Earnings Call Transcript - BMRN Q1 2022

Operator, Operator

Good day and thank you for standing by. Welcome to the BioMarin First Quarter 2022 Financial Results Conference Call. Hosting the conference call today from BioMarin is Traci McCarty, Group Vice President of Investor Relations. Please go ahead, Traci.

Traci McCarty, Group VP of Investor Relations

Thank you, Ashley. 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 today from BioMarin management are J.J. Bienaime, Chairman and Chief Executive Officer; Jeff Ajer, Executive Vice President, Chief Commercial Officer; Hank Fuchs, President, Worldwide Research and Development; Greg Guyer, Executive Vice President, Chief Technical Officer; and Brian Mueller, Executive Vice President and Chief Financial Officer. I will now turn the call over to our Chairman and CEO, J.J. Bienaime.

J.J. Bienaime, Chairman and CEO

Thank you, Traci, and good afternoon everyone. Thank you for joining us today. So we begin 2022 with points for significant growth and the transition to sustainable GAAP profitability. Interest in VOXZOGO from families seeking a treatment option that addresses the underlying cause of achondroplasia has been very positive, as underscored by today’s increase in full year 2022 VOXZOGO guidance to between $100 million and $125 million. We also reaffirm previously released financial guidance for all other metrics included in our full year 2022 guidance. We generated $590 million in record revenues in the first quarter, representing an 11% growth year-over-year, excluding Kuvan. This marks the start of BioMarin’s return to significant double-digit growth. The revenues for products marketed by BioMarin were up 15%, including Kuvan. These results highlight the strength of our base business and the significant opportunity that lies ahead with VOXZOGO. It is important to note that $13 million of the $20 million total for the first quarter from VOXZOGO sales were from outside the United States, emphasizing the breadth of our global footprint and commercial capabilities and the importance of the ex-U.S. markets. This will be advantageous as we prepare for a potential European launch of our ROCTAVIAN in the second half of this year, ahead of a potential U.S. approval. With the financial outlook and robust global launch of VOXZOGO tracking to plan, we look forward to the next important regulatory steps with ROCTAVIAN over the coming months. For people with hemophilia seeking hemophilia A control superior to test prophylaxis, we think ROCTAVIAN presents a treatment option based on the results that we observed in our Phase 2 and Phase 3 studies. We believe this data provides supportive evidence of efficacy as part of the marketing authorization application currently under review in Europe and planned for inclusion in our BLA resubmission in late June. We were also pleased to share the news today that we have completed the genomic analysis of the salivary gland from the participants in our Phase 2 ROCTAVIAN study, which was treated over 5 years ago. Findings from the completed analysis did not identify evidence that vector integration contributed to the salivary gland mass. This is great news for patients and the safety profile of ROCTAVIAN and actually for the entire AV gene therapy field. Hank will say a few more words on this in a moment. As we look forward to the remainder of 2022, we are on our way to achieving the goals set forth at the start of the year, turning the quarter to stable GAAP profitability, ramping up our largest pediatric opportunity to-date with VOXZOGO and progressing ROCTAVIAN applications with health authorities in Europe and the United States while also addressing the broadest exchange pipeline in our history. We will continue to build on this financial, commercial and regulatory momentum in 2022 and beyond as we make the transition to an earnings growth story. So, thank you for your continued support. And I will now turn the call over to Jeff to discuss the commercial business update. Jeff?

Jeff Ajer, Executive VP, Chief Commercial Officer

Thank you, J.J. I am very pleased with our performance in the first quarter of 2022, recording $119 million in total revenues. The $20 million VOXZOGO contributions in the first quarter drove increased VOXZOGO 2022 full year guidance to between $100 million and $125 million and will be an important component of our 2022 growth story. Now, turning to specifics of the VOXZOGO launch, we are pleased to share that as of March 31 this year, an estimated 284 children were being treated with commercial VOXZOGO. This includes 201 children in countries outside of the United States and 83 children within the United States. An estimated additional 53 children were in process in the United States as of April 15. At the end of the first quarter, VOXZOGO sales were spread across 15 active markets including sales in new markets, as previously reported in Saudi Arabia, Slovenia, Czech Republic, United Arab Emirates and Italy. We continue to be very pleased with uptake in the EMEA region, which has been driven by a combination of growth in Germany and collectively from individually smaller markets. Upcoming and outside of the EU, we expect potential approvals in Japan and Australia later in the year. The opportunity in Japan is expected to be significant, and we expect revenue contributions to begin there later this year. Turning to launch dynamics in the United States, we have seen prescription demand pick up quickly. We have been able to rapidly convert patient referrals to patient starts. In the quarter, we experienced prescriptions from genetics and pediatric endocrinologists as expected. We also see more payer coverage policies published which are largely consistent with our label or our clinical trials criteria and are aligned to our expectations. In summary, we are very pleased with the pace of uptake during this ramp year for VOXZOGO. Launching in the EMEA regions ahead of the United States was a first for BioMarin and underscores the ability of our experienced commercial teams to tap into large market opportunities regardless of location. This is of particular importance as we look toward a potential ROCTAVIAN launch in the coming months should the CHMP and European decision be supportive. Turning now to our enzyme replacement therapy brands, Vimizim and Naglazyme both achieved record quarterly results in Q1 of 2022. Consistent with our experience last year for both brands, we fulfilled large orders during the first quarter from such markets as Turkey, Brazil, Egypt, Russia and Saudi Arabia. This demand is gratifying and good for our business, and we expect it will cause the first half of 2022 to have some concentration of our annual revenues, similar to our experience last year relative to the second half of 2022. As J.J. mentioned, we reaffirm our annual guidance for Naglazyme and Vimizim revenues. For Brineura, 33% growth year-over-year and revenue of $36 million in the first quarter was driven by 18% growth in new patients starting therapy. Moving now to Palynziq, net product revenues grew 2% in the first quarter as compared to the first quarter of 2021 and were impacted by a variety of factors. In the U.S., seasonality of healthcare coverage, similar to what was experienced with Kuvan in the past, resulted in a Q1 dip in Palynziq revenues as compared to the fourth quarter of 2021. And while we expect this dynamic in the U.S. to recover for the remainder of 2022, the impact from ongoing PKU clinic limitations suggests full year Palynziq revenues will trend to the lower end of the guidance range for the full year. Continuing with the PKU franchise, Kuvan contributed $59 million in revenues in the first quarter of 2022, down 16% as compared to Q1 2021. Since the loss of U.S. market exclusivity in October of 2020, we experienced a further step down in the U.S. in the first quarter. As Kuvan nears the end of its life cycle, as we would expect from a small molecule drug, we are gratified to retain the market share and the resulting revenues we are experiencing. Based on market conditions, we expect full year Kuvan revenues in 2022 to trend closer to the lower end of the previously provided full year guidance range. Lastly, with the CHMP opinion on ROCTAVIAN expected in the near future, launch readiness activities continue to progress. The team is onboard and well prepared to launch, assuming regulatory approvals later this year. We are encouraged that our longer-term data results offer a potentially attractive value proposition and treatment option for those with severe hemophilia A, and we look forward to providing you with more detailed updates at launch. In conclusion, in 2022, we anticipate increased demand for all of our commercial brands with the exception of Kuvan, as just described. Our MBS products are expected to contribute significantly to revenue growth this year. We also expect VOXZOGO to be a meaningful factor in this ramp year noted in today’s increase in VOXZOGO revenue guidance. We believe that robust prescription demand represents a foundation for continued growth, including new markets throughout 2022. Thank you for your attention. And I will now turn the call over to Hank to provide an R&D update. Hank?

Hank Fuchs, President, Worldwide Research and Development

Thanks, Jeff and thank you all for joining us today. The R&D organization had a very busy quarter as well. Our regulatory team has been focused on health authority interactions with the European Medicines Agency on the ROCTAVIAN application currently under review and preparations for the June resubmission of our biologics license application in the United States. We have enjoyed a high degree of collaboration with the EMA as we enter the later stages of the review procedure. Thus far, we have been able to satisfy their request for information, putting us on track for a potential CHMP decision midyear, subject to the EMA's scheduling. As J.J. mentioned, we were pleased to have completed the analysis of the salivary gland tumor identified in one of our Phase 2 study participants, as noted in our EHA presentation this past February. Results are consistent with the benign integration profile for ROCTAVIAN, as we did not observe ROCTAVIAN integration associated with the growth of the tumor cells. We plan to provide the EMA with these data as part of the ongoing review of our marketing authorization application as well as include the data in the biological license application in the United States and the resubmission in June. Needless to say, we are pleased with the findings as they further support the safety profile ROCTAVIAN has demonstrated to date. As leaders in the field of gene therapy, we look forward to sharing the results of the analysis with the scientific community at the upcoming World Federation of Hemophilia 2022 World Congress and the Annual American Society of Cell and Gene Therapy. Additionally, turning to VOXZOGO, we are pleased to share that Dr. Andrew Dave will present results from his study in genetic natural conditions at the Pediatric Endocrine Society Meeting this coming Sunday, May 1. As we shared in our last R&D Day, this study spans six different genetic statural conditions, so we look forward to learning about the potential of VOXZOGO to positively impact children with other conditions besides achondroplasia. Next milestone with VOXZOGO is a data update from our Phase 2 randomized double-blind, placebo-controlled VOXZOGO study in infants and young children aged 5 and under with achondroplasia. The team has had the opportunity to analyze the results since they were unblinded in February, and we expect to share them at a medical meeting in the middle of the year. Finally, turning to the earlier stage pipeline, all of the candidates under development continue to advance. A new update today is that we have begun dosing patients in the Phase 1/2 HARMONY 1 study using BMN-331 or gene therapy for hereditary angioedema. We are encouraged by this new opportunity for HAE patients, as our preclinical data suggests that BMN-331 can reduce the frequency and severity of attacks and potentially eliminate chronic therapy for some patients, significantly reducing the treatment burden of HAE and the current standard of care. We are excited to begin this development journey and learn about the potential for BMN-331 to restore C1-esterase inhibitor protein in humans based on the encouraging preclinical data set. The BMN-255, which addresses the subset of chronic disease, has completed the single-ascending dose arm of the Phase 1/2 study and we are in the process of analyzing results. Concerning BMN-351 for Duchenne muscular dystrophy, we expect to file the IND in the first half of the year with the goal of treating the first Duchenne boys in the fourth quarter of this year. Our preclinical studies of BMN-349 continue to build our enthusiasm for its potential to dramatically improve liver health in people living with alpha-1 antitrypsin deficiency. The BMN-293, formerly known as DYNA-001, is on track to be our next gene therapy clinical candidate, in this case, for the treatment of hypertrophic areas caused by mutations in cardiac myosin in C3, we continue to advance 349 to 293 towards INDs in the second half of 2023. Lastly, on BMN-307 PKU gene therapy, we await the results of 9 clinical studies required to remove the current clinical hold. As we said in January and February, we believe that this will be a multi-quarter process. So we will update that program status when available. We look forward to keeping you apprised of our progress across the R&D organization as we advance our ROCTAVIAN applications and present data at upcoming medical meetings to move the earlier-stage pipeline products forward. Thanks for your support. And I’ll now turn the call over to Brian to update financial results for the quarter. Brian?

Brian Mueller, Executive Vice President and CFO

Thank you, Hank. Please refer to today’s press release summarizing our financial results for full details on the first quarter of 2022. Since Jeff touched on many of the top-line results from the commercial business, I will primarily focus on operating expenses, bottom line results and other key financial updates for this quarter. As usual, all results will be available in our upcoming Form 10-Q, which we are on track to file over the next few days. As we highlighted in February, we believe that 2022 is an exciting year for BioMarin. As the company anticipates transitioning to sustainable GAAP profitability driven by the continued strong growth of our base business, plus a significant contribution from VOXZOGO in its launch year. We are pleased to be tracking the plan based on the company’s first quarter results provided today. Total revenue growth of 11% in the first quarter of 2022 compared to the first quarter of 2021, excluding Kuvan, sets us up nicely to achieve our full year GAAP and non-GAAP income goals in 2022. To elaborate on one important comment from Jeff, while we expect Naglazyme and Vimizim orders to be weighted to the first half of 2022, based on the ordering patterns of select markets, we expect that our total revenues for the full year will be balanced out by growth in our other brands in the second half of the year, and that total BioMarin revenues will be roughly even between the first and second half of ‘22. Also a comment on VOXZOGO: while we are pleased to observe the early patient uptake trends for VOXZOGO globally, which drove our increased expectations for the full year 2022, it’s important to note that even though we expect to continue to add new VOXZOGO patients over the remainder of 2022, the mechanics of daily dosing mean that these new patients on therapy for just a portion of the year will contribute slightly less to full year 2022 revenue. Moving to operating expenses for the first quarter of 2022, both R&D and SG&A expense fell in line with our expectations. R&D expenses for the first quarter were $161 million, a slight increase compared to the first quarter of 2021, reflecting increased ROCTAVIAN development efforts and increased R&D on our early-stage programs. SG&A expenses for the first quarter of 2022 were $195 million as compared to $174 million for the same period last year, reflecting the global VOXZOGO commercial launch efforts since the European and U.S. approvals in the second half of last year, as well as ROCTAVIAN’s commercial launch preparation costs. Moving to bottom line results for the first quarter. As we shared in February, during the first quarter of 2022, we sold the priority review voucher received with the approval of VOXZOGO in the United States. The transaction was recognized as a gain on sale of a non-financial asset on our statement of operations and was the primary driver of Q1 GAAP net income of $120.8 million. While GAAP profitability in 2022 will benefit from the sale, we note that our business plan for the year and the related profitability expectations are not dependent upon the after-tax gain from the PRV sale. With respect to non-GAAP income, Q1 2022 non-GAAP income of $105 million excludes the gain on the sale of the PRV and was relatively flat to Q1 2021 non-GAAP income of $104 million and represents a strong start to our expectation of earnings between $350 million to $390 million of non-GAAP income this year. Turning to total cash and investments, we ended the first quarter of 2022 with $1.5 billion, mostly flat compared to year-end 2021. While our total cash increased with the proceeds from the sale of the PRV, we also experienced quarterly working capital timing differences during Q1 2022. As we said when we provided 2022 guidance, we do expect positive operating cash flows for the full year. Briefly on the Ukraine crisis, given our global footprint and commercial presence in this region. As we previously shared, the Russia and Ukraine markets represent approximately 2% to 3% of BioMarin’s total revenue. Based on what we know today, we expect that to be consistent in 2022. Given the essential nature of our product which treats underlying conditions for which no alternative pharmaceutical treatments are available, we continue to serve our patients in the region and are working to minimize the treatment disruptions for Ukrainian patients. In fact, we have already fulfilled a significant portion of the expected 2022 supply to Ukraine and Russia. In closing, 2022 is off to a great start, and we are on track to achieve our transition to sustainable profitability with record first quarter revenues, driven by a strong global launch of VOXZOGO and solid growth in the base business. Our plan to support both continued product approvals and innovative pipeline growth, while at the same time generating sustainably increasing revenue, profit and operating cash flow is being realized with an eye towards continued growth further into this decade. Thank you for your attention. And we will now open up the call to your questions. Operator?

Operator, Operator

Your first question comes from Salveen Richter of Goldman Sachs. You may proceed with your question.

Salveen Richter, Analyst

Good afternoon. First, congratulations on turning GAAP profitable. Two questions from me, for VOXZOGO in the U.S., how is outreach and uptake progressing in pediatric endocrinologists? And then for ROCTAVIAN, anything you can provide us on how regulatory discussions are playing out in the U.S.? Thank you.

Jeff Ajer, Executive VP, Chief Commercial Officer

Hi, Salveen. I will take the first question. Yes, we are doing really well with outreach to pediatric endocrinologists. It is a new call point and as we are emerging from the shutdown, our teams are establishing connections with this new call point in the United States and other markets, for example, in Germany. And we are seeing prescriptions coming in from a mix of physician specialties, as I noted, but mainly from geneticists and pediatric endocrinologists as we would expect. So I would say it’s going right on track with nothing notable to describe that’s kind of surprising or different than we expected.

Hank Fuchs, President, Worldwide Research and Development

And on regulatory discussions, again, the bulk of the conversations have been with the European Medicines Agency, and we feel pretty good about the connection between the remaining questions they have and the information that we have to provide them including the recently completed genomic analysis and the salivary gland tumor, which is favorable. In regard to the U.S., we plan to have even further discussions with the Food and Drug Administration in advance of our resubmission; pre-submission interaction is indeed scheduled with the FDA. But we have also already had quite a bit of dialogue since the CRL about information they will want us to provide back to them when we do resubmit. We feel pretty good about the sufficiency of the data that we have in hand for satisfying the concerns that were raised in the CRL letter. So, feeling pretty good about the regulatory situation in both markets.

Salveen Richter, Analyst

Got it. Thank you.

Operator, Operator

Your next question comes from Chris Raymond of Piper Sandler.

Chris Raymond, Analyst

Hey, thanks for taking the question. Just on VOXZOGO, maybe just a couple of questions on the dynamic there. I think with the number you guys gave about a third or so of revenue last quarter was in the U.S. and just a little less than a third of patients. I know it’s early, but is this maybe indicative of more sort of parity pricing or is there some sort of patient add dynamic? And then also, just doing the math on the revenue and then the patients that seems to be a relatively high number for the quarter. Just is there anything you can add there in terms of the pricing dynamic? And if I can ask a pipeline question, no mention of – I think I heard no mention of BMN-307. Can you just give us a sense of where that program sort of sits? Thank you.

Jeff Ajer, Executive VP, Chief Commercial Officer

Chris, I’ll start off on the VOXZOGO question. So you mentioned and confirming that we stated about a third of our revenues from the United States and the balance ex U.S., which ties up pretty closely to the patient numbers that we’re reporting also in the United States. Early in Q1, we did have some specialty pharmacy stocking, which was a one-time event. Not a huge number, but enough so that there is a resting inventory in our specialty pharmacy network. That’s a one-time event. By late March, I would say, we were seeing reorders of our specialty pharmacy network in the U.S. on a consistent enough basis that you would conclude that there was no further buying down of that inventory and that the SPs were essentially ordering to demand. So that could be a little bit of a bump in Q1 tilted towards the U.S. And you followed along our pricing discussion. As usual, we have a robust price, particularly in the U.S. And so far, we’re managing a pretty tight price corridor for VOXZOGO in other markets. Does that cover your question?

J.J. Bienaime, Chairman and CEO

If I may add, the launch is going very well on both sides of the Atlantic and the different shares. I mean, two aspects, the difference you see a little bit is because we started selling in Europe and Germany in October of last year, a little ahead of the U.S., which really started spending in the U.S. in January. Basically, what’s happening is that the revenues are commensurate with market size. We have always said that the largest opportunity was outside the U.S., and the numbers are confirming that. The good news here is that, again, I think there were some anxieties I read in some analyst reports about launching a product first in Europe and before the U.S.; this is the first time we do that. And this issue shows you that we can be very successful launching a product in Europe ahead of the U.S., which is likely to happen for updates. So all this is looking pretty good. Hank, you want to answer the...

Hank Fuchs, President, Worldwide Research and Development

Yes, Chris, the game plan is we’ve got to complete some additional preclinical studies that pertain to the findings that had been previously reported to the agency. We were hopeful that based on some early interactions with the agency that we would be able to remove the hold quicker. But unfortunately, with the requirement to conduct additional studies, we probably won’t have any updates for you on that until we have the results of those studies, which are going to be several quarters from now. So I’d say, unfortunately, there will be no near-term updates on 307.

Chris Raymond, Analyst

Great. Thanks, guys.

Operator, Operator

Your next question comes from Robyn Karnauskas of Truist.

Robyn Karnauskas, Analyst

Hi guys. Thanks for taking my question. So just a quick one. I guess for the EMA discussion in the U.S. discussion, given that you’re adding additional salivary gland data. Is it possible that we could go into July? I know you’re not on the docket, it looks like for April for EMEA. And same for the U.S., do you think that this could take a little longer if the filing could be mid-year, like July, August? And then the second question is on VOXZOGO. So, it seems like you have the same number of patients in process that you did last quarter. Do you expect this – the addition of patients to be consistent? Or do you think this is more of a bolus upfront? And then maybe you can comment on – and it’s a lot, but maybe you can comment on compliance. Given the early – and it’s early, but compliance with daily subcu dosing. Thanks.

Hank Fuchs, President, Worldwide Research and Development

This is Hank. I’ll take a shot at the first part of your question as to the timeline with the European Medicines Agency. We’re feeling pretty optimistic that all the information that we said we will be able to provide the EMA and the last leg of review will enable them to make a decision in June. But it’s also a decent amount of information and EMA has – based on the questions that they have asked, a decent chunk of information they need to review in terms of risk management plans, label, subscriber commitments and things like that. Yes, it could drift into July, but we are hoping to be lined up with them to enable them to come to a positive opinion. Of course, that’s the objective of all that. In regard to the U.S., you’re right to ask the question; my team will certainly appreciate the nature of the question, which is that they are carrying a lot of water on the European application at the same time we’re finalizing the U.S. application. Yes, things may take a little longer. We want to make sure that we will submit an application that will facilitate an effective review by the U.S. But that target, again, is in June, and we are hopeful remaining on that track.

J.J. Bienaime, Chairman and CEO

On your question about VOXZOGO, I’ll let Jeff answer whether it’s a bolus of patients or if the growth is going to be sustainable. I believe it will be, but just to elaborate on compliance, I think we’ve lost only one patient. Is that correct? All the patients we saw, we have lost one patient so far. Jeff? Extremely good compliance.

Jeff Ajer, Executive VP, Chief Commercial Officer

Thanks, Robyn, for the question. It’s actually a positive sign of the launch trajectory in the United States, which is the one place in the world that we’re able to track patient numbers in process. So the fact that our in-process group is holding steady compared to where it was a quarter ago is indicative of getting a steady stream of both new patients being enrolled and then also having the ability to work through those patients, get them approved for treatment, get products shipped out and prescriptions fulfilled. So I view that as a positive related to compliance. J.J. noted a very small number of drop-off so far. We don’t have an estimate of compliance other than the drop-off figure, which is supportive of a high rate of compliance so far. The other thing that we’re doing is proactively training patients and their families about the daily injection. We’ve gotten very positive feedback in both Europe and the United States, which has been really helpful for families, giving them the confidence to begin the daily injection routine. I think that bodes well for compliance going forward. Thanks.

J.J. Bienaime, Chairman and CEO

That’s right. We have very good visibility in the U.S., because this is basically first and roll kind of in it signifies that they want their kids to be treated with VOXZOGO. So we have good visibility for the accretion rate, and we have those at this time that this is in terms of new patients wanting to be treated that it is slowing down. And I think – and Jeff, do you want to mention how long it takes between when the patient is basically signed up and when we start shipping on average in the U.S.?

Jeff Ajer, Executive VP, Chief Commercial Officer

Yes. So far, it’s pretty rapid. Our average is 23 days from complete enrollment with the prescription to shipment of that first prescription to a patient, with some variability around that.

Robyn Karnauskas, Analyst

Great. Thank you.

Operator, Operator

Your next question comes from Cory Kasimov of JPMorgan.

Cory Kasimov, Analyst

Hi, good afternoon, guys. Thanks for taking my questions. Two for me as well. Both probably for Hank. First, just a follow-up on the U.S. ROCTAVIAN situation. Is there anything specific that needs to be addressed in the pre-BLA meeting that hasn’t been dealt with already? I guess just curious if this is a standard operating procedure for a resubmission or if there are issues still to discuss. And then the second thing, I was just wondering, Hank, if you could set the stage ahead of the short stature update this weekend for VOXZOGO. What would be compelling in your view or an investigator’s view when you speak with them? Thank you.

Hank Fuchs, President, Worldwide Research and Development

Yes. No, I think interaction with the FDA pre-submission for ROCTAVIAN is more of the standard operating procedure rather than necessarily involving any new information. I think the agency’s stance is likely to be that these issues are going to be resolved during the review. What’s important for us to do is to make sure that we have a clear view of the information that they are looking for. We have all this data. So it’s really just a matter of ensuring that it’s in the form and content of what they are looking for. So more on the SOP side. As far as the VOXZOGO presentation, I think the expectation to have is that in the amalgam across a range of mutations, we have patients with six different types of mutations; there can be an improvement in stature as measured by growth in children who have mutations different from the achondroplasia FGFR mutation. He’s accrued patients with a lot of biology as to why he believes that to be the case. Of course, the data themselves will be that’s positive for this underlying hypothesis. A good outcome would be similar or better than what we’ve seen in achondroplasia, a great outcome might be mutation-specific where certain mutations are even more responsive to the treatment. So, I think that’s the stage to set for the data.

Cory Kasimov, Analyst

Great. Thank you.

Operator, Operator

Your next question comes from Paul Matteis at Stifel.

Paul Matteis, Analyst

I think she said Paul Matteis, Stifel. Thanks for taking my questions. Good to talk to you. Just one VOXZOGO question on the commercial side. I guess – are you seeing physicians or do you think physicians will do anything to determine whether or not patients are benefiting? Obviously, you can look at growth natural history, but every patient is different, you kind of get into hypotheticals. So maybe just comment on how you sort of verify efficacy with this drug. And then to the extent you’ve seen any discontinuations so far, what are the reasons, if you wouldn’t mind clarifying? Thank you.

Jeff Ajer, Executive VP, Chief Commercial Officer

Thanks for your question, Paul. So in terms of tracking benefit, that’s not something that we guide specifically to – but we would certainly expect physicians to be following along the progress of their patients. There is a newly published guidance on the management of achondroplasia, which I think is helpful in providing those prescribers the guidance to do that in growth velocity and height being kind of a lowest common denominator to expect. Some of the U.S. insurers are requiring evidence of benefit for future renewal of prescriptions, which seems reasonable enough. Regarding the publication on management guidelines, as you’ve heard me say before, there was no medical home, particularly in the U.S., in our system, for achondroplasia patients. Part of the opportunity here is establishing a medical home for kids with achondroplasia, up to and including the use of VOXZOGO as a part of that overall management scheme. I think that’s going to be good for BioMarin and VOXZOGO and it’s going to be great for the kids with achondroplasia and their families. In terms of discontinuation, we don’t really have enough data; as J.J. mentioned, I think we have one discontinuation and I have stated reason for that one.

Paul Matteis, Analyst

Okay, thanks. And maybe just one – sorry, go ahead.

J.J. Bienaime, Chairman and CEO

If you go back to tracking the efficacy, this is not a scientific way to do it, but just an anecdote that when we tested the advertising campaign with European healthcare professionals and patients, we received great reactions from the doctors and families of treated patients, which suggests that we should utilize really achondroplastic patients for our advertising. But that’s my informal answer to your question.

Paul Matteis, Analyst

Thank you, J.J. And last, just one quick thing. Any update on the path to full approval? Thanks again.

J.J. Bienaime, Chairman and CEO

Not in particular. The good news is that the data that’s going to generate the core package will follow up these patients from the pivotal clinical trial. And as you just heard, the compliance and the program overall is very excellent. So we do expect to be able to provide that in a filing fashion; I don’t know that we’ve guided to a specific submission date.

Operator, Operator

Your next question comes from Gena Wang of Barclays.

Gena Wang, Analyst

Thank you for taking my questions. I have two sets of questions. So, the first one is regarding the ROCTAVIAN salivary gland mass integration analysis. So you saw a similar pattern, but did you see any unwanted sites that show up in this analysis? And a related question for your BMN-307 program, your analysis also showed that integration is not a tumor-initiating event, but the FDA still asked for data that requires several quarters of work. So, wondering how you think about read-through for your program? And I have a quick question on VOXZOGO; just wondering, what is the price range for different countries outside the U.S.? And for France, now you have listing prices of $300,000, but since you expect that future negotiated prices will be lower, how would you book the revenue here?

Hank Fuchs, President, Worldwide Research and Development

Hi, Gena. As regards the pattern of integration, there really was nothing particularly noteworthy about the pattern of integration. One comparison case is to look at the pattern of integration between the healthy tissue and the adjacent tissue block to the tumor tissue. As has been previously described for wild-type AAV recombinant vectors, there is a relatively low propensity for integration. I think that has been foundational from the regulatory perspective. You might remember there was an FDA guidance document on this and they referred to AAV vectors as having a low propensity for integration. One of the great things about what we’ve found so far is that ROCTAVIAN’s vector is behaving similarly in terms of distribution, integration patterns, frequencies and size of integration, which is similar to the wild-type, that is, not binding preferential hotspots of particular relevance. As for your question about 307, how does that relate to the evaluation for 270? The short answer is because the 270 vector has cleared its safety studies to the adequate satisfaction of health authority standards. The only suspicious signal that’s arisen in the 270 program is what we just discussed, which was the tumor. There is nothing particularly unique to this individual case. I think all the factors discussed bode well for ROCTAVIAN’s overall risk-benefit evaluation, namely that in preclinical studies and in humans, there is no confirming signal of oncogenic potential of the vector.

J.J. Bienaime, Chairman and CEO

Clearly, the FDA is viewing these two products differently. ROCTAVIAN is not under clinical hold. We are rolling out these studies as we see it.

Hank Fuchs, President, Worldwide Research and Development

Additionally, BMN-331 is also enrolling, and we believe that the agency is taking each factor, clinical situation, and product on a case-by-case basis.

J.J. Bienaime, Chairman and CEO

You also had a question on the revenue price range of VOXZOGO in Europe and revenue recognition. Jeff, would you like to start and then Brian, you can explain?

Jeff Ajer, Executive VP, Chief Commercial Officer

Regarding the price range, Gena, the prices that we’re anchoring to, we’ve got the WAC price in the United States and on our approval call we guided to our expectation of kind of gross or WAC price to net realizable price per patient. I think that’s a pretty solid estimate. We’ve got the list price, as you noted, in Germany and France. We expect it will take about a year from product introduction to get to negotiated prices for full reimbursement. So that will happen later this year. In the meanwhile, we’re establishing pricing for our named patient sales in markets, with a pretty tight corridor consistent with the U.S. French and German pricing. I’ll let Brian cover the discount basis.

Brian Mueller, Executive Vice President and CFO

Yes. Thanks, Jeff. Thanks for the question, Gena. This is Brian. There is nothing materially unique to speak about regarding VOXZOGO’s gross to net. Our experience and expectations are that the overall gross to net will be similar to our other products as well as our prior launches. Not to get into each of the country dynamics, but in some cases, you do start with an initial price, and then there could be a clawback when you get to the final negotiated price. So, we are required under GAAP to make estimates of those and record those reserves. So what you’re seeing in our reported revenues would be the net revenue.

Gena Wang, Analyst

Great. Thank you. Very helpful.

Operator, Operator

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

Geoff Meacham, Analyst

Hey guys, thanks so much for the question. I just had a couple along kind of the same theme as everyone has been asking I think on ROCTAVIAN – I know it’s parsing the language a bit, but is the shift from 2Q to mid-2022 from the CHMP. Is that just a normal fluctuation or was, in fact, there an impact to the review clock when you look at the tumor analysis? And then on VOXZOGO, commercially, I know it’s early, but are there some themes and new patient starts in Europe who weren’t in the clinical studies in terms of patient flows or awareness? I’m just trying to get a sense for what was working early in the launch and if that could be similar or different when looking to the U.S. launch? Thank you.

Hank Fuchs, President, Worldwide Research and Development

Geoff, regarding the earlier question about the shift, there is no concrete indication that the shift is more than normal. The minor shift from June potentially into the summer is just part of the natural process. We have seen it off accelerated assessments. But you never know at the beginning of the procedure, even with the expedited procedures, how their timelines will align. We are being a bit cautious in projecting timelines because they are not entirely under our control. The most important insight is that we believe we have provided the EMA with the information needed to address their questions that were raised. Regarding VOXZOGO patient flow, the diversity of experience here points away from common themes in an important way. A key aspect is the diversity in the age group starting therapy; we’re seeing different types of physician specialties involved, including pediatricians, and while the trajectory is leading toward a positive uptake overall, the experiences have varied according to different countries and structures.

J.J. Bienaime, Chairman and CEO

We can successfully launch a product in Europe ahead of the U.S., which current data reconfirm.

Geoff Meacham, Analyst

Got it. Okay. Thanks guys.

Operator, Operator

The next question we have is from Phil Nadeau with Cowen.

Phil Nadeau, Analyst

Good afternoon. Let me add my congratulations on a productive quarter. Just a couple of follow-ups from us on VOXZOGO and ROCTAVIAN. First, on VOXZOGO, Jeff I think on the approval call, you identified one of the challenges of the U.S. launch that a lot of patients were in expert centers. Are the expert centers reporting that patients are inquiring about being treated, or is there a general flux of patients towards the expert centers with the availability of VOXZOGO? And then second, on ROCTAVIAN. Hank, just briefly, what are your expectations for an AdCom? I know there wasn’t one in the first review. Do you think the FDA is likely to hold AdCom to review the ROCTAVIAN resubmission? Thanks.

Jeff Ajer, Executive VP, Chief Commercial Officer

I’ll start on the VOXZOGO experience in the United States. You’re right. I mentioned previously that longer term, our big task was to establish a referral network and get patients out of the random physician, which is not a medical home for achondroplasia, into genetics or pediatric endocrinology clinics. Recently, we’ve noted a steady rate of patients coming in for referrals and our in-process group remaining steady, which is a positive sign, confirming our ability to establish that network. In the early months, a lot of our patients were from the genetics and skeletal dysplasia clinics with interest indicated, thus leading to enhanced referrals as more connections are made.

Hank Fuchs, President, Worldwide Research and Development

Regarding the concern about the AdCom, I haven’t particularly useful information to add. The agency won’t really decide that until they have reviewed the submission. I would suggest that historically, AdComs are called when the FDA is interested in reassuring a decision or showcasing concerns. From my perspective, it seems we have a solid efficacy profile and the safety profile as well, and I hope that they regulate gene therapy products using a robust review package – but we will know soon enough.

Phil Nadeau, Analyst

That’s helpful. Thank you.

Operator, Operator

Your next question is from Matthew Harrison of Morgan Stanley.

Matthew Harrison, Analyst

Great. Good afternoon. Thanks for taking the questions. Jeff, I just want to follow up on two things. One, I think you talked about some inventory dynamics that helped VOXZOGO this quarter at the specialty pharmacy. Could you be or maybe you are willing to quantify or give us some sense about how much that helped? And then secondly, just as you are preparing for ROCTAVIAN in Europe, can you give us some sense of how much work has been done so far and what engagement you’ve had with each of the countries regarding price, and whether any engagement around price has occurred?

Jeff Ajer, Executive VP, Chief Commercial Officer

Back on VOXZOGO in the U.S. regarding the resting specialty pharmacy inventory, you could judge from the mix of revenue ex-U.S. and U.S. Well, BioMarin is guiding the $7 million of revenue was in the U.S. I also indicated that by March, we were seeing orders indicating that specialty pharmacies were not drawing down their inventory. We know specialty pharmacies don’t like to hold a lot of inventory. We’ve got good reorder dynamics. So, I might suggest that a couple to several million dollars of resting inventory helped us in the quarter. Regarding ROCTAVIAN in Europe, we’re leveraging our experience from previous launches and have formed specialized teams for preparation, including individuals with significant hemophilia experience. We’re ready to operate in the first key markets in France, Germany, and Italy, and our market access advisors are actively engaged in researching pricing strategies.

J.J. Bienaime, Chairman and CEO

In Germany, at launch, we are pricing close to the U.S. Fed price, or around $2 million. We have conducted significant reimbursement research. There is substantial interest from payers regarding outcome-based agreements that we plan to make available. We are confident about the robust data proving that most patients respond very well to ROCTAVIAN, with only a few in the low-single digits not responding or going back to prophylactic Factor VIII therapy. This model allows us to maximize product launch through guarantees of success to payers.

Operator, Operator

Your next question comes from Joseph Schwartz with SVB Securities.

Joseph Schwartz, Analyst

Hi, a lot of my questions have been answered. So, I will ask some things about your mid-stage pipeline. It’s been over a year since the IND was filed for BMN-255. So, I was wondering if you could give us an update on this program. I see you completed the SAP work and are analyzing maps. Do you think you will be advancing to the MAD portion? And when can we expect to see some data there? Is it possible to see a signal from the mantra than these are healthy volunteers?

Hank Fuchs, President, Worldwide Research and Development

Hi, Joe. All good questions. The early stages of small molecule development often have their challenges. All I can share is we have completed the single ascending dose portion of the study, and we’re analyzing the results now. I think the enthusiasm for 255 comes from its genetic enablement; we believe it can significantly benefit those who suffer from recurrent stones or other chronic renal diseases. Please stay tuned as we receive the data.

Operator, Operator

Your next question is from Debjit Chattopadhyay with Guggenheim.

Debjit Chattopadhyay, Analyst

Hey, thanks for letting in. So, just on VOXZOGO, on the commercial launch so far, what is the upper age limit of patients currently being prescribed? And number two, any clarity on the sleep apnea signal noted in the younger subjects in the zero to 5-year-old study? And finally, are you planning to advance the long-acting version into the clinic? Thanks so much.

Jeff Ajer, Executive VP, Chief Commercial Officer

Hi Debjit. I will start with the age range; we have seen quite a diversity in age, including teenagers being enrolled. We don’t have a ceiling age, but we know that kids with closed growth plates will not benefit. We’d expect the upper limit to be around 18 years of age. The second question is related to the zero to 5-year-old data. In Europe, they have been compelled by the full data package we provided. In the U.S., the FDA wanted a bit more information from the 206 results, which we will inform and pursue similarly in other parts of the world. We believe data support our goal of offering treatment options for children who are under 5 years of age with achondroplasia. Regarding long-acting formulation, while there hasn't been any significant efficacy or safety advantages noted, we have talked about it as an option due to its potential appeal for younger demographics, though Ascendis's early stage is a significant factor in this competition.

J.J. Bienaime, Chairman and CEO

As you know, we are in late-stage review for our application to Japan for the treatment of patients from birth to five, as well.

Hank Fuchs, President, Worldwide Research and Development

The data will be presented during the summer, so stay tuned for further details. Regarding the long-acting formulation, while we have considered it, we are focused primarily on maintaining a strong efficacy profile with minimal compliance burden for young children.

Debjit Chattopadhyay, Analyst

Thank you. Good luck.

Operator, Operator

Your next question comes from Joel Beatty with Baird.

Joel Beatty, Analyst

Thanks for taking the questions. The first one is for VOXZOGO. What’s the level of awareness of the drug among patients with achondroplasia and their families? And then also for BMN-351 for DMD, what will be learned from the initial study starting later this year?

Hank Fuchs, President, Worldwide Research and Development

On the level of awareness, while we typically plan market research to gauge awareness, we have not launched a specific study yet following the launch. However, qualitatively, it appears to be quite high based on the level of patients we see coming in for treatment. As for BMN-351 for DMD, our goal is to administer it as quickly as possible by the end of this year, pending regulatory interactions. The key question is the relationship between the delivered dose, its safety profile, and the level of dystrophin increase achieved; we believe that our compound can achieve a meaningful concentration level that produces detectable changes.

J.J. Bienaime, Chairman and CEO

We expect that the initial proof of concept studies will demonstrate safe improvement in dystrophin levels, can't provide a timeline, but we are enthusiastic about its potential.

Operator, Operator

Your next question comes from Luca Issi with RBC Capital.

Luca Issi, Analyst

Well, great. Thanks so much for taking my questions. Quick one on ValRox. I know you are ruling out AAV as the potential cause of the salivary gland cancer, but can you actually share the integration frequency that you have observed on the surgical piece? I know uniQure mentioned in the past is 0.027% of their cell showing evidence of AAV integrations for their paracellular carcinoma case. So, just wondering how your number compares to that number. And maybe also related, I think I heard no mention of tonsil cancer in the hemophilia B program. So, wondering how you are thinking about read-through for your program? And then still on ValRox, assuming it does get approved, remind us what’s the latest thinking on pricing strategy and feel free to dichotomize the answer between the U.S. and the EU, should that make sense.

Jeff Ajer, Executive VP, Chief Commercial Officer

I can’t give you specifics on integration frequency right now, but I can affirm what we have observed aligns with the previous descriptions of low propensity for integration associated with AAV vectors. We believe we will show remarkably low integration levels in tissues. Regarding tumors, I agree with J.J. that we remain focused on a patient-centric approach, ensuring safety through rigorous preclinical work and maintaining transparency with all data throughout our communication. As to pricing, J.J. mentioned earlier that the price range is likely to remain between $2 million and $3 million as a starting gross price, but we will finalize the numbers at launch depending on the outcomes available.

J.J. Bienaime, Chairman and CEO

We committed to bringing value through outcome-based agreements that payers will support, paving the way for a successful launch.

Operator, Operator

This concludes the Q&A session. I will now hand it over to J.J. Bienaime for closing remarks.

J.J. Bienaime, Chairman and CEO

Thank you, operator, and thank you all for joining us today. We are again pleased to begin 2022 with record first quarter results. The addition of VOXZOGO to our commercial portfolio is an important component of our growth story going forward and it paves the way for GAAP profitability, a sustainable GAAP profitability beginning this year. We have successfully transitioned our focus to the development and commercialization of innovative therapies for larger genetic conditions, and we are hopeful that 2022 will be the year that ROCTAVIAN will be approved in the U.S. and Europe. We look forward to keeping you apprised of our progress over the coming weeks and months. Thank you for your continued support and we look forward to seeing you soon.

Operator, Operator

This concludes today’s conference call. Thank you for participating. You may now disconnect.