportunity to ask questions about the clinical efficacy, which would be typically the place that an AD com would come in they said, we don't have any issues to discuss with you on the clinical efficacy because we had agreed on the efficacy criteria before a study was completed and reported on in you've met all those criteria. So we haven't.

Brian R. Mueller: And we wanted to make sure you were both aware of the potential transaction and the financial reporting, which, again, is a non-cash, gap income tax benefit with no anticipated impact on our operations or cash flows and finances. In closing, 2020 is the year that we expect Biomarin to become GAP profitable, based on the expectation that total revenues will be $2 billion roughly for the year. Over the next 18 months, we also expect to accelerate the next phase of higher revenue and profitability growth through the potential approval and launches of Bellrocks and Visora Tech. Thank you for your support, and we will now open up the call to your questions.

Nothing new asking Advisory committee since you jumped over our high bar.

And as far as identifying patients the companion diagnostic is a unique in the sense that so it ideas such patients who are 85 positive now maybe later well be able to demonstrate how to treat 85 positive patients within the first instance, we think preexisting immunity to the capsid could.

Unknown Executive: Ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash. Thank you. Our first question comes from the line of Phil Nadeau from Counting Company. Please go ahead. Good afternoon.

In form a clinical outcome. So that's why we're watching companion diagnostic as far as other diagnostics identify potentially eligible patients, it's really not necessary because hemophilia a it's such a severe condition and the easy way to tell if you have severe hemophilia hey, it's a measure your blood clotting factor in your plasma.

Unknown Executive: Thanks for taking my questions and congrats on the progress. Just a two-part question on Valrox. First, we've heard from some physicians that there is a pool of early adopters out there who want to try gene therapy close to the time of the launch, but it's hard to quantify how many of those patients are out there. Do you have any data, either from your own market research or your clinical studies, as to how big that population could be? And then the second part of the question is that Valrox isn't called out in your 2020 Revenue Guidance. Does your guidance include any contribution from it? Thanks.

Uhhuh team very routine lab tests done Diagnostically else, that's all of our adult patients already knows they have severe you know tell you. This is not a this is not one of these diagnoses that sneaks up on you or requires any kind of specialisation to make a severe hemophilia a is one of the devastating medical conditions there are.

I mean it didn't that is yes. This is Brian has been thanks for the question regarding your it wasn't guys question, you're right to the mid mid point in the range. It represents about 7.5% growth and there was in revenues.

JJ Bien-Aime: I'll start. Hi PLJJ.

We view that it's still pretty strong this branded the seventh year of launch so it isn't mature product, but with that being said and I can let Jeff colored and with any details we are still finding patients around the world. So it's still growing good luck.

JJ Bien-Aime: So in terms of early adopters, I mean, there is definitely very significant interest, in charge. I mean, maybe the best way to Transcribed by https://otter.ai. Patients can opt-in to receive information on Virox. So they can provide us with some personal information to opt-in to receive information on Virox. And as of a couple of days ago, I think we already had 400 patients in the U.S. alone that had shown interest in receiving information on Varrox. I presume these patients are, I mean, it's unlikely that all of them will eventually want to move forward, but I think a large number of them will.

Unknown Executive: you know.

Yes, Thanks, Brian maybe maybe just a little bit of color for from from the kind of sales trenches here.

So the dynamics on the women's them is we're essentially in market now in all of the.

All of the primary and secondary and most of the tertiary markets, we're going to get in news, so opening up new markets with a substantial pools of basin, probably not the source of growth going forward, we continue to identify patients and get them onto therapy at a pretty good paces Brian.

JJ Bien-Aime: All of them, it's unlikely that all of them will be eligible for therapy, but they're definitely interested in it. And also, there's some marketing research that we have communicated in the past that shows that investigators and patients are very interested in the drug. Second question, including the guidance, please include the guidance in terms of the top line and the bottom line.

As noted I'm. So that's kind of a built in growth driver. Unlike with all of our enzymes and the patients that get started early on treatment. They tend to perform really well on treatment and stay compliant and durable as patients overtime.

We are at that point on the lifecycle, where we're getting some you know some price renegotiations in certain markets and so that's another one of the one of the little headwinds, but our expectation is that them as and we'll continue to grow a in 2020 and into.

JJ Bien-Aime: The issue with Valrox this year in terms of, well, we don't want to give individual Valrox guidance this year. Actually, we rarely do it when we're in the launch year for any product because it's highly dependent upon the timing of the approval. The PDUFA date is late August, but you never know. It could happen, and if it happens in late August, then it might be much easier to generate some significant revenues than if it happens in October or November. And this is a bit, as of today, a bit beyond our control. Same for Europe. And, you know, there's some paperwork just in the U.S. to get patients started on therapy. We are the first. And then, remember, we're going to need to get the patients to do the 85 antibody test. Actually, some of them, we're going to line them up to do it, you know, as soon as possible after launch. So all those things make it a little difficult to give you tight FADROX-only guidance for this year, but we'll do it for next year.

The end of the future as well.

Your next question comes from the line that's Martin Oscar from Credit Suisse. Your line is open.

Hi, everyone. This is mark on for Marty. Thanks for taking my question one for Ballard, It's fun box again, so I JJ I know you had previously mentioned that 300 patients had one to be in the valley rock phase three trial.

But unfortunately the trial is enrolling about 130 patients. So I was hoping to better understand the 300 number was this based on reported interest that docs communicated to you or was it based on patients actually filling out a preliminary paperwork to join the trial.

And then secondly, [laughter] sorry signed informed consent. This is real sorry.

And then in addition, I guess how much of this excess demand was from patients in the U.S. versus Europe or rest of world. Thank you.

Global.

I wouldn't be able to break it up where you're sitting here.

But theres no.

From the trial that we put in the field, there's no evidence of geographic preference in.

Unknown Executive: Well stated, JJ. Thank you for adding on that.

Unknown Executive: Okay, next question.

Terms of update I are our strategy on site selection.

We knew Jeff and I haven't talked of those for a lot of years and we knew that it's novelist gene therapy is gonna be we're gonna have to cultivate centers of excellence for dose administration for monitoring of LTX four steroid management and so we wanted to create a condray of physicians, who have a lot of experience.

Unknown Executive: Your next question comes from the line of Salveen Richter from Goldman Sachs. Your line is open. Thanks for taking the questions. This is Andrea on behalf of Salveen. Maybe one question for Jeff. Can you please provide additional color on the registry that's been formed to promote your patient outreach and help us understand how eligible patients are being identified to potentially come on to Bell Rocks upon its launch later this year? Thank you.

Jeffrey Robert Ajer: So JJ mentioned an opt-in mechanism, so this is not a formal registry per se; these are promotional, non-branded promotional efforts that we conduct relative to gene therapy education in general to introduce Biomarin to the community, and there is a mechanism for patients to opt in for further contact from Biomarin and other information as it becomes available. So that's really an unofficial mechanism, and we don't really have anything, Hank, to note at this point about expectations for a more formal registry.

And we also wanted to do that on a global basis, because the condition as itself global in the commercial opportunity is global so we didnt overpopulate in any particular leaky region and I think therefore, the representation there were getting back into say really as a global representation, that's not heavily informed by a particular market or its particular.

Certainties.

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

My apologies. Your next question will now come from the line as Matthew Harrison from Morgan Stanley. Your line is open.

Hi, everybody on D. she's cost us on for my view I have two questions. My sense is how should we think about potential talent do stupid drugs that anything you're seeing the fourth question caught that'll do indeed Wendy.

Then potentially illustrates challenges.

I mean, the main challenges the timing of the approval.

Henry J. Fuchs: But other than that, we'll do a post-approval registry if that's required from a regulatory perspective, although obviously, documenting long-term outcomes for patients treated with Valrox is going to be a prime interest in the medical community over time.

And not the best particularly a challenge is not that uncertain do the babies admitted variable.

The timing of the approval, maybe just a little bit of color on that so so revenues are going to be sensitive to timing of approval because the approval sets in motion. These other things that need to be done before a patient can be a pre the and.

Unknown Executive: https://www.kenhub.com Generate your first revenue.

Revenue recognized for example, we're going to have to have label product release and in a warehouse.

Unknown Executive: I got it. Thanks so much.

Unknown Executive: Your next question comes from the line of Corey Kasimov from J.P. Morgan. Please go ahead. Hey guys, thanks for taking my questions. I've got two as well.

Ready to ship and that could take a short period of time, we're gonna have to get reimbursement approvals for patients that want to start therapy.

Unknown Executive: I'm just curious what the gating factors would be to submitting the...

Patient to want to start therapy, we're gonna have to do a ciro positivity says that could take a couple of weeks from you know from start to finish. So there's a number of mechanical things going on that will take a little bit of the time and that.

That tied with the timing of an approval or make the revenues in Q4 kind of us.

A sensitive or challenging thing to forecast.

Unknown Executive: [inaudible]

Your next question comes from.

Henry J. Fuchs: Hi Corey, I'll start with the first one on dating type groups and the sort of type group.

Yeah, we're more commentary.

The timing of approval thing, it's coming that we've got now I just want make sure that people are not hearing that we have concerns about the approval a bit about you know when when pelon seek was submitted the F. you told US expect a major amendment. So we were communicating that the PDUFA date was likely to be expected to be longer we're not.

Unknown Executive: [inaudible] I'm here.

Unknown Executive: So, Gaining Factors of Sewer Tide, including Consideration of CMC. So, as we've said before, and it was nicely demonstrated by the 2018 Advisory Committee that the FDA held, there really are four principal components to the sewer tide development program. Randomized, double-blind, placebo-controlled, pivotal trial, p-value of 10 to the minus 13, check, check, check. A 205 study, long-term data treating patients with sewer tide for four and a half years, demonstrating growth velocity that is sustainably increased over pretreatment baseline levels, in spite of declining growth velocity in untreated patients. A contemporaneous natural history study that we showed you four and a half years of comparison at R&D Day, demonstrating that compared to patients who were not treated with the sewer tide, age and gender-matched patients gained at least nine centimeters more while being treated with sewer tide than they would have gained if they were not treated.

Can being that here, we have a side we have a PDUFA date of August 20 person. My team is working towards an August 21st U.S.

Action date, and we're reasonably confident that that's what it's going to I think the point that out so end of commercial team in U.S. and you up it is.

Is getting ready for a earlier.

On August flush early August loss.

And your next question comes from line of night and sell from Citi. Your line is open.

Great. Thanks for taking my question and congratulation to probably that's.

Maybe just a couple of from my side.

How should we expect you don't satellite TV in concert in the neighborhood do you think though I think I just mentioned city, it's what the fact that you commissions.

Henry J. Fuchs: And an ongoing study in patients under five. So, we're check, check, check. As you say, the next gating step is to have the meeting. As you may know from the Advisory Committee, there were some questions about the length of the placebo-controlled study. We believe we have strong arguments to make about why this package checks all the boxes. And, Robert, do you want to comment on any CMC issues we need to address between now and the submission?

And the next one is basically do you have any plans to me that drops are available in younger patients like John can you give me a little wise. Thank you.

I'm, sorry, I didn't hear the second question, sorry, somewhat I got that despite the second what you if he could.

The second part just I guess, so do you have any plans to make that lots available saw agenda advised slightly can you Uh huh.

Robert Maffie: Yeah, so thank you for the question, Corey. Certainly, we have been tracking to the clinical development timeline, and in fact, we have completed the process.

Okay. Thank you okay.

So.

[music].

So steroids.

Robert Maffie: 2019 collected the data from those campaigns.

You're talking about the label is pretty for mature, but what I can tell you is we've got to experiences with steroids that are been now well described the official to stay with prophylactic steroids in a total of Oh seven patients treated the high dose and on demand steroid use in the.

Robert Maffie: are well into the process of writing up the documentation for the BLA and are tracking along with Hank and his team to a filing date later this year and are All systems go in terms of the CMC activities, although currently anticipated from a regulatory review perspective.

Interim analysis set that's coming to the FDA Upper review for approval. So we have some of each and or if it's not in the label.

Unknown Executive: I have met with the agency several times during the program to outline our CMC program.

We hope that medical information can be provided for prescribers I think what you're going to find out there are first of all it's going to take a really long time to establish yes. There is such a thing is a better steroid regiment is the thing that we obviously care about is duration of effect and now that were out past three years, it's going to take longer than.

Unknown Executive: I need a question about two years from now. Do you want to talk about that, Jeff?

Jeffrey Robert Ajer: So, great point, great question, Corey. For commercial audiences, including payers, in general, I would characterize the sentiment of durability looking something like this, an expectation of continued durability based on the data demonstrated so far and based on the kind of biological mechanism of action here. With a healthy respect for the risk of loss of durability at some point in the future. And as I mentioned in my remarks, I think that translates into a desire to try to get to the next level. , and Dan McCarty.

Three years to establish durability and comparisons of one regimen to another regimens, let's go take a long time before optimal steroid regimen is actually known therefore in the meantime, giving physicians a choice I think there's a very prudent options for us and we have some of each we have some prophylactic steroid.

And you said, we ask them on and advanced your ideas.

So we think we're well positioned with our steroid experience and as far as our plans for pediatric investigation.

The process. This is that we've agreed with the pediatric committee of the CHF of of the European Medicines Agency that we'll get to a action decision before a defining the next steps of our pediatric development program. So we're obviously very interested in getting younger and younger patients.

JJ Bien-Aime: We are looking at ways to manage that risk, which is something that we can potentially do with outcomes-based agreements. And I might characterize that as a very different sentiment than not believing in durability until we see that data reported. Of course, having four-year data mid-this year will be a very helpful data point, and we look forward to having that.

Obviously, you also know there's a little bit of headwind around gene dilution that what age.

Can you actually starts only on Dol rocks and count on reliable durability. So we're still doing some preclinical work that we want to finish up have follow up conversations after approval lift health authorities, and then delineate more concretely, our our plan for children.

JJ Bien-Aime: So it's not, you know, Jeff, people, Jeff and myself, actually, we've met with a lot of payers already. There is no, never heard a payer say, well, it works at 3, but let's say we don't have anything at 4. No, we don't, there is no threshold, that's not the way they function, of minimum efficacy that they need to have to pay for the product. What they're really looking at very closely is factory usage. And as we have, you know, as I think Hank mentioned, with the most recent New England Journal of Medicine publication, we basically almost eliminated factory usage three years after treatment, and we're looking forward to showing some bleeding control at the four-year update.

Your next question comes from the line of Kennen Mackay from RBC capital markets. Your line is open I.

Hi, Thank you for scrutiny and first off congrats to the whole team on the after you accept them took about rocks B. I am.

Hopefully a landmark approval.

Medium in relation to that the afternoon, guys came in little bit above our thinking I'm guessing that's probably due to the teams plans for the valve rocks launch, but maybe a for Jay or Brian or for Jeff maybe you could talk about somebody additions, but are behind that a 10 year old Yearoveryear growth and then a specific or just maybe talks about the commercial network.

Unknown Executive: Very helpful. Thank you, guys.

Unknown Executive: Your next question comes from the line of Chris Raymond from Piper Sandler. Please go ahead. Hey, thanks. I've got just a couple of questions, too. So I guess, guys, I know you kind of answered the question a little bit when Phil asked it, but if I can probe maybe a little deeper, just on Valrox's role in the guidance, just by my math, if you add up all the components and even take into account, you know, Alduras and Royal Peas, Midpoint to Midpoint, so I'm not sure if you're going to answer this, but that's kind of the implicit guidance.

As you are building out for now rocks medium as offensive, how many NFL greenfell's reps or are gonna be behind this hematology salesforce. Thanks, so much.

So I'm, so sorry, Brian said it starts on the financial than then.

Jeff will come in some there.

Commercial preparation, yes. They said is Brian so regarding the estimate guidance again 782 830 million third full year 2020, Oh, we are keeping <unk> flat as a percentage of sales consistent with 29 team, which we thought was a good good out.

Given we are funding is starting to fund three potential launches are still launching pellet easy in Europe are preparing for robots to Bell rocks launched globally and then early market preparations for the store type as well so although it is growing year over here a lot going out and of course we're.

JJ Bien-Aime: Great. It's in the guidance, and obviously, if we have it, if we have some fireworks over there, it would be easier to meet the guidance than if we don't.

Unknown Executive: Got it. Okay, so that's fine.

JJ Bien-Aime: And then, um, maybe just a broader question on pricing, J.J., specifically. So I think we all appreciate the cost avoidance, I'm sure payers as well, and not just in Factor, but other stuff that it offers. Um, just kind of talk a little bit about this being a relatively politically charged time with respect to drug prices. I think you've already attracted the attention of at least one presidential candidate on this. Just, you know, talk to JJ a little bit about how this is factoring into your pricing calculus, if at all. Thanks.

Not realizing all the sales of those products yet so over time, you know well, we'll expect that seen as a percentage of sales to decrease in our margins will improve but it's just hard and these launch years.

Okay commercial yeah. So what that is the backdrop the commercial preparations for.

Launch readiness for a bow rocks are well underway.

We've been building out.

The framework of commercial team starting over the last couple of years in both the United States and Europe, including with some really great work, but has been done early on and will continue through bonds from our medical Affairs organization.

JJ Bien-Aime: [inaudible] Of course, I mean, like, the political factors, of course, you know, will enter into our final decision. [inaudible] So we have a little time before deciding; we'll see where we stand when we have to price the drug, you know, sometime this summer or end of the summer. Uh, but I think already... The cost of this story is a pretty significant story for the payers.

Inside of Hanks R&D organization.

And in terms of the build out of the team. We're we're 90 plus percent.

Put together right now for the U.S. launch.

The European lots were handling a little bit different but because of the sequencing of markets and then necessity to go through formal price on reimbursement process sees in Europe, which can take you know Pat.

Plus or minus a year so the layering of the country teams and in Europe. It we're starting out right now with a with brand marketing teams and market access teams in Europe, as well as I myself and medical affairs we.

JJ Bien-Aime: The market that we are entering into and the cost of treating hemophilia in general. Also, ICER is doing an analysis, which should be available sometime this summer. Which would be another variable as to what we can do here. And I think, of course, the headlines are the headlines, but at the same time, we'll see how we communicate our price. We will try to highlight, you know, the price per year of documented efficacy, which whatever price we decide we're going to tell you is going to be much lower than many other therapies that are approved today. So that's definitely a new variable, but also, I just want to say

Have sales managers in place and the major European market will build out the actual sales teams.

A little bit slower as we get closer to reimbursement approvals, there and I'm going to understand a keen in that as we're operating in a in a highly competitive environment here, probably wouldn't want to comment specifically on on the size of our teams accepted.

No that in the hemophilia world based largely on the concentration of care in the United States in Europe in hemophilia treatment centers.

JJ Bien-Aime: So we don't sell a service. So we're not going to sell a piece of service, and what is the price? Remember, we're going to sell vials at the end of the day.

JJ Bien-Aime: The product is going to be dosed based on weight, so the price is going to be variable from patient to patient, depending on their weight, for one. And also, there is something related to the fact that a lot, or probably the majority of the patients, at least in the U.S., will be treated in 340B hospitals, uh, whereby there will be a mandatory discount that will be applied. The General Managerial Discount is 23%, but FACA replaced it, and actually recently, Himdibra got some kind of exemption, and it's actually only 17% for Himm So between the fact that we're certainly going to need a different number of...

We don't need a huge commercial team and that is not what weve constructed. It is certainly adequately sized to address the the the market and where patients are treated in both the United States and as we go forward in Europe.

But it may well be that'd be a didier salesforce different from our you know.

Unless it was starting to your salesforce to use salesforce.

And nine just on both of them.

Is it going experiencing in hemophilia market a steady.

Products that would be there are currently on the market.

Yeah.

Your next question comes from line of policies from Stifel. Your line is open.

Hi, Thanks for taking the question guys as Nate on for Paul.

Maybe just one of the valley rocks filing is they have taken a c. the entire data set of patients who have received valtrex or will it would just be that interim cohort.

JJ Bien-Aime: Discounts, we'll provide a list, and you've shown that you are very good at math, so I'm sure you'll figure it out.

Unknown Executive: That's cool, thanks so much. And your next question comes from the line of Robyn Karnauskas from SunTrust Robinson. Your line is open. Hi guys, thanks for taking my question. I guess I have another Valrox question, of course. So when you're thinking, I guess two quick ones, just to be clear.

We have talked about a data cut off with them.

I shouldn't say dated caught up as the data that you've seen so it will include safety data on a few more patients that have been dose asked the interim analysis dose cohort.

JJ Bien-Aime: So the four-year data, if you continue to show a reduction in bleeds, will that affect the price point? Has the price point roughly been decided already, or are there any more moving parts? And then the second question: you noted there are 400 people you've identified so far that really want it right out of the gate. What are you identifying in your market research that points to what people want to see or what other patients want to see before getting the gene therapy? What trends should we be looking for besides people who just want to get it right out of the gate?

But for the most part the applications benefit risk.

Based on the 22 patients are part of the interim analysis whistle efficacy data 26 weeks. The protocol based interim efficacy analysis would pull down to 26 weeks.

And the three year data.

That was updated from the phase one two study and just a little bit of safety data from a few extra patients that were just as part of the full Threea one study.

Got it that's helpful. And then one more I think I might've missed this inquiries question, but can you talk about how you might incorporate the zero to five year old data for the Facilitized falling I think you'd mentioned that the conversation to regulators my focus on the scope.

Unknown Executive: Thanks.

Henry J. Fuchs: I'll start with the first question and then Jeff will answer the second one and maybe also part of it. So, we have already documented three years of efficacy. Of course, four years will be additional data that will enter into the picture, mainly to actually calculate the cost offset more than anything else or document the cost offset. It's just going to be another variable. As I said, it's a variable in the continuum of the reimbursement discussion. We have to pass a certain hurdle. But it will be there. Also, the cost offset is just calculated based on... The cost of Imdibra, and recombinant factory prophylactic in the U.S. is about the same price right now, but at WAC, it's about $750,000 a year, http://www.kenhub.com visit to the emergency room, need for surgery. It's been estimated, I think, in some papers that were recently published that the cost of treating a bleeding episode in the US is $50,000.

The application. So I was just wondering if you can explicitly if you're planning on explicitly including those data.

Yeah, well actually we have had the pre NDA submission means the M. A pre submission is for the rhetoric co raptor to get really look more concrete about this that are thinking is that.

In fact, our thinking was heavily informed by the FDA Advisory Committee during open public session basically the Advisory Committee said because of safety considerations and children under five years of age.

It will be more fell to get the drugs through registration, enabling work in children over five years of age before you have data under five years of age and therefore, FCTA you shouldn't hold up the application waiting for data on children under five years of age, but you should also expect sponsors to have some measure of safety.

Data on children under five years of age before you take in the application and that's exactly where we are we will we have an ongoing study is enrolling we have safety data on a number of children, who are under five years of age we won't we don't intend to hold up the application waiting for that trial that will be another probably too.

Two years before those data are available for an application and the feedback from the community is get this to us sooner than later, we don't want to wait for the zero to five year old data safety data is that enough at this point.

JJ Bien-Aime: So all this enters into the picture, and these are... These are metrics that the payers know about and will take into account in negotiating a price with you. So with that, sorry. Jeff, you want to give your perspective on the four years and then talk about the kind of people patients want to see, whatever. Thanks, JJ. I think you've stated it for the, you know,

[noise]. Thank you ladies and gentlemen, we have now reached our time limit for today I would now like to turn the conference back over to our chairman and CEO JJ be enemy. Please go ahead.

Jeffrey Robert Ajer: Maybe in terms of early adopters, we've noted this kind of opt-in mechanism, which is a really, really helpful way of connecting early with patients and caregivers that want to receive more information. And as JJ said, we'll have an opportunity, we hope, right after launch to help facilitate, for example, AAV-5 seropositivity testing.

[noise]. Thank you so in confusion or we knew we have you done update here any cubo strategy that position, so I'm going to long term subset.

We have two potential blockbuster products than bottlenecks in Brazil, we sign.

And our continued expansion of RPQ franchise with global Ponzi penetration and see huge you said you only ryzen and only gene therapy for AG evident we tied for dominant eat having to charge stature above cash reserves honing on manufacturing facilities around the world Novo commercial footprint I mean that all this position as well.

Jeffrey Robert Ajer: This would be one dimension of eligibility criteria. Our expectation of Valrox at launch is that a minority of hemophilia A patients would be eligible for treatment with Valrox based on dimensions or variables such as age, whether or not they're an adult, degree of severity of hemophilia A, and others. No, it's not exactly like that. I wouldn't want to set the expectation that all of those patients are going, Jumping in the first month and being treated. In terms of identifying early patients to target at launch, you won't be surprised to hear that we've been conducting market research with patients that are identifying as early adopters and what their profiles look like. And also physicians that are eager to treat and what they view as an ideal early candidate for treatment. And because we're operating in a highly competitive environment, I probably wouldn't have any.

Unknown Executive: [inaudible]

Or dramatic and sustainable wrong.

Stability and had a critical growth drivers for the long terms are in place that we'd be do you want to delever, he's going to be valspar stake holder. So in conclusion.

We have plans with our achievements in 2019, and where fool anticipations for what lies ahead this year and beyond so thank you for.

Youre accused support and we look forward to seeing Youre talking to you said.

Yeah.

This concludes today's conference call. Thank you for your participation you may now disconnect.

[music].

Unknown Executive: Okay, thank you. Your next question comes from the line of Jeff Meacham from Bank of America. Please go ahead. Hey guys, it's Aspyn on Progest.

Unknown Executive: Thanks for taking our questions. Just a couple quick ones on Valrox and then one on guidance. So first on the ATCOM decision, is this more of the FDA just not having scheduled one yet, or have they explicitly kind of expressed that they don't think it will be necessary? And then, beyond the companion diagnostic, any other plans to help make diagnosis and treatment as smooth as possible? And sorry, one last one. On VIMS and guidance, it looks like the midpoint is implying a bit of a slowdown in growth than we've seen over the past couple years. Could you help us understand the dynamics going into the guidance there? Thanks.

Henry J. Fuchs: Adcom, not necessary, not scheduled later. The reason we say not necessary is because what they wrote to us is that at this time, they don't believe that an adcom would be necessary. That's pretty definitive for them, and in all of the discussions that we've had with them, they've never signaled an interest in an adcom. And there really aren't any, as we've talked about before, at our pre-VLA meeting where they had a lot of opportunity to ask questions about clinical efficacy, which would typically be the place that an adcom would come in. They said, we don't have any issues to discuss with you about clinical efficacy because we had agreed on the efficacy criteria before the study was completed and reported on, and you've met So we have nothing to ask an advisory committee since you jumped over our high bar.

Henry J. Fuchs: And as far as identifying patients, the companion diagnostic is unique in the sense that it identifies patients who are AAV5 positive. Now, maybe later we'll be able to demonstrate how to treat AAV5 positive patients, but in the first instance, we think pre-existing immunity to the capsid could inform clinical outcomes. So that's why we're launching the companion diagnostic. As far as other diagnostics to identify potentially eligible patients, it's really not necessary because hemophilia A is such a severe condition, and the easy way to tell if you have severe hemophilia A is to measure your blood clotting factor in your plasma, routine, very routine lab tests done diagnostically all the time. So all of our adult patients already know that they have severe hemophilia. This is not one of these diagnoses that sneaks up on you or requires any kind of specialization to make. Severe hemophilia A is one of those devastating medical conditions there is.

Brian R. Mueller: This is Brian Aspin. Thanks for the question. Regarding your VIMISIM guidance question, you're right. So the midpoint of the range represents about 7.5% growth in VIMISIM revenue. We view that as still pretty strong. This brand is in its seventh year of launch, so it is a mature product. But with that being said, and I can let Jeff color it in with any details, we are still finding patients around the world. And so it is still growing.

Jeffrey Robert Ajer: Yeah, thanks, Brian. Maybe just a little bit of color for you from the kind of sales trenches here. So the dynamics on VimVim is we're essentially in the market now, and all of the, you know, all of the primary and secondary, and most of the tertiary markets we're going to get into. So opening up new markets with substantial pools of patients is probably not the source of growth going forward. We continue to identify patients and get them on to therapy at a pretty good pace, as Brian just noted. So that's kind of a built-in growth driver. And like with all of our enzymes, the patients that get started early on treatment tend to perform really well on treatment and stay, you know, compliant and durable as patients over time.

Unknown Executive: That's another one.

Unknown Executive: And one of the little headwinds, but our expectation is that Vimisin will continue to grow in 2020 and into the future as well.

Unknown Executive: Your next question comes from the line of Martin Oster from Credit Suisse. Your line is open. Hi everyone, this is Mark Gan from MARDI.

Unknown Executive: Thanks for taking my question. One for Valrox. It's on Valrox again. So JJ, I know you had previously mentioned that 300 patients wanted to be in the Valrox Phase 3 trial, but unfortunately, the trial was enrolling about 130 patients. So I was hoping to better understand this 300 number. Was this based on reported interest that doctors communicated to you, or was it based on patients actually filling out preliminary paperwork to join the trial?

Unknown Executive: Unknown Speaker

Unknown Executive: This is real.

Unknown Executive: Sorry. Okay.

Unknown Executive: Signing off. And then, I guess, how much of this excess demand was from patients in the U.S. versus Europe or the rest of the world? Thank you. Blah, blah, blah.

Unknown Executive: What? What? What?

Unknown Executive: I wouldn't be able to break it up for you sitting here, but from the trial that we put in the field, there's no evidence of geographic preference in terms of updating. Our strategy for site selection, you know, Jeff and I have been talking about this for a lot of years, and we knew that as novel as gene therapy was going to be, we're going to have to cultivate centers of excellence for dose administration, for monitoring of ALTs, for steroid management. And so we wanted to create a cadre of physicians who have a lot of experience, and we also wanted to do that on a global basis because the So we didn't overpopulate in any particularly key region. And I think, therefore, the representation that we're getting back from the study really is a global representation. It is not heavily informed by a particular market or its particular uncertainties.

Unknown Executive: Your next question comes from the line of Joseph Schwartz from SVB Lyric. Your line is open. My apologies, your next question will now come from the line of Matthew Harrison from Morgan Stanley. Your line is open. Hi everyone, this is Costas Son on Matthew's behalf. I have two questions. The first is, how should we think about potential challenges to Valrock's revenues in the fourth quarter of 2020?

Unknown Executive: Potential what, sorry? Challenges The main challenge is the timing of the approach.

Unknown Executive: And not that that's particularly a challenge; it's just an uncertainty that's there. It's a major variable.

Unknown Executive: Timing of the approval. Maybe just a little bit of color on that.

Jeffrey Robert Ajer: So revenues are going to be sensitive to the timing of approval because the approval sets in motion these other things that need to be done before a patient can be treated and revenue recognized. For example, we're going to have to have labeled product released into a warehouse ready to ship, and that could take a short period of time. We're going to have to get reimbursement approvals for patients that want to start therapy. Patients that want to start therapy will have to do a seropositivity test. That could take a couple of weeks from, you know, from start to finish. So there's a number of mechanical things going on that will take a little bit of time, and that, tied with the timing of an approval, makes the revenues in Q4 kind of a Sensitive or Challenging Thing to Forecast.

Unknown Executive: And your next question comes from...

Unknown Executive: I would say that we have one more comment here.

Henry J. Fuchs: The time of approval thing is coming in. We've got now, and I just want to make sure that people are not hearing that we have concerns about the approval of it. You know, when Palin-Zeek was submitted, the FDA told us to expect a major amendment. So we were communicating that the PDUFA date was likely to be longer. We're not conveying that here. We have a PDUFA date of August 21st, and my team is working towards an August 21st U.S. action date. And we're reasonably confident that that's what's going to happen. That's a good point.

Unknown Executive: is getting ready for an earlier launch order.

Unknown Executive: And your next question comes from the line of Mohit Bansal from Citi. Your line is open.

Unknown Executive: Great, thanks for taking my question and congrats on all the progress. Maybe a couple of questions from my side. How should we expect the use of steroids to be included in the label? Do you think FDA guidance would be necessary here for practicing physicians? And the next one is basically, do you have any plans to make Valrox available to younger patients like 12 to 18 years old? Why? Thank you.

Henry J. Fuchs: I didn't hear

Unknown Executive: https://www.youtube.com.au

Unknown Executive: Do you want to repeat your second question?

Unknown Executive: Do you have any plans to make WellDocs available for younger boys, 12 to 18 year olds?

Henry J. Fuchs: So on steroids, very early to talk about the label, it's pretty premature, but what I can tell you is we've got two experiences with steroids that have now been well described, the phase 1-2 study with prophylactic steroids in a total of seven patients treated at high doses, and on-demand steroid use in the interim analysis set that's coming to the FDA for review for approval. So we have some of each, and if it's not in the label, we hope that medical information can be provided for prescribers.

Henry J. Fuchs: I think what you're going to find out there is, first of all, it's going to take a really long time to establish if there is such a thing as a better steroid regimen, because the thing that we obviously care about is duration of effect, and now that we're past three years, it's going to take longer than three years to establish durability and comparisons of one regimen to another. So it's going to take a long time before an optimal steroid regimen is actually known. Therefore, in the meantime, giving physicians a choice is, I think, a very prudent option for us, and we have some of each. We have some prophylactic steroid use, and we have some on-demand steroid use. So we think we're well-positioned with our steroid experience.

Henry J. Fuchs: And as far as our plans for pediatric investigation, the process is that we've agreed with the pediatric committee of the CHM of the European Medicines Agency that we'll get to an action decision before defining the next steps of our pediatric development program. So we're obviously very interested in getting this into younger and younger patients. Obviously, you also know there's a little bit of a headwind around gene dilution at what age. But can you actually start somebody on Valrox and count on reliable durability? So we're still doing some preclinical work that we want to finish up, have follow-up conversations after approval with health authorities, and then delineate more concretely our plan for children.

Henry J. Fuchs: Your next question comes from the line of Kenan McKay from RBC Capital Markets. Your line is open. Hi, thank you for squeezing me in.

Unknown Executive: First off, congratulations to the whole team on the FDA acceptance of the Valrox BLA and this, hopefully, landmark approval. Maybe in relation to that, the SG&A guide came in a little bit above our thinking. I'm guessing that's probably due to the team's plans for the Valrox launch. But maybe for JJ or Brian or Jeff, maybe you could talk about some of the additions that are behind that annual year-over-year growth. And then specifically for Jeff, can you maybe talk about the commercial network that you're building out for Valrox and give us a sense of how many MSLs and sales reps are going to be behind this hematology sales force? Thanks so much.

Unknown Executive: Brian is going to start on the financial side, and Jeff will comment on the Commercial Preparation

Unknown Executive: Yes, this is Brian. Regarding the SG&A guidance, again, $780 to $830 million for full year 2020, we are keeping SG&A flat as a percentage of sales, consistent with 2019, which we thought was a good outcome, given we are funding, or starting to fund, three potential launches. We're still launching Palanzec in Europe, preparing for a robust Bell Rocks launch globally, and then early market preparation for Visoratide as well. So, although it is growing year over year, there is a lot going on, and, of course, we're not realizing all the sales of those products yet. So over time, we'll expect SG&A as a percentage of sales to decrease, and our margins will improve. But it's just hard in these early years.

Brian R. Mueller: Shabbat shalom.

Jeffrey Robert Ajer: Yeah, so with that as a backdrop, the commercial preparations for launch readiness for Valrox are well underway. We've been building out the framework of a commercial team over the last couple of years in both the United States and Europe, including some really great work that has been done early on and will continue through launch from our medical affairs organization inside of Hank's R&D organization. In terms of the build out of the team, we're 90 plus percent put together right now for the US launch. The European launch is a little bit different, but because of the sequencing of markets and the necessity to go through formal price and reimbursement processes in Europe, which can take, you know, [inaudible] to see you again. We don't need a huge commercial team, and that is not what we've constructed. It is certainly adequately sized to address the market and where patients are treated in both the United States and the world.

Jeffrey Robert Ajer: And by the, by both, I mean, it's going to be...

Unknown Executive: Of course, separate from us, you know, and 90% plus of them have significant experience in the hemophilia market selling products that are currently on the market.

Jeffrey Robert Ajer: Your next question comes from the line of Paul Matteis from Stiefel. Your line is open. Hey, thanks for taking the question, guys. This is Nate on behalf of Paul. Maybe just one on the Valrox filing. Is the FDA going to see the entire data set of patients who have received Valrox, or will it just be that interim cohort?

Henry J. Fuchs: We talked about a data cutoff with them. That's actually the same data cutoff as the data that you've seen. So it will include safety data on a few more patients that have been dosed past the interim analysis dose cohort. But for the most part, the benefit risk is based on the 22 patients that were part of the interim analysis dose cohort.

Henry J. Fuchs: And this is the interim analysis with full efficacy data out of 26 weeks. The protocol-based interim efficacy analysis with full data out of 26 weeks. And the three-year data that was updated from the Phase 1-2 study. And just a little bit of safety data from a few extra patients that were dosed as part of the full 301 study.

Unknown Executive: Unstudied. Got it. That's helpful. And then one more.

Henry J. Fuchs: I think I might have missed this in Corey's question, but can you talk about how you might incorporate the zero to five-year-old data for viscerotide fouling? I think you had mentioned that the conversation with the regulators might focus on the scope of the application, so I was just wondering if you can explicitly, if you're planning on explicitly including those data.

Henry J. Fuchs: Well, obviously, we have to have the pre-NDA submission meeting, the MAA pre-submission meetings with the rapporteur and the co-rapporteur to get really a little more concrete about this. But our thinking is that, and in fact, our thinking was heavily informed by the FDA's advisory committee.

Henry J. Fuchs: During the open public session, basically, the advisory committee said, because of safety considerations in children under five years of age, it will be more facile to get the drug through registration-enabling work in children over 5 years of age before you have data on children under 5 years of age. And therefore, FDA, you shouldn't hold up the application waiting for data on children under 5 years of age, but you should also expect sponsors to have some measure of safety data on children under 5 years of age before you take in the application, and that's exactly where we are. We have an ongoing study. It's enrolling.

Henry J. Fuchs: We have safety data on a number of children who are under 5 years of age. We don't intend to hold up the application waiting for that trial. That will be another probably 2 years before those data are available for an application. And the feedback from the community is get this to us sooner than later. We don't want to wait for the 0-5-year-old data. Safety data is good enough at this point.

Unknown Executive: Thank you. Ladies and gentlemen, we have now reached our time limit for today. I would now like to turn the conference back over to our Chairman and CEO, J.J. Bien-Aimé. Please go ahead.

JJ Bien-Aime: Thank you. So, in conclusion, we have developed a

JJ Bien-Aime: Here is an achievable strategy that...

JJ Bien-Aime: We have two potential blockbuster products on Valrox and Vazoritide and a continued expansion of our PQ franchise with global palliative penetration and PQ gene therapy on the horizon, along with gene therapy for HAE and Vazoritide for dominant T-inherited short stature, abundant cash reserves, wholly owned manufacturing facilities around the world, global commercial footprint, Thank you.

Unknown Executive: y'all

JJ Bien-Aime: Thank you for your continued support, and we look forward to seeing you or talking to you.

Unknown Executive: This concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you for watching!