Q4 2021 Biomarin Pharmaceutical Inc Earnings Call
Yeah.
Welcome to the Biomarin fourth quarter 2021 financial results conference call hosting the conference call today from Biomarin is Traci Mohan.
Traci Mccarty.
Vice President of Investor Relations. Please go ahead Traci.
Thank you operator, thank you all for joining us today to remind you. This presentation contains forward looking statements about the business prospects of Biomarin pharmaceutical, Inc, including expectations regarding biomarin finish performance.
Actual products potential future products to different areas of therapeutic research and development.
May differ materially depending on the progress of the Biomarin <unk> product programs actions of regulatory authority availability of capital future actions in the pharmaceutical market and developments by competitors and those factors detailed in <unk> filings.
Finally, <unk> Securities and Exchange Commission, such as 10-Q, 10-K and 8-K.
Sure.
On the call today from Biomarin management team are J, Casey enemy, Chairman and Chief Executive Officer, Jeff <unk> Executive Vice President Chief Commercial officer. Thank you President worldwide Research development break Guyer Executive Vice President Chief Technical Officer, Brian Mueller Executive Vice President and Chief Financial Officer, I will now turn the call over to.
Our chairman and CEO J J D.
Thank you Tracy and good afternoon to everyone.
Thank you for joining us on today's call.
So I'm very pleased with our performance and progress in 2021.
I'm also pleased to share our outlook for the year exports for 2022, So that's where we laid the foundation for our transition to sustainable GAAP profitability.
In 2022.
The addition of our seventh commercial product Sparks Sogou is expected to drive a meaningful step up in revenues beginning this year.
Indicated an increase in full year 2022 boxes below revenue guidance announced today.
$211 billion or 40% growth year over year represents the midpoint of our 2022 for the year.
Our guidance.
And in Australia in terms of revenues and demonstrates the return to significant.
Double digit sales growth for Biomarin.
It is important to note that I think you did a tough time course in 'twenty.
Despite the reduction.
<unk> contribution.
Exclusivity in the United States in late 2020.
This further underscores the strength of our base business.
And the opportunity that lies ahead, we lost several.
Especially considering how early we are in a global launch.
Jeff will provide more detail in a moment also I guess you don't see in our release that we generated $5 $8 million.
Two four per box, although there was a first quarter then the product goes into markets mainly in Europe .
And the vast majority of the sales were in Europe , and it does show that once you've got the right products.
European losses and pick.
Pick off pretty well.
Pretty fast.
So beyond the strength of our financial outlook.
So do we.
He said to you update from our pivotal study with one caveat.
Provided further evidence of the transformational nature of <unk>.
As a treatment for people with severe hemophilia a.
The results from our 134 subject study that we shared in January .
Illustrated doable consistent pain control.
Annualized bleeding rates could use by 85% and with 95% of participants.
Our factory protection.
Through two years.
Do these people with severe hemophilia, a and you can't really control that is superior to standard of care.
This would leave productivity and will present, a very attractive treatment option.
And based on the results observed in our phase two study.
We believe that these data will provide supportive evidence of efficacy as part of the review.
Currently underway in Europe , as well as the BLE.
To be submitted in the U S in June .
To summarize we have set the stage for transformational growth in the company and.
And the people we seek to treat.
In 2022, we expect to turn the corner to sustainable GAAP profitability wrapped up our largest opportunity today.
October .
Advanced.
Applications to Europe , or the United States.
And progress.
He is a progress.
He brought us early stage pipeline in the Israel bombed right.
Financial commercial and regulatory momentum at Biomarin.
Never been stronger and we want to thank you for your continued support.
Our foundation building journey.
Especially want to thank our bond when colleagues for their continued commitment.
So developing the essential medicines that help so many.
I will now turn the call over to Jeff to discuss the commercial business update.
Thank you J J I am pleased with the team's performance across all brands and regions during 2021 and I'm very excited about our uplift for 2022.
As noted in today's press release, 2021 box Sogou revenues were $5 $9 million and today, we increased box. So go 2022 full year guidance to between 90 and $115 million based on strong prescription demand seen so far this year, we continue to believe.
But box sogo represents our largest brands.
J J has already noted the underlying demand for our products is expected to drive double digit sales growth. This year with box saga of being an important contributor to the growth story.
On that note starting with the box yoga launch we are pleased to share that by February 15, 2022 or midway through Q1.
An estimated 210 children were being treated with commercial box sogo across 10 markets with an estimated additional 54 children in process in the United States.
The active markets, including Germany, France, the U S, Switzerland, Austria, Israel, Singapore, Argentina, Luxembourg and Chile.
In Europe , we have been fortunate to have access to the two largest markets, Germany and France. This has resulted in rapid uptake early in the European launch, which we expect will continue through 2022.
As noted in the list tobacco markets. We are also seeing uptake in smaller individual countries, which collectively will contribute to meaningful revenue uptake also this year.
We are pursuing reimbursement in other material European markets, such as Italy, and Spain, and expect that it will take time to reach price and reimbursement approvals in these markets outside of the EU, Russia and Middle East markets are also expected to come online this year.
In the U S. We have the ability to quickly respond to prescription demand following approval.
U S payers are numerous and diverse we have been successfully navigating the medical exception process to facilitate access to commercial box sogo.
We have seen the first coverage policy is being published by U S payers, the details of which are consistent with our expectation.
As expected, we're seeing prescriptions, mainly from geneticists pediatric endocrinologists, which isn't even targeted call point for box sogo.
In summary, we're very pleased with the pace of uptake during this ramp year for box sogo launching in the EMEA region ahead of the United States was the first for Biomarin and our experienced commercial teams are managing the dual launches as planned we look forward to registration in Japan, and Australia later this year.
As these markets are expected to generate a high level of demand for box sogo.
Turning now to our enzyme replacement therapy brands, Vimizim <unk> and <unk> we.
We were pleased to have achieved 8% growth year over year in 2021 for these brands in total starting with Vimizim revenues in 2021 were robust as expect.
And benefited from additional Q4 ordering to end the year at $623 million or 14% growth year over year as mentioned with <unk> 2021 year over year results were impacted by the timing of large orders from Latin America in 2020.
We remain encouraged by high compliance rates and year over year patient growth of approximately 5% and 1% for Vimizim and <unk> respectively.
We're burner at 16% revenue growth year over year and sales of $128 million represents continued growth in North America, and the EMEA regions principally.
Children on therapy increased by approximately 18% year over year.
Moving now to <unk> net product revenues grew 39% in 2021 as compared to 2020 and reached $238 million for the full year.
Sales were driven in the U S by a combination of new patient initiations and patients achieving maintenance dosing patients.
Patients on therapy increased approximately 15% in 2021 as compared to 2020.
We are seeing the majority of growth from the U S market, which continues to be impacted by reduced PKU clinics bandwidth due to the Panther.
Continuing with the PKU franchise, Kuban contributed $286 million of revenues in 2021.
<unk> incremental erosion to generics.
Revenues decreased by 38% year over year compared to full year 2020, primarily due to the U S lots of market exclusivity in October 2020.
We continue to expect a material contribution from <unk> in 2022 as noted in our full year guidance.
Lastly, with the CH MP opinion on rock Debian expected in the second quarter loss readiness activities continue to progress the team is onboard and well prepared to watch assuming regulatory approvals. Later. This year. We are encouraged that our longer term data results offer an attractive value proposition.
Treatment option for those with severe hemophilia, a and we look forward to providing you with more detailed updates at launch.
In conclusion in 2022, we anticipate increased demand for all of our commercial brands with the exception of <unk>.
<unk> products are expected to contribute significantly to revenue growth. This year. We also expect our newest brand <unk> to be a meaningful factor in this ramp year, the global watches on a strong trajectory and while it is early days, we believe the robust early prescription demand represents a foundation for continued growth include.
And in new markets through 2020 to the.
The commercial team is energized to be a global launch both with box logo.
Largest potential revenue opportunity is the date.
And we look forward to keeping you apprised of our progress over the year.
So thank you for your attention and I will now turn the call over to Hank to provide an R&D update.
Thanks, Jeff we are in the organization organization echoes your enthusiasm I appreciate all the hard work of the commercial team, making available the first and only treatment option for children with achondroplasia, following but sogo approvals in Europe , and the United States last year as well as other territories based on the targeted mechanism about sogo, which promotes into kind of a bone growth.
Growth plates are open treatment can have a meaningful and lifelong effect on children with achondroplasia for families in Europe seeking treatment and we're very pleased that health authorities prove outside broker children ages, two and up underscoring the importance of a young treatment as early as possible and provide maximum benefit.
Today, we provided a top line update from the phase II randomized double blind placebo controlled lots of the study in infants and young children up to five years of age with achondroplasia we.
We are encouraged to share the 52 weeks results trended in favor of OXXO compared to placebo on height Z score annualized growth velocity and no worsening of proportionality in the overall study population.
This is a relatively small phase III study when one considers the high variability between age cohorts.
Regarding the safety profile is generally consistent with older subjects from the phase III. That's over 301 study and currently the population.
Serious adverse events were higher in the placebo group, 18% compared to box other trigger children at 7%.
All serious adverse events, including a fatal event, a sudden infant death syndrome in the treatment group were deemed by investigators to be unrelated to treatment.
All increase in events of sleep apnea when reported in the treatment group that were mild or moderate severity and did not require treatment discontinuation of these events will be fully assessed once they are studying MRI data are available. Our next step is to engage with regulatory authorities to discuss next steps regarding efforts to expand access to box over treatment for this younger age group.
We plan to share more detailed results at a medical meeting as we receive these days to less than 24 hours ago. So please stay tuned.
Briefly on Octavian as J J said 2022 regulatory milestones are tracking to plan see HMP opinion is expected in the second quarter and Resubmission of the biologics license application is planned for this June this resubmission will be followed by an expected six month review procedure should the resubmission satisfy the food and drug administration.
And appreciating that there has been inconsistent communication this deal with this novel platform.
Based on the dramatic reductions in bleeding rates factory utilization et accurate infusion rates at year two following treatment with Octavian shared in January and again. He had earlier in February we remain confident in <unk> potential to be an important treatment option for those with severe hemophilia a.
Turning now to <unk> zero seven gene therapy for Phenylketonuria, as we announced last week. The FDA has requested data from additional new non clinical studies to assess oncogenic risk to human participants, which is expected to take several quarters, where more as a reminder, the whole dose based on safety findings from a non clinical manji LTE pharmacology.
In immuno deficient mice as we said when we announced the clinical hold what holds true today scientists striving to serve patient needs. We remain committed to understanding. These findings we are in the process of collaborating with the FDA on specific next steps and we will provide you with an update when we have meaningful information sure.
Finally, turning to the earlier stage pipeline at R&D Day last November we were very pleased to have shared a detailed overview of the many products currently under development. We have a number of candidates advancing this year, including <unk> 331 gene therapy for hereditary angioedema that trial is currently open for enrollment with BMS 351 for Duchenne muscular dystrophy.
Expect to file the IND in the first half of this year with the goal of treating the first Duchenne boys in the fourth quarter of this year. We also hope to advance studies following dose selection with Eni to five five which is a threat, which addresses the subset of chronic renal disease in the second half of the year.
We look forward to keeping you apprised of our progress across the R&D organization throughout the year. Thanks for your support and I'll now turn the call over to Brian to update on financial results for the quarter Brian .
Please refer to today's press release summarizing our financial results for full details on the fourth quarter and full year 2021.
Since Jeff touched on many of the top line results from the commercial business I will primarily focus on operating expenses bottom line results and our 2022 guidance as usual all results will be available in our upcoming Form 10-K , which we are on track to file over the next few days.
At the beginning of last year, we referred to 2021 as a quote unquote hold the line here for our financial performance.
Meaning that our goal was to navigate a handful of revenue growth headwinds with expense control and our focus on operating performance.
We are pleased to have accomplished that objective.
<unk> 2021 revenue dynamics that included a decrease in Kuban revenues of $172 million year over year total revenues were essentially flat in 2021 as compared to 2020.
And modest 2021 expense growth resulted in a full year GAAP net loss of $64 million landing.
Landing at the midpoint of our guidance and full year non-GAAP income of $243 million within the top half of our guidance.
<unk> strong operating performance in 2021 also translated into substantial cash flow for the year.
Cash and investments grew by $171 million in 2021, finishing the year with over one 5 billion.
Fueled by over $300 million of positive cash flow from operations.
Contributing to those bottom line results were operating expenses that fell in line with our expectations for the fourth quarter and full year 2021 and were mostly consistent with 2020.
R&D expenses for the fourth quarter and full year, 2021 were $161 million and $629 million, respectively. SG&A expenses for the fourth quarter and full year, 2021 were $218 million and $759 million respectively.
SG&A expenses increased in the fourth quarter of 2021 as compared to last year, mostly due to the global launch of Fox, Cisco and some year over year increases in administrative costs.
Now moving to 2020 to guidance as noted by Jay Jay The expected continued strong growth of our base business plus a significant contribution from box they'll go in its launch year. We expect total revenues in 2022 of between 2.05 billion and $2, one 5 billion, which at the midpoint represents 14% growth over 2020.
Within that revenue guidance, we observed that our base business marketed brands, except for Kuban are growing by 13% year over year at the midpoint.
And as Jeff highlighted we're pleased to improve our 2022 Bucks Sogo total revenue guidance from the preliminary guidance that we shared earlier in the year based on our observation of the October launch the first two months of 2022.
And lastly regarding revenues given the estimated timing of receiving approvals and launches in the second half of 2022, we anticipate that rock TV will be a modest contributor to 2022 records.
Moving to our expectations for expenses and bottom line in 2022, consistent with our plans to increase leverage from the operational Foundation is built in recent years, our estimated increases to SG&A and R&D expenses in 2022, alright rates significantly lower than our expected revenue growth and importantly, as we recognize the importance of <unk>.
Fueling our innovation into the future R&D expenses are increasing at a rate higher than SG&A expenses.
This measured growth in expenses is a key component to our transitional GAAP profitability objectives for 2022, where we estimate earnings GAAP net income of between $95 million and $135 million.
Noteworthy is that our GAAP profitability expectations for 2022 are expected to benefit from but are not dependent upon the after tax gain from the expected sale of our recently obtained priority review voucher announced earlier this month.
With respect to non-GAAP income, we plan to adjust out the gain on the expected sale of the PRP and is further illustration of our journey into P&L leverage in 2022, we expect non-GAAP income for the year of between $350 million and $390 million, which at the midpoint is over 50% growth as compared to 2021.
Sure.
In closing, while 2022 is expected to be a transitional year into our long term strategy. We are pleased to see our longtime goals for biomarin start to materialize, which include building an enterprise that can support both continued product approval and innovative pipeline growth while at the same time generating sustainably increasing profits and positive operating cash.
Sure.
We believe that the strength of our base business. The recent approvals and launches of <unk> and the commercial prospects of rock TV. After observing the two year phase III data represent three strong pillars of near term growth.
These are followed by the increasing number of opportunities in our early stage pipeline that have the opportunity to drive <unk> growth further into this decade. Thank.
Thank you for your attention and we'll now open the call to your questions.
Later.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press <unk>.
And please standby, while we compile the Q&A roster.
For the first question, we have thousand Richter of Goldman Sachs. Your line is open.
Good afternoon, Thanks for taking my questions.
One on Voc Sogo, how are you.
Progressing with expansion to the dedicated contract Felicia centers versus the initial targeting skeletal dysplasia geneticists and then secondly on the clinical hold that's playing out with the PKU program could you just talk about what exactly the FDA is requesting and whether there is something about PKU itself that makes it.
More of a concern or less amenable to gene therapy.
I felt I mean I'll take the first question.
Box sogo.
<unk>.
What we experienced so far which is consistent with our expectations are that.
Some of portion of minority of Achondroplasia children.
Are being seen and followed by geneticists.
Including in skeletal dysplasia clinics and this is a this is a prescriber base that we have very good relationships with that are established what we think is that and our experience has been that that gives us kind of a quick access to that group of patients based on our existing.
Relationships. What we also think is that because the majority of achondroplasia patients.
Particularly in the states are not being actively managed by that prescriber audience, we think that.
Driving to a new treatment at home with pediatric endocrinology.
Chronologist is an appropriate strategy pediatric endocrinologists being both the growth disorder specialists and also having capacity that we don't currently see in genetics clinics. So our early experience has been.
A lot of children in the United States referred in by Geneticists.
Skeletal dysplasia clinics.
Great.
And other children getting into a referral network.
And being seen by what will what is a new call point for Biomarin, but are very interested and engaged new call point and that is a relatively small number.
<unk> endocrinologists specialize in growth disorders, and are proving to be very interested in.
Treating achondroplasia and prescribing box sogo. So good news good news and good progress on both of those fronts.
And then the second part of your question Salvi.
It's a little bit hard to say exactly what the FDA is looking for and so far as we only just received their letter it appears that while we satisfy some of their concerns they appear to be looking for more direct evidence of the mechanism of the underlying cancer causation and therefore, they've asked for these additional preclinical experiments.
We'll provide updates when we have more.
More specific updates, but as to the role of <unk>.
PKU and this consideration in general I think the only thing I can say there is the agency has made no secret of commenting that they consider gene therapy approaches for conditions, which there is available therapy different from <unk>.
Condition for which there isn't available therapy and exactly how that fits into their overall decision, making is crystal clear to us at this point, let me hand, you might want to comment also on the fact that.
It would be for adults on the adult PKU.
There's less of it.
Need for treatment in some parts of the world.
Yeah I'm, putting this in a positive way I mean, I think the burden of illness is really quite substantial for children with L. Pic near yet.
For adults with sound Ketonuria, there's less compelling.
Evidence of effectiveness of the product, but all that said I think it's hard to dial in exactly how much PKU is a therapeutic indication is contributing to the agency's conservatism around the 307 findings.
Thank you.
Thank you and just for the next question, we have quite causing most of Jpmorgan. Your line is open.
Hey, good afternoon, guys. Thanks for taking the question Hank I was hoping you could provide some more details on the box that will go data in the zero to five year olds. I'm curious was this powered for statistical significance and then intended to be a registrational phase III or was it too small for that and on the safety front, it's nice to see overall.
Adverse events lower than placebo, but can you just address the sleep apnea.
Single case.
Sid to just kind of any description or or color around that would be helpful. Thank you.
Yeah. So we're obviously.
Hoping to get an amazingly great signal out of the 206 study and were very encouraged that in fact, we did see trends.
I think the.
A key lesson learned out of all this is that these different age ranges are a little bit more complicated in regard to both signal and noise and so we just got these data we need to dig into it a little further to generate some hypotheses about why we didn't get a gigantic signal of effectiveness.
And so I would say on that on that score stay tuned.
We are encouraged by the safety.
And so far is very low rates of hypotension that was clinically significant consistent with the older population.
In the older population by the way, we did not see a meaningful imbalance of sleep apnea. We are reporting. This now because these were adverse events reported to us even though we haven't had a chance to fully dig into laboratory or MRI evidence of <unk>.
What's going on for these children in the main.
Yes.
As I said I apologize it might've said it really fast.
The events of sleep apnea that occurred.
Mild to moderate in severity.
Were deemed unrelated by the investigators.
And a large part of that it has to do with the fact that sleep apnea is not an uncommon occurrence in this patient population as I mentioned, even in the older population. There is a little bit of sleep apnea. That's been recorded so whether this is really drug related or it's just a bad luck signal.
We're going to need to get more information the good news about it. So far is like I said mild to moderate it didn't result in discontinuation deemed unrelated by investigators.
Okay. Thanks, and then.
A child with a sudden death as a child to again the event was deemed unrelated by the investigator with a childhood. These children standardized mortality rate for children with Achondroplasia is like 50 times that of unaffected child. So these events will happen. Unfortunately in children and I guess at a minimum you conclude that.
That oh targeted rescue this child, but.
We will have to look at the overall pattern of safety that we saw in the trial with a lot more detailed laboratory evidence.
Still yet to come.
That's helpful. Thank you Heng.
Okay.
Your next question is from Chris Raymond of Piper Sandler Your line is open.
Hi, This is allie rats on for Chris Tonight, Thanks for taking our question.
So just I'm not Iraq sogo.
You talk about your expectation perfect the geographic patient split second.
Second better than your 2022 guidance I think just by our math on sickle patient number. If you include those that could be for your patients.
Patients and process the split right now is around 20%, 80% rest of world.
So should we expect that split to hold up for the full year and related I know you talked about Japan actually pick up.
And more important countries like a box or a launch could you just sort of talk about what's driving your optimism on that box to go opportunity there I guess.
How do you expect to launch dynamics to play out.
Compared to the U S.
Thanks.
Okay.
Good question. So the Q4 revenue that we reported was.
Predominantly from ex U S. As you would expect because we got a U S approval late in Q4.
Whereas we were able to start patients.
In Q4 in Europe , it's dark driving that that revenue.
As we begin the year, we're off to a quick start in the United States.
But we're also off to a quick start in Germany, and France, which are the two largest markets in Europe and we've got smaller contributions coming now from a number of smaller countries outside of the United States.
And as you noted we were expecting an approval in Japan around mid year.
So the picture is going to be pretty diverse I'm not going to help you sort out the specifics of geographic mix.
Im going to point, you back to our revenue guidance for the year.
Starting out this year relative to Japan, specifically.
Japan is is depending on how you measure it either the second or the third largest pharmaceutical market in the world and market, where Biomarin has long invested in having capabilities to operate on our own it happens with the rare disease portfolio that we have.
We haven't had the right opportunity to have.
Our brand.
Would be representative of the second or third largest market.
The world.
That picture is about the change with box Sogo, where we have we.
We have relatively uniform.
Incidence and prevalence of achondroplasia means that Japan is a large market.
Japan is a large market with a large population we expect.
Large population of achondroplasia kits, and we know that Japan has developed already for achondroplasia is the only place in the world where growth hormone is approved for the treatment of achondroplasia I think the prevailing opinion, there would be pretty straight from prescribers that growth hormone is not particularly.
<unk> effective if at all and there's a lot of excitement.
<unk> from clinical investigators in Japan about box ago. So that's what's driving our enthusiasm about Japanese opportunity.
And I mean by that.
I mean, we probably lost we emphasized the fact that the.
The ex U S market was significantly larger than the U S market.
820.
Even 85 bps so.
So he is very likely that well.
Over time, the Europeans ex U S sales are going to be.
Great or the U S sales also the U S.
As Jeff stated, we only got approved in the U S and very late.
2021. So obviously you are paid at a almost like a quarter as start over in the U S. But.
That being said there's a.
The demand on the <unk>.
Four.
But by the U S patient community for <unk> treatment.
So.
And if we just keep me honest.
Thanks, guys.
Got it thank you.
Your next question is from Phil Nadeau.
Your line is open.
Good afternoon, and thanks for taking my questions. A couple on rock TVN first you had been guiding to an FDA meeting during the first quarter of this year pre submission meeting.
Any update on assessed them meeting, whether it's happened or what's like could it be discussed and then second in the.
Recent presentation of the updated phase one two data.
We're active in it.
The disclosure of one celebrate gland cancer those deemed unrelated to <unk>, but curious to hear more about that in that case, how long after dosing.
And any other information around that patient that you have would be it would be interesting. Thanks.
Yes.
So for the question so as far as the status of individual interactions with the FDA.
Given the ongoing nature of our regulatory interactions we plan to update you only at the major milestones of <unk>.
Admission of the file by US and then of course FDA action date.
At this point.
Given the history of inconsistent communications from the agency I think it would be unwise to provide integral updates.
Because those are so much subject to interpretation and potential misinterpretation. So if you can bear with us we're going to just stick to the basic facts of the U S review of submission.
As far as the scientific report at <unk> had.
Individual patient again this was an individual ultimate had.
Serious adverse events the occurrence of cancer in the context of a clinical trial, but it was deemed by the investigator is unrelated.
We actually undertook an internal review that was really quite extensive in regard to the case, partly because we have a lot more information from preclinical and other sources about potential safety considerations. We also discuss these cases this case Smith, our independent data monitoring committee.
And concluded that out of an abundance of caution and not due to any particular regulatory requirements. We would go ahead and convey our understanding of the case when it occurred which was I think in late November early December that we communicated with the agencies.
Since then they've been fully aware of the case and to remind you. This is an individual who was dosed more than five years ago and has an isolated salivary gland cancer.
And.
We plan to undertake genomic analysis of the tumor for all of US in this deal we're going to expect that cancers are going to be observed in individual patients by protocol, where possible. We collect tumoral data to try to understand if there is any relationship at a molecular level between the occurrence of the cancer in the presence of the VI.
The rest of the.
Octavian.
And that analysis hasn't been concluded when that analysis has concluded we'll share that information in a scientific context, but again this appears to be.
Unrelated to adverse event that.
It's in an individual's those five years ago, and that's been under a lot of review by by the investigator by our independent data monitoring committee by Us and by health authorities around the world and important point at this point is erected in trials continue to be open for enrollment.
That's very helpful. Thanks for all the color.
Okay.
Your next question is from Geoff Meacham of Bank of America. Your line is open.
Hey, guys. Thanks for the question just.
Just had a couple on rock TV I know, obviously, you don't want to give a play by play but just just.
Just to be clear are there any other ongoing.
Say CMC or preclinical or any other parts of the filing that that will be new beyond the second phase III in the two year data.
And then the second question more commercially I know in the past you guys have talked about you know COVID-19 still being a bit of a headwind in PKU clinics.
How how is that progressing do you still see that having a bit of a lingering effect in 2022 or is that going to generally work itself out as we move to the middle part of the year. Thank you.
Yes, so I'll start with the first part.
So Jeff about the submission play in the United States again getting into the blow by blow what's about what's between the blow by blow and we're going to update you with submission.
Yes.
Maybe not a whole lot in there, but what I can say is this is practically March we're targeting our submission in June that doesn't leave a lot of time for a whole lots of new studies to be.
Assembled and digested I think we feel.
Especially with a two year efficacy update that we've really got the evidence that we believe would support a positive benefit this conclusion, and we'll be providing that to the agency.
In the first half of this year, if all goes well.
You want to talk about TMT young inspection as Doug already back.
Yeah. The only thing that we would from a U S standpoint, we would be inspecting happens we would be expecting an inspection.
Later this year after the filing and before.
The six month time period has ended so that would be probably in the third or early fourth quarter.
So we're prepared for that and.
In terms of CMC.
As I said the majority of the re file will be clinical theres, some minor things, but nothing of significance from a CMC perspective that will be included in the file.
Can you remind that we expected by you yeah. So that facility has been inspected by Europe .
So as you know we're in the midst of that review right now there's no.
There is no re inspection necessary for Europe , So that's not.
An additional step for <unk>.
Approval, there, but it will be a step for the U S. Since they are non perspective that facility yet.
Maybe moving over to the question about the pandemic impact on.
PKU. So if you look at the palace Zeke results for 2021.
On the one hand, we're really pleased with the growth in revenue and we have experienced growth of patients on therapy on the other hand that growth of patients on therapy is slower than it otherwise would've been but for the impact of the pandemic on PKU clinics capacity.
I think that earlier on we were expecting as as the pandemic moved from some acute phase post acute phase that we would see further opening PKU clinics.
As you know the pandemic has behaved as it has and we have been.
Disappointed that we haven't seen PKU clinics open back up as.
As much as we had hoped for the treatment of adults with PKU. Some of that is due to the fact that these genetics clinics and PKU clinics more specifically tend to be located in tertiary medical centers in major metropolitan areas.
And those facilities have been impacted by the pandemic another part of it.
<unk> is that for the clinic bandwidth, but does exist.
Geneticists C desperately ill children, and it's likely that PKU adults.
Requires some attention to start <unk> are not are not at the top of the priority list. So having said that we do expect continued patient growth and we are taking tactical measures to try to address the bottlenecks in the PKU clinics and help out where we can with tactics to help.
Our adult patients more adult patients get started on therapy.
So that'd be great.
So we reported revenues for <unk> and 'twenty, one to $237 $5 million in our guidance for 'twenty two.
It's $280 million to $310 million, so we do anticipate though.
Some pretty significant growth here.
Into Asia.
Thanks, guys.
Your next question is from Gena Wang of Barclays. Your line is open.
Thank you for taking my questions I had one regarding the Pbms safety data.
So for the PKU program.
We ask you to do.
The preclinical studies.
Do you have the same data package for hemophilia, a and then the second related question is.
What is the latest human biopsy data.
The EV integration analysis.
From.
And patients alike, what is the longest.
On to work the data you have from the patients.
A very complicated question, let's see if I can help there.
As regards the rock TVN preclinical data package and its similarity to what the FDA is asking work from 307 since we just got the clinical hold letter from the FDA on 307, and they have requested additional studies, but they havent specified additional studies and as I've mentioned.
And we're going to be working with them to try to understand what those additional studies will likely be it would be impossible to compare contrast.
What's been asked for SBA seven with what's available already for 2017, but I think a clear picture.
It can be arrived at from just saying that whatever they are asking for for 307, it's not in the way of it.
<unk> and the ongoing 270 or $3 31 trial. So this appears to be the clinical appears to be vector specific in the United States.
And then the second part of your question remind me.
Sure.
The integration analysis.
That patient.
Taking rock PV and what is the longest.
Data for how many years you have.
No.
Yes off the top of my head I want to come back to you Gino on more specific situation I will do that but exactly whats been published I think there's something in the works on the subject, but I don't think its yet appeared but here's an important consideration. It's been known that AAV can be found to be integrated into the genome of all different.
The question is what's the relationship between any of those.
Molecular findings in the occurrence of cancer, it's almost impossible to answer that question in the context of human biology, because there are no cancers that have been tied to AAV in humans. So at this point.
That would be a scientific curiosity of undefined significance now I mentioned that will be sequencing. This carotid tumor fully expect to find evidence of AAV and integration that sort of thing as to whether that's causal.
We don't think it will be obviously, but that's why we're going to do the additional analysis just to remind you with unica, where they did it in a tumor analysis of integrations in the ACC individuals they found and they've done pretty much what was expected which is a non connolly dominant relatively low frequency events.
Integration and.
With those results the agency lifted the clinical hold for unit cure I suspect, but until we have all these data in hand.
Our cases, it's going to follow a similar trajectory.
And do you think that if you ask you that data or do you think are the data would be sufficient enough to show Darren no concern.
And you're talking about two seven years.
Yes.
That's full rock PV for hemophilia.
As I said, we're about we're in the regulatory cycles right now and any individual question could easily be misinterpreted. So as regards to U S submission process I'm, just going to stick with submit in June six months are there.
Okay. That's fair thank you.
Your next question is from Kevin Mcveigh of RBC capital markets. Your line is open.
Alright, thanks for taking the question.
A question on the box Yoga launch first I know you're doing a lot of patient access early in the launch can you help us understand the impact of gross to net in the quarter and how we should think about it but that is the watch continues and second just hoping you could help us with some color on the U S launch and really towards the types of patients that are now on <unk>.
<unk> drug and that your reps and myself are hearing from if they're switching out <unk> are there any commonalities for instance based on.
Page or size or disease severity or statue versus versus normal ranges.
Thanks, so much.
Hey, Kevin This is Bryan I'll start and answer your gross to net question and then I'll, let Jeff answer the second part so not much color frankly to offer behind the gross to net on Q4 revenues, while we're pleased with the six nearly $6 million in Q4.
It's a relatively immaterial some overall so the gross to net is therefore, even further immaterial but.
We have said that we expect.
<unk> gross to net to be similar to our other products.
And perhaps where your question was going is in these territories, where you get early access you set a price and then you negotiate a final price over the course of time, we do make our best estimate of what the final price will be set up those reserves. So any any of that it's going to be included in the net sales we report.
And maybe kind of address your question about color on the U S launch.
I would start by noting that the most striking thing about the U S launch is that diversity that we're seeing.
In patients and prescribers and geographies.
And Payors, so we're seeing patients being referred in.
By a mix of prescribers and.
Parents.
In the case of.
Patients that get referred in by my parents, we have an opportunity to.
Help those families get connected with an appropriate prescriber about sogo.
As I mentioned earlier were mainly seeing a mix of geneticists and pediatric endocrinologists in terms of prescribers. We're also seeing some.
Pediatricians in the United States.
<unk> is not unexpected in terms of age segmentation I've been a little surprised to see really a variety of age segmentation, including.
And in a gratifying way older patients that are referring and starting on therapy as for disease severity. That's not something that we have access to so I can't really comment on that and as I said geographically, we're getting we're getting patients from.
All over the United States as you might expect we're seeing some correlation with how.
Population is distributed.
States, So I would characterize the U S as being highly diverse and probably strong and its centricity.
Your next question is from Doug <unk>.
He is Guggenheim Securities. Your line is open.
Hi, Good afternoon. This is Robert on the contingent.
Thanks for taking our questions.
Two questions from US today can you provide any details.
The cadence for the earlier stage portfolio, such as <unk> to five five.
Our 331.
Two.
Any current thoughts on capital allocation framework, that's companies clearly on a path to GAAP profitability would be helpful. Thanks, Steve.
There was a.
Yes, there was a word in the 255 and $3 three one question that I didn't quite catch your comment cadence the cadence.
So two five times.
Human clinical trials.
We're looking to establish dose to take forward into efficacy trials, which we hope to complete by these.
The dose finding to complete by the end of the year. So we can initiate.
Studies of.
The efficacy.
And then on 331 that trial is open for enrollment we haven't guided to a specific enrollment timeline expectation.
Many of these things it depends on how many dose level expansions you have just little Escalations on expansion do you have to go through to find your target dose. So we tend not to give specific timeline guidance for those kinds of studies so stay tuned.
Great. Thanks, Hey, Ken Thanks, Robert for the question on capital allocation. This is Brian .
First of all it's great to have a question like that after years of.
Dilutive financing cash burn losses, we're talking about profit and positive cash flows now so great to take that question and similar to the journey into our long term profitability growth and leverage.
We're at the early stages of our capital allocation strategy journey as well and you can imagine as we grow and we start to generate.
True free cash flow that we're going to explore all the traditional capital allocation mechanisms that you've seen in our larger profitable peers.
But just a reminder, in the near term well, while we're pleased and thrilled to be generating operating cash flow and make this transition to GAAP profitability. We do have over $1 billion of debt on the books with our convertible debt maturities coming in 'twenty, four and 2007, so those would likely be the top priority.
Think about more strategic alternatives.
But thanks for the question.
Thanks Keith.
Yeah.
Your next question is from Paul Matisse of Stifel. Your line is open.
Thanks, So much for taking my question I appreciate it.
On the new <unk> data in patients up to five years old can you comment a little bit more on the efficacy signal you saw.
How big was the effect size compared to what you observed in the phase III study and do you think it'll be convincing.
To regulators and clinicians I guess, maybe maybe more of a direct way of asking do you feel like these data are viable to expand the label in the U S. Thanks.
Well I think it's premature to talk about what the impact of the data on health authorities' responses going to be because we just got the data.
Need to have our next round of interactions with them based on the data.
As far as the specific data, but I don't want to do is get in the way of scientific investigators presented scientific data at medical meetings. So stay tuned to updates from us in terms of where those data can appear I think.
When when you examine the transcript and you realize you used the word trend.
That's going to come to mind is sort of a signal and noise and I mentioned this is a noisy heterogeneous population so.
I think bear that in mind. When you are looking at the data and you come to your own interpretation about how strong and robust evidence is I.
I think the context of this investigation is people are most importantly, keen to see that there was no cardiovascular access safety of these very young children I think we feel really good about that.
I think most people think that earlier treatment of genetic conditions is warranted, but again, you've got to put the data side by side with those questions and beliefs.
To your own conclusions and for now it's premature to comment on.
Cars are going to do.
And I would think I mean for competitive reasons, we don't want to get into too many specifics at this time.
Alright, thank you.
Your next question is from Joseph Schwartz of SBB Leerink. Your line is open.
Alright, thanks, very much when do you think we might see data from <unk> and other non counterplay, just natural conditions and.
How much more of a patient population could that represent relative to contemplate here.
Can you talk about your plans for a buck so go outside of achondroplasia.
Very excited about that and I think Dr. Andrew <unk> has been a guest of ours with a couple of R&D days one of the things. He's most excited about is investigating.
Statute deficiencies that are due to other etiologies, Dutch receding tide replacement patients.
Reeling about the pleasure mutations that this is what he said to us before we unblinded the pivotal phase III trial that led to the approval is content with where that's a strong driver mutation and maybe difficult to overcome that maybe you want to be playing in maybe you wanna be investigating other skeletal dysplasia as that are not so dominantly driven.
By constitutive negative mutations well when 301 turned out to be positive.
His enthusiasm like quadruple because this attitude was like Oh Wow, if you could if you could make an impact and that then there's all these other central conditions that are likely to be genetically mediated likely to be responsive to that said, though so he initiated this study in.
Genetically defined subsets of patients. So it's really a signal generating study.
He presented at R&D day in November just to remind everybody that that trials ongoing he's actually been pleased with enrollment I think he gave the Cheshire cat ran of.
It really looked at the data it's an ongoing study it's preliminary but I hope to see you at a medical meeting in the first half of next year, where we can talk about that.
More definitively we don't know exactly when those data are going to appear otherwise I'd be telling you exactly when they would appear I think we need to look at those data and start to develop our own plan.
One of the things that we talk about is do you want to go after specific mutations or do you want to go after more general crowd. If you go after a more general crowd of central.
Conditions wanted to be careful that we don't erode the value of the contemplation of opportunity that we alone have created.
And now others are slowly awakening to.
So we don't want to erode that value and at the same time, we recognize that there are a lot of patients who have pretty significant central deficiencies that could be addressed by a drug like box other than just to put that in perspective, if you said that.
Wanted to investigate children, who are four standard deviation predicted to be four standard deviations.
Deficiency in their stature when they arrive at their final adult height, you'd be talking about something like 1% of the incident population, so talking about fairly large and to put a much more specific quantitative.
Framework around that I think we're going to have to get into like what are the eligibility of the trial that we would plan to conduct which is still a bit in front of us.
So, let's see Doctor Doctor's data when it's available and then let's see what the company's plans are in regard to how to access that opportunity.
Protect the achondroplasia indication.
George it's likely that Dr. <unk> will present these data at a medical meeting.
You too.
Very helpful. Thanks for all the color.
Your next question is from attached to Ari of Jefferies. Your line is open.
Hi, This is a little thought past. Thank you for taking our question. So I have two.
Two questions one is related to uptake again, so is it possible that update then they have a black box warning around the integration of great on label.
Label, and if so how much of a commercial impediment would that be the second question is about 800 patient if that's all right.
Based on current data it looks like all the half of the 800 patient market is ex U S and EU five could you walk us through your plans to commercialize that market and what what is the scope opportunity in places like <unk>.
Right.
Thank you.
Just starting with the safety thing, it's a little premature to talk about what the label might look like in any territory given that were under review, although what I would say is that so far we've not we've not observed anything that would warrant a black box warning, but as to how health authorities' process.
Potential uncertainties related to Dr. Octavian.
<unk> determined at the tail end of review cycles, they were checking when I'm talking about.
Part of the question Yeah happy to so.
<unk> was about the.
The market potential is defined by patient.
Congress Asia patient populations in different markets around the world and I think more specifically how about beyond.
Ex U S.
And you referred the <unk> five I think you meant you for now.
And if you recall from our launch call we characterized the available population.
In the EMEA or Europe Middle East Africa.
Operating region is roughly three times the size of.
Of the North American opportunity.
No.
Fortunately, we have two things going for us to tap into that.
Opportunity over time.
As we have a <unk>.
Experienced commercial.
Including <unk>.
Medical regulatory and other functions that support our existing business in those markets. So in short we are operating in those markets, we have knowhow and getting into those markets.
And so it'll be a combination of <unk>.
Our registration, where we require them pursuing named patient sales channels, where they are available and having the.
Commercial capabilities to promote box I'll go in those markets.
Got all that.
Going to take some time to properly tap into that big.
<unk>, but that's consistent without Biomarin has operated with all of our previous products, which is capitalize on rapid uptake in the markets like the U S, Germany, France and others.
Where they exist and then the long term growth is driven by.
Getting penetration into those other markets around the world, which would include markets like.
Latin America.
Brazil, Argentina, Chile.
Australia, where we have a file under review and we have a.
A very engaged investigator and Japan, which I've already commented on so all of those over time. Thank you.
Your next question is from Matthew Harrison of Morgan Stanley . Your line is open.
Hi, This is avatar Jones on for Matthew a couple of questions.
Firstly not to beat a dead horse, but just to clarify specifically has the FDA asked to investigate cancer risk of rocks.
Second what Kpis do plan to provide going forward for box sogo.
And then finally, how do you see the financial leverage profile of the company developing in the near term.
Yes, so on the first question without getting into the specifics of back and forth dialogue with the agencies, but I can tell you about <unk>.
Damian and cancer risk as the trials are open for enrollment.
The agency apparently is there if we're happy with the submitted preclinical plans as to what that means in the context of the larger question of regulatory review or perhaps <unk>.
Commercial authorization reviews internationally again were not going to comment on that because we're in the middle of the review.
The second part of your question Oxoco Kpis a reminder, as we noted in the approval call.
We are going to report for you.
In addition to quarterly revenues for.
For six quarters, we will report on the quarter and number of patients on commercial therapy, we will note the number.
Identity active commercial markets.
And we will provide.
Other color commentary intended to help you gauge the success of our launch and we will do that those additional figures of patients on therapy inactive markets will do that for six quarters starting with.
The Q4 of 2021.
And the last question was on.
Our views on financial leverage going forward, thanks to touch on a few dynamics there so.
First.
Important to note when we talk about the foundation that we've built over the last few years.
We're now getting the leverage from this was our growth. If you think about how we doubled the size of the company from 1 billion to roughly $2 billion in revenue with them.
That came.
Construction of fully end to end integrated capabilities, whether it be the early stage research clinical research manufacturing through to commercialization that same infrastructure that we built well we'll continue to invest in it is the point of leverage for now these larger market size opportunity. So the base business still growing as I mentioned.
Box sogo.
<unk> potentially our largest brand opportunity getting leverage from that infrastructure. That's already built so long way of saying revenue due to continued substantial growth, we're seeing that return to double digit growth. This year, but importantly expenses growing at a much slower rate.
Look at our SG&A growth as an example over the years with the exception of last year that hold the line here. This is the lowest percentage increase of SG&A growth in a sort of growth year for biomarin, but importantly, still growing R&D at about 10%. This year, because we need to make sure that the R&D engine is sustainable as well. So the leverage story is a combination of.
Growing revenues faster than expenses, continuing the investment in R&D.
Which over time, it's going to create P&L capacity. It just gets back to the capital allocation question earlier.
With more P&L capacity, we plan to increase our internal R&D, but it's also going to open us up to external collaboration opportunity, but again its first year transitional year.
Relatively modest amount of GAAP profit, but this is this is how we're going to play in the future.
Thank you.
Your next question is from Robin for Nascar's.
That's really securities your line is open.
Hi, Good evening guys. Thanks for taking our question. This is nicole on for Robyn.
So just.
Just like a big picture question here, so with so many gene therapy companies in that competitive landscape can you just talk a little bit about the next gen capsid.
How youre going to get this how are you guys going to differentiate themselves from other players and when will we see those coming into the clinic.
Okay.
The short version of our Nextgen caps.
And even the Nextgen delivery strategies as we have a lot of research going on in that area and we have some interesting ideas, but we're also a little bit waiting for there to be a unmet needs to be addressed.
We had this year, we presented the second year of the post for Actelion transduction data just to remind you in year one of 134 dose patients only two of those patients for a term to prophylactic factor eight administration and so therefore could even conceivably be eligible for a re dosing approach.
That number was re examined at the end of year two.
As it turned out that half the patients had lost control of their bleeding this might be a much bigger issue and a bigger opportunity.
And in fact, the number of patients who returned to prophylaxis two years. After a single dose of <unk> in gene therapy with an additional four people. So theres just not that.
Telling right now a reason we're aware of the potential consideration in the far future doing a lotta research about but not pulling the trigger on anything in particular just yet.
Great. Thank you.
Your next question is from Joel.
Baird Your line is open.
Hi, Thanks for taking the questions first one is on the recent request from FDA on 307 earlier in the Q&A. If I heard right I think it was mentioned that this is a vector specific concern in the U S. Could you elaborate on what you mean by vector specific.
Specific to the vector in 301 or more broad AAV vectors.
The second question is in the prepared remarks.
You mentioned that productivity and is expected to be a modest contributor to revenue in 2022.
Could you discuss given that it's a gene therapy and gene therapy may have the opportunity to have frontloaded revenue compared to more traditional drugs.
So maybe it was just a little nomenclature vector consists of a bunch of packaging parts promoter spacers and then the gene of interest.
Most of our investors have different genes of interest in them. So what I meant by Vectra specific.
There are questions pertain to the 307 Baxter with the gene of interest in coding the phenylalanine hydroxylase, we think that the.
Questions that they have our vector specific because.
Because trials of $2 70, with the gene of interest the hemophilia factor eight product and $3 31, with a gene of interest being <unk> inhibitor, our ongoing trials that are not.
So that's why we think the business specific to the vector of the use of 307.
And not to the parts of that overlap among other vendors and the second question was related to.
Frontloading of.
Revenues.
You are right, we are expecting that gene therapies, being a onetime and durable treatment.
We will generate substantial upfront costs, which are not repeatable.
<unk> as we see with our other.
Chronic therapies, so there will be a different revenue pattern associated with them and I'll ask Brian if he wants to comment further but we are similarly expecting that for the most part we will be recognizing revenue with at or around the time of treatment and not recognizing.
That revenue over over time in some fashion. So yes expect a different pattern of revenues from Octavian.
When <unk> is approved and we're in the market relative to our base of chronic therapies.
Nothing else to add on that specifically, thank Jeff, but it sounded like the question you were trying to reconcile that revenue recognition pattern with our comments around 2022, Rob teething revenue. So those arent related with the comment that we made on 2022 expected rock television revenues is mostly due to the timing of the anticipated.
<unk> almost look similar to October if you think about it at a potential.
Second quarter see HMP opinion would mean, a third quarter European launch and then the end of year U S launch so.
Modest modest contribution but included we are expecting revenue.
Just not mentioning specifics at this point and so the product gets approved.
Great. Thank you.
Your next question is from Tim Lugo with William Blair. Your line is open.
Hey, this is lachlan on for Tim Thanks for taking the questions. I was wondering on the books are going to launch in the U S. You've previously mentioned that most patients are already diagnosed so identification just isn't as much of an issue here as it has been in prior launches.
So I mean can you talk about how many of these patients that physicians, you've actually been able to access so far and what that looks like.
And then secondly, just on Cuda and it seems like it's stabilizing a bit.
Do you think we're reaching a pretty stable level this year or would you expect continued erosion.
2023.
Yes.
Good.
Thank you I'll start with the question about the box I'll go in the U S launch.
As described on our approval call.
One of the issues that we face with for example, our enzyme replacement therapies is helping patients gain a diagnosis, we don't really face that challenge with achondroplasia, because essentially all kids with achondroplasia are diagnosed.
Perry berth and so they and their families.
Diagnosis of achondroplasia.
The challenge in the United States is to connect with.
With the the physicians that are caring for these kids and their families because there really isn't for the most part.
A well established medical home for the treatment of achondroplasia beyond limb lengthening, which is very specific.
Seizure.
Before Bob <unk>, there was no real standard of care.
Treatment. So you wouldn't expect there would necessarily be a medical home.
Our challenge in the United States, which is a large and diverse country. As you know is to connect with.
Prescribers, whether that's a pediatrician or <unk>.
<unk> Doc or.
Orthopedists or even a geneticist.
That has a patient that's under their care and drive that patient to a inappropriate prescriber of box Gogo and as I've noted.
Doing pretty good so far I'm really happy with the results and I'm expecting that that will continue unlike with for example, our enzyme replacement therapies.
Half.
Which which enzyme replacement therapies, we would count patients in the dozens or or maybe 100 or a couple of hundred without really have a system in place, where we're trying to track patients individually.
Monitor them over time. This is just a bigger market opportunity that we're not doing that with.
And then.
So very good progress so far expect that to continue with respect to Kuban and stability as Brian noted, we lost a lot of revenue.
For Kuban.
In 2021 and that was following a loss of revenue in Q4 of 2020 all of that essentially.
Being dropped from the U S market. So yes, we are expecting the erosion to slow down and partially that's because.
A lot of the base of business in the United States is already converted over to generics as we would have expected by this point in a generic cycle and so it's necessarily slowing down from.
A higher place going forward I refer you back to our full year revenue guidance for expectations.
Thanks.
And no further questions I would like to turn the call back to Jay J B in May for final remarks.
Yeah. Thank you operator, and thank you all.
Yesterday, so we are pleased with our performance here.
Look forward to your momentum growth in 2022.
Thanks for the additional box so.
Which again, we expect will be our largest opportunity to date.
And we have transitioned to the development and commercialization of <unk>.
When you say IP for larger genetic condition.
Alright.
It would be more productive and we expect to put forth. Many early stage candidates.
What I'm gonna advances over the coming quarters, So the financial health of the company as it would be stronger.
Turning the corner to sustainable GAAP profitability.
It's really too.
This is an important achievement and it marks the beginning of the next stage of growth for Biomarin. So.
Thank you all for your continued support and we look forward to seeing you soon.
And this concludes today's conference call. Thank you for participating you may now disconnect presenters. Please stay on the line for the post conference.
Okay.
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Good morning.
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