Biomarin Pharmaceutical Inc Q1 FY2024 Earnings Call

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the BioMarin Pharmaceutical First Quarter 2024 Conference Call. Today's conference is being recorded. 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 nonconfidential 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 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 presentation, both of which are available in the Investor Relations section of our website. On the call from BioMarin management today are Alexander Hardy, President and Chief Executive Officer; Hank Fuchs, President of Worldwide R&D; and Bert Brian Mueller, Executive Vice President, Chief Financial Officer. Jeff Ajer, 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's President and CEO, Alexander Hardy.

Thank you, Traci, 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's new corporate vision and strategy, all in the interest of positively impacting patients' lives while creating value for shareholders, with a number of strategic initiatives ongoing to finalize these components to be communicated at Investor Day, which we have now set for September 4. We are pleased to share the first chapter update today, the results from our strategic assessment of BioMarin's R&D portfolio. As innovation has fueled BioMarin's success to date, we undertook a prioritization of our overall portfolio from early to life cycle stage assets. The goal of this assessment was to accelerate the delivery of those assets, which add the greatest value to all of our stakeholders and align with the timelines for our strategic growth plans. We added a commercial lens early in the portfolio review process to ensure that return on investment, resource allocation, and patient impact were all thoroughly considered. As a result, we chose to accelerate three assets that we believe offer the most transformative potential for patients and value creation for shareholders. We are also discontinuing four programs that did not meet our new higher bar for continued development. Moving briefly to progress made in the quarter on our four strategic priorities outlined in January. Beginning with our opportunity to accelerate and maximize our Voxzogo, we made significant progress during the quarter with 74% revenue growth year-over-year and more than 500 additional children receiving therapy in the first quarter. Voxzogo in achondroplasia continues towards blockbuster status. The majority of new U.S. prescriptions in the quarter were for children under the age of 5, an important trend since the FDA's age expansion approval last quarter, albeit we continue to see expansion in the over 5 population as well. Global access to Voxzogo from infancy is having a significant impact on rapid uptake as families pursue maximum therapeutic benefit by starting treatment early. In the United States, we continue to observe an increase in the breadth and depth of our prescriber base as real-world experience drives confidence in Voxzogo's extensive safety and efficacy profile. Leveraging our established leadership in achondroplasia, we also made important strides in our plans to expand the multiple other growth-related conditions. Our pivotal program with Voxzogo for the treatment of children with hypochondroplasia will begin the treatment study mid-year with a target of completing enrollment by the first half of 2025. Based on ongoing discussions with global health authorities on study protocols with Voxzogo for idiopathic short stature and multiple genetic short stature pathway conditions, we expect to begin enrollment in these programs later this year. The momentum we are seeing with Voxzogo in achondroplasia supports our belief that CNP can potentially unlock clinical benefit for children across a number of growth-related conditions for many years to come. Hank will share a perspective on the opportunities ahead with Voxzogo based on strong proof-of-concept in indications beyond achondroplasia as well as the potential for longer-acting formulations. The second priority, establishing the Roctavian opportunity continues to be complex. With pricing and reimbursement established in the United States, Germany, and Italy, aligning the required steps leading to patient treatment continues to pose different challenges. For example, while the Roctavian National German price was established and published in December, the sub-insurers have inserted new barriers to reimbursement. In the U.S., the complexity of local site reimbursement contracting continues to be an obstacle. We remain confident in the clinical profile of Roctavian and we're pleased with the Roctavian update at the TH SNA meeting, showing durable hemostatic efficacy, improved quality of life, and no safety signals at four years. With respect to the additional Roctavian development programs, we are proceeding with Roctavian development in Japan and in the prior inhibitor population and of course, other programs until we observe more meaningful Roctavian commercial uptake. We recognize the importance of allocating our resources to the highest value-creating opportunities. With the current levels of Roctavian investments and continued challenges with commercial uptake, we plan to communicate our evaluation criteria for Roctavian in terms of its place in our portfolio and related timing for potential next steps at Investor Day in September. The third priority is our focus on the most productive R&D assets. We have completed the initial chapter of that work. Beyond our refreshed pipeline, centered around three key assets to be accelerated, we're 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 portfolio innovation strategies. Lastly, our fourth priority to increase profitability faster than originally planned. As demonstrated by our first-quarter results, we're tracking well towards achieving this priority. As I complete my first quarter as CEO, I hope it's evident that we're taking decisive and thoughtful action to realize our priorities, all designed to align with our broader operational and cost transformation strategies 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's operating model to produce the best outcomes for the patients we serve, our employees, and our shareholders. So in summary, we are making tangible progress across the enterprise to reshape BioMarin's corporate vision and strategy. This is an enormous body of work that remains in process. But as you can see from our first-quarter updates, we're working with a sense of urgency on this, and we are making definitive progress. We're excited to continue this work over the coming months with the goal of sharing our vision for a successful future with you at Investor Day on September 4 in New York. Thank you for your attention. I will now turn the call over to Hank to provide an update on key R&D highlights.

Thank you, Alexander, and good afternoon, everyone. The R&D team is energized by the more focused approach, decisions, and clarity on the path forward to advancing the highest potential programs following our portfolio review. As a leading innovative and scaled biopharma company, it is more important than ever that we invest R&D resources in medicines that benefit the greatest number of patients. We move 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, starting with BMN 351 for the treatment of Duchenne muscular dystrophy. BMN 351 is the potential best-in-class antisense oligonucleotide designed to restore full-length dystrophin expression to more than 10% of normal at steady state. The next-generation skipping oligo has the potential to convert patients' phenotypes from progressive functional loss to durably preserve strength and function if data are supportive. BMN 351 is differentiated from other antisense oligos based on optimized chemistry and a unique splice enhancer target site, which together result in significantly improved potency for restoring dystrophin expression. It is also differentiated from gene therapy as BMN 351 produces near full-length dystrophin rather than the truncated microdystrophin produced via gene therapy. And BMN 351 can be administered chronically. For this reason, we believe the potential clinical benefit of BMN 351 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 BMN 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 BMN 349, a potential first oral therapeutic for the treatment of alpha-1 antitrypsin deficiency liver disease with the ability to address genotypes beyond PiZZ based on preferential binding to the Z protein with potential transformative effects on reversing fibrosis and preventing end-stage liver disease. There is a large addressable market, and we aim to differentiate ourselves from the competition based on specificity for the Z AAT allele and the ability to titrate to effect. This first-in-human study in healthy volunteers remains ongoing. BMN 333, our long-acting formulation of CNP is designed to optimize and expand the reach of treatment for our portfolio of growth disorders by providing treatment optionality through 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 hypochondroplasia, idiopathic short stature, and multiple genetic short stature pathway conditions. We believe offering multiple treatment options will help families interested in safe and effective medicines to treat rare skeletal disorders. BMN 333 is completing IND-enabling studies and is slated to enter the clinic in early 2025. Finally, for BMN 293, our gene therapy for hypertrophic cardiomyopathy, we are completing activities to advance it towards the clinic while we wait for additional supportive information, and we'll 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. The programs 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. There were no safety signals observed across the discontinued programs. We are working with sites now where applicable to continue monitoring patient safety per protocol as a top priority, and we would like to thank all the patients who participated in these studies, the investigational sites, and other healthcare providers. Having the ability to focus on our priority programs in terms of resources and strategy, that will enable the highest probability and 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 Voxzogo's reach to address a variety of growth-related conditions, we were pleased to see Dr. Dauber's one-year update from his hypochondroplasia study demonstrating a 1.8-centimeter improvement in annualized growth velocity at the American College of Medical Genetics. Our registration study in hypochondroplasia is progressing well with the treatment study enrollment planned for midyear. We are targeting approval in 2027, subject to enrollment and data results. I was also pleased to preview Dr. Dauber's abstract to be shared at the Pediatric Endocrine Society's website, including very encouraging data from his study addressing both idiopathic short stature and pathway conditions. This first presentation of data at 12 months of treatment with Voxzogo in Noonan and ISS conditions showed positive efficacy results in all subgroups. It was well tolerated with a similar safety profile to previous reports in patients with achondroplasia. These data are supportive of our thinking around the role CNP 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 study in the second half of the year. On BioMarin's 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 a new indication. Based on the feedback, we plan to start the clinical development program in ISS in the second half of this year. We expect our first study protocol in ISS to be posted to clinicaltrials.gov in the next few weeks and will include the following agreed-upon elements. The study will be a placebo-controlled Phase II study in patients who will be naive to human growth hormone 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 Voxzogo, 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 the development path for ISS and intend to refine the design of our Phase III program as data emerge from the Phase II program, including the results of dose selection from the planned study. In conclusion, we are pleased with our rapid progress building out BioMarin's 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, Hank. 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. All 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 2024, 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 Voxzogo. Our base portfolio of products, including Kuvan, contributed $484 million of net product revenues in the first quarter. Looking more closely at net product revenue in the first quarter, Voxzogo revenues of $153 million represented 74% year-over-year growth. That level of growth was despite the supply constraint on Voxzogo 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 of Palynziq in the first quarter demonstrated continued momentum for the only biologic approved for the treatment of PKU, offset by lower Kuvan revenues as expected. And within Naglazyme and Aldurazyme contributions in the first quarter, we're 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. GAAP 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 Voxzogo market expansion 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 $0.47. Non-GAAP income for the first quarter was $140 million, representing non-GAAP diluted earnings per share of $0.71 and growth of 18% over the same period in 2023. The R&D prioritization decisions made in the first quarter will 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 are prioritizing three of our pipeline assets as well as the Voxzogo indication expansion. We identified opportunities to accelerate the development of those assets this year. Therefore, there is a planned offsetting increase in 2024 R&D expenses of approximately $15 million to $20 million, which together with the planned reductions, 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% to 25%. And an increase to our full-year non-GAAP diluted earnings per share guidance to between $2.75 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. 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 of orders for the enzyme products and similarly for Voxzogo while we manage through the supply constraint. We expect higher operating expenses in Q2 versus Q1 due to normal quarterly business dynamics, our 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 '24, we anticipate more meaningful revenue growth as we expect the Voxzogo 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 of 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 Voxzogo in achondroplasia in our pursuit of new indications, a durable and growing 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. Thank you for your continued support, and we will now open up the call to your questions. Operator?

Just wanted to follow up on your comments on Roctavian. Can you give us some sense of what you need to see to support continued investment in the Roctavian program? Or maybe asked another way, what would you have to see over the next several months in order to decide to out-license Roctavian or curtail future investments there?

Thanks very much for the question, Phil. As you heard today, our focus from the R&D side is to allocate assets to the highest value, and clearly, we have a high level of current Roctavian investments and continued challenges with commercial uptake. What we're saying today is that at Investor Day, we will communicate our evaluation criteria and 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. The second would be, we see a lower potential for the asset and a path towards a reasonable return on investment by rightsizing the level of investment across the organization from an R&D, medical affairs, and commercial standpoint. And thirdly, the third possible outcome would be that we remove it from our portfolio and we divest the asset. So we're not ready yet to share the evaluation criteria or when valuation 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 Roctavian. We're focused on the site-level pull-through of the patients in the three major commercial markets where reimbursement is established, the United States, Germany, and Italy. We have focused our life cycle management activities. So the ongoing studies, ones where we feel that there is a high potential, which is the prior inhibitor population and the registration in Japan. We will continue to drive towards an evaluation and communicate more at Investor Day. Thank you, Phil.

I know you've talked about label expansion for Voxzogo being 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 Voxzogo? I wasn't sure what the cadence of data coming up is for that.

Yes, Geoff, Hank here. So big picture, absolutely, your question started in the right direction, which is all of the activities that are underway to expand our CNP franchise into as many areas where there's potentially transformative medical benefit for children with statural impairments, not least of which is entering into a Phase III registration-enabling trial in hypochondroplasia and as I delineated we're now well underway in terms of idiopathic short stature. 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 CNP franchise, a number of different opportunities for treating and transforming the lives of patients and a number of different approaches to give families as many good choices as they can have for treating their children.

On the strategic review here across the pipeline, what levers are you considering for lowering OpEx from this line? And how are you thinking separately about the mid- to late-stage pipeline in this context?

Salveen, 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?

Sure. The R&D line item.

Yes, R&D, thanks. So as you noted, starting with your question, thank you, by the way. The strategic review is looking at both strategy and operations and efficiency, and we'll be eager to share details at Investor Day. But big picture, similar to the margin expansion narrative just enhanced now that we talked about in the past. It starts with a bit of core leverage of what we've built over the last many years, specific to R&D, full end-to-end, early-stage research, clinical regulatory to medical affairs, leveraging that engine, and then next, we'll be streamlining the business and cost transformation. So doing that same work but more efficiently. And then third, as you're seeing today is prioritizing the work on the right assets. So those three things, we believe, will provide leverage. We'll share more details on what the specific levers are and the tools around cost transformation and business efficiency at Investor Day, but those are the three big levers. I'll hand it over to Hank on the pipeline question.

Yes, Salveen, the portfolio evaluation we conducted began as a planned activity. However, this year we applied a greater degree of rigor and set a higher standard with more focused commercial input, as Alexander noted. I'm very pleased with this closer commercial connection starting under Jeff, and I look forward to Kristin joining us. Together, we'll have the chance to examine assets that are not only significant and transformational for patients but also valuable for BioMarin as a company. One thing that remained constant in this review is our commitment to making a meaningful difference in people's lives. We will utilize good biology to identify assets that we believe have a high chance of success. Increasingly, we've been aligning our portfolio timing considerations with our emerging growth strategy. With that, I will hand it over to Alexander to address your comments regarding the rest of the pipeline and the potential for accommodating later-stage or other assets.

Yes, thank you, Hank, and thank you, Salveen, for your question. We are deeply committed to innovation at BioMarin and are enthusiastic about our early pipeline. We are particularly excited about the three assets we are promoting for acceleration and the progress we are making with Voxzogo lifecycle management, which we are pleased to discuss today. Looking ahead, to achieve our long-term growth ambitions, we see a significant role for external innovation. Historically, this approach has proven successful for us, especially in early research. We recognize an opportunity to focus on assets that can enhance our current portfolio and capitalize on our strengths, as there are areas where we excel compared to others. I want to emphasize that our current guidance for this year does not include any additional business development activities. We will provide more details at Investor Day regarding our plans in this area. For now, we do not have major business development transactions planned, but we anticipate a growing importance for this in the future.

So just on the leverage you guys highlighted here. The focus today is all on the R&D pipeline. But I guess I wanted to ask on another important line item, which is SG&A. BioMarin's 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 hasn't dropped yet with respect to all the transformation you're affecting here, Alexander. But any thoughts there in terms of the potential of having maybe a more in-line SG&A line item?

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 as he thinks about the opportunity. It starts with leverage. For us to get to the $2 billion plus in revenue, mostly through the base enzyme products business where we sell in almost 80 markets, very diverse, complicated global sales and marketing, supply chain and related supporting infrastructure. That's the level of operational capability that we built over the last decade. And basically, over the last couple of years and now going forward, we're growing into it and making that machine work. It's that same infrastructure that's launching Voxzogo that's driving a lot of the margin improvement that you're seeing last year and this year. It will be that same infrastructure that launches future products and 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. We're also making sure we're reallocating resources, not just to the right places organizationally and globally but in the right brands. Voxzogo with this growth we've seen and its future potential deserves more resource allocation. How can we continue to sustain this robust launch? And for the mature brands, is there an opportunity to be more efficient there and recognize that while they're still growing, they may not require the same level of investment that they did over the years. So that's the approach. Alexander, your comment on the opportunity?

Yes. Thanks very much, Brian. Thanks for the question, Chris. Yes. I've been really impressed by the potential leverage we have within our footprint in 70 countries and the capabilities we have globally. So building off the leverage, just like we've done with R&D, we're considering how to really leverage the capabilities we've got to have a greater impact and to be more efficient. And that's one of the work streams that we have is cost transformation. It's looking at all the line items on our P&L to say how can we now optimize that? So you can expect to hear more from us at an Investor Day about our specific plans on the G&A line, on the sales and marketing line, and additional efficiency in how we do research and development. This will all be rolled up into the long-term guidance that we'll be providing and our path to significantly improved margins, which, as we've said, at the start of this year was one of our priorities. So more details to come, but it's certainly one of the areas of focus for us.

So first, what's driving the difference between the reported Voxzogo demand increase and the revenue increase from the numbers? It seems like the demand is up more than sales from a quarter-over-quarter basis, would really appreciate any color on how to reconcile this? And then also, if we can sneak in one more. Is there an increased appetite to divest the gene therapy franchise? And can you outline how much spend this makes up currently on OpEx?

Thanks for your question, Amy. This is Brian. I'll begin, and Jeff may have some additional insights. What you're noticing with the Voxzogo line reflects its strong global growth and the activation of several key markets. We're experiencing two main factors. Firstly, there is some variability in order timing that we've seen historically with the enzyme business. Larger markets tend to place less frequent, but larger orders, which is affecting Voxzogo revenue. Secondly, the timing of patient additions for chronic therapy means that any new patients added in the latter part of the quarter generate less revenue than those who were on the medication for the entire quarter. This creates a disconnect in the results you mentioned. Additionally, we are currently facing some unique supply constraints. We are managing our orders closely at the market and SKU level, which may disrupt the trends somewhat. You might remember that in Q4, we reported revenues that exceeded our guidance not due to increased patient additions, but because additional supply became available for us to ship. So please stay tuned as we aim to provide you with the right metrics regarding patients and encourage you to track revenue to observe these trends. It's a great question, and it's a dynamic situation. Jeff has indicated that we covered everything, and there was also a question about gene therapy and the potential for divestiture.

Yes. Thanks for the question on Roctavian divestment. As I mentioned before, our focus right now is making sure that we really establish what the Roctavian opportunity is, and we really focused our strategy around that. I talked already about the possible outcomes of our assessment. And one of them could be that we remove it from the portfolio and divest, that is not our focus right now. We are not engaging with people around the divestment of Roctavian. 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.

On the pipeline, can you talk a little more about the long-acting CNP product you're prioritizing? What's the half-life there and the dosing frequency you're contemplating? And then just a quick one on BMN 293, the gene therapy for hypertrophic cardiomyopathy. Is that one staying or going, I don't know if I caught it in the list?

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, that's a program we want to gather a little bit more information. We recently learned that there is a population of patients with C3 deficiency in hypertrophic cardiomyopathy who are very severely affected with really poor outcomes as measured, for example, by short time to left ventricular assist devices or mortality. We are actively working with investigators to understand better how findable those patients are and how interested and motivated those patients are. Finally, whether there's a regulatory pathway for a faster approval by virtue of the severity of their condition. As we learned, the more significant the medical need is, the more motivation there can be for the uptake of these novel disruptive types of therapy. So that's the additional information we're gathering and we'll keep you informed as to decisions that we make about further advancement of 293.

I was wondering, can we infer anything from the amount of savings that you expect to realize as a result of the strategic portfolio assessment of R&D programs, which you announced today about the amount 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 a general order of magnitude?

Yes. 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. The financial repercussions and the net reduced R&D were a consequence of that portfolio review, not the purpose. From there, I would not make an inference on what the future potential savings are for two reasons. This was a review, top to bottom of the current portfolio. A consequence but also the strategic review and the remaining optimization of the business is work in process. So we'll have to put that latter part in the category of stay tuned for Investor Day to hear both the strategy, both top-level business strategy, operational excellence strategy, and long-term guidance. We'll get color on all the line items, how we'll plan to be more efficient on cost. But the heart of your question, I would not make that influence today.

I have one regarding Roctavian revenue of $0.8 million in the quarter. We also, together with, I believe, many investors did due diligence regarding exactly how many patients got treated in the first quarter. So based on our due diligence, we understand that Germany actually, there's no patient got treated and as some investors who did due diligence believe there are a few patients treated in the U.S. So the question here is $0.8 million, can you remind us where that revenue is from? And also at what point is the timing for you to recognize revenue as well as pay for performance, the warrant at what point you booked this? My understanding previously was gross to net but I just want to make sure.

Gena, Jeff here. Yes, we are aware and have 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 revenues. In the press release, it was noted that the first patient was treated in Italy, and the revenue that you see in Q1 is tied to that first patient in Italy. Revenue recognition varies a little bit by market. But essentially, Gena, we can tell when the product is shipped to patients, we're scoring revenue right around that treatment of patients. If your question is, is it likely that there's 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 is that Italy happens to be a market where title transfer and revenue recognition occurs before the actual dosing of the patient. Hence, the March revenue and the first week of April treatment. I'll share that in other key markets like the U.S. and Germany, the revenue recognition and title transfer is much closer, if not at the point of infusion.

Can you help us understand how you're thinking about the relative size of the opportunities between ISS and genetic short stature pathways? And also as well as the level of clinical risk or clinical validation from the data that you've seen from these two planned studies and just help us understand how you're thinking about the biology and confidence in activity in ISS as well as the genetic short stature pathways?

Maybe I'll start on the R&D science piece and then I'll look for help from Alexander on the market sizing kinds of pieces. Although I can say a little bit about things like epidemiology. From an R&D perspective, our confidence that CNP is going to work in conditions beyond hypochondroplasia is driven by genetics, and we've talked about where patients who have gain-of-function mutations in the CNP pathway or taller than their predicted final adult height. In contrast, patients who have negative mutations are shorter. These are human proofs of concept about exposure. There are also individuals who are extremely tall due to gain-of-function mutations in NPR2 or in its receptor. So a lot of biological data but what's new now is we're days away from Dr. Dauber presenting his first 12-month cohort of using Voxzogo to treat patients with either pathway conditions, in his case, Noonan syndrome or with things that were formerly known as idiopathic short stature because that term got coined before sequencing helped us to understand that specific mutations could be accountable. As has the FDA to review those emerging data, which led them and us to conclude that there is a great prospect for benefit with vosoritide and the treatment of these relatively more common conditions. You've heard me talk about idiopathic short stature in terms of the volume of people who are available. It's something like 2 standard deviations below average stature encompasses about 2.5% of the human population. So we're talking about a fairly large potential indication. I don't know if Alexander you want to add anything more about that.

In terms of the size of the future indications. As mentioned, we talked about how the indications beyond achondroplasia, so hypochondroplasia, ISS, Noonan's, Turner's, SHOX, in total, represent about 600,000 patients compared to the total global addressable population for any achondroplasia of 21,000. We're obviously going to be and I just want to highlight this that we're going to be going for a more severe patient population in example, idiopathic short stature editions. If you go on clinical trials, you'll see the design of our Phase II study in ISS as posted today. We'll share more at Investor Day about the TAMs for all the different indications. They represent significant multiyear growth potentials for Voxzogo. It's exciting to see that we are able to share today not just the R&D prioritization but the progress we're making with Voxzogo, not just the uptake which is really exciting to see in achondroplasia globally with growth accelerating, but we've had really productive conversations with regulatory authorities. We have definite plans now solidified, heard from the feedback from the FDA on ISS. We have clarity now of the duration of the study, endpoints, and comparator. We have a very clear path forward in multiple of these indications and an opportunity to bring Voxzogo to so many more patients around the world.

I was curious what the management team's current thinking is on the various competitors in achondroplasia given that we're going to get data from a couple this year. And as you think about potentially giving margins guidance or commentary aspirations at the Investor Day, it feels like whether or not there is competition in achondroplasia is a key variable. So I would love your perspective on that.

Thank you for the question, Paul. I appreciate it. Overall, we're feeling very optimistic about our position in achondroplasia, and our path forward in other indications is becoming much clearer. The demand and feedback from families has been excellent. We're observing strong support and adherence to Voxzogo, and now that we have over 3,000 patients on the product, we are establishing a safety and efficacy profile that instills confidence in physicians, as well as in families and children, including infants starting treatment. From our perspective, we’ve conducted extensive market research and have a solid understanding of these disease states. It is clear that safety and efficacy are the top priorities for patients and caregivers, and they won't compromise on that for convenience. I reviewed some market research and found that a caregiver stated that any alternative would need to deliver at least 95% of the efficacy of Voxzogo to be considered, with safety being non-negotiable. A physician mentioned that their top priority for new therapies is ensuring safety and efficacy, which they would not trade for convenience. Overall, we're excited about BMN 333, aiming for it to be at least as effective and safe as Voxzogo, with the potential for more convenient dosing. However, we believe that Voxzogo is well positioned to remain a strong competitor against any new entrants.

And staying on the competitive theme, I think one of your competitors is also testing a longer-acting CNP in combination with growth hormones in achondroplasia. How do you think about the rationale there? And do you think you could do something like that for Voxzogo? And then the related question is, in the ISS trial that has been posted, it seems like you are testing against growth hormones. Is there a rationale to test it in combination with growth hormones as well in that indication?

Yes, Mohit. The efficacy of Voxzogo in achondroplasia restores growth to a fairly physiologic level, over 90% of average stature growth, so it's hard to beat that in terms of efficacy. 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 Voxzogo as regards to improving long-term outcomes is to start therapy earlier, which was why we were so keen to have label extension into almost every market in the world where Voxzogo is available from infancy because that's where you can make a big difference in the overall outcome. Again, probably doesn't necessarily warrant the addition of another therapy; it warrants starting therapy as soon as the condition is understood. Same story for ISS. We need to look at the data that comes out next month from Dr. Dauber to gauge how much of a stature improvement we get and whether there is any room for improvement, but I wouldn't anticipate that being a key consideration.

So we had a follow-up on Roctavian. So you obviously discussed some of the reimbursement and market access challenges. The product is seen here to date. But looking forward, could you speak about some of the strategies you're putting in place now to help with the operational lift of the franchise? And how many months or quarters would you expect it to take for some of the challenges to be a bit less of a variable in the product trajectory, assuming the franchise stays in-house with BioMarin?

Thank you for the question. This is Jeff. I'll field that one. As Alexander mentioned earlier, we're really focused on patient pull-through in the markets where we have reimbursement approvals. So a reminder, that's the U.S., Germany, and Italy. Patient pull-through is really the last mile but we've experienced challenges with that. We think that establishing proof-of-concept in pulling those patients through that last mile and getting them treated is what we need to do going forward. How long that will take is undetermined. Alexander already mentioned that at Investor Day early September, criteria will be laid out for what that looks like. The other thing I would comment on is, in Europe, in most cases, the commercialization starts with the price and reimbursement approval. We got the GBA approval listed in December of last year, 4 months ago. So one way of looking at the situation, at least in Europe, is that perhaps the clock started ticking 3 to 4 months ago in those two target markets, so thinking about how long that might take during the course of this year could be instructive.

This is Lachlan on for Tim. So you've identified Voxzogo as a strategic priority and have obviously made a lot of progress on the development front in new indications. But is there anything you're doing on the commercial front there, too? Because I noticed you obviously added a much larger number of patients this quarter than last quarter. So I was curious if that's sort of a result of any direct initiatives or actions you've taken or just the maturing markets and increasing supply.

Thank you for the question. We are very pleased with the progress on Voxzogo, which we've identified as a key priority and has significant potential in treating achondroplasia, as we've previously discussed for other conditions. Currently, our focus is on achondroplasia, and we are seeing an acceleration in uptake. In the first quarter, we added 500 patients, compared to 300 in the fourth quarter of last year, indicating strong growth. This increase is primarily driven by the use of the product by the 0 to 5 age group from birth, now available in many regions worldwide. It's encouraging to see consistent growth across major markets, with the U.S. leading this expansion, which is particularly significant given our previous slower ramp-up there. Our team is focused on the 0 to 5 age group and other initiatives that are starting to show results. We are concentrating on the pediatric population, ensuring we have effective referral pathways, and establishing skeletal dysplasia clinics, which are crucial not just for achondroplasia but also for future indications. The team is making substantial progress in expanding into more regions. I also want to mention our supply situation; we noted in our prepared remarks that we expect to reach supply levels in the middle of this year that will meet demand. We have promising news regarding our maximum supply for this year. At the JPMorgan conference in January, we outlined our supply plan for Voxzogo. We are set to supply for 8,000 patients by the end of this year, which is a year earlier than we initially projected for 2025. Our manufacturing team has made significant strides, increasing our confidence that we will meet the rising demand for Voxzogo by the year's end. Well, thank you all for joining us today. I hope you've heard and it came across that how hard this team, and all the teams across BioMarin are working right now to shape the future corporate and R&D strategy for BioMarin. 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 and our full plans with you all in New York at Investor Day on September 4. Meantime, thank you very much for your attention. I wish you all a wonderful evening. Take care.

And that does conclude today's conference call. Again, thank you for your participation. You may now disconnect.