Welcome to the BioMarin Second Quarter 2020 Financial Results Conference Call. Hosting the conference call today from BioMarin is Traci McCarty, Vice President of Investor Relations. Please go ahead, Tracy.

Thank you, Laurie, and thank you, everyone, for joining us today. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin’s financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin’s product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin’s filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K report. On the call remotely from BioMarin management today are J.J. Bienaimé, Chairman and Chief Executive Officer; Jeff Ajer, Executive Vice President and Chief Commercial Officer; Robert Baffi, President of Global Manufacturing and Technical Operations; Hank Fuchs, President, Worldwide Research and Development; and Brian Mueller, Executive Vice President and Chief Financial Officer. We hope to keep this call to 1 hour so we respectfully request that you limit yourself to one question during the Q&A portion of the call. Thank you for your understanding. I will now turn the call over to our Chairman and CEO, J.J. Bienaimé.

Thank you, Traci. Good afternoon and thank you all for joining us on today’s call. We hope that you and your families have been well during these uncertain times. While at BioMarin we continue to manage the business in new ways to ensure access to our essential therapies around the world. I want to commend our employees for their extraordinary commitments to our mission of providing innovative treatments to people with rare diseases which have been especially challenging in a COVID-19 world. Our second quarter results of $430 million in total revenues are 11% growth over last year is a testament to the importance of our diversified product base and far-reaching commercial footprint. Consistent with our commentary in Q1 we experienced impact from COVID-19 in the second quarter, but hope to return to normal demand patterns by the end of 2020 barring any significant deterioration of the pandemic situation before year end. We continue to expect to achieve full year revenue and operating expenses guidance as communicated on our first quarter call. Moving now to the most anticipated milestones of the year, the advancement of our two product candidates under regulatory review, ROCTAVIAN gene therapy for the treatment of severe hemophilia A and vosoritide for the treatment of achondroplasia. In June we were pleased to share the four-year ROCTAVIAN data set at the World Federation of Hemophilia Virtual Summit following a wildcard infusion of ROCTAVIAN all study participants who received the marketed dose remained off exogenous factor VIII prophylactic therapy and demonstrated a greater than 90% reduction in bleeding episodes four years after treatment.

Thank you, JJ. As we discussed results from the second quarter of 2020, I’d like to begin by saying I'm very proud of the team's performance across all regions during this quarter which has challenged the entire world to think, react and operate differently than ever before. When we provided our Q1 quarter results to you, the COVID-19 situation was still developing, yet we were already focused on assessing and forecasting near and longer-term impact from what remains today a dynamic and unpredictable situation. These Q2 results are in line with the revised guidance that we provided previously and reflect the strength and resiliency of our business. They are also a testament to the ability of our teams globally to quickly employ mitigation efforts to reduce the impact of COVID-19 as much as possible. Further, these results underscore the recognition worldwide that we are providing essential therapies to patients with high unmet medical needs and the prioritizing access to these products is vital to their long-term outcomes.

Thanks Jeff. As JJ mentioned, we will not be commenting on the status of the review of our ROCTAVIAN BLA given how close we are to the PDUFA target action date of August 21. Thank you for bearing with us. In Europe, our marketing authorization application filing remains under accelerated assessment at this time. However, and as we previously communicated, the review procedure has been extended by at least three months due to COVID-19 related delays. As the situation improves in R&D as was the case with most filings and initially seen in the accelerated assessment, we believe there is a high possibility that our MAA will reverse the standard review procedure from accelerated assessment. Based on these assumptions we expect the CHMP opinion late in this year or early next year. I have already stated the ROCTAVIAN program is coming soon with our 134 subjects Phase 3 studies completion. Subjects in the study will have completed 52 weeks of observation by the end of November with data readout anticipated soon thereafter.

Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the second quarter of 2020. As usual, our comprehensive report on the quarter will be available in our upcoming Form 10-Q which we are planning to file later today. Starting with revenues, we've observed that the impact of COVID-19 on our commercial business is overall consistent with our expectations back in April. As Jeff mentioned, we experienced a modest top-line impact from the COVID-19 pandemic in the second quarter that has continued into the start of the third quarter. We note that much of our business is beginning to stabilize and is on trajectory toward normalized demand patterns. We considered this level of COVID-19 impact on our business when we revised guidance in April and we remain committed to full-year 2020 revenues of between $1.85 billion to $1.95 billion. Moving on to operating expenses, R&D expense for the second quarter was $182 million, slightly lower compared to R&D expense for the second quarter of 2019, which is mostly due to reduced R&D activity for ROCTAVIAN given its late stage of development. SG&A expense for the second quarter of 2020 was $175 million, which is slightly higher than SG&A expense for the second quarter of 2019. As expected, the year-over-year increase is due to commercial preparation for the launch of ROCTAVIAN and the continued global launch of PALYNZIQ. Turning to the bottom line results, we reported GAAP net loss of $29 million in the second quarter of 2020, compared to GAAP net loss of $37 million in the second quarter of 2019. The net loss in the second quarter was expected due to the COVID-19 impact on revenue and the overall timing of our quarterly revenue expenses for the year. This quarter's net loss was considered when we provided our 2020 GAAP net income guidance earlier in the year. With higher revenues and essentially flat SG&A and R&D expenses, non-GAAP income of $57 million in the second quarter of 2020 also grew substantially as compared to Q2 2019. Both of the second quarter 2020 bottom line results keep us on track towards achieving our 2020 goals of full-year GAAP net income for the first time in BioMarin's history and considerable growth in non-GAAP income. With respect to total cash and investments, we ended the second quarter of 2020 with $1.7 billion compared to $1.2 billion at the end of 2019. The increase in cash in Q2 was related to our May convertible note offering that brought us $535 million of net proceeds executed primarily to pay down the $375 million of convertible notes due in October of this year. Beyond the May convertible note issuance and despite the COVID-19 impact on our business, we generated $28 million of positive operating cash flow in the second quarter of 2020. This solid cash position, coupled with BioMarin's business fundamentals, puts us in good standing to both manage through the uncertainty related to COVID-19 as well as launch ROCTAVIAN and vosoritide should they be commercially approved. Finally, I would like to discuss a significant one-time item that we anticipate will impact GAAP net income in the second half of 2020. As I mentioned on the Q1 conference call back in April, we may recognize a tax benefit related to transfers of intangible assets between BioMarin entities. As I mentioned previously, you may have seen similar transactions completed by some of our larger peers over the last year. Our previous 2020 GAAP net income guidance of between $20 million to $80 million noted that it excluded the potential impacts of these intangible asset transfers. We now expect these transactions to occur in the second half of 2020, which we estimate will result in a one-time non-cash income tax benefit of approximately $700 million to $900 million in 2020. Therefore, we have adjusted our full-year GAAP net income guidance for this one-time tax benefit and now project that full-year 2020 GAAP net income will be between $720 million and $908 million. The range acknowledges that we've not yet completed the intangible asset transfers and therefore the final value cannot not be determined with certainty. Considering the high value of the underlying BioMarin products, the amounts are significant. Importantly, we note that our base business performance, excluding this one-time item, remains on track to generate GAAP net income for the full year for the first time in the company's history. Also, as this transaction impacts the income tax line item in our financial statement, we expect to exclude it from our non-GAAP income for which guidance remains unchanged at $260 million to $310 million. In closing, our second quarter results in trends towards normalization in the second half of the year. In addition to the potential approval of ROCTAVIAN indicate that 2020 should be a transformative year for the company on many levels. Thank you for your support and we'll now open the call to your questions.

Your first question is from Joseph Schwartz from SVB Leerink. Please go ahead.

Great, thanks very much. I was just wondering if you're planning to employ any special tactics in order to support a successful launch of ROCTAVIAN during a pandemic period. Is there anything based on your wealth of experience launching different products that you think you might want to bring out of your bag of tricks or any new strategies given the new world we're operating in?

Jeff, do you want to answer the question?

Yes, happy to. Thanks Joe for the question. And this is going to sound deceptively easy to say, harder to do in practice, but what we're having to do is to shift from largely, not exclusively, but largely from live interactions to virtual interactions and in the absence of having many more live interactions. We're increasingly turning to digital assets to help us communicate with different commercial stakeholders. I might comment that the virtual interactions have gone pretty well with payer groups in particular, the payers have shifted very nicely through virtual interactions, but are not too different in quality from live interactions. We've got a team on the ground, a commercial and sales organization on the ground that are connecting with patient associations, providing educational opportunities on gene therapy. Those virtual interactions give us an opportunity in some cases to cast a broader net than we would if we were doing a live programming event. There have been enough live interactions with hemophilia treatment centers and their associated infusion center locations that have allowed us to pursue launch and infusion readiness activities for ROCTAVIAN in advance of launch with a smaller but perfectly adequate number of treatment sites to be ready at or shortly after launch to facilitate a launch. So that's kind of a summary.

Very helpful. Thank you.

Your next question is from Salveen Richter of Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking my question. On ROCTAVIAN approval, could you just walk us through the process for a patient to receive the gene therapy outside of the payer process? So basically how blood tests sites have been of excellence and any other factors would come into play?

Yes, so Salveen we have a commercial organization and medical affairs have been working on actually guiding and helping the patients with the whole process. And Jeff can describe that to you. Jeff?

Thanks for the question, Salveen. And in fact, a lot of what happens with the patient journey for ROCTAVIAN will be very similar to the kind of patient journey that we've become accustomed to dealing with, with the launch of Brineura and Vimizim for example. So the patients already fortunately have a diagnosis, but they need to go through a diagnostic process to check for AAV5 sero negativity. So there is a code diagnostic in there, but again, relative to our enzyme programs, there is also this diagnostic step that we're adept at facilitating. Education about the therapy, I mentioned in response to Joe's question. I also noted that like we would do with the enzymes, we're focused on having a number of treatment centers that are educated and ready to initiate therapy upon or shortly after launch. So there's that step. And then there is some preparatory step that the patients need to take to get ready for infusion in parallel with that and probably the biggest rate-limiting step would be going through the reimbursement approval process. And again, this is stuff that we have a team that's been doing this in the United States and are very adept at that. We've been doing this for many years, and then getting the infusion scheduled at an infusion center. It's only one infusion again, not too dissimilar from our experience with the enzymes. One thing worth noting is there is a significant patient follow-up for 52 weeks following infusion. And again, this looks a lot like the kind of patient support that BioMarin provides for our other enzyme replacement therapies. So there are a lot of really new and innovative aspects about ROCTAVIAN from a commercial perspective and relative to patient's baseline standard of care. There is also a lot of parallels between what we'll need to do with ROCTAVIAN and what we already do with our base business. So we feel like we're leveraging a lot of competencies here. Thank you, Salveen, for the question.

Thank you. Your next question is from Cory Kasimov of JPMorgan. Your line is open.

Hi, thanks. Good afternoon guys. Thanks for taking the question. I saw that the WFH treatment guidelines for hemophilia A were just updated, and I'm just curious whether this timing poses any potential problem for ROCTAVIAN since it came up for preapproval, or would you expect them to be updated following potential commercialization? And on that note, do you have any color in terms of how meaningful guidelines might be on uptake curves for hemophilia A or what we've seen in the past?

I mean, could you be more specific as to what changed in those guidelines? Just Cory…

Well, they just came out and it was sent around earlier that World Federation Hemophilia updated treatment guidelines and for it to happen now, just in front of the approval, there is commentary on gene therapy, but obviously nothing specific. And so, I didn't know if you are going to interact with them at all, or if they update these guidelines somewhat regularly, or when new important new products are approved. I was just trying to get a better understanding of what the dynamics might be on that front and whether it would be a potential tailwind, if they update on deals of whatever kind of irrelevant data speaks for itself in a setting like this.

Again, I'm not aware that those guidelines are creating any kind of impediment for us. So, Hank or Jeff, are you aware of this?

Yes, I can take a first comment on this one and see if Hank wants to augment. Thanks for noticing those treatment guidelines, Cory. In fact, treatment guidelines in the world of hemophilia are longstanding. They're very important and they do get updated periodically. So I don't think it's a problem that those treatment guidelines have updated in advance of an approval of ROCTAVIAN. I might expect that there would be another cycle and a reasonable period of time perhaps prompted by the availability of gene therapies, and that an approved gene therapy or therapies would be incorporated in those treatment guidelines. In the meantime, I don't think that's an impediment to the launch of ROCTAVIAN, but as Hank stated in his prepared remarks, this community has been waiting for gene therapy for decades. There is a huge amount of interest in ROCTAVIAN and gene therapy in general. I think we've got some tailwinds in that regard already and without having new guidelines that actually incorporate gene therapy.

Okay. That's what I assumed. Thanks for the color though, Jeff.

I think the other thing just to add would be, we've dosed 134 patients in the Phase 3 trial. So we've got a lot of hands-on experience now to share with the community. We've been in a lot of conversations, medical symposia, et cetera, because there is a great educational opportunity. As Jeff says, it's almost like a dry sponge filling with information. So we've been doing a lot of the work that you do in between guideline periods anyway.

Okay, thank you guys.

And your next question is from Robyn Karnauskas, SunTrust Securities. Your line is open.

Hi guys. Thank you for taking the question. So it sounds like you're making a lot of progress getting facilities up and ready for gene therapy. Two questions on that point. So what are your expectations? Do you have any updated thoughts on the eligible patient population? I know you said 400 before if I believe, and you gave some color around that last quarter, any additional numbers there or thoughts? And then on the viral testing for the virus, are there any patients that are getting that done - they're possibly getting it done and they are getting it reimbursed ahead of the launch or should we expect that, that will have to take place as you've worked for the reimbursement process and be another step in the delay? Thank you.

Yes, those two or three questions, I mean I could answer them, but Jeff is the expert there and I'll let Jeff answer those questions on reimbursement.

Okay, thanks JJ. Great questions, Ron. So just to reiterate, we've modeled what we think is an appropriate eligible patient population at launch of 2,400. It's worth noting that every six months the CDC numbers that estimate the people with hemophilia in the United States are updated and they bounce around a little bit. So those numbers could change over time, but base – and our modeling estimates would be based on whatever is finally in an approved label for ROCTAVIAN. But even if there is some variation around that 2,400, I think is a pretty solid number we're sticking with, and that's just a launch. And so, a reminder that with lifecycle management activities, we would hope over time to broaden that eligible patient population. And then regarding your comment about the co-diagnostic to test for AAV5 sero positivity, we're waiting for that co-diagnostic to be approved, probably temporarily in line with ROCTAVIAN approval. To my knowledge, there's not been an opportunity to test for that in advance of the launch. Hank may have more specifics on that point.

All are technically correct what Jeff just said about the companion diagnostic. We're planning that we're going to be approved with a requirement of companion diagnostic. We've been working with CDRH and our laboratory partner to assure the availability of the companion diagnostic on ROCTAVIAN approval. You can't get the companion diagnostic without the companion being approved. So they're hinged together and the agencies where the centers work together to time that. So it's not possible to be testing somebody for the companion diagnostic prior to its approval.

Great. And one follow-up any color around the foreign, you said you identified foreign people through family and friends. It's kind of like a hodgepodge number, as that increased, as you've really drilled in with the hospitals and got to know or in preparation for this launch, is that number just forward? Is that trending in upward direction or downward direction?

Yes, I think, Robyn, if I heard you correctly, you're inquiring about the number of opt-ins for further information that we've been collecting over time. Yes, the number of opt-ins for further information has been increasing commensurate with the kind of educational activities that we've been doing on a virtual basis and also commensurate with people accessing our digital assets and opting in for further information. So I don't have specific numbers to share with you today. But it's an encouraging indicator of interest and hopefully future demand.

Great, thank you guys. Thanks a lot.

And your next question is from Matthew Harrison of Morgan Stanley.

Hi all, thanks for taking the question. This is Connor on for Matthew. So just two quick from us. How are you guys thinking about pricing for ROCTAVIAN? And could you just comment on what kind of impact generally you'd expect to see with being able to dose patients due to COVID? And then, just quickly on PKU? What are the steps that you need to complete to start dosing for the PKU gene therapy studies? Thank you.

I will start and Jeff can talk about pricing and Hank about the PKU gene therapy. Currently, I just want to certainly make one comment regarding the ability to dose patients. I mean, we can treat patients with ROCTAVIAN in the current environment. One of the issues and questions we've had. We used to that was using steroids with potential with ROCTAVIAN, in the current environment. As you might know, some of you there were a few publications a few weeks ago in the UK, using steroids for the treatment and the management of COVID-19 patients. The study actually showed that the steroid had a beneficial effect on COVID-19 management, although I'm not personally recommending you do that. My point here is that it appears that if anything, that the need or likely need to use steroids in the early days of starting treatments with ROCTAVIAN should not be an impediment to using ROCTAVIAN based on this and actually the fact that steroids are actually recommended as approved in the UK for the management of COVID-19. So with that little preamble maybe Jeff, you could answer the pricing question and then Hank can talk about PKU gene therapy. Jeff?

Okay, thanks, JJ. So relative to pricing, as we have with our other recent launches, we'll disclose pricing when we have the good fortune of having a product launch, we hope will be soon. So stay tuned for that. I’ll turn it over to Hank, regarding the gene therapy question.

Next steps are for clinical trial sites to finish the paperwork that's involved. We've had to revise consents for in the COVID pandemic, and so they're also going through revisions. As soon as sites are up and ready for dosing, we'll start a project that will be in the third quarter.

Understood, thank you.

And your next question is from Philip Nadeau of Cowen and Company. Your line is open.

Good afternoon. Thanks for taking my question. Just one question on ROCTAVIAN reimbursement. Jeff, I know you said during your prepared remarks that you've been able to engage with payers virtually, can you talk a little bit more about what you've been able to show them? Whether they understand the value of gene therapy and hemophilia? And maybe lastly, what type of reimbursement paradigm is going to predominate? Is there any desire to do alternative reimbursements or is it likely to be a one-time upfront fee? Thanks.

Okay, thanks for the question, Phil. Yes, our payer launch actually started in Q4 of last year under a safe harbor provision provided by the FDA for these types of situations. So we have a payer team that is very experienced, the same payer team that launched PALYNZIQ in the United States, and that launched Brineura in the United States. So, good working relationships and access with payers. We were able to put together the standard in the U.S., so-called AMCP dossier, which is the basis upon which all payers evaluate new drugs. We've been able to educate them on data related to our investigational program to date. We've been able to talk to them about their hemophilia book of business, which has been really positive in the sense that for all payers, their hemophilia book of business is large. It's material; they all want to do something about it. Combined with the high level of interest on the part of payers in gene therapies in general and how they're going to fit that into their business model, it's been a really nice combination. We've gotten a lot of access and had a lot of really productive engagements. The whole outcomes-based agreement concept in the United States to date has been limited by government price reporting rules related to Medicaid. That's kind of limited the options. There's a proposed rule out from CMS that intends to address that as a proposed rule. The way it's proposed, it's not going to be relevant to our ROCTAVIAN launch. We've been working in the background and trying to find a way of having a meaningful outcomes-based agreement that stands behind what we expect to be the performance of ROCTAVIAN, and that the payers will find meaningful. We're intending to go out to launch with that. While details are confidential at the moment, we expect that would likely result in a one-time recognition of revenue for ROCTAVIAN as opposed to recognition of revenue streamed over time, for example.

That’s helpful. Thank you.

Your next question is from Chris Raymond of Piper Sandler. Your line is open.

Great, thanks. This is Aari on for Chris. Another question on ROCTAVIAN and the hemophilia A landscape. We noticed last month, Roche took an impairment on the FARC gene therapy asset on the rationale that Hemlibra has shifted the goalpost for gene therapy, efficacy, and safety. Just curious to get your thoughts on this based on your interactions with the physician and patient community ahead of launch? Is it your sense that Hemlibra has meaningfully changed patients' opinions to be dosed with ROCTAVIAN or other gene therapy approaches or how does that actually come into the patient level decision making on gene therapy? Thanks.

Hank, do you want to start? I mean, actually, we're not really, I think there was a question as far as I know, there was a question about a potential impairment to be taken by Roche, but I don't think they have taken an impairment as far as I know. That's just for clarification purposes. And that is related to this will be all related to their acquisition of Spark, which has a somewhat different profile from ROCTAVIAN at this time. So Hank or Jeff, do you want to make some comments or reply to the question here?

One comment would be to. I'm not familiar with the impairment either. But I would say that the 8011 data at the highest pH didn't particularly exceed expectations. It is one thing that is interesting about the Spark data since that you can get gene transfer relatively low, you can get hemostatic efficacy with relatively low levels of gene expression. I think like a two years their data was like half of our data two years. Even if we drift down a little bit like prognosis, the factory data yes. Yes, they had bleeding control at half the factor VIII levels that we had. And so that prognosis as well if our factor VIII levels do in fact drip down we should be able to maintain hemostatic efficacy for a while, but I don't think that their safety profile - I think their safety profile and efficacy profile warrants further investigation. As far as patients' preferences for in hemophilia, as I said in my comments, the community has been dreaming about having actual factor VIII made endogenously for years and years. Hemlibra is a fantastic advancement. It's not for everybody. Patients have breakthrough bleeding, and we think hemophilia gene therapy is going to be a really solid offering in this community. Maybe Jeff, do you want to add anything?

Yes, I would. I would just add that Hemlibra has certainly changed the treatment landscape. It has also broken through the myth that hemophilia patients are unwilling to change therapies. So if that has kind of broken through the barrier of switching, that could also bode well for another big advancement coming to the market, namely ROCTAVIAN if we're so fortunate with an approval.

And your next question is from Joshua Schimmer of Evercore ISI. Your line is open.

Hi thanks for taking the question. Can you discuss your expectations for Kuvan version is generic center in the U.S., what percent on brand do you think you can retain over the mid and long-term?

Jeff, do you want to go over that?

Hi, Josh. Thanks for the question. I think just to ground everybody. We have a loss of exclusivity on Kuvan in the United States coming on October 1. We've anticipated and prepared for this for a long time. Also, to remind and reinforce about 75% of our business in Kuvan is coming from the United States presently. So this is a big event for us. What's unclear, Josh, is how a generic erosion curve applies to a specialty product like Kuvan. There aren't very many good analogues to study. The ones that we have, have complicating factors. So it's a little bit difficult to guide to in the background. You know that BioMarin provides a lot of Patient Support Services and reimbursement services to patients. So we've worked really hard to build a value-added relationship that is recognized by all patients, their providers, and also payers. That said, we're expecting a significant erosion of our business. We don't think it will be the immediate catastrophic type of loss of share that you might expect for a retail pharmacy product going generic. Beyond that, I'm afraid we can't offer a lot more specific guidance, or at least I can't.

Okay, you covered it. Jeff, that this is only impacting the U.S. business. So no, there are no generics, no loss of exclusivity at this time in Europe.

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

Hi guys, thanks for taking the question. I know the focus obviously is on U.S. ROCTAVIAN, I want to ask you in Europe, though, what do you need to do in advance of that launch, maybe just help us with some of the nuances between the U.S. and Europe in terms of how care is delivered for hemophilia and then just talk about maybe your visibility outside the U.S.?

Jeff, do you want to cover that?

Yes. Thanks, Geoff. Great question. There are a lot of similarities between how hemophilia is treated in Europe and in the United States. One thing to note is there's a greater concentration of care in centers of excellence in the major European markets. As we've worked with stakeholders in Europe to prepare for an eventual launch, we've been encouraged in the major markets to kind of work with a concentrated set of centers of excellence, which is actually working really well for us because it limits the number of resources that we need to have at launch out in the field working with treatment centers. The biggest gating factor in Europe is navigating price and reimbursement approvals. From watching our most recent launches of PALYNZIQ and Brineura, even where there is a high need that's being addressed, those things can take time. Particularly, we're being slowed down from COVID-19 related issues on that front in Europe. The big upside in Europe, of course, is that there's a bigger patient population. Overall, the patient opportunity in Europe is very large. Even if it takes a little while longer to tap into, if we have, if we're so fortunate of having a U.S. launch followed by an EU launch, we would expect more rapid uptake in the United States, but a bigger opportunity in terms of numbers of patients overall from Europe. Thank you, Geoff.

Okay, thank you.

Your next question is from Martin Auster of Credit Suisse.

Hi, everyone. This is Mark on from Marty. Thanks for taking my questions. So you mentioned earlier that there are, there may be 2,400 immediately addressable hemophilia A patients in the U.S. at the time of ROCTAVIAN launch. Can you speak to what the process is to expand the label, what those timelines might be? And ultimately, what portion of the population do you think could eventually become eligible for your drug? Thank you.

We have a whole program over the next few years to expand the addressable population, Hank and Jeff can outline this if you're interested. We anticipate a very significant increase in the eligible population over time. The number we're giving you is about 14% of the U.S. population, but the U.S. hemophilia A population that's all commerce, not just your patients. I think this could expand to probably 40% or 50% of the population over time. But Hank do you want to start or describe what we're trying to do, and Jeff can add some comments.

Sure. The two biggest segments to go after immediately in terms of lifecycle are patients who have pre-existing immunity to capture the AAV5 and we actually have an ongoing study and we're collecting data on the impact of pre-existing immunity on factor VIII expression and bleed control. So that's ongoing; it is going a little slowly but it's ongoing. A second major area for investigation would be in patients who have had inhibitors—about 25%, 35% of the hemophilia patient population has inhibitors to factor VIII they've been excluded from clinical trials. We've talked about patients with pre-existing liver disease. We've talked about starting to dose adolescents, so there can be quite a lot of excitement about bringing a drug like ROCTAVIAN to an earlier age population for better preservation of overall health. Those are just some of the lifecycle thoughts, much of which is already underway. The first step to achieve label expansion is to finish the label, so that's where we are.

Jeff, do you want anything to add or?

Nothing further to add; that was complete. Thank you.

So before the next question, just a point of clarification. If we look into information regarding Roche, write off it looks like they took a $400 million writeoff in their most recent quarter, which is, I guess, less than 10% of the acquisition cost of Spark. It looks like they're finding this is the main reason for a delay in the implementation of the Phase 2 and Phase 3 trials because of COVID-19, which is likely to result in lower sales and we would agree with that. Next question?

Your next question is from Akash Tewari of Wolfe Research. Akash, your line is open.

Hi, sorry. Sorry I was on mute. So can you walk us through the incentive structure for ROCTAVIAN, for doctors, particularly at the 340B level? Will they be getting a percent of the total cost of ROCTAVIAN? And how do you think that those incentives will impact the initial launch for 2020 and beyond? Thanks a lot.

I mean, I could start; I mean it. I mean, the majority of honest thing is that the majority of hemophilia treatment centers are our 340B hospitals in the U.S. Consequently, in treating most patients will be treated in 340B hospitals. Generally, 340B hospitals get a 21% or 22% discount for most drugs. We also understand that for recombinant factor VIII and also recently for Hemlibra that discount can be reduced to 17%. So we're likely to start with 21%, and we might eventually get reduced to 17%. These are payments made directly to the treatment centers. I would say we don't believe there is a disincentive there to use ROCTAVIAN because, right now, let's say they seem to be priced ROCTAVIAN for about four years of value of the current standard of care. So instead of the centers getting those 20% or so discounts over four years, they can get them entirely upfront and those payments are made directly to the centers. Anything to add, Jeff?

That was well stated, JJ. Thank you though. The only other thing I would add to that is, there may be a perception that these hemophilia treatment centers are concerned about losing revenue streams that are ongoing over time from existing patients receiving factor replacement therapy chronically. Our research indicates that hemophilia treatment centers have a revenue 340B revenue stream from only a portion of the patients under their care, and that just kind of amplifies JJs comments. We think that, in fact, the 340B margin that these treatment centers would likely be able to take from ROCTAVIAN would be significant and would be a good incentive.

And I would like to turn the call over to J.J. Bienaimé, Chairman and CEO for closing comments.

Thank you, Operator. So now we are over halfway through 2020. I have continued confidence in BioMarin’s ability to deliver on the tremendous opportunity for value creation that we have ahead of us. Our underlying fundamentals remain strong, and we are well positioned for achieving our mission. We've built a successful base business in 2020 and our pipeline to address larger rare indications. We've laid a foundation for significant profitability with ROCTAVIAN until we got approvals. All this positions BioMarin for substantial accomplishments in both the near term and the long term. So we are looking forward to the remainder of 2020. We apologize if we couldn't get to your questions because we limited the Q&A to one hour. Please, if you have questions that we have not addressed here during the call, please reach out to Traci McCarty and we can hopefully address your questions. So, thank you all for your continued support and stay safe.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Presenters, please stay on the line for your closed conference.