Q1 2023 Biomarin Pharmaceutical Inc Earnings Call
Welcome to the Biomarin Pharmaceuticals, first quarter Investor update call hosting the conference call today from Biomarin is Traci Mccarty Vice President of Investor Relations. Please go ahead Traci.
Thank you Rob and thank you all for joining us today to remind you. This non confidential presentation contains.
Looking statements about the business prospects of Biomarin pharmaceutical, including expectations regarding Biomarin <unk> financial performance commercial products and potential future products in different areas of therapeutic research and development.
Also may differ materially depending on the progress of Biomarin product programs actions of regulatory authority availability of capital future actions in the pharmaceutical market and developments by competitors and those factors detailed in Biomarin filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K report.
On the call today from Biomarin management team are J, J, B enemy, Chairman and Chief Executive Officer, Jeff <unk> Executive Vice President Chief Commercial Officer, Fuchs, President worldwide Research and development, Greg Guyer Executive Vice President Chief Technical Officer, and Brian Mueller Executive Vice President and Chief Financial Officer I will.
Now I'll turn the call over to our chairman and CEO J J the enemy.
Thank you Tracy and good afternoon, everyone.
You for joining us today.
We are very pleased with our boundaries progress in the first floor.
As more families gain access to box the rule as well.
Our other essential medicines.
Our financial performance in the quarter was strong, especially in light of ongoing macroeconomic challenges across the globe.
15% growth on the top line and 15%.
non-GAAP income growth on the bottom line.
Bottomline firmly on track to achieving our 2023 financial goals.
These results include $88 million Inbox, silver revenues and strong Q1 profitability up $51 million on a GAAP basis.
And all in Vermont.
Wholly owned portfolio of commercial products.
With Q1 total revenues coming in at just under $600 million, we only have two.
To achieving our 2022 objectives of double digit revenue growth and significant operating leverage.
Driving approximately 30% growth in bottom line profitability in 2023 as communicated in February .
We are very pleased with the continued.
In terms of October uptake worldwide.
October is not being used in around 1500 pieces is 35 different geographies and.
And we have seen a significant growth of OXXO in Japan.
This approval there and as a result, we are raising again, our 2020 full year guidance midpoint by <unk> $50 million at the midpoint level based on increasing expectations for the brand.
Based on the still very limited market penetration, we believe OXXO is honest.
The way to become a blockbuster.
Turning to our activity in Europe today, we have begun working directly with a single National German insurance.
Or <unk> on our final federal German price and therefore, we will not pursue any additional outcome based agreements with insurance, which on the German.
Most of the original seek funds at this time.
We believe that a highly innovative profile Octavian offers an attractive treatment option for those people with severe hemophilia a interesting efficacious alternative to chronic therapy.
We believe that working directly with our primary health insurance provider in Germany.
Which we expect will cover of Activision treatments with a onetime payment and without an outcome based compliance.
To facilitate access.
We also believe the German health care system were recognized with David and value based on this transformational efficacy observed majority of participants across our extensive development program with Royal Caribbean, Our initial interactions with the <unk> before that even as we anticipate it.
I know German reimbursement price that would be representative of the full value from Kevin is delivering to patients, especially based on our recent three year.
Data of our phase III trial.
Over there over the long term, we don't expect today's updates to impact our expectations for Damien.
We continue to hear feedback from Germany, hematology is that they are ready to treat despite some of the challenges.
His experience with German region will seek funds will be in Brisbane in the very short term.
So we are pleased to share that.
Other markets in Europe , and outside of Europe are actively pursuing accenture, we're keeping which Jeff will review in a moment.
With the U S action date, only two months away.
We are optimistic.
Cautiously of course for what lies ahead in the second half of the year.
Commercial team is working hard to prepare for another successful product launch and as we communicated during our Q4 conference call a couple of months ago.
In the United States, roughly 300 patients from the bleeding disorders community, having engaged with biomarin directly to learn more about our activity, which is a very positive sign.
So we believe 2023 is a year of rotation and we're looking forward to continued progress in both Europe and the U S and the rest of the world.
So in summary, we're very pleased with pro.
Performance in the first bar and our outlook for the remainder of the year.
The momentum behind Hawks over continues driving record financial results.
We are making good progress on the European launch of rotation and we look forward to the outcome of the June 30th Dupont.
A milestone.
In the U S. We are ready.
So unfortunately, we have made the transition to our earnings growth story and unique accomplishment in our industry.
And we thank you for your continued support.
I'll turn the call over to Jeff to discuss the commercial business subject.
Thank you J J and I'm very pleased with our record breaking performance in the first quarter, resulting in $596 million until revenues and representing 15% growth year over year, including 2000.
19% growth excluding kabam.
Solid contributions from our enzyme products resulted in year over year growth of approximately 5%, which is in line given anticipated seasonality and ordering patterns for certain brands overall the enzyme product revenue base is tracking as expected and we anticipate it will provide meaningful.
<unk> full year total revenues this year.
Turning to box sogo as underscored by our guidance increase today, we're very pleased with the continued acceleration of growth today, we raised full year box. So the revenue guidance to between 380 and $430 million $50 million increase at the midpoint.
Representing a HUD or 40% growth over 2022.
At the end of the first quarter approximately 500 children with achondroplasia in 35 different markets were being treated with box I'll go within the currently approved age ranges.
Uptake to date represents 9% penetration of indicated patients in biomarin commercial footprint, highlighting the significant growth potential that remains.
This includes Europe for children, two years old and older the United States for children, five years old and older and in Japan, where box. So goes approved with no age restrictions.
Ban was a key driver of growth due in part to the availability of box. So good treatment for children of all ages. We also saw significant contributions in the quarter in Europe .
Right.
In certain markets in the Latin American region looking.
Looking ahead for the remainder of 2023, we expect growth across markets with continued uptake in existing markets and expansion into new markets. We do look forward to learning in the coming months, if European and U S. Health authorities are supportive of extending access to box I'll go to younger children.
Which would make it available to more than 1000 additional children in those markets.
Taken together, we continue to believe that box. So go has the potential to be our first $1 billion brands.
Turning now to Octavian to remind you the bond European approval of Octavian late last year. Our plan was to quickly facilitate access for patients in Germany through the use of outcomes based agreements at the time of approval of fruit pricing window, and Germany was 12 months, but what's changed.
So in January .
With a 12 month free pricing window at the time of launch it makes sense to pursue Ob as with the goal of facilitating access to right Damian prior to final federal reimbursement.
Now that we're already working with <unk> on our final federal price for Iraq, Damian, we will not pursue additional ob as J J sure.
As a reminder, <unk> is the umbrella entity that is responsible for health insurance to approximately 90% of the German population and we believe this path will facilitate the broadest access.
While we work to finalize the German price with Teekay b reimbursement for people treated with rock Fabian as possible under named patient authorizations through individual insurance.
Those sales would be subject to the final price once it has been established.
Patients treated under executed Adobe as we'll benefit from the terms of that or.
At least until the German price is finalized.
As J J shared we expect the <unk> negotiations to yield a price per rocked avian that incorporates durability and other benefits that would be paid in a one time upfront payment and without bespoke outcomes based agreements.
Turning to see Dx testing in Germany, we are pleased to see a significant pipeline of patients building as more tests are in motion.
The most recent data 18 people had been screened for AAV five zero positivity and important eligibility criteria for treatment with <unk>.
We expect that our first treated patient in Germany will be sourced from this pool in the second quarter.
And while not all patients tested will be eligible and she is treatment with rock JV and we are encouraged by the level of interest from patients in Germany.
Beyond Germany, our application seeking price and reimbursement approvals as well as other launch preparation activities are making progress in both France, and Italy, where we expect negotiations to conclude by Q4 of this year.
In Italy, we were pleased the rocks avian was recently awarded conditional innovation designation a positive signal that.
Facilitate pricing and reimbursement.
We are also encouraged by early interest in rock JV and in other markets, including Argentina, and Saudi Arabia, where we have the potential to provide access to rocks avion during named patient authorizations. We are aware of 11 completed the CTX stuffs in Argentina, and a recent prescription for Octavian treatment.
Taken together, we are pleased with the progress we are seeing outside of the United States, especially noting some key differences and reimbursement and launch dynamics between the U S and other markets.
Touching briefly on some of the differences that we believe will positively impact of Octavian <unk> U S launch.
Potential approval on June <unk>.
First we intend to implement a single warranty, which will allow us to offer a uniform agreement to all purchasers in the U S avoiding the need to negotiate bespoke contracts.
We plan to leverage the value based assessment.
The Institute for clinical and economic review or ISR, which noted that rocked Hadrian was the dominant treatment with substantial cost savings along with projected gains in quality adjusted life years at $2 $5 million for one time treatment.
<unk> conclusion of value is consistent with results from payer research conducted recently in the U S. As in prior launches, we believe it will be possible to navigate reimbursement approvals following approval for individual patients on the basis of medical exception until coverage policy.
Policies are issued.
And finally in Europe , we are not promoted to promote we're not permitted to promote rocked avian directly to patients. So many people with severe hemophilia a only learn of it during their annual or semiannual check ins with their hematologists in the U S. In contrast, we intend to use all channels avail.
<unk> to raise awareness of Octavian.
That is a good segue to our update on U S. Commercial preparedness. Our teams have worked with treatment centers to ensure site readiness conducted discussions with Payors worked through refinement of our warranty and our promotional campaign is ready the supply of Octavian to meet demand has been manufacturer we.
Stand ready to go upon potential.
Potential approval.
We have identified and are focused on a relatively small number of the largest and most capable hemophilia treatment centers to be ready to treat with <unk> in the U S at or shortly after launch we understand the value of and are committed to hemophilia treatment centers being the side of treatment for Octavian.
For the reasons of appropriate patient selection post.
Post treatment follow up and monitoring and more generally due to the complexity of hemophilia management.
In conclusion, we are off to a strong start in 2023 delivering record record breaking results in the first quarter underscores the demand for our essential medicines.
Just on the challenges faced securing additional EMEA in the quarter to facilitate patient access Directv and the updated U S. Purdue for action date for March to June we have lowered full year 2023, Caribbean guidance to between $50 million and $150 million.
Thank you for your attention and I will now turn the call over to Hank to provide an R&D update.
Thanks, Jeff and thank you all for joining us today Biomarin worldwide R&D organization is gratified to see the enthusiasm from families interested in benefiting from box as a treatment for their children with achondroplasia in the coming months, we look forward to learning the outcome of our request to potentially expand the label both in Europe and in the United States to offer the possibility of treatment.
Two children of all ages four boxes on whats currently available.
Also later in 2023 with Berkshire, though we look forward to results from the investigator sponsored trial evaluating.
Evaluating <unk> potential to treat other genetic forms of short stature, including for example, hyper contemplation mutations in the NPR to gene and new Noonan syndrome, just to name a few.
Also engaged in active discussions with health authorities concerning the opportunity to leverage five sogo, a natural regulator bone growth and these other conditions characterized by impaired with downgrades.
Moving to rock, David as we announced in March the United States Food and drug administration extended their review of the biologics license application for <unk>.
As anticipated the FDA determined that the submission of the three year data analysis from the ongoing phase III generate one study as requested by the agency constitute a major amendment due to the substantial amount of additional data and set a new target action date of June 32023.
We continue to engage with the agency and look forward to our June 30, because of the accident.
On the earlier stage pipeline, we shared a few incremental updates in our press release today <unk> 255 for hypoxic Youre in chronic liver disease, <unk> 331 gene therapy for hereditary angioedema EMEA them at 349 for Alpha one Antitrypsin deficiency, we look forward to providing updates across our advancing development pipeline at our RN.
D Day in New York on September 12.
Starting with <unk> five we have concluded the multi ascending dose in healthy volunteer study in January we shared early data that demonstrated rapid and potent increase in plasma glycolate following treatment with <unk> hundred 55 <unk>.
Oral daily dosing in all tested levels for 14 days were safe and showed sustained elevations in plasma globally, which is predicted to have a profound reduction in oxalate excretion in patients based on these early signals. We now plan to initiate and enroll an expanded study in patients with chronic liver disease and hyperactivity here out later in 2000.
'twenty three we believe the availability of a potent orally bio available small molecule like <unk> five may be able to significantly reduce disease and treatment burden in patients with in a patient population with significant unmet need.
Turning to our next gene therapy, <unk> 31 per editorial angioedema, which is like hemophilia in the sense that it poses a chronic lifelong burden of therapy due to the risk of breakthrough attacks that are extremely burdensome and potentially life threatening.
A disease due to genetically determined loss of a key protein regulating inflammatory Cascade response responsible for these attacks.
<unk> therapies on the market have confirmed the effectiveness of replacement much lies in the case of replacement factor eight therapy in hemophilia.
We've shown in three studies with <unk> hundred 31 gene therapy that immune mice and nonhuman primates that is similar to that employed in clinical studies of heart failure can.
<unk> ample and constant expression of <unk> inhibitor within the therapeutic range in patients. We expect to continuously expect express levels of protein will provide improvements in the disease course of for this area of angioedema.
Over existing therapies and March 2nd Sentinel patient was dosed safely at $6 13 vector genomes per kilo filing an encouraging response from the first participant who demonstrated an early increase in cone esterase inhibitor that may ultimately be therapeutically relevant this is exciting.
<unk> hundred four nine for Alpha one antitrypsin deficiency preclinical studies have demonstrated or by availability in a small molecule that potentially sequesters, the mutant protein preventing polymerization and the liver cells that drive progressive liver disease liver disease form of illness, and preclinical studies P. M 349 is titratable to effect.
With rapid onset and high potency <unk>.
Preclinical results have strong applications for potential improvement of our current management, particularly for severe liver disease, requiring rapid action.
R&D, enabling studies are underway environment close to submit an IND for <unk> 349 in the second half of the year stay tuned for updates on these as well as 351 for Duchenne muscular dystrophy in Dms III <unk> III for myosin binding protein C. III hypertrophic cardiomyopathy at R&D day in New York in September .
Thank you all for your continued support and I will now turn the call over to Brian to update financial results in the quarter Brian . Thank.
Thank you Hank please refer to today's press release summarizing our financial results for full details on the first quarter of 2023.
J J and Jeff spoke to our revenue performance for the quarter and future revenue outlook I will primarily focus on the remainder of our P&L and other key financial updates this quarter.
As usual all results will be available in our upcoming Form 10-Q, which we are on track to file by the end of this week.
We referred to last year as a transformational year for Biomarin with a growing base business depends on product cost. The successful launch of box you. All go together with operating expense control driving meaningful GAAP net income and a foundation for our financial growth strategy into the future. We are pleased that the strong start of the.
Business in the first quarter of 2023 is supportive of our 2023 and long term objectives of substantial revenue growth margin expansion and increasing earnings bomber.
Biomarin is $596 million of total revenue in the first quarter of 2023 is an increase of 15% compared to the first quarter of 2022 regarding our revenue outlook for the rest of 2023, Jeff commented on the increase to our 2023 Bucks Soho revenue guidance and decrease to our 2023 block caving.
<unk> revenue guidance, which offset each other in aggregate, resulting in no change to our total revenue guidance for 2023, which is annual growth of 16% at the midpoint.
Cross the rest of the P&L Q1, 2023 gross margin was 78, 8%, which is an improvement of one 3% as compared to the first quarter of 2022.
<unk> expense in 2023 started at a moderate rate in the first quarter, which was expected given the planned increase in R&D investment in our early stage pipeline and the lifecycle management development efforts Directv Inbox logo that we expect to ramp up over the course of this year.
SG&A expense in the first quarter of 2023 of $223 million increase as compared to $195 million in the first quarter of 2022, which is in line with expectations as we continue to invest in the global box Novo commercialization the EUR TV in March and the commercial launch preparation.
<unk> in the U S.
Back to the bottom line, we delivered on our commitment to profitability, but the $51 million of GAAP net income in Q1, 2023, and $116 million of non-GAAP income, which sets up biomarin well to achieve our full year 2023 profitability objectives.
GAAP net income decreased in Q1 year over year. However, it is important to note that GAAP net income in the first quarter of last year included the gain on the sale of the priority review voucher received in connection with the U S approval of <unk>, which was approximately $89 million after income tax.
Today, we reaffirmed our 2023, GAAP and non-GAAP income guidance of $155 million to $205 million and $360 million to $410 million respectively.
Total cash and investments in the first quarter of 2023 with close to one 5 billion, which decreased during the quarter due to some milestone payments the timing of accounts receivable collection and known seasonality of operating accrual net paydowns.
As we believe these cash flow timing events were frontloaded to the beginning of the year, we expect to resume positive cash flows over the course of 2023.
In closing we are pleased to observe the solid start to 2023 and our team is focused on maximizing the potential of the global box Sogo and European rock television commercial launches measured operating expense investments and the resulting leverage profit profitability growth that we anticipate for the full year MBR. Thank you.
All for your attention and we'll now open up the call for your questions.
Operator.
If you'd like to ask a question. Please press star one on your telephone keypad now and you'll be placed in the queue in order to received.
Please be prepared to ask your question when prompted in the interest of time, we request that you limit yourself to one question. So that everyone in the queue is able to ask their question.
Once again, if you would like to ask a question. Please press star one on your phone now.
And our first question comes from <unk> Richter from Goldman Sachs. Please go ahead David.
Good afternoon, Thanks for taking my question.
I'll provide more detail here on how the TKD facilitates discussions on the final price and any impact on this price given that additional opa's will not be pursued and then in the interim do you expect to actually be treated through either named pinson operations or that one finalized LTE or is it real.
So to be here.
Thanks, Avi and they'll be happy to take that went on so that the <unk> process that we have.
Described here.
That takes essentially 12 months to get to a final final reimbursement price.
Broad reimbursement access.
This is normal. So this is the same process that we've gone through for all of our previous brands.
I think 12 months from approval out 12 months from today.
12 months from our price less thing, which was September 15th.
Last year, so we're very familiar with that process and we are we're pretty deep into that process, but by now so we submit a full price and reimbursement dossier. We did in the fall of last year. So that takes a while to get processed five.
With TK B, we've had our first meeting.
To review that there's there's usually a series of four meetings and reviews before we get to a final answer them. We think that that first meeting was.
Set up a very favorable tone, including.
Testimony from here.
Key positions in Germany on behalf of rock Baby and so that's kind of the process, what's different with rock Dalian than our other brands as our other brands have all entered into a situation where there is no existing standard of care in the case of hemophilia.
We knew that we were launching into a situation where there was an existing indeed, an evolving standard of care and so our strategy was to.
Contract with some national insurer umbrella organizations, what we're calling southern insurers here.
To put outcomes based agreements in place get agreement on preliminary price to facilitate rapid uptake right caveats when when we launched we believe that the free pricing period in Germany as it has been for years and years would be 12 months, so what changed the <unk>.
Thing that changed is late last year, there was new legislation that changed the 12 months the six months free pricing period and that's new.
While some people saw that coming as we did.
What's new about that is nobody really knows how the parties will behave.
At the end of the six months free pricing period, and before we have final pricing and reimbursement approval from Teekay V. The second thing that they changed according to our plan was we saw more reticence than we were expecting from the sub insured groups to engage.
Age and finding a path forward and and defining Ob as which are new.
Barack patios.
So now that we are in are well into discussions on our final pricing and reimbursement arrangement. The covers essentially all of Germany. We think it just does not make sense any longer to pursue additional outcomes based agreements with those so called sub national insurers and <unk>.
<unk> said, we think we've got some patients covered under an existing outcomes based agreement covers a part of the population.
And we know that.
Ah patients can be submitted through their health insurer for essentially a one off or a named patient approval.
While we while we work to get the final price some reimbursement elbow sorry for all the detail, but you did ask for it.
And our next question comes from Geoff Meacham from Bank of America. Please go ahead, Jeff.
Afternoon, guys. Thanks for the question just had two quick ones on Octavian, So I guess to follow up on Germany.
Do you have to go back to square, one and communication of kind of cost benefits to <unk> and I guess it was the six months of negotiation.
A total waste here and then secondly in the U S.
Just commercially you know what's left to help streamline access and reimbursement obviously aside from from formal FDA approval. Thank you.
Yeah. So thanks for the question, Jeff reiterate right. After we submitted our price and got that listed in September 15th of last year. Shortly after that we submit it as we always do for our brands to the GK be a full price and reimbursement dossier and as I noted in the lab.
Question It takes.
456 months for <unk> to get to the point, where they're ready to.
And our negotiations with us because it isn't it.
An intensive dossier to review.
That the work that we did with the so called sub national insurers was not a complete waste of time. Indeed, we achieved proof of principle with getting one major insurer assigned signed up so Ah patients under that insurance group has the benefit of that outcomes based agreements.
And and so I think that's you know as I described also in the previous question, but that's where we're at we're more than six months in we're well underway with getting to a final federal reimbursement.
Price and that price when weather set will be retroactive to any patients that are treated for March 15th.
When the free pricing period ended.
Okay.
Yes, sorry U S. U S is a completely different situation.
So as we've disclosed we have a warranty agreement.
Does not require to be negotiated one payer by one payer. It's a uniform agreement that we intend to offer to all purchasers of RASK avian so that cuts down on the time associated with doing bespoke agreements.
That's the first piece and then the second piece is similar to our other losses in the United States. We know that it is possible to navigate individual payer approvals for.
Ah patients that are submitted as a part of a medical exception process and while a.
Coverage policies are in process of being issues and you know because you follow other launches that.
Coverage policies can take anywhere from one to nine or 12 months to get issued variable by by payer. So that's how we plan to navigate that process immediately following launch.
And our next question comes from Chris Raymond from Piper Sandler. Please go ahead Chris.
Hey, Thanks, if I can ask another rock taking question.
So you know just hum.
Curious you guys highlighted 18 patients have undergone antibody testing.
I think last quarter that number was 10.
So it doesn't seem like you're seeing necessarily in Germany any way up.
Hum, an inflection higher or sort of an acceleration, maybe just talk about that dynamic as.
That also subject to any reimbursement.
Barriers that you didn't anticipate and then maybe on the guidance change you know changing cutting top and bottom by 50, it's $50 million.
Yeah, I know you werent expecting $50 million in Q1, and I know your original plan didn't hinge on our March U S approval, but maybe can you talk about how much of this reduction is driven by.
Just sort of the resistance, you're seeing in Germany versus maybe a reassessment of the U S opportunity.
So let me start out and I'll ask Brian or J J to round out anything I Miss Chris first with respect to the CTX that's completed.
Youre right. It was it was two months ago actually that we reported that we had 10 patients that had been submitted for CTX testing. So you could look at that and say over the past two months.
We've seen an additional eight and I can tell you because I review the situation of the team every week already have additional patients in motion. This week, so what I'm, saying is the development of a <unk>.
A patient pipeline.
And it was slow to get started it was for sure impacted by Ah patient awareness or the lack of patient awareness immediately following approval and our ability to influence patient awareness and in Germany, the cadence of when patients come in to see there.
Hematologists.
For hemophilia guidance, which is anywhere from.
Every three months to every 12 months and that cadence of patient visits to hemophilia treatment centers didn't change just because rock avian was was approved.
So I would say that that building of the patient funnel and all the things that are happening underneath the top of that funnel are really encouraging to me.
I'm seeing movement literally every week now in that movement every week that I'm seeing is is picking up pace, so I'm pretty encouraged by that.
In terms of guidance guidance was impacted for rock stadium by the pace.
The pace and timing of getting first patient treated which is different than we were expecting at the beginning of the year and the change of the <unk> date in the United States from the end of March to end of June .
That's all right. This is Brian Thanks, Chris just to supplement that we noted that the.
High end of the previous range accounted for.
March Purdue, but and so just a reminder, what was the March bidding for at the time, just a reminder, that while that's a three months shift with the product micro Octavian that we expect to ramp up in terms of revenue overtime that three months shifts from a revenue standpoint actually causes us to lose lose what would've been the last quarter.
<unk> revenue in 2023.
And our next question comes from Phil Nadeau from Cowen. Please go ahead Phil.
Good afternoon, and thanks for taking my questions. One more question on Germany, I guess, it's still unclear who was who are those patients who have gone through city access they have not gone on therapy, I think I've been pretty clear about that.
Price or the reimbursement negotiation process, but you've also suggested that there were patients who are covered through EMEA when it would be a or named patient use.
Those patients who have gone through city existing why have they not been treated here, what's the bottleneck there or is that a concern about time to reimbursement.
The physicians have some other concern kind of what's what's preventing that and then secondarily I think you said in your prepared remarks, you do expect the first patient to be treated in Q2 what.
What gives you confidence in that.
Given that no one was pictured in Q1.
Hi, Bill I'll start with that one and if JJ wants to round out any comments.
So what's going on between the CTX testing and treatment.
The first thing is C. Dx testing is one of a couple of eligibility criteria.
So it's an important one and it's probably the biggest piece to get done. There's also liver health testing, that's an eligibility criteria.
It is possible, it's likely highly likely that anybody that's going through the process of CTX testing is interested in.
Potential treatment with <unk>.
As as has been described to me by some of the the German physicians.
So the decision, making may not just hands on a positive or negative C D excess.
Possible, but as described to me.
Patients go back they confer with their family sometimes they have additional questions for their treating physician, sometimes they come back for additional appointments to discuss them and be counseled on right Fabian as a treatment option. So I think it's an important but not the only part in the process.
What am I termed the the purchase decision.
A patient for rock KVM.
And then the second question what gives us confidence.
First patients tested in Q2.
In the previous questions I was describing that we've got a patient funnel now that is 18 and <unk>.
Growing and if you said well.
The emergence of a patient at the top of the funnel as defined by.
Sending.
Sending sample in for CD excess thing and then I just describe maybe some of the other steps along the way additional liver testing.
Conferring with family thinking a big decision over maybe coming back into the clinic for further counseling that those patients are working down the funnel that leads to the purchase decision and as I said in the previous question every week I see updates and movement in.
In Germany, and the pace of those movement is is picking up all the time. So that's what gives me confidence that we will have shortly first or more than one patients coming out of the bottom of that funnel for treatment.
And maybe I missed you at this time to let just say that I mean first of all taking about a year to get your MSP in Germany.
Competitive markets is the norm.
So there's nothing that's surprising here again, we thought would be that <unk> would you be able to get it yes.
Yes, usually faster, but obviously, it's been difficult so we did sign.
In EMEA agreement.
Mainly with when payers that only represent about 10% of a German lives covered lives.
10% up 18 basis would be like $1 eight patients. So it's not that surprising because the other patients basically are not covered by.
An existing <unk> so.
So for the other patients who are dependent about a different insurance company.
And Germany physicians are personally liable financially for priest.
Prescribing a treatment or procedure.
Not when they don't they don't have coverage from there.
Six months.
You see here, we're talking about $8 million or so.
Cost of therapy. So obviously, you understand why physicians want to double and triple check that they are.
The health insurance company other pieces will cover the procedure before they move forward I think all of this is being Deepak.
And it's going to be happening.
This is right now based on the on the Green pipeline of patients.
We believe that we're going to get a patient treated.
In Q2 of this year in Germany, and then there are pieces of the country, you're talking about the rest of the world.
And then the other thing that you just forgot to mention is regarding what happened in the past two months. Since we gave the previous update of 10 patients that have been screening for 85.
In Germany to take I understand I think Easter holidays reduced yourself for two weeks enough in early April there wasn't there wasn't much activity going on anywhere in the vehicles do in Germany.
Also explain but it looked like.
We've got eastern I, it looks like things are picking up again in terms of.
That's great so which is very positive.
Yeah.
And our next question comes from Jessica Fye from Jpmorgan. Please go ahead Jessica.
Hey, guys good afternoon.
Thanks for taking my question.
Hey.
Hi.
One more on rock came in.
And then another one box of though so.
I think you mentioned you expect the first German patient to get rock TV in the second quarter, but maybe more broadly can you just help us understand your expectations for Rockies in uptake in Germany between now.
In September when you get that final reimbursement.
I guess like apart from a patient here and there does this upbeat.
About not pursuing it'll be as you mean that we should expect there.
Very modest uptake in Germany until the fall.
And then separately on box Odell.
Can you share your latest thinking about the most likely path to approval for settings like hypochondriac plays yet thank you.
I'll take the first part of that Jessica so relative to the subject of uptake.
We tried that.
And I think it was a good plan, but things didn't work out according to that plan. So I think we are resetting expectations about the pace of uptake. The time certainly the timing of first uptake, which I think is likely in Q2 of this year and as J J noted in the script.
The fact that were.
We are deemphasizing or deep prioritizing those outcomes based agreements in favor of the full federal process.
Probably means that we will have slower uptake until we get that.
Price finalize it doesn't mean that we won't have any uptake.
Because we've got one agreement in place and there is a process for a physician.
Issuance to submit.
Patients that they want to treat their insurer for.
Individual review, so that's kind of our our qualitative expectation there I'll turn it over to Hank for the box. So good question.
Fab two hypochondria pleasure other new indications for box Sogo pretty exciting question time, because so goes tremendous activity as a natural regulator bone growth and because the unmet need of individuals who have severe impairments in bone growth, resulting health outcomes are poor health outcomes and.
Path includes both generating some additional pilot data.
Which we've shared a little bit off, but we're generating more of that data and increase our and your confidence in the potential for rock Damian farebox ago to add value to patients with a scalable impairments and also dialogue with health authorities around.
Requirements for registration.
As far as our next steps with <unk>.
With.
Stakeholders.
Probably the next real meaningful update you'll get from us about the back and forth that we're having with health authorities is going to be when we finalize our plans and we can tell you what the trial is going to look like when it's going to start how many patients are going to be involved what the endpoints are going to be what if any or a comparator.
Concomitant medications in the trial, so pretty exciting time and stay tuned we're well underway.
And our next question comes from a cautious tomorrow from Jefferies. Please go ahead of cash.
Yeah, just on the upcoming data readout is there a potential the FDA may require you to run a trial head to head versus growth hormone and kind of what's your confidence that the sort of tightened efficacy won't drop off.
As we go to a one year and beyond obviously that didnt occur with achondroplasia, but with these new growth eye disorders. That's a question that does come up and then I also noticed you had 11 patients in Argentina screen for 85 antibody can you walk us through a reasonable launch timeframe and price expectations for markets outside of the U S and EU five thanks.
I'll start.
Your one question I have a survey by sub parts, but I may not get them all.
One is.
What what will be expected of us in regard to durability demonstration.
Core non achondroplasia indications in another part of your question is will lead to require comparator for example, with growth for them and I think the answers to both of those questions are a little bit TBD in the sense that we are in discussions with the agency and as I said, we'll tell you what sort of the resolution of all that.
In regard to more specifically the answer to your question by bi specific type of indication, but I think you'll also put your finger on the head.
The figure on the on the actual pulse of what the issues to address our and I think one of the really exciting things about the October was a natural regulator bone growth is that even in a severe skeletal dysplasia like achondroplasia, we were actually able to demonstrate sufficient durability to satisfy the agency the FDA that at least the changes that we saw in.
We are in fact real.
Reasonably likely to predict long term accumulation of a clinically meaningful benefit.
So I think that is a good platform you referenced that.
I also think the issue about growth hormone is that outside of growth hormone deficiencies. There isn't great evidence about accumulated benefit of growth hormone as regard well there and that's just.
Let me qualify that there is a lot of evidence about the cumulated hike benefit of growth hormone in non growth hormone deficiency syndrome, it's not very compelling evidence that is to say there isn't much of a hiking in regard to what growth hormone can do for children, who don't have growth hormone deficiency. So I think you take all that together and these are going to be the kinds of discussions that we have.
With the agency to chart the path forward for new indications for about setup, it's not without complications, but I think the settler for all of this is a medication like <unk> like October that has.
You know that has to prevent the property up being a natural regulator bank groups.
And your second question the gosh about what's the significance of what do we read into that.
Those 11 city excess in Argentina, I would say in a general sense.
<unk> named patient sales in the absence of or even prior just prior to our registration is an important part of our commercial picture overall.
Witness for example, the rapid uptake across our commercial footprint with Fox Sogo, some of which but not all of which is in markets, where we have.
Registrations, we don't tend to talk about those.
Market's a lot in detail because they tend to be smaller than it has come at a slower pace than for example, the major markets in Europe , Japan, or the United States, but they are important overall and I think Argentina and.
We have early signals of patient movement. A first prescription is is a good representation of what we might expect also in other markets.
Where we get going one patient at a time on a on a named patient basis. We also mentioned that Saudi Arabia, which is also in Peru, usually an early mover like Argentina on the named patient sales basis as.
We also are are underway and there's interest in rock baby and in that market. So what we're trying to do here is highlight the fact that beyond where we have very specific plans like in Germany, France, and Italy that Ive mentioned.
There is movement in those other important named patient sales markets.
Okay.
And our next question comes from Joseph Schwartz from <unk> Securities. Please go ahead Joseph.
Yes, hi, another question on <unk>.
I'm Jerry dialing in for Joe how is the process with a single public insurance fun in France, and Italy going and can you provide any more color around your expectations does he care reimbursement and access to my opinion later in 2023.
Hi, Julie so the process in each of France and Italy.
And in our commercial footprint with our with our kind of capabilities.
It is always a close follower to Germany in terms of timing and prioritization.
As markets essentially take a year sometimes longer.
To get price and reimbursement approval.
And you're right I mentioned as soon as we got our price listed in Germany, we submitted the full <unk>.
Some reimbursement dossier, there and got the process going last fall right. After we did that with Germany. We were submitting in the fall of last year for France, and Italy. So both of those processes are ongoing and there's no guarantee.
As there is in Germany that Youll conclude in 12 months.
But we're on track in both of those markets and we think it's likely that we'll be at the end of that process.
By the fall of next year and are in you know in the.
In the script, we mentioned.
This year.
Sorry, and we mentioned in the script that in Italy, and this is breaking news. It just happened last week that we were granted.
Conditionally innovative status for a rock canyon.
Does that confer anything specific but as.
Is in the general sense, a positive signal to how the how iva is looking at.
Brock avian in Italy, as an example.
Yeah.
And our next question comes from Gena Wang from Barclays. Please go ahead gena.
Thank you I.
Wanted to ask about Octavian.
For the 18 patients that completed antibody testing, how many would be eligible also in Europe now.
<unk> directly with key television with all pursuing outcome based agreements separate insurance does that make you what price would be much lower than the one 5 million.
Alright. Thank you previously discussed and then lastly, very quickly regarding the U S. Can you discuss on hemophilia a patient of theirs to reach 40 program.
How does that mechanism impact among PD initial launch.
Thank you gena for those questions. So let me start with the 18 CTX there than a.
Percentage that are eligible so first thing to note is CTX that thing as one.
One eligibility tests liver health as the second.
Relative to.
The AAV five zero positive or negative status.
First thing that we can do to guide our expectations on that is the publication from our server prevalence study in hemophilia a.
And in that study, which was published.
The overall Cerro positivity rates for AAV five in Germany was 35%. So that's guiding our expectations of the percent of patients. So it would be.
Eligible based on AAV five zero negativity.
Relative to the <unk> price negotiations and what we had guided to.
The net price of about $1 5 million euros, which was last fall.
We think it is likely based on what the <unk> is statutorily allowed to do we think it's likely that they will not.
Be putting into the agreement and outcome space component or a pay over time component.
But nothing is certain until we get done with that process, but youre right in that particular case, we think that the.
The price negotiations with GE JV will incorporate all of the aspects of value right avian including include.
Including durability.
For example, so we think that the final price would model in <unk>.
<unk> is looking at durability of rotating overtime and then relative to the 340 <unk> question in the United States.
And in our script remarks, we mentioned that where we're committed to this HTC model of treatment and follow up.
Hemophilia treatment centers are AC season in the United States are granted 340, b eligibility, that's a way of kind of funding. The work the important work that they do to care for hemophilia patients. So we think all or substantially all of our.
Revenue in the United States would be subject to the $3 40 B discount.
What's your opinion as to what that's going to do it through the lost some respect it's positive for us. So yeah. We think that's a very positive. So as I mentioned the reason for being for HD seems to have access to the 340 <unk> discount is to have a source of revenue to fund there theyre important operations and.
As Ross avian would likely be eligible for those 340, <unk> discounts for all or essentially all of their patients.
That's revenue that would accrue to those H D CS.
To fund our operations and that revenue would happen at the time of treatment.
Versus for example revenue that they might be getting from.
Supplying factor replacement products, which which they would see overtime and by the way.
Horton point to note is the HTC see a revenue comp on a from a.
Factor replacement therapy, only for a small proportion of their patients on average.
So we think that this is actually maybe a motivating factor for treatment with <unk> in the U S.
And our next question comes from Tim Lugo from William Blair. Please go ahead Tim.
Hello, Thanks for taking my question you mentioned about Bogo is on its way to becoming the first blockbuster for the company.
These other nor the kinds of places indication.
The marketing how much thank you.
Update us maybe I missed this on converting the accelerated approval to full approval.
So and then just.
Providing more equal I mean.
I think as we've made in the prepared remarks I think it just.
<unk>.
We only have penetrated about less than 10% of the market right now with OXXO achondroplasia.
So obviously, we can get past that and we are on a run rate already.
Oh.
Alright.
$480 million or so so it's obviously.
Acorn market alone, there's a lot of room to grow and we could easily pass $1 billion in revenues gone along.
So obviously all the indications are going to make it.
Even larger.
But that's kind of my first my first comment to your question, Jeff nothing to add that things should change.
Yes.
And then there was the question of the accelerated before nothing.
Nothing new to report there.
Published post marketing requirement.
The.
Specifics of the timing for that we've kept those relatively proprietary.
So stay tuned.
And our next question comes from Paul Matteis from Stifel. Please go ahead Paul.
Great. Thanks, so much surprised it took a long time to get a question on the F. D. A with rock KPN, but I thought I'd just throw it in there you should be only a handful of weeks away from labeling discussions just curious if you get update us on the cadence of your discussions and how everything's going and then if you do get approval in June do you think these.
Reimbursement warranties could be agreed upon them placed quickly enough to generate meaningful revenues Barack even in the U S. In <unk>. Thanks, so much.
Thanks, a lot for the question I won't get into the specifics of the back and forth, but I would say that as a general matter the things that we expect to be happening in some stage of the review appear to be happening.
And I think that gives us optimism I think we've also expressed some caution there because we don't have perfect visibility into everything going on in the agency exactly where senior management.
The people who signed the letters are but.
But we're optimistic.
But relative to the warranty Paul.
The nature of the warranty is that it is uniform and is non negotiable is available to all purchasers and essentially we don't have to negotiate.
The purchaser essentially gets that warranty with purchase so the timing.
The timing is relatively trivial.
There is no timing.
Okay.
And our next question comes from Robyn <unk> from Truest Truest Securities. Please go ahead Robyn.
Great. Thanks for taking my question, so just to clarify for Octavian.
Not getting the Ob as anymore can you give us some sense of what prices should be using because that's been a fixation of a lot of us for Europe .
And how to think about that in a second for Fox they'll go you're averaging now like 400 patients a quarter you might say in a lot of experience in new indications geographic shall we think of it more consistent or choppy.
Yes.
Okay.
Let me start off with the.
With the price component.
How we get there.
From a gross Tonight net process is different whether there's an outcomes based agreement or where no outcomes based agreement and that figured into the value of the durability of witches figured into the value of the upfront price, but the over where we wind up.
It should not be materially different.
For me the bat Yeah, I mean, that's also MVC. That's one of the reasons why we decided to focus though on the national price. He goes.
We assume that it's very likely that we'll not be year over year with a federal German federal governments and then so the so the this price might be lower than what we would potentially have had with adobe here, but the net price.
We'll be about the same based on the fact that there is no.
We don't we don't have to reimburse us.
Here's a based on.
Richard is patient is going back to proxy therapy. After 345 years. So net net we would anticipate based on our interaction with it. He gave you so far.
It looks very promising and we actually we don't anticipate any.
Substantial as Jeff said, a substantial difference with this approach.
And then relative to your question about the cadence of box sogo patient uptake.
It's within kind of a band it's actually been pretty steady.
Last few quarters underneath that steady uptake there was a lot of individual market dynamics.
Going on but it comes on pretty smooth.
<unk> suggests.
When modeling forward that you work from our revenue guidance. So we've updated most recently.
Acknowledging that we've had a lot of updates to those revenue guidance.
In a positive direction, but.
Yeah, I'd fall back to that.
And that is all the time, we have for questions today I would like to turn the call back to Biomarin C. O J J P enemy for closing remarks.
In conclusion, we are very pleased with.
Well I mean, our progress in the first quarter and the continued successful launch of box I'll go around the world.
Portions of our medicines to the people who rely on them as clear.
And one whereas sometimes the development that's always not always skier got who will continue to push that in the interest of our patients. Thank you for your support and have a good rest of the day.
Okay.
The host has ended this call goodbye.