Q1 2024 Biomarin Pharmaceutical Inc Earnings Call
You did it good afternoon. My name is Andrea and I will be your conference operator today at this time I would like to welcome everyone to the to the Biomarin pharmaceutical first quarter 2024 Conference call. Today's conference is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks.
So will be a question and answer session. If you would like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.
At this time I'd like to turn the conference over to Traci Mccarty Group Vice President Investor Relations. Please go ahead.
To remind you. This non confidential presentation contains forward looking statements about the business prospects of Biomarin pharmaceutical, Inc, including expectations regarding Biomarin <unk> financial performance commercial products and potential future products in different areas of therapeutic research and development.
Else may differ materially depending on the progress of Biomarin <unk> product programs actions of regulatory authorities availability of capital future actions in the pharmaceutical market and developments by competitors and those factors detailed in Biomarin filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports.
In addition, we will use non-GAAP financial measures as defined in regulation G. During the call today. These non-GAAP measures should not be considered in isolation from as substitutes for or superior to financial measures prepared in accordance with U S. GAAP and you can find the related reconciliations to U S. GAAP in the earnings release and earnings press.
Dentation both of which are available in the Investor Relations section of our website on.
On the call from Biomarin management today are Alexandra Hardy, President and Chief Executive Officer, Hank Fuchs President of worldwide R&D and <unk>.
Brian Mueller Executive Vice President Chief Financial Officer, Jeff <unk> Executive Vice President Chief Commercial Officer, and Greg Guyer Executive Vice President Chief Technical Officer are here with us to answer questions. During the Q&A portion of the call I will now turn the call over to Biomarin as President and CEO Alexandra Hardy.
Thank you Tracy and good afternoon, everyone. Thank you all for joining US today. In addition to strong financial results, we made significant progress in the quarter developing the components of Biomarin <unk> corporate mission and strategy all in the interests of positively impacting patients' lives, while creating value for shareholders.
And with a number of strategic initiatives ongoing to finalize these components will be communicated at Investor day, which we have now set for September the fourth.
We are pleased to share the first Chuck to update today the results from our strategic assessment Biomarin R&D portfolio.
As innovation is field Biomarin success to date, we undertook a prioritization.
Our overall portfolio.
Early lifecycle stage assets.
The goal of this assessment was to accelerate the delivery of those assets, which add the greatest value all of our stakeholders and align with the timelines for our strategic growth plans.
We added a commercial launch early in the portfolio review process to ensure that return on investment and resource allocation.
Impact.
All thoroughly considered.
As a result, we chose to accelerate three assets that we believe offer the most transformative potential for patients and VA.
<unk> creation shareholders.
We are also discontinuing full programs that did not meet our new high bar for continued development.
Moving briefly to progress made in the quarter on our four strategic priorities outlined in January.
With our opportunity to accelerate and maximize saga we made.
Second progress during the quarter with 74% revenue growth year over year.
More than 500 additional children receiving therapy in the first quarter.
In achondroplasia continues towards the status.
The majority of new U S prescriptions in the quarter.
Children under the age of five and important trend since FDA H expansion approval last quarter, albeit we continue to see expansion in the over five population as well.
Global access to bulk saga from infancy is having a significant impact on rapid uptake as families pursue maximum therapeutic benefit starting treatment early.
The United States, we continue to observe an increase in the breadth and depths of up prescriber base, that's real world experience drives confidence in booking for OXXO, guys extensive safety and efficacy profile.
Leveraging our established leadership in Achondroplasia, we also made important strides in our plans to expand multiple other growth related conditions.
<unk> program with bauxite go for the treatment of children with hydro contemplates that we will begin the treatment study midyear with a target of completing enrollment by the first half of 2025.
Just on ongoing discussions with global health authorities on study protocols with bulk saga.
Pathics story short stature at multiple genetic short stature off rate conditions, we expect to begin enrollment in these programs later this year.
The momentum we are seeing with bauxite guy in achondroplasia, yet supports our belief that see NPS and potentially unlock clinical benefit for children across a number gross related conditions for many years to come.
We'll share our perspective on the opportunities ahead with bauxite guidance based on strong proof of concept indications beyond achondroplasia as well as the potential longer acting formulations.
The second priority, establishing the Octavian opportunity continues to be complex with.
With pricing and reimbursement is established in the United States, Germany and Italy.
Aligning the required steps leading to patient treatment continues to pose different challenges for.
For example.
While a octavian national German price was established and published in December the sub insurers to new areas to reimbursement in the U S. The complexity of local site reinvestment contracting continues to be an obstacle.
We remain confident in the clinical profile of Octavian and we're pleased with rux avian update at the th SMA meeting showing durable hemostatic efficacy improve quality of life and no safety signals at four years.
With respect to the additional rotating in development programs, we are proceeding with rotating development in Japan and in the inhibitor population and of course other programs until we observed more meaningful Octavian commercial uptake.
Recognize the importance of allocating our resources to the highest value creating opportunities with current levels of Octavian investments and continued challenges with commercial uptake we plan to communicate our evaluation criteria for a paid in terms of its place in our portfolio and related timing for <unk>.
Potential next steps Investor Day September.
The third priority is our focus on the most productive R&D assets and as already mentioned I am pleased we have completed the initial chapter of that work.
Beyond our refreshed pipeline centered around three key assets to be accelerated we are in a strong position to leverage external innovation in conjunction with our internal capabilities to fortify our mid and longer term pipeline.
At Investor Day, we will also share more about our innovation strategy and plans and how they fit into our capital allocation and internal external external portfolio innovation strategist.
Lastly, our fourth priority to increase profitability faster than originally planned.
Demonstrated by our first quarter results were tracking well towards achieving this priority as I complete my first quarter as CEO I hope, it's evident we're taking decisive thoughtful action to realize our priorities all designed to align with our broader operational and cost transformation strategy has to be shared at Investor day.
Our full year 2024 guidance reflects.
Double digit revenue growth non-GAAP operating margin expansion and non-GAAP earnings per share growing faster than revenues.
These full year guidance items allow you to track our financial progress as we transform biomarin operating model to produce the best outcomes for the patients we serve our employees our shareholders.
So in summary, we are making tangible progress across the enterprise to reshape Biomarin corporate vision and strategy. This is enormous body of work that remains in process.
You can see from our first quarter updates, we're working with a sense of urgency.
And we are making definitive progress.
We're excited to continue this work over the coming months with the goal sharing our vision for successful future with you at Investor Day on September four in New York. Thank you for your attention I will now turn the call over to Hank to provide an update key R&D highlights.
Thank you Alexander and good afternoon, everyone. The R&D team is energized by the more focused approach decisions clarity on the path forward to advancing the highest potential programs following our portfolio review.
Leading innovative and scale Biopharma company is more important than ever that the way that we invest R&D resources and medicines that benefit the greatest number of patients. We moved forward with an evaluation framework that will provide a high bar for consistent assessment of programs to determine if they fit in our burgeoning portfolio strategy.
Briefly on the three programs that we chose to accelerate and starting with BMS 351 for the treatment of Duchenne muscular dystrophy.
<unk> five one as a potential best in class antisense oligonucleotide designed to restore full length dystrophin expression to more than 10% of normal steady state.
The next generation skipping Aldo this next generation skipping Allergan has the potential to convert patients phenotypes from progressive functional loss to Durably preserve strength and function if data are supportive.
<unk> hundred five one is differentiated from other antisense oligos based on optimized chemistry, and a unique slice enhancer target site, which together result in significantly improved potency for restoring dystrophin expression.
It is also differentiated from gene therapy as BMS 351 produces near full length dystrophin, rather than the truncated micro dystrophin produced via gene therapy.
And <unk> can be administered chronically.
For this reason, we believe the potential clinical benefit of <unk> five one over currently approved gene therapies and other treatments represents high value to patients and families living with this debilitating condition.
The 52 week clinical proof of concept study with BMS 351 is actively recruiting patients and will include 18 boys with Duchenne muscular dystrophy with the potential to expand enrollment as needed and is designed to assess both dystrophin levels and functional measures.
Also accelerating <unk> hundred 49, as a potential first world therapeutic for the treatment of Alpha one antitrypsin deficiency liver disease with the ability to address genotype beyond <unk> based on preferential binding to the Z protein with potential transformative effects on reversing fibrosis and preventing <unk>.
<unk> liver disease.
There is a large addressable market and we aim to differentiate ourselves from the competition based on specificity for the Z E.
L L and the ability to titrate to effect. This first in human study in helping healthy volunteers remains ongoing.
Being about 333, our long acting formulation of cgmp is designed to optimize and expand the reach of treatment for our portfolio of growth disorders.
Finding treatment optionality by a less frequent dosing and potentially improving the patient and caregiver experience.
Leveraging our current leadership in treating achondroplasia and anticipated expansion into other growth related conditions, including contemplation idiopathic short stature and multiple genetic short stature pathway conditions. We believe operating multiple treatment options will help families interested in safe and effective medicines to treat <unk>.
The disorders.
<unk> hundred 33 is completing IND, enabling studies and are slated to enter the clinic in early 2025.
Finally for <unk> at 293, our gene therapy for hypertrophic cardiomyopathy, we're completing activities to advance towards the clinic, while we wait additional supportive information and we will share our next update with you at Investor Day.
We look forward to accelerating our prioritized programs as they hold the highest promise for patients and align with the timing of our strategic growth plans.
<unk> cramps that did not meet the criteria for advancement, mostly earlier stage are listed in our press release and will wind down over the coming quarters.
No safety signals observed across the discontinued programs, we are working with sites now where applicable to continue monitoring patient safety.
On the call is the top priority and we'd like to thank all the patients who participated in these studies the investigators sites and other health care providers, having the inability to focus on our prioritized programs in terms of resources and strategy that will enable us to that will enable the highest probability of the most rapid outcome for patients who may benefit we will share.
More on timelines for each at Investor Day.
Touching briefly on other encouraging clinical updates validating our plans to expand <unk> reach to address a variety of growth related conditions. We were pleased to see Dr. Dobber is one year update from his hydro contemplation study demonstrating a one eight centimeter improvement in annualized gross velocity at the American College of medical genetics.
Our registration study and hypochondria placement is progressing well with the treatment study enrollment planned for mid year.
Targeting approval in 2027 subject to enrollment and data results.
I'm also pleased to preview Dr. <unk> abstract to be shared at the pediatric endocrine societies website.
Including very encouraging data from this study addressing both ISS and pathway conditions.
This first presentation of data at 12 months treatment with facts of it.
<unk> and ISS conditions showed positive efficacy results in all subgroups was well tolerated with similar safety profile to previous reports and patients with achondroplasia.
These data are supportive of our thinking around the role CMT may play in benefiting patients across a variety of growth related conditions.
We are still in discussions on study design for multiple genetic short stature pathway conditions and expect to have a more detailed update on the second quarter call and are still expecting to begin that setting in the second half of the year.
Biomarin clinical program in idiopathic short stature, we held productive discussions with the U S. FDA on this program and have aligned on plans to support approval in the us new condition new indication.
Based on this feedback we plan to start the clinical development program and ISS in the second half of this year. We expect our first party study protocol up and ISS to be posted to clinical trials Dot Gov. In the next few weeks and will include the following an agreed upon elements. The study will be placebo controlled phase II study and patients who will be naive to human growth.
<unk> treatment and we use the primary endpoint of annualized growth velocity determined at six months to determine the therapeutic dose levels.
Patients will be randomized to one of five study cohorts one of three different doses of oxide, including doses that are both higher and lower than the commercial dose in achondroplasia placebo or human growth hormone. We have made a lot of progress with the FDA in designing a development path for ISS and intend to refine the design of our phase II.
Graham as data emerge from the phase III program, including the results of dose selection from the planned study.
In conclusion, we are pleased with our rapid progress building out Biomarin leadership in multiple growth related conditions, and we look forward to updating you on our progress with these clinical programs in the coming months. Thank you for your attention and I'll now turn the call over to Brian for our financial updates.
Thank you Henk. Please refer to today's press release summarizing our financial results for full details on the first quarter of 2024, including reconciliations of GAAP to non-GAAP financial measures.
I'll first quarter 2024 results will be available in our upcoming Form 10-Q, which we expect to file in the coming days.
In the first quarter of 2020 for Biomarin generated record total revenue of $649 million, representing 9% year over year growth, 13% on a constant currency basis, driven by continued strong demand for <unk>.
Our base portfolio of products, including Kuban contributed $484 million of net product revenues in the first quarter looking more closely at net product revenue in the first quarter box yoga revenues of $153 million represented 74% year over year growth.
That level of growth was despite.
Hi constraint on box I'll go discussed last year and expected to continue through the second quarter of this year.
Our plan for supply to satisfy the forecasted commercial demand around the middle of this year remains intact.
21% revenue growth with pound Zika in the first quarter demonstrated continued momentum for the only biologic approved for the treatment of PKU offset by lower <unk> revenues as expected.
<unk> and Aldurazyme contributions in the first quarter were not surprising given the usual variable global ordering patterns for those brands.
Importantly, we continue to observe commercial patient growth in these brands that we expect will drive sustainable revenue growth over time, despite the quarterly order timing.
GAAP R&D expenses in the first quarter were $205 million, an increase of $33 million year over year, primarily due to increased early stage research activities as well as increased activity in our clinical programs.
SG&A expense in the first quarter was $226 million, representing a year over year increase of $15 million driven by the continued support of the global <unk> market expansion as.
As well as corporate expenses in the quarter.
This financial performance in Q1 drove an operating margin of 13, 6% on a GAAP basis, and 23, 8% on a non-GAAP basis.
Moving to the bottom line GAAP net income for the first quarter was $89 million, an increase of $38 million year over year, and representing GAAP diluted earnings per share of 46.
non-GAAP income for the first quarter was $140 million, representing non-GAAP diluted earnings per share of <unk> 71, and.
And growth of 18% over the same period in 2023.
The R&D prioritization decisions made in the first quarter positively impact non-GAAP diluted earnings per share in 2024 due to now lower levels of expected R&D expense in the second half of 2024 versus prior guidance.
We estimate that the discontinuation of the four programs announced today will result in a reduction of between $50 million to $60 million in R&D expense in 2024.
And as Alexander and Hank mentioned, we're prioritizing three of our pipeline assets as well as the Max they'll go indication expansion.
We identified opportunities to accelerate the development of those assets this year.
Therefore, there was a plan to offsetting increase in 2020 for R&D expenses of approximately 15% to $20 million, which together with the planned reductions. We expect will result in lower projected R&D expense for the full year of between $35 million to $40 million.
Those anticipated net R&D spend reductions in 2024 are driving an expected increase to our non-GAAP operating margin guidance to 24, 25%.
And an increase to our full year non-GAAP diluted earnings per share guidance to between $2 75 to.
To $2 95 per share.
Noteworthy is that we are maintaining our prior projections for the full year, except for the changes in R&D, including total revenue guidance, which remains the same as communicated in February.
Also this update does not include the impact of any further potential strategic business decisions and potential future cost efficiencies to be discussed at Investor day.
As we look forward to Q2 2024, we continue to anticipate limited revenue growth in Q2 versus Q1 due to the timing orders timing of orders for the enzyme products and similarly for Baxter will go while we manage through the supply constraint.
We expect higher operating expenses in Q2 versus Q1 due to normal quarterly business dynamics are various 2024 strategic initiatives and the timing of expenses.
With all this in mind, we expect limited total revenue growth in Q2 versus Q1, and we expect non-GAAP operating margin and EPS to be lower in Q2 than in Q1.
In the second half of 'twenty, four we anticipate more meaningful revenue growth as we expect to backfill those supply constraints to be resolved from an expense point of view, we expect all of the reduced R&D for the discontinued programs announced today to begin to be realized in the beginning of Q3 through the end of the year.
Lastly, while we plan to share our updated capital allocation strategy at Investor day regarding our $495 million of convertible notes maturing in August of this year, we plan to leverage our strong cash position and expected operating cash flow to repay the notes with available cash.
Furthermore, given the settlement structure. The notes we are planning for a share neutral outcome should the notes be in the money at maturity with the goal of returning value to shareholders by avoiding the potential dilution associated with the 4 million underlying shares.
As we move into our next chapter of Biomarin, we are executing on our growth strategy with impressive performance driven by Baxter will go into calendar plays in our pursuit of new indications.
A durable and growing and enzyme products business and an increased focus on streamlining the business through cost structure transformation and operating model efficiencies.
Together this presents an opportunity to drive meaningful improvements in our financial performance and sustainable shareholder value creation.
For your continued support and we will now open up the call to your questions operator.
Thank you we will now begin the question and answer session. If you have dialed in and then we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question and our listening via loud speaker on your device. Please pick up your <unk>.
<unk> sat and ensure that your phone is not on mute when asking your question.
We ask that you. Please limit yourselves to one question to allow everyone an opportunity to ask a question.
We will go first to Phil Nadeau at TD Cowen.
Good evening, Thanks for taking my question and congratulations on a good quarter just wanted to follow up on your comments on rock TV can you give us some sense of what you need to see to support continued investment in their Octavian program or maybe asked another way what.
What would you have to see over the next several months in order to decide to out license or Octavian or curtail future investments there. Thank you.
Thanks, very much the question Phil.
As you heard today.
Ill focus from the R&D side is to allocate assets to the highest value.
And clearly we have a high level of current Ortega and investments and continued challenges with commercial uptake.
What we're saying today is that at Investor day.
We will communicate our evaluation criteria.
The timing for that evaluation criteria.
At Investor Day on the fourth of September.
The possible outcomes of that I'll, just elucidate one would be that we see the uptake.
The ramp starting to happen in a meaningful way and that would be a state of course approach would be the outcome.
We will be we see a lower potential for the asset.
A path towards a.
Reasonable return on investment by right sizing the level of investment.
Across the organization from an R&D medical affairs and commercial standpoint.
And thirdly, the possible outcome be remove it from our portfolio and we divested the asset.
Speaker Change: So we're not ready yet to share the evaluation criteria.
When Patrick evaluation criteria timing would be but we will provide more information on this at Investor day.
I just wanted to also highlight that even as we speak right now, we've really focused our strategy and execution with rux agent.
We're focused on the site level pull through as the patients.
In the three major commercial markets, where reimbursement is established.
States, Germany and Italy.
We have.
Focus on lifecycle.
<unk> activities.
So the ongoing studies.
One is where we feel that there is.
Our high potential which is set at prior inhibitor population the registration in Japan.
And we will continue to.
To drive to drive towards an evaluation.
Communicate more on Investor day, Thank you Phil.
We will go next to Geoff Meacham at Bank of America.
Speaker Change: Yes.
Geoffrey Meacham: Afternoon, guys. Thanks for the question.
You've talked about label expansion for box sogo be of the highest importance strategically I guess the question is in the near term what are the next steps in optimizing the current formulation for box. Okay. I wasn't sure what the cadence of data coming up as is for that thank you.
Yes, Hi, Jess panic here.
So big picture absolutely. Your question started in the right direction, which is all of the activities that are underway to expand our CMP franchise into as many areas, where there's potentially transformative medical benefit for children with central impairments that at least at which is entering into a phase III.
Enabling trial and hyper contemplation at ESI.
<unk>, we're now well underway in terms of idiopathic short stature, and we're really making great progress with our long acting formulation. So in the category of additional presentations to delight patients. We have a lot of stuff. That's also going on internally that for proprietary reasons, we won't.
Detail until we're ready to get a little further along but suffice it to say that we have a lot of confidence in the future of the CMP franchise number of different opportunities for treating and transforming the lives of patients and at a number of different approaches to take to give families. As many good choices. They can have for treating their children.
Well move next to Salvino Victor at Goldman Sachs.
Good afternoon. Thanks Jess.
My question on the 16th.
Quick review here across the play.
So many levers for Lorraine.
Opex from this line and how are you thinking about the mid to late stage pipeline in this context.
Does that need to be done.
So this is essentially add.
Geoffrey Meacham: Pipeline.
Thanks, Tobey this is Brian.
You broke up for just a second when you mentioned the line item you were asking about would you mind repeating which one.
The R&D line item.
Yeah R&D thanks, Joe.
As you noted starting with your question. Thank you by the way.
This strategic review.
<unk> is looking at both strategy and operations and efficiency and.
Yes, we'll be eager to share details at Investor day.
But big picture similar to the.
Margin expansion narrative, just enhanced now that we've talked about in the past it starts with a bit of core leverage of what we've built over the last many years specific R&D full end to end early stage research clinical regulatory medical affairs.
Leveraging that engine.
And then next will be streamlining the business and cost transformation. So doing that same work, but more efficiently and then third is youre seeing today is prioritizing the work on the right assets. So those three things. We believe will provide leverage will share more details on what the specific levers are and the tools around cost transformation and busy.
This efficiency at Investor day, but those are the three big levers I hand, it over to Hank on the pipeline question.
Yes.
The portfolio evaluation, we undertook was actually it started as a planned activity, but I think what's new this year because we've been doing it annually every so often every trip last several years, but what was do I think this year well.
Yes.
A higher degree of rigor and a higher bar set.
And a tighter commercial input as as Alexander mentioned as.
As well.
I have to comment that I'm very pleased about that tighter commercial connection starting under Jeff and looking forward to Kristen joining.
There will really be able to have the opportunity to look at assets, which are both important and transformational to patients, but also valuable to biomarin as an organization what didn't change in any of this review was this notion that we're going to do what we can to make a big difference in People's lives, we're going to leverage goodbye.
G to find those assets that we believe are highly likely to work increasingly.
Increasingly what we've been doing is tying the timing considerations of our portfolio to our emerging growth strategy, which kind of leaves then the last piece of your question over I'll turn it over to Alexandra to talk about your comments about the rest of the pipeline and potentially making room for later stage or other assets.
Yeah. Thanks very much. Thank you. Thank you Sylvia good question.
Yes.
We are we.
We have a.
A real commitment to innovation at Biomarin and <unk>.
We're excited about what we see in our early pipeline. We're excited about the three assets that we are prioritizing to accelerate.
And we're extremely excited about the Fox soccer and lifecycle management, which we are really excited at this at this quarter.
To share some really significant progress I think keeps you heard in <unk> comments.
But we also see that going forward in terms of that.
Meeting, our ambitions and growth into a long long time, we see a role for external innovation.
Geoffrey Meacham: Past that.
Very successful for us from an early research standpoint.
We now see that.
There is an opportunity by dialing in on on on assets.
<unk>.
Could augment our existing portfolio.
Leverage our distinctiveness I E. What we know and we know we do well.
And others.
That we should.
It'd be more open to those sorts of opportunities.
I would just to stress that.
Our guidance at the moment for this year does not reflect.
Any incremental BD activity.
We will share more and you'll have to get used to is saying this will share more at investor day.
Our plans in this space, but in the interim we've got no plans right now to transact.
But we do see a growing role for this in the future.
Helpful. Thank you.
We'll take our next question from Chris Raymond of Piper Sandler.
Thanks.
Just on the on the leverage you guys highlighted here the focus today is on the.
The R&D line, but I guess I wanted to ask on another important line item, which is SG&A.
Biomarin this historical spending as a percent of revenue has been pretty meaningfully above that of your large cap peers.
And I know the.
Last few if you will hasn't dropped yet with respect to all.
All the transformation, you're affecting here Alexandra, but any sort of thoughts there in terms of the potential.
In terms of having.
Maybe a more inline SG&A line item.
Hey, Chris This is Brian Mueller. Thank you for the question I'll start just to give you a little more color on the line item and then maybe hand it over to Alexander.
Thinks about the opportunity.
So I might reference back to the comments I gave.
In response to <unk> question on <unk>.
Barry.
Diverse complicated.
Global sales and marketing supply chain.
And related supporting infrastructure.
That's the the level of <unk>.
Operational capability that we built over the last decade, and basically over the last couple of years and now going forward.
Growing into it and making that machine work at that same infrastructure. That's marching back sogo, that's driving a lot of the margin improvement that youre seeing last year and this year it'll be that same infrastructure that matches future problems.
<unk>.
Grows the business from here.
It does start with leveraging what we built recognizing that that was a significant investment in the last few years.
And then next what we're doing is streamlining it again, our focus over the last several years has been that organic capability growth. We're now focused on optimizing the business.
And prioritizing the work.
Also making sure we're reallocating resources not just to the right places organizationally and globally, but in the right brands.
Box. They will go with this growth we've seen in its future potential deserves more resource allocation. How can we continue to sustain this this robust launch and for the mature brands is there an opportunity to be more efficient there and recognize that while there are still growing they may not require the same level of investment that they did.
Over the years, so thats the approach <unk>, Alexander and comment on the opportunity.
Yes, thanks, very much Brian and thanks for the question Chris.
So I mean I've been very impressed by the.
The potential leverage we have vita without footprint 70 countries.
And the capabilities we have globally.
So building off of leverage just just like we've done with separately R&D, where we are.
<unk>.
Hi.
To really leverage the capabilities we've got.
To have a greater impact to be more efficient and thats one of the one of the work streams that we have as cost transformation.
Looking at all the line items.
On a P.
P&L.
Say, how can we now optimize stock.
So you can expect.
To hear more from us in Investor day.
About our specific plans on the G&A line.
On the.
On the sales and marketing line and additional efficiency in <unk>.
How we do research and development.
This will all be rolled up.
Into the long term guidance, we will be providing.
And our path to significantly improved margins, which as we said.
Starting this year was one of our priorities is so more details to come but it is certainly one of the areas of focus for us.
Okay. Thank you.
We'll take our next question from a cash to worry at Jefferies.
Hey, this is Amy unfair cause thanks, so much for taking my question. So first what's driving the difference between the reported box.
That's correct me on Opex. Thanks, so much.
Thanks for the question Amy This is Bryan I'll start and.
Jeff has any other color to add I think what you're starting to see on the box over the line.
Is that.
The consequences of its robust growth globally.
A number of significant markets now online whereby.
We've got two things going on one.
Order timing, we see.
In that.
Trend over the years with the enzyme business, we're seeing a bit of larger for those.
For those markets that place less frequent larger orders, we're seeing sandbox logo.
Revenue impacted by basic order timing two is the timing thing is patient additions.
And being a chronic therapy any new patient additions for <unk>, especially in say the second half of the quarter are going to be less revenue generating than patients that were on drug the entire quarter. So that's another dynamic that could just drive the disconnect that you mentioned and then perhaps to the first point there is some <unk>.
Aspects right now with the supply constraints, we are managing through the supply constraint by managing orders at the specific market and SKU level, and that's going to throw the trends off a little bit you might recall back in Q4, where we reported revenues over our guidance not because we over performed on patient additions.
But because of some additional supply became available and so we shifted into the market. So I will ask you to stay tuned we're trying to provide.
The right metrics in terms of patients and ask you to follow revenues.
To watch those trends, it's a great question, but it is dynamic and Jess giving me a thumbs up silver government.
And that gene the gene therapy question weather.
Divestitures as an option.
Yes. Thanks, Thanks for the question on TVN divestment.
As I mentioned before our focus right now.
Is making sure that we've really.
Establish what the opportunity is.
Geoffrey Meacham: We've refocused our strategy around that.
I talked already about.
Possible.
Outcomes of.
Of our assessment.
And one of them could be that we removed from the portfolio and divest.
That is not our focus right now.
We are known engaging with people around the divestment uptake. It our focus is really on establishing the opportunity right now, but should we remove it from the portfolio. We will absolutely look at the options around divesting it.
Yeah.
We'll go next to Jessica Fye of JP Morgan.
Hey, guys good afternoon.
You.
Hi, Jess.
Long acting we have every reason to believe that the dosing interval there could be as long as weekly, but obviously that's going to be informed by early human clinical trials to actually measure what that dosing frequency is going to be.
On 293.
It's a program we want to gather a little bit more information we've recently.
<unk>.
Learned that there is a population of patients with <unk>.
<unk> deficiency in hypertrophic cardiomyopathy.
Severely affected with really poor outcomes.
As measured for example by short time to left ventricular assist devices or mortality and we are actively working with investigators to understand better how findable those patients are and how interested motivated those patients are and finally, whether theres a regulatory pathway to a faster approval by virtue of.
The severity of their condition.
As we've learned are the more significant the medical the unmet need is that more a motivation there can be for the uptake of these novel disruptive types of therapy. So.
That's the additional information were gathering and will keep you informed as to decisions that we make about further advancement of 293.
Thank you.
We will go next to Joseph Schwartz at Leerink partners.
Great. Thanks very much.
About the <unk>.
Now of operating expense savings, which might be realized as a result of the remainder of the strategic and operating assessment, which is ongoing can you give us any insight into the relative degree of operating expense savings, which might remain to be realized relative to what you announced today, even if it's just general order of <unk>.
Magnitude.
Yeah. Thanks, a lot Joe it's a really good question given we talked today about the financial impact of what was a discrete clear eye view on the portfolio itself the financial repercussions in the net reduced R&D were a consequence of that.
Portfolio review not the purpose.
And that in.
From there I would not make an influence on what the future potential savings are for two reasons. This was a review top to bottom of the current portfolio and again the consequence.
But also the strategic review and the remaining optimization of the business as work in process. So we'll have to put that latter part.
The category is stay tuned for Investor day to hear both the strategy.
Tap tap level business strategy operational excellence strategy long term guidance.
And we will give color on all the line items, how we plan to be more efficient and cost but.
Part of your question I would not make that influence today.
Okay. Thank you.
Our next question comes from Gena Wang of Barclays.
Thank you for taking my questions.
I had one regarding the <unk> revenue of $8 million in the quarter.
We also together with I believe many investors did the due diligence regarding exactly how many patients are treated in the first quarter. So based on our due diligence we understand that Germany actually there is no patient treated.
And if something does it did their due diligence believed there are fewer patients are treated in the U S. So the question here is <unk> can you remind us where that revenue is from and also.
Good point, the timing for you to recognize revenue so as well as pay for performance the Walgreens at what point you might.
Geoffrey Meacham: My understanding previously was across too, but just wanted to make sure.
Hi, Dana Jeff here.
Yes, we are.
Jeff: And I've heard of some survey or due diligence work.
By yourself and others, but without knowing the methodology and so forth of the survey results, we can't really speak to them specifically, we can speak to our revenue. So in the press release. It was noted that first patient was treated in Italy.
And the revenue that you see in Q1, it was tied to that participation in Italy.
Revenue recognition varies a little bit by by market, but essentially genome.
We can tell when product is shipped.
To patients.
We're scoring revenue right around that treatment of patients and so.
If your question is is it likely that there has been a bunch of patients treated and we're not seeing that.
In our prepared remarks or revenue I think the answer is no and maybe Brian could make some further remarks about revenue recognition, yes, I think you've got it right Jeff. Thank you.
Maybe just noting the nuance in Italy.
Italy happens to be a market where title transfer and revenue revenue recognition occurs before the actual dosing of the patient hence the March revenue in the <unk>.
First week of April.
Treatment I'll share.
That and other key markets like the U S and Germany that revenue recognition entitled transfer.
As much closer if not at the point of infusion.
Thanks.
We'll go next to Elie Moreau at UBS.
Elie Moreau: Hey, guys. Thanks for taking the question.
Can you help us understand how you're thinking about the relative size of the opportunity between ISS and genetics SAP care pathways.
And also as long as the level of clinical risk or clinical validation from the data that you've seen.
Elie Moreau: Between the two MPS Glen studies.
That is and just help us understand how you're thinking about the biology and confidence in our company.
Hum.
Is that.
Alright, Thank you your conference.
Yes, maybe I'll start on the R&D Science piece, and then look for help from Alexander on the market sizing kinds of pieces, although I can say a little bit about things like epidemiology, but.
From an R&D perspective, our confidence that <unk> is going to work and conditions beyond Hypochondriacs Asia is driven by genetics, and we've talked about where.
Patients, who had humans, who have gain of function mutations in the CMP pathway are taller than their predicted final adult height. It would be in patients who have negative mutations are shorter. So these are human.
We'll proof of concepts about exposure there also individuals.
Who are extremely tall, who have gain of function mutations in MPR to or who are.
Or and its receptor so lot of biological data, but what is new now is.
We're days away from Dr. Dobber presenting his first 12 month cohort of using <unk> to treat patients with either pathway conditions in his case Noonan syndrome or were things that were formerly known as idiopathic short stature because that that term got coined before sequencing helped us to understand.
And that specific mutations could be accountable for what was formerly known as idiopathic short stature and had an opportunity as has the food and drug administration to review those emerging data, which led them and us to conclude that there is a great prospect for benefit with the sort of tied.
And the treatment of these relatively more common conditions, though you've heard me talk about idiopathic short stature in terms of the volume of people who are available you know thats something like a two standard deviations below average stature campuses two 5% of the basically the human population. So we're talking about a fairly.
Large potential indication of Alexander you want to add anything more about that.
In terms of the size of these.
Future invitations.
J P. Morgan, we talked about how the indications beyond.
They can replace yes, so hypochondria place ISS.
ISS.
<unk> ton is shocks in total represented about 600000 patients and add to the total global addressable population for achondroplasia of 21000.
We're obviously going to be and I just wanted to highlight this that we're going to be going for more Sofia.
Uh huh.
Patient population for example, idiopathic short stature.
Got it.
Missions.
And Youll see and if you go onto clinical trials Dot Gov is actually it's actually posted today youll see the design of a phase two study.
So we'll share more at Investor day about the times for all of the different.
Indications.
Represent significant multiyear growth potentials for.
Fox Saga.
And it's pretty exciting to see and being able to share that today not just the R&D prioritization for the progress, we're making with OXXO got.
No just the uptake.
Really exciting to see in achondroplasia globally with growth accelerating, but we've had really productive conversations with regulatory authorities.
Have.
Definite plans now.
Solidified.
From Okay.
Feedback from the FDA on ISS, we have clarity now of duration of the study endpoints comparator.
Have a very clear path forward.
In multiple disease indications.
Attunity to bring books, sorry go to so many more patients around the world.
Elie Moreau: Great.
We'll go next to Paul Matteis with Stifel.
Paul Andrew Matteis: Thanks, so much.
I was curious what the management team's current thinking is on the various competitors are in a contemplation.
Given that we're going to get data from a couple this year and as you think about potentially I don't know if thats exactly a point essentially giving margin guidance or commentary aspiration at the investor day, it feels like whether or not there is competition in the contemplated is a key variable so would love your perspective on that thank you.
Yes, thanks very much for the.
A question.
I really do appreciate it.
Overall, we're feeling very good about where we are.
In.
In achondroplasia and now with the path forward and all these other indications starting to become really quite clear from us for us.
Demand in the feedback from families is excellent we see really good assist.
Assistance and adherence to bulk saga.
And.
We're really every day and we're on the market clearly we now have over 3000 patients now on book Saga.
Establishing a safety and efficacy profile.
A lot of confidence to physicians to prescribe the product.
And also family members and parents.
Children now infants beginning treatment.
I think from our perspective, we've done extensive market research, we really understand these.
These disease states.
It's really very clear.
Most important thing to note.
Patients and caregivers.
Unequivocally is safety and efficacy.
And then we will not sacrifice that.
For convenience.
I was I was reviewing with the team some of the market research just give you a couple of a couple of examples.
Okay.
Kind of give a cent.
Weekly or normal would need to be within 5% or less of the efficacy of bulks, okay, but I wouldn't consider it.
Safety is an absolute.
And the physician said my number one priority for novel therapies safety and efficacy.
Won't be sacrificed to something more convenient.
So whilst we believe.
At <unk>, we're excited about it.
TPP for that is for it to be leased is effective and safe spoke saga with.
With the potential for Hank mentioned will convenient dosing, but we believe that Fox Argos as well set up to be.
Already robust.
Competitors into any potential new entrants.
Thank you.
Our next question comes from Mohit Bansal at Wells Fargo.
Great. Thanks for taking my question and staying on the competitive team I think one of your competitor is also testing a longer acting CMT in combination with growth hormones.
Uh huh.
Any conduct Asia, how do you think about the.
How do you think about the rationale there and do you think you could do something like something similar.
For Sogou and then the related question is in the ISS.
Trial that has been posted it seems like you're testing against growth hormones.
Paul Andrew Matteis: And so a little tough to rationalize combination therapy to do better than basically normal I think the most important thing to be doing with OXXO go as regards to improving long term outcomes is to start therapy earlier, which was why we were so keen to have a label extension into almost every market in the world whereby the telcos.
Paul Andrew Matteis: Available to almost from infancy, because that's where you can make a big difference in the overall outcome and again probably doesn't necessarily warrant a the addition of another therapy. It warrants are starting therapy as soon as the condition is understood.
Paul Andrew Matteis: And I think the same story for ISS.
Paul Andrew Matteis: Need to look at the data.
Paul Andrew Matteis: That comes out next month's from Dr. Dobber to gauge how much of a stature of improvement we get and whether there is any room for improvement.
Paul Andrew Matteis: But I wouldn't anticipate that being a key consideration finally in the phase III study you mentioned.
Paul Andrew Matteis: The inclusion of the growth hormone ours really purely for internal reference so that we have a sense of sort of randomization, what the sort of apples to apples comparison might be as Alexandra just mentioned, then and I believe I steered us in the direction of we do have agreement from the food and drug administration on some really cardinal import Cardinal important.
Paul Andrew Matteis: <unk> of the design of the Phase III program, just to recapitulate them. We've agreed on the target patient population that is growth hormone naive. We've agreed on the endpoint 52 weeks annualized growth velocity as improvement and most importantly, we have agreed with the agency that placebo can be an appropriate comparator for the registration so we're well under.
Paul Andrew Matteis: Wei don't believe that we need to add other therapies into the armamentarium to augment the effective ESR tied because it's doing just fine by itself.
Speaker Change: Helpful. Thank you.
Speaker Change: We will go next to Vikram here ahead at Morgan Stanley.
Vikram: Hi, good afternoon. Thanks for taking our question. So we had a follow up on rock avian.
Vikram: Obviously discuss some of the reimbursement and market access challenges the product is seen here to date, but looking forward.
Vikram: Could you think about some of the strategies, you're putting in place now.
Vikram: Help with.
Vikram: But the operational lift of the franchise and how many months or quarters would you expect it to take four.
Vikram: Some of the challenges to be a bit less of a variable in the product's trajectory assuming the franchise stays in house with Biomarin.
Vikram: Alright. Thank you for the question. This is Jeff I'll field that one.
Jeff: As Alexander mentioned earlier, we're really focused on patient pull through in the markets, where we have reimbursement approvals. So reminder, that the U S. G.
Jeff: Germany and Italy.
Jeff: <unk>.
Jeff: Patient pull through is really.
Jeff: The last mile that we've experienced the challenges with so we think that.
Jeff: Establishing proof of concept and pulling those patients three of that last mile and getting them treated as what we need to do.
Jeff: Going forward basis, how long that will take.
Jeff: Undetermined Alexandra already mentioned that at Investor Day early September criteria will be laid out for what that looks like.
Speaker Change: And the only other thing I would comment on is.
Speaker Change: In Europe in most cases.
Speaker Change: The commercialization starts with the price and reimbursement approval.
We got the GBA approval listed in December of last year. It was four months ago in Italy that was three months ago. So one way of looking at the situation at least in Europe is to say, perhaps the clock started ticking three to four months ago and those too.
<unk> markets and so thinking about how long that might take during.
During the course of this year could be instructive. Thank you.
Thank you.
Okay.
We'll move next to Tim Lugo with William Blair.
Hey, guys. This is lachlan on for Tim. Thanks for taking the question. So you've identified <unk> as a strategic priority and have obviously made a lot of progress on the development front can you indications, but is there anything you're doing on the commercial front that too because I noticed you obviously out of the.
Much larger number of patients this quarter than last quarter. So I'm just curious if that's sort of a result of any direct.
These are actions you've taken or just.
The maturing markets increasing supply.
Yes.
Thanks very much for the question, we're really happy with the progress on box or go I mean, it is one of the priorities we set out.
We didn't describe has tremendous potential.
100 basis, as we talked about extensively in the diseases set right now it's an April depletion and that ramp is.
Accelerating we added.
500 patients.
First quarter.
Compared to adding 300 patients in the fourth quarter of last year.
So we're seeing that growth is actually accelerating.
It is driven very much by zero to five.
Good luck to use the product from from bus, which is now in many many geographies around the world.
And it's good to see that that growth is actually consistent.
Across the major markets.
With the U S actually driving the most growth which is great to see because this was this was where we didn't have the same breadth, we're now seeing that.
And I think the zero to five and that team is really focused on that.
As well as the other things that we've been doing the same bearing fruit, which is really focusing on the pediatric.
Just making sure we've got referral pathways setting up the skeletal dysplasia clinics, which is going to be very important not just for achondroplasia, but also for the subsequent indications.
So.
The team is really driving on.
So in those geographies.
There's one thing that actually I do wanted to say which is.
With regard to supply.
We mentioned in our.
Prepared remarks.
We'll be hitting.
Supply levels.
We'll be able to meet.
Demand.
In the middle of this year.
But we have really good news to share with regard to the deep.
The maximum supply by available this year in.
In January at the JP Morgan Conference, we shed a supply plan for Bulks cargo, which is obviously very very critical, especially as we accelerate our lifecycle.
So the ambitions for this product.
We are now going to be able to supply by the end of this year.
8000 patients.
Supplies worth all folks are good.
You remember from January that's what we said we would achieve by the end of 2025 so.
The.
The team here in manufacturing has moved this up by one year.
And this continues to give us confidence.
Even as we ramp up demand for bulk saga.
The end of this year, we're going to be able to meet that demand.
And that is all the time, we have for Q&A today, I will turn it back to Alexander Hardy.
Well. Thank you all for joining us today, I hope use HUD and it came across that how hard this team and all of the teams across Biomarin are working right now.
Shape, the future corporate and R&D strategy.
Biomarin and we're setting very ambitious long term financial targets and we're starting to deliver on them.
We've got a real sense of urgency I think that comes across.
And we're really looking forward to sharing our vision with you at our full plans with you all in New York Investor Day on September 4th.
Meantime, thank you very much for your attention and wish you all wonderful evening take care.
And that does conclude today's conference call again. Thank you for your participation you may now disconnect.
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