BioMarin Pharmaceutical - Q2 2023
July 31, 2023
Transcript
Jeffrey Ajer (EVP and Chief Commercial Officer)
Thank you for joining BioMarin's second quarterly results conference call. Hosting today's call from BioMarin is Traci McCarty, Head of Investor Relations at BioMarin. Please go ahead, Traci.
Traci McCarty (Head of Investor Relations)
Thank you, J.P., and thank you everyone for joining us today. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin's financial performance, commercial products, and potential future products in different areas of therapeutic research and development. Results may differ materially, depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market, and developments by competitors. Those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K, and 8-K reports. On the call from BioMarin's management team today are Jean-Jacques Bienaimé, Chairman and Chief Executive Officer; Jeffrey Ajer, Executive Vice President, Chief Commercial Officer; Hank Fuchs, President, Worldwide Research and Development; Greg Guyer, Executive Vice President, Commercial, Chief Technical Officer; Brian Mueller, Executive Vice President and Chief Financial Officer.
I will now turn the call over to BioMarin's Chairman and CEO, J.J. Bienaimé.
Jean-Jacques Bienaimé (Chairman and CEO)
Thank you, Traci, and good afternoon, everyone. Thank you for joining us today on this call. We were very pleased with our progress in the second quarter as more families around the world gain access to VOXZOGO and the highly anticipated FDA approval of Roctavian was received. The achievement of these two milestones are key components of our growth plans, including continued VOXZOGO expansion and Roctavian launch execution. Record revenues of approximately $1.2 billion in the first half of the year represented 13% year-over-year growth and 16% growth excluding Kuvan. Our commitment to profitability was demonstrated again this quarter. We were pleased to deliver $56 million in GAAP net income as a result of strong product demand.
With Q2 total revenues coming in at $595 million, including $113 million in VOXZOGO revenues, we are on a path to achieving our 2023 objectives of double-digit revenue growth and significant operating leverage. This is expected to drive more than 30% growth in bottom line profitability in 2023, as communicated earlier this year. We were very pleased to have received FDA's approval of Roctavian in the quarter, as we believe the demonstrated clinical benefits of this one-time gene therapy has transformative potential for those living with severe hemophilia and eligible for treatment. With combined U.S. and European addressable patient population of nearly 6,000 patients, we are optimistic that Roctavian will become the treatment of choice for those seeking an alternative to chronic therapy.
The commercial team moved quickly to activate the first phase of launch following FDA's approval. We have been encouraged by the early signals of interest in Roctavian in the United States. We have also made good progress in Germany and other European countries during the quarter. Jeff will provide more launch details in a moment. Turning to VOXZOGO, we continue to be impressed by the cadence of uptake worldwide. As a result of continued strong demand, we are raising full-year VOXZOGO guidance for the second time this year to between $400 million and $440 million, representing a significant increase from our initial guidance in February of between $330 million and $380 million. Jeff will provide additional detail on our VOXZOGO guidance in a moment.
Building on the significant demand for VOXZOGO for the treatment of achondroplasia, we are pleased to announce today plans to begin our pivotal program with VOXZOGO for the treatment of hypochondroplasia. With over seven years of efficacy and safety data from our clinical program and nearly two years of commercial experience in achondroplasia, we view VOXZOGO as highly de-risked and now on the fast track in a potential second new underserved patient population. Hank will provide more details in a moment. Suffice it to say, we are rapidly executing on our expansion plans with VOXZOGO. In summary, we are very pleased with BioMarin's performance in the second quarter, second quarter and year to date. The global demand for VOXZOGO continues to drive record revenue and margin expansion, supporting our confidence that we will potentially it will be our first blockbuster product.
With Roctavian, we're excited about the opportunity at hand and remain focused on launch execution, both in the United States and Europe. We believe our ability to raise awareness of Roctavian among patients and physicians in U.S. through a direct outreach to the hemophilia community will result in meaningful demand over the coming quarters. Thank you for your continued support, now, I now will turn the call over to Jeff to discuss the commercial business updates. Jeff?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Thank you, JJ. I'm very pleased with our commercial performance in the second quarter, resulting in $595 million in total revenues and representing 12% growth year-over-year, including Kuvan, and 14% growth excluding Kuvan. Contributions from our enzyme products in the quarter keep us on track to deliver full year 2023 guidance for this franchise, as well as provide significant contributions to BioMarin's full year 2023 total revenues. Turning to VOXZOGO, today, we increased full year guidance again, as new patient penetration continues to exceed our aggressive expectations. As noted in the press release, today, we once again raised full year VOXZOGO revenues guidance to between $400 million and $440 million, representing 150% year-over-year growth at the midpoint of guidance.
Appreciating that the run rate for the remainder of the year may seem muted based on VOXZOGO revenues of $201 million in the first half of the year, we note that we are managing temporarily tight supply into 2024. We are closely managing new growth, including limiting inventory stocking, to ensure that we achieve our main goal, which is to ensure that patients maintain continuity of VOXZOGO. Importantly, while we are focusing on inventory levels and new patient starts, our supply plan provides for hundreds of new patient starts in the second half of this year. We do have ample drug substance on hand, which we manufacture at our Novato facility and have sufficient capacity to meet all future demands for achondroplasia and other possible indications. We have secured additional capacity at our fill-finish CMO, which is the constrained element of the process.
These accelerated steps will ensure that we have ample supply to exceed full year 2024 consensus, currently at $597 million on FactSet and support growth beyond 2024. At the end of the second quarter, more than 2,000 children with achondroplasia in 36 different markets were being treated with VOXZOGO. Uptake to date represents 12% penetration of indicated patients in BioMarin's commercial footprint, highlighting the significant growth potential remaining. Turning now to Roctavian. We've been very pleased with U.S. launch progress since receiving FDA approval on June 29th. Following approval, the team immediately began the outreach campaign, educating stakeholders, including patients, Hemophilia Treatment Centers or HTCs, and payers on the value of Roctavian.
In the four weeks since approval, we've been pleased with the increasing inflow of patient consent forms, the number of executed or in-process warranty agreements, and the utility of our executed group purchasing agreement contract that we expect will facilitate access and uptake of Roctavian at Hemophilia Treatment Centers across the U.S. There are many commercial activities ongoing to facilitate access to Roctavian. We are currently in process of working with the largest, most capable Hemophilia Treatment Centers on-site readiness. On the payer side, our U.S. market access team has been actively engaging with payers to facilitate patient access and the issuance of coverage policies. In advance of coverage policies being issued by payers and once commercial Roctavian is available in the U.S., we have the ability to get approval for individual patients through the medical exception process.
In summary, in the U.S., we are actively promoting Roctavian to the hemophilia community, and the sales force has been activated in all key regions. We expect labeled commercial Roctavian to be available to ship to pharmacies in August and look forward to updating you of our progress over the coming months. As we stated on our June approval call, we expect it could take from two to five months to complete the steps necessary before treatment with Roctavian, depending on a patient's location, insurer, cadence of regularly scheduled visits with the HTCs, and completion of eligibility testing. Moving briefly to Roctavian updates in Europe, we continue to make good progress. In Germany, new AAV5 antibody tests in Germany continue to come through, resulting in a robust funnel of patients preparing for potential treatment with Roctavian.
While final federal pricing negotiations are ongoing, reimbursement for patients treated with Roctavian is possible under named patient authorizations through individual insurers. Those sales would be subject to the final price once it has been established. In Italy and France, we are also making good progress. Our applications seeking price and reimbursement approvals, as well as other launch preparation activities, are moving ahead in both countries, where we expect negotiations to conclude by Q4 of this year. We continue to be encouraged by early interest in Roctavian in other markets, including Argentina and Saudi Arabia, where we have the potential to provide access to Roctavian through named patient authorizations. Taken together, we are pleased with the progress we are seeing in markets outside of the United States.
Briefly, on full year 2023 Roctavian guidance, we maintain our current full year 2023 guidance of between $50 million-$150 million. Appreciating that we are at the start of launching a truly pioneering therapy, which has required significant effort to support novel reimbursement arrangements, as well as training for those providing Roctavian treatment and follow-up, we believe there are a variety of potential outcomes over the next several months.
Our confidence in the guidance range is supported by ongoing progress in Europe, requests from patients for CDx testing and treatment, the inflow of patient consent forms and warranties in the U.S., and feedback from physicians globally, as well as the one-time nature of both Roctavian treatment and reimbursement. For perspective, the treatment of slightly more than 50 U.S. patients achieves the midpoint of current guidance. Stay tuned over the coming months as we track global launch progress. In conclusion, at the midpoint of 2023, we are on track to achieve full-year total revenue guidance. The unique one-time treatment and reimbursement profile of Roctavian lends itself to contributing meaningfully during the second half of the year. VOXZOGO continues to exceed expectations, resulting in 2 guidance increases so far this year.
The start of our new pivotal program with VOXZOGO for the treatment of hypochondroplasia opens the possibility of a new indication opportunity for a marketed product. These opportunities are now layered on top of BioMarin's established base business that delivers nearly $2 billion annually and growing. Taken together, we are well positioned to achieve financial growth and profitability goals outlined earlier this year. 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 of Worldwide Research and Development)
Thanks, Jeffrey Ajer, thank you all for joining us today. Echoing Jean-Jacques Bienaimé and Jeffrey Ajer's enthusiasm for the June 29 Food and Drug Administration approval of Roctavian, we are extremely gratified that people in the United States living with severe hemophilia A have access to this innovative therapy. Our goal with each of BioMarin's therapeutic interventions is improving health outcomes for people with genetic conditions, and we believe Roctavian clearly achieves that goal. As we have stated previously, we believe VOXZOGO has the potential to treat a variety of genetic stature conditions, many of which represent significant unmet need. As Jean-Jacques Bienaimé mentioned, we have solidified our plans to begin the pivotal program with VOXZOGO for the treatment of hypochondroplasia.
We estimate the patient population in hypochondroplasia across BioMarin's global territories to be approximately 15,000 individuals and expect the full spectrum of disease to be elucidated over the course of the study. As a reminder, hypochondroplasia is a genetic skeletal dysplasia characterized by small stature and disproportionately short arms, legs, hands and feet. As Dr. Andrew Dauber, who BioMarin is supporting to run the phase II study of VOXZOGO in a multitude of genetic stature conditions, has educated us, for decades, doctors had only one tool to improve outcomes in patients with skeletal diseases, and it does not work well outside of growth hormone deficiency. As is typical of BioMarin, we look forward to ushering in a new era in improving health outcomes for children with severe impairment and growth now beyond achondroplasia. Following our interactions with the FDA and based on the emerging data set from Dr.
Dauber's study, we aligned on a study design to test VOXZOGO in this new indication. Supported by our extensive clinical development program in achondroplasia and profile of VOXZOGO as a natural regulator of bone growth, we are pleased to be moving directly into a pivotal program in hypochondroplasia. We plan to begin the six-month observation of the arm of the study later this year, followed by a 52-week randomized, double-blind, placebo-controlled phase of the 80 participant clinical trial. Based on the enthusiasm we have seen with VOXZOGO for the treatment of achondroplasia, we're excited to get started on the first potential treatment option for children with hypochondroplasia. Briefly, on the earlier stage pipeline, we've been working to put together an interesting and informative update across our pipeline programs for our upcoming R&D Day on September 12th.
This includes our five publicly disclosed product candidates as well as other new updates. The agenda includes BMN-255 for hyperoxaluria and chronic liver disease, BMN-331, gene therapy for hereditary angioedema, BMN-349 for alpha-1 antitrypsin deficiency, BMN-351 for Duchenne muscular dystrophy, and BMN-293 for myosin-binding protein C3 deficiency, causing hypertrophic cardiomyopathy. Some fireside chats with key opinion leaders or on key areas of our therapeutic focus for BioMarin will be an important and interesting part of the R&D Day. We look forward to sharing an update on what's been happening in the earlier stage pipeline, and we hope that you'll tune in to learn more about next potential commercial product candidates. Thanks for your support, and I'll now turn the call over to Brian to update financial results in the quarter. Over to you, Brian.
Brian R. Mueller (EVP and CFO)
Thank you, Hank. Please refer to today's press release summarizing our financial results for full details on the second quarter of 2023. Since JJ and Jeff spoke to our revenue performance for the quarter and future revenue outlook, I'll make just a few more revenue comments, then we'll focus on the remainder of our P&L and other key financial updates this quarter. As usual, all results will be available in our upcoming Form 10-Q, which we are on track to file over the next couple of days. As we have previously noted, we view last year as a transformative year at BioMarin, laying the foundation of our growth strategy driven by VOXZOGO, approval of Roctavian in the EU, double-digit revenue growth, and our important milestone of sustainable full-year GAAP profitability in 2022.
As we close the first half of 2023, we're pleased to build on that foundation with the approval of Roctavian in the U.S. and strong first-half financial performance that aligns to our long-term objectives of continued revenue growth and P&L leverage. BioMarin's $595 million of total revenue in the second quarter of 2023 is an increase of 12% compared to the second quarter of 2022. Regarding our revenue outlook for the rest of 2023, we continue to anticipate strong double-digit growth of 16% at the midpoint of our reaffirmed total revenue guidance.
As Jeff mentioned earlier, we are pleased with our first half performance of VOXZOGO, given the first half revenue has come in over $200 million, we felt it appropriate to note that the low end of our prior guidance is no longer in line with our expectations. With that in mind, we have provided an updated view for the year, raising guidance slightly to $400 million-$440 million. Moving past revenue, Q2 2023 gross margin was 78.5%, which is an improvement of 1.6% as compared to the second quarter of 2022. We are pleased with our gross margin performance over the first half of 2023, as it reflects our fundamental objective to improve this metric through cost efficiencies and favorable product mix.
R&D expense in Q2 2023 of $177 million and SG&A expense of $215 million grew 12% and 9% versus Q2 2022, respectively, and in line with our goal to grow expense base slower than revenue. While we expect operating expense growth on a full year basis to align to that goal, we do anticipate a second-half acceleration of expenses as we continue to progress our R&D pipeline, including the new phase III study announced today for hypochondroplasia and investments in the Roctavian and VOXZOGO launches. On the bottom line, we continue to deliver on our commitment to profitability with $56 million of GAAP net income in Q2 2023 and $105 million of non-GAAP income. This positions us to achieve our stated objective of sustained and growing full-year GAAP profitability going forward.
Today, we also updated our 2023 GAAP and non-GAAP income guidance to $165 million to $215 million, and $370 million to $420 million, respectively. Similar to our VOXZOGO revenue guidance adjustment, our updated outlook for the bottom line reflects our strong performance in the first half of the year and continued revenue growth expectations in the back half of 2023. At the midpoint, we expect more than 30% of net income growth, which represents meaningful leverage versus revenue and is in line with our financial transformation goal. In closing, we are on track to meet our objectives for 2023 and beyond.
The recent approval of Roctavian in the US, coupled with the strong foundation in place, including the successful VOXZOGO launch, will further enable our ability to drive revenue growth, expand profitability, and generate meaningful cash flows over the course of the next several years. Thank you for your attention, and we'll now open up the call to your questions. Operator?
Operator (participant)
Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. If you would like to cancel your request, please press star two. Please ensure you lift the handset if you are using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Akash Tewari from Jefferies. Your line is now open.
Akash Tewari (Managing Director and Global Head of Biopharmaceutical Research)
Hey, thanks so much. Just any update on the 300 patients you've previously had interactions with regarding Roctavian in the U.S.? It sounds like you won't get commercial product into the distribution centers until late August, but I think you've previously mentioned you're going to see some leading indicators in terms of patients who've actually been treated with a companion diagnostic, or have actually, you know, gone to a treatment center of excellence. I'd love any update on that number. I guess, number 2 on hypochondroplasia data. Can you comment a bit on why the FDA wouldn't require two years of Phase III data for VOXZOGO like they did in hypochondroplasia? Maybe what timelines would be for Noonan syndrome, right? I think you have about five patients worth of data right now.
Should we expect that you would need about 25 patients worth of data at the 15 microgram dose in Noonan syndrome to be supported for phase II approval there? Thank you.
Brian R. Mueller (EVP and CFO)
Jeff, you want to start with the first question and then Hank?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Yes. Hi, Akash. I'll start with your first question. It's absolutely the case that we started with the U.S. launch with an estimated 300 qualified patient leads. So these are individuals that had been in touch with BioMarin through either one of our digital properties or an in-person engagement and had opted in to further information. As noted on our approval call a month ago, that list of 300 is top priority for getting back to in different ways, digitally and through our sales force. I can assure you that the team has been processing those leads in the last month and actively.
As you noted, we expect and, in fact, are seeing, you know, small pieces of signals of demand falling into place from, you know, from responses to those lead engagements to patient consent forms coming in. Things are looking really encouraging on that front. Maybe with that, I'd turn it over to Hank on the hypochondroplasia and Noonan syndrome questions.
Hank Fuchs (President of Worldwide Research and Development)
Yeah. Thanks, Jeff, and thanks, Akash, for the inquiry. In terms of the duration of the hypochondroplasia, in contrast to achondroplasia, in which the FDA has been very interested in two years of data, we've lined up with the FDA that a one-year study would be sufficient to support registration. I think that's driven by the comfort level they're gaining on the durability of VOXZOGO in disproportionate skeletal dysplasias. As regards timelines for Noonan syndrome, really for further development beyond achondroplasia and hypochondroplasia, it does make sense that given that VOXZOGO is an analog of a natural bone regulator, bone growth regulator, it is anticipated that VOXZOGO could be effective across a variety of indications, Noonan syndrome and others. This is being borne out in Andrew Dauber, evaluating a range of mutations as you noted.
He's treated at least three patients with Noonan syndrome for at least a year, and their growth velocity is maintained above their baseline, and importantly, good safety data are being collected in patients with Noonan syndrome. We're in discussions with health authorities now to pin down anticipated eligibility, comparators, endpoints, and study durations, and as we finalize those study designs, we'll communicate our plans more specifically, as we have just done for hypochondroplasia. Your question really points at the exciting future potential of VOXZOGO and other skeletal abnormalities, based on its great safety record and its activity as a natural regulator of bone growth.
Jean-Jacques Bienaimé (Chairman and CEO)
Next question, please.
Operator (participant)
Your next question comes from the line of Salveen Richter from Goldman Sachs. Your line is now open.
Salveen Richter (Managing Director and Lead Analyst for US Biotechnology)
Good afternoon. Can you help us to understand the confidence in Roctavian guidance for the second half in the context of the U.S. and EU dynamics? Thank you.
Jean-Jacques Bienaimé (Chairman and CEO)
Maybe I'll start, then I'll have Jeff join. I just, I think, as Jeff said in the prepared remarks, based on the net price of Roctavian in the U.S., which is pretty close to $2 million, the midpoint of our guidance, $100 million, would be only 50 U.S. patients. Without counting any non-U.S., ex-U.S. patients, also just something that's special about, you know, VOXZOGO because it's gene therapy, as compared to any forecast of chronic therapy, is that, you know, starting a patient early in the year or late in the year makes a difference in terms of revenue recognition. Because, you know, with like VOXZOGO, for instance, chronic therapy, if you start a patient on December 1st, the revenues of this year will be much lower than if you start them on February 1st.
For Roctavian, if we treat a patient in, on August thirtieth or on December thirtieth, it's the same thing to the revenue. Just keep that in mind. With this introduction, Jeff?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Yeah, thanks, JJ. I think that's exactly right, and thanks for the question, Salveen. The other couple of things that I would add are we're, we're now seeing multiple pathways that we expect to open up for Roctavian revenue. I mentioned progress in all of Germany, Italy, and France, which are our priority European markets for price and reimbursement. Remember, you know, I've, I've been quoted on numerous occasions saying, "Typically takes 12-15 months to get through that process." We're now just a couple of weeks away from one year since approval. So we should be getting to the end of the process in some or all of those markets between now and the end of the year, opening up a pathway for treating patients.
The inpatient markets, I've, I've quoted Saudi Arabia and Argentina that we've been working diligently but quietly on in the background. Finally, the United States, where, you know, we got our, our approval at the mid-year point. It takes a couple of months for product availability and for startup activities, but in the US, our experience has generally been that we can get patients treated pretty quickly after approval. All of those things add up to channels for being able to treat patients, and I think add to the confidence of being in that revenue guidance range.
Salveen Richter (Managing Director and Lead Analyst for US Biotechnology)
Thank you.
Operator (participant)
Your next question comes from the line of Geoffrey Meacham from Bank of America. Your line is now open.
Geoffrey Meacham (Managing Director)
Hey, guys. Thanks for the question. Just had a few. For Roctavian in Europe, I know it's been a few months since you tweaked the access strategy in Germany. Are there any metrics you can give us, either, you know, activated centers or diagnostic volumes? I just want to get a sense for, you know, the progress since you've had a shift in the reimbursement strategy. On VOXZOGO, you know, you talked, Hank, about Andrew Dauber work expanding the indication base. I guess the question is, as you've rolled out globally in achondroplasia commercially, have you identified hypochondroplasia patients? I wasn't sure if the new Phase III was sort of mechanism-driven or kind of commercially driven. Thank you.
Jeffrey Ajer (EVP and Chief Commercial Officer)
Hi, Geoff. Maybe I'll start with the question about Germany and Roctavian. You know, as JJ quoted on our approval call, we've actually got a really robust funnel of patients now that are in process for eligibility testing, going through the CDx testing process, following, you know, eligible patients via CDx, goes through liver health testing, and then it's a prescription and reimbursement approvals. With as JJ quoted a month ago, approximately 60 patients, I view that as a really healthy patient funnel starting. Recall last fall, we said we estimated about 40 early adopter patients in Germany. We're at 1.5x that number, and that's before we get through the formal federal price and reimbursement process.
Those patients are making progress inside of the funnel, and I understand it's frustrating not to see them popping out. The other side is treated revenue patients, but I'm confident that they're making progress and that we'll get there, particularly if we can come to an agreement with the federal authorities on price and reimbursement. Maybe I'll turn that over to Hank on the VOXZOGO question.
Hank Fuchs (President of Worldwide Research and Development)
Thanks, Jeff. You know, with a lot of the genetic conditions, when there is no treatment, there tends to be no diagnosis. Now, with achondroplasia gaining so much traction, patients with hypochondroplasia are identifying themselves, or families with patients with hypochondroplasia are identifying themselves and getting themselves, you know, forwarded to treatment centers for identification, and in the case of Dr. Dauber, referral into his study. I think a lot of that is driven by the phenotypic similarity of achondroplasia and hypochondroplasia to your point about mechanistic similarity. Our expectation is that this will begin to extend into other skeletal disorders as more clinicians and more families recognize CNP as a natural regulator of bone growth. I think this is a process that could lead us to many additional indications.
As I said on the call, stay tuned for further updates on the regulatory strategy to enable Roctavian to- the VOXZOGO to be available for children suffering from other skeletal abnormalities beyond achondroplasia and hypochondroplasia. It's a very exciting time.
Jeffrey Ajer (EVP and Chief Commercial Officer)
Great. Thank you.
Operator (participant)
Your next question comes from the line of Chris Raymond from Piper Sandler. Your line is now open.
Chris Raymond (Managing Director and Senior Biotech Research Analyst)
Hey, thanks. Just a couple questions. First on, on the VOXZOGO supply issue. Jeff, I wonder if you could maybe expand a little bit. I think I heard you say it's why the full year 23 guidance wasn't raised more, and it's a supply issue at a CMO. But can you maybe expand on this? Like, what exactly is the fill-finish bottleneck? And I think you said you have supply to handle 2024 consensus, but just maybe could you put some brackets around the timing and the plan of action, you know, to not be supply constrained? Like, what's the plan to sort of, you know, deal with this situation, so it's no longer an issue?
Then maybe for Hank Fuchs, on the pipeline, just looking at the, the verbiage on BMN-331, you've got 2 patients now where, you know, the expression trajectory is not yet into the therapeutic range. Maybe can you sort of talk about, you know, what would drive a go, no-go decision for this program, or just any more color on there on that? Thanks.
Jean-Jacques Bienaimé (Chairman and CEO)
Yeah, thanks, Chris. We have Greg, we have Greg Guyer, our, our head of, taking operations here, who's gonna answer your, your VOXZOGO supply question.
Hank Fuchs (President of Worldwide Research and Development)
Yeah, Chris, thanks for the question. Just maybe to clarify a little bit about what, what Jeff was talking about is that, you know, currently we're able to supply VOXZOGO with many hundreds of patients' starts in the second half of this year and have a supply plan that exceeds even the 2024 consensus estimates that he mentioned earlier in the FactSet. That said, that supply just remains tight from an inventory perspective, so we thought it was just appropriate just to escalate it to this group. My team is doing everything we can to continue to escalate or accelerate supply from the CMO, which we use. They're a great partner. They're reliable, dependable, high compliance. There's no issue. It's just trying to accelerate the supply availability faster than what we had planned.
That's really a tribute to our commercial team for really getting the type of penetration rates much faster than we had expected. So we are working very closely with them to make sure that we can meet that future demand and also deliver on the full potential of VOXZOGO long term.
Jean-Jacques Bienaimé (Chairman and CEO)
Again, there is no manufacturing issue. There is the manufacturing details, you know, the drug substance, we manufacture ourselves here in California. The fill-finish is done by a outside supplier. As you know, outside suppliers, there's a lot of lead time when you wanna increase the volume, and that's what we face here because VOXZOGO is doing way, way better than anybody, including yourself, anticipate in terms of penetration. That's what's creating a little. It's a really limiting factor. Again, we believe it's gonna ease up in 2024, and then at the end of 2024, in 2025 and beyond, we shouldn't have any problem. And we have, we have, Greg tells me almost unlimited drug substance capacity.
I mean, nothing is unlimited, but I would say, we can, we can clearly, we have enough drug substance capacity to go way above $1 billion or probably $2 billion. If we need more down the road, if you ne
ed hypochondroplasia successful, actually, we can even go further. It's just a fill, just a fill, fill-finish bottleneck, which is temporary, in a sense, a good problem to have. You're correct in your remark that actually, if we didn't have that bottleneck, we would have increased the, the guidance for 2023 higher, you know, above what we are- so we, we, we indicated today. At the same time, the good news is that next year, we have-- we believe that our plan, including.
what our supplier can do and the fill-finish can allow us to easily beat the current consensus for Roctavian in 2024, and after that, it should be much easier. Jeff, you want to add anything to the?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Nope, well-stated, thank you.
Jean-Jacques Bienaimé (Chairman and CEO)
All right. There was a many question for Hank, yeah?
Hank Fuchs (President of Worldwide Research and Development)
Yep, on BMN-331. Yes, Chris, we do have very clear criteria for stopping, and a note would be taken that at this stage, one option could be before reaching those stop criteria, to raise the dose, you know, AAV5-based therapies have a pretty good safety profile, so we could contemplate raising the dose. Another thing I'll mention is that I'm not going to be very specific about this just yet, but we've, you know, with as much Roctavian data as we have, we have some new insights about optimizing gene expression in patients treated with gene therapy. We're working very closely with the data monitoring committee and the investigators of the study to incorporate those insights.
If neither of those two are successful, of course, we would meet a stop criteria, but it's still a little bit early for that program, and as we resume dosing and obtain more data, we'll provide further updates.
Chris Raymond (Managing Director and Senior Biotech Research Analyst)
Thank you.
Operator (participant)
Your next question comes from the line of Robyn Karnauskas from Truist Securities. Your line is now open.
Robyn Karnauskas (Managing Director and Senior Biotech Analyst)
Hi, thanks. I'll be quick. Three questions. Number 1, we've heard compliance is very high on VOXZOGO. Can you elaborate? That gets to the competitive landscape and how committed these parents are. Number 2, there's questions around hypochondroplasia. Like, do you have to do as many studies, long-term studies, giving insight into that? I have 1 follow-up. Thank you.
Jeffrey Ajer (EVP and Chief Commercial Officer)
Maybe I'll start with the question on compliance with VOXZOGO, Robin. As you note, it's very high. We, we're not able to measure that explicitly in all markets, so the one market that we can really dial in on that is the United States. Our experience so far in the United States is very few dropoffs and compliance with the daily dosing as we measure it, appears to be very high. So far, so good on the compliance side. Maybe I'll turn it over to-
Hank Fuchs (President of Worldwide Research and Development)
And then-
Jeffrey Ajer (EVP and Chief Commercial Officer)
Thanks.
Hank Fuchs (President of Worldwide Research and Development)
Yeah, thanks, Jeff. In regard to the hypochondroplasia question, one study we've interacted with the Food and Drug Administration and have a pretty clear picture of their requirements, which would be satisfied with one study. The reason for not requiring longer-term follow-up as regards randomized placebo-controlled period is their growing satisfaction with the durability. In fact, maybe to go even a little further, depending on where achondroplasia is at the time of the regulatory action on hypochondroplasia, even further follow-up may no longer be required for hypochondroplasia. We had a great dialogue with the FDA and, you know, insofar as there's an excellent safety track record for VOXZOGO in patients with hypochondroplasia, with accumulating excellent efficacy data. These sorts of supplemental new drug application are not subject to necessarily the same demands as the initial. We're pretty excited.
You mentioned you had a follow-up question.
Robyn Karnauskas (Managing Director and Senior Biotech Analyst)
Yes, one follow-up. Sorry. There's so much fixation on when you'll dose patients in Europe, and I was just curious, like, have you thought about, like, letting us know earlier or during the analyst day? There's so much fixation on that, so maybe give clarity on when you might give us timing of that and how much color you would give, 'cause there's excitement, but we're yet to see the dosing?
Jean-Jacques Bienaimé (Chairman and CEO)
Yeah. Actually, One. Hi, Robin. One of, one of your financial analyst competitor had a recent, you know, call with a German physician. That German physician announced on that call, but public information that he's scheduled to treat his first patient, I think, on August 30th or 31st. That looked like this one is probably a given. Then, and then, you know, there's a possibility that we would treat also our first U.S. patients by the end of August, as Mark said. Then after that, September should be when we're going to start really getting some real traction on patient treatments and revenues.
Robyn Karnauskas (Managing Director and Senior Biotech Analyst)
Great. Thank you.
Operator (participant)
Your next question comes from the line of Philip Nadeau from TD Cowen. Your line is now open.
Philip Nadeau (Managing Director and Senior Biotechnology Analyst)
Good afternoon, thanks for taking our questions as well. A couple more on Roctavian. JJ, during your prepared remarks, you mentioned the consent forms received in the U.S. as adding confidence to the guidance. Can you go into a bit more detail on that comment? Is that simply the 300 patients that you knew of as of the time of approval, or have there been incremental consent forms received over the last month?
Jean-Jacques Bienaimé (Chairman and CEO)
I'll let, I'll let Jeff answer that question. I don't, I don't even believe, though, that we, we already received 300 patient consent form. We, we haven't, but they're, they're, they're starting to roll in and, but maybe Jeff could provide some more color here.
Jeffrey Ajer (EVP and Chief Commercial Officer)
Yeah, thanks for the question, Phil. These are really independent sets of patients. The 300 patients that we've quoted are qualified leads, means we have a lead, we've qualified that lead to be a hemophilia patient, not a sales rep at a competitor company, for example, and we're following up. Those patients have opted in for further information. Patient consent forms, on the other hand, are our usual vehicle that we use for all of our programs, including for Roctavian in the United States, to conduct patient intake into our case management system. Any patient that's come in with a patient consent form has been in touch with our case management system and has opted in for further services.
Depending, that patient consent form might be coming in from a Hemophilia Treatment Center, along with a prescription, or might be coming in independently, as patient-directed interest. In that case, we would, we would connect them with a, a sales rep for, for follow-up. It's, it's a mix, but it's really, really good that we have patient consent forms coming into our case management system. That's how it always begins for us with all of our programs, including Roctavian.
Philip Nadeau (Managing Director and Senior Biotechnology Analyst)
Would you care to disclose how many patient consent forms you have?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Not at this time. Thanks for the offer, though.
Philip Nadeau (Managing Director and Senior Biotechnology Analyst)
Got it. Then, in terms of the centers themselves, what, what do they need to do in order to make Roctavian available for a patient, in general? Is there a formulary committee that has to accept Roctavian as, as a therapy? Any other committees that you have to talk to or get permission from before a center can bring Roctavian to its patients?
Jeffrey Ajer (EVP and Chief Commercial Officer)
It, it's a great and an important question, the notion of site readiness, and, and unfortunately, there's no kind of simple one-size-fits-all description. Some HTCs are connected to a larger healthcare system. In those cases, an HTC might tap into the administrative procedures that you mentioned, like formulary, for example, and maybe also pharmacy services from the larger institution. In other cases, you have Hemophilia Treatment Centers that are more or less standalone and do all of that on their own. Site readiness looks different depending on what, what is the size capability of the HTC, and are they connected or not with a larger healthcare institution? Just a reminder that the infusion of Roctavian is a relatively trivial step.
The, the more important things are issues like the administration formulary, for example, navigating, payer interactions, product handling, of a very frozen, product that has a high value, for example. Patient eligibility testing and counseling to determine if there's a patient with interest, and if so, you know, moving them forward in the process. Then, the follow-up, the follow-up following, following administration, which, which we talked about on the approval call. Lots going on there. None, none of those things involve a big hurdle. It's mostly a bunch of smaller things that need to be done, and a whole list of them for that is rather bespoke for each Hemophilia Treatment Center, and our team is on it.
Philip Nadeau (Managing Director and Senior Biotechnology Analyst)
Great. Last from us, on, on that follow-up that you just mentioned, how onerous are the liver enzyme and factor monitoring requirements? Is that something that you can make very easy for the patients?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Blood tests. Liver function tests are on a panel that probably most of us do once or twice, a year. It's a simple blood test. At the same time that that simple blood test is being taken, the blood can be used for factor expression levels.
Jean-Jacques Bienaimé (Chairman and CEO)
Is that for, you know, helping the patients do that?
Jeffrey Ajer (EVP and Chief Commercial Officer)
That, that's right. For a lot of patients, it's as simple as, as going to a, a very nearby lab testing facility. In, in the case of patients that, that don't have convenient access to that, we have programs to assist.
Philip Nadeau (Managing Director and Senior Biotechnology Analyst)
Perfect. Thanks for taking our questions.
Operator (participant)
Your next question comes from the line of Joseph Schwartz from Leerink Partners. Your line is now open.
Joseph Schwartz (Managing Director and Senior Research Analyst)
Great, thanks so much. Our checks in Germany indicate that there is still some uncertainty about how many and which sites will be able to administer Roctavian there. I was wondering if you could talk about how this rulemaking process works and how you expect it to play out. Is this part of the reimbursement negotiations, which are expected to wrap up in September, or is this something separate? In the U.S., our checks underscore the importance of contracting with the sites that the initial ordering and longer-term follow-up on patient performance can be done reliably. I was wondering, sort of to follow on to Phil's question, if you can give us any insight into the extent of contracting that you've been doing with HTCs in the U.S. Thank you.
Jeffrey Ajer (EVP and Chief Commercial Officer)
Hi, Joe. Let me start with Germany. You've, you've heard me talk over the last year or even longer about the hub-and-spoke model for treatment that the major markets in Europe have been rallying around. That's the hemophilia treatment community in Europe, not BioMarin, as the driver behind that. The notion is that In Germany, for example, the largest and the most capable Hemophilia Treatment Centers would be hub centers for both screening and testing patients, and that there would be smaller, less capable Hemophilia Treatment Centers that would be spoke centers. Those spoke centers would probably do all of the screening and recommending of treatment. The treatment would be done at a hub center, and then likely back to the spoke center for follow-up after, after treatment.
There may, in fact, be a little bit of uncertainty on the entire list of who's a hub and who's a spoke. From a practical perspective, we're focused on engaging with all of the, the significant Hemophilia Treatment Centers in Germany. It doesn't really matter very much from a kind of promotional perspective, which centers do infusions and, and which centers refer for infusions. Not much on, on Germany. You mentioned contracting, I'm not sure exactly what kind of contracting you're talking about. In the United States, there would certainly need to be an agreement reached between a treatment center and a payer on the level of reimbursement for Roctavian, which might involve a patient-specific contract between a Hemophilia Treatment Center and a payer.
We think that that's likely and not a big barrier at all to proceed with the treatment. There might also be contracting between spoke sites, to use the analogy, spoke sites and hub sites in the United States if there's a desire on the part of a Hemophilia Treatment Center to refer one of their patients to a more capable center or one that's further along in site readiness for treatment of Roctavian. All of those things are possible. I haven't personally heard that there are any barriers to proceeding due to contracting. If you've got something more specific, let us know.
Jean-Jacques Bienaimé (Chairman and CEO)
No, that's good. Yeah, I, I. Sorry, I may add, Joe, in case it has escaped some of our investors that listen, you know, basically all patients in the U.S. that will be treated with Roctavian in Hemophilia Treatment Centers are Hemophilia Treatment Centers that are receiving 340B discounts, basically statutory for the centers. Let's take around, you know, it will be initially more than 20%, and it might go down to 17.5%, whatever, but it's rounding to 20%. That's 20% of the WAC cost. Our WAC is $3 million a patient. 20% is $600,000 that would go in the pocket of the HTCs per patient. You might have this information, or you might find this information interesting. Very much so.
Thanks again.
Operator (participant)
Our next question comes from the line of Paul Matteis from Stifel. Your line is now open.
Paul Matteis (Managing Director and Head of Therapeutics Research)
Hey, thanks so much for taking my questions. On VOXZOGO, Jeff, does the supply issue, or I guess capacity issue, temporarily impact how you market the drug? How might that impact the way you sort of seek to interact with healthcare providers and patients, if and when the label is expanded before the capacity constraint is fully resolved? Then on Roctavian, just in terms of the timing, you know, this two-five month timing that you spoke to, around approval, I think it took around seven months to dose the first Hemgenix patient. Can you just outline the couple key reasons in your mind for why you think you can get this done so much faster than CSL did? Thanks so much.
Jean-Jacques Bienaimé (Chairman and CEO)
Yeah, good question. I'll start on the, on the VOXZOGO, and then Jeff can chip in. again, when, you know, in our prepared remarks and our, we said that, for 2024, we, we will have, ample supply to beat the current, consensus, which is close to $600 million. For us, that includes, potential increase of I mean, la- label expansion in terms of new patients, new patients that are under age of 5 in- if, if that does occur at some point. That's, that's, that's already included. It's, it doesn't change any- anything in the, the remarks that we made in this respect. I mean, and Greg, you have anything to add here?
Jeffrey Ajer (EVP and Chief Commercial Officer)
No, by the time hypochondroplasia comes, this supply issue will not be one. We'll have plenty of supply.
Jean-Jacques Bienaimé (Chairman and CEO)
Yeah, because we're not gonna get hypochondroplasia, the hypochondroplasia indication next year.
Paul Matteis (Managing Director and Head of Therapeutics Research)
Yeah, I didn't say hypochondroplasia. I just meant younger patients, but okay, thanks.
Jean-Jacques Bienaimé (Chairman and CEO)
Yeah, younger patients, but that's already, again, the current consensus is significantly above the top of our guidance for this year of $440 million, and we are very comfortable. We have enough supply to significantly beat the current 2024 consensus, whatever the patients are. Jeff, you want to add anything before-
Jeffrey Ajer (EVP and Chief Commercial Officer)
Yeah, maybe just a couple of metrics to put it into perspective. At the end of Q1, we advised that there were 1,500 patients on treatment around the world. At the end of Q2, 2,000 patients on treatment around the world. That's a big increase quarter to quarter, and we've guided that our, our supply plan, just through the end of this year, allows for hundreds of additional patients to gain therapy. Kind of internally, how we're looking at this is, the overall demand is not a big surprise. It's just coming sooner, and the uptake is coming faster in markets that we're gaining access to. Gaining access sooner, faster uptake in those markets than, than we were planning on.
We, we still need and want that patient base to grow, so it doesn't fundamentally alter our launch of this drug. This is a really good growth trajectory for us. We're just bumping into some ceilings in certain places. Where that's happening, we're prioritizing keeping kids that, that have started or will start, to make sure that we've got continuity of supply, because what we really don't want to have happen is for kids that have started supply to go off therapy. That much on VOXZOGO. On Roctavian, you know, for, for Roctavian, we're highly motivated to treat patients in the United States as rapidly as possible. On the one hand, we, we are a new entrant to hemophilia.
We've been preparing for this day for a number of years, but it's not like we have an existing therapy that we need to cannibalize with the treatment of our gene therapy. We've taken steps, for example, having a group purchasing organization contract signed before we even got approval. We took those steps to facilitate rapid access. We're moving as quickly as possible.
Jean-Jacques Bienaimé (Chairman and CEO)
The warranty.
Jeffrey Ajer (EVP and Chief Commercial Officer)
We've got the warranty. Those are differentiating factors. I can't speak for, I can't speak for, for the other manufacturer, but we're moving as rapidly as possible, and I think the, the steps that we've taken so far, would be consistent with that desire to move fast.
Jean-Jacques Bienaimé (Chairman and CEO)
Several payers have already signed a warranty contract. That means that I presume they are intending to cover VOXZOGO, otherwise there would be no need for them to do that.
Jeffrey Ajer (EVP and Chief Commercial Officer)
Thank you.
Operator (participant)
Your next question comes from the line of Gena Wang from Barclays. Your line is now open.
Gena Wang (Managing Director and Senior Equity Research Analyst)
Thank you for taking my questions. Maybe just follow Paul, comment, question, and also JJ, your comments. Maybe for Roctavian 2023 revenue. First, do you expect most revenue from Germany or U.S.? Regarding U.S. payers, what is the feedback on 1 warranty program since you just mentioned, and how many centers and lives under the coverage that right now are in place? Second question is regarding the VOXZOGO in high hypochondroplasia. Regarding the six months observation study, what would you be looking for to help define the pivotal study? For 52-week pivotal study, what is the trial assumption, and how much you actually learn from Dr. Andrew Dauber's trial?
Jeffrey Ajer (EVP and Chief Commercial Officer)
Maybe I'll start, Gena, and I'll let JJ fill in. In terms of revenue expectations for Roctavian and where, as I noted, in Salveen's question, you know, part of the confidence in our guidance is not only the U.S. approval that we received when we did, the price that we've named for the United States, but the fact that now, almost 12 months from the conditional approval in Europe, we're approaching that period of time where you would expect we would be able to finish getting through formal price and reimbursement processes, at least in the initial major markets in Europe.
That, together with, you know, what I've described on a couple of occasions to questions, is what we think is a rapid start in the United States and, and even the possibility of named patient sales in other markets. Those channels give different, different opportunities for patients to get treated and contribute to, to revenue. In terms of percent coverage and lives, Actually, we, we don't have coverage policies issued in the United States yet, at least that I'm aware of. Those policies can take anywhere from one to 12 months to issue. I've seen some draft language around coverage policies that have not yet been issued, but would indicate that those coverage policies will be consistent with either a label or clinical trial inclusion criteria, which, both of which would be fine.
We haven't seen those coverage policies start to be issued yet, so, so I can't comment on what % of covered lives in the United States. Maybe I would turn it over to Hank for the questions on VOXZOGO and hypochondroplasia.
Hank Fuchs (President of Worldwide Research and Development)
Yeah, Gena, the six-month prospective run-in study is important to document baseline annualized growth rate prior to randomization into the study. As we've talked about before, one of the things that we observe in the growth disorder area is that that knowledge of that baseline growth rate is really important to be able to interpret subsequent changes in growth velocity and is important for randomization purposes. The study, as I mentioned, is an N of 80 participants, which is a little bit smaller than the study of VOXZOGO in achondroplasia, where we are expecting a relatively similar magnitude of effect. Of course, that can be tuned depending on what that baseline AGV run-in is for the baseline population.
Just to remind you, in the 110 patient study of VOXZOGO and achondroplasia, the p-value is 10 to minus 13, so we don't anticipate needing to power the study quite as aggressively as we did in achondroplasia. We're reassured about all of this based on the evolving data that we've seen from Andrew Dauber, as has the FDA been reassured that we can go directly into a Phase III clinical trial. Thanks for the questions.
Philip Nadeau (Managing Director and Senior Biotechnology Analyst)
Thank you.
Operator (participant)
That concludes the Q&A portion of our conference call. We will turn it back to BioMarin CEO, Jean-Jacques Bienaimé, for closing remarks.
Jean-Jacques Bienaimé (Chairman and CEO)
Thank you, operator, thank you all for joining us on the call today. Outstanding execution across our business led to record revenues in the first half of 2023. We reached more children with VOXZOGO around the world as physicians and families start treatments with the only approved medicine targeting the genetic use of causal achondroplasia. We are well on our way to begin treating patients in the U.S. and Europe with VOXZOGO over the coming months. For the remainder of 2023, we plan to build on the foundation of growth and profitability achieved in the first half of the year. Thank you for your continued support and have a good day.
Operator (participant)
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
