Research team at Leerink Partners. It's my pleasure to kick off this fireside chat with BioMarin Pharmaceutical. We're very pleased to have Brian Mueller, CFO, with us today to give us an update at a very exciting time when BioMarin is in the midst of so much growth and transformation. Maybe we could start by having you summarize the high points of the company's recent 2024 outlook, and then we'll jump into questions.
Yeah, thanks, Joe. Thanks so much for having us. Great to see you all. BioMarin is truly at an inflection point. We've had a lot of success over the years. Highly innovative. We've got eight internally developed assets. We transitioned to approved assets. We've transitioned to profitability and positive cash flows over the last couple of years. Those are unique milestones in biopharma. But the next wave of growth to come from both the top line as well as our operating model improvements while maintaining that level of scientific innovation that got us here really set up the future outstandingly well, we believe. We reported 2023 total revenues of just a little over $2.4 billion. Our 2024 revenue guidance is $2.7-$2.8 billion. That's 14% growth at the midpoint. We are guiding to non-GAAP earnings per share growth of 30%. So 2x leveraged growth on the bottom line.
And again, just continuing to move forward with accelerating VOXZOGO, which is our fastest growing product and has a number of indication expansion opportunities. Which is a good note that we've got our new CEO, Alexander Hardy, who has outlined his top four priorities for BioMarin as an enterprise. The first is maximize the full potential of VOXZOGO. Next is establishing ROCTAVIAN gene therapy for severe hemophilia A, still launching in the U.S. and globally. Next is prioritizing our R&D. And the fourth is increasing the growth of profitability faster than prior plans.
Okay, great. Thank you for the excellent intro. So how should we think about the timeline, scope, and goals of the strategic and operating review that's ongoing now under the new CEO?
Yeah, thanks. So we have a new committee of the board, the Strategic and Operating Review Committee. They are deep into their work here in early 2024. It involves both a high-level, again, review of corporate strategy, R&D strategy, some visioning for BioMarin, benchmarking, long-term aspirational target setting, but is also greatly in the details of both the current state and future state business planning that will ultimately culminate with an investor day later this year that will cover corporate strategy, R&D strategy, long-term financial plans. We'd expect to give long-term financial guidance, and then capital allocation strategy as well.
Okay. Generally speaking, I know you'll have more to say about this later this year, but generally speaking, what kinds of things could BioMarin potentially do better? How does the company hope to unlock value as part of that process?
Thank you. Yeah, absolutely. I think two good examples come to mind. First is that prioritization of our R&D. BioMarin, again, has always been high science, highly innovative. We've built a lot of capabilities and currently have more assets under development than any other time in the company's history. On one hand, that's what got us here. That is BioMarin's nature. On the other hand, there's an inherent tendency, if you try to do everything, then you may not focus on what could be the most value-creating or important by trying to do too much. Raising the bar on the type of assets that we believe can create the most value for shareholders and patients is one area where we can do better. The second is operating model efficiency.
Again, as a fast-growing traditional biotech company, for many years we were focused on building out our capabilities. We sell our products in almost 80 markets. We've got full world-class end-to-end capabilities in manufacturing, commercial, R&D, business support. But over recent years we were focused on growth and building those capabilities, not as much on the business optimization. So whether it be cost efficiency, whether it be operating model efficiency, we think there's opportunity there. And back to your last question, that is also under the review of the SORC.
Okay. Yeah, that makes sense. So then continuing on that line of thought, what are the potential outcomes in terms of the potential operating or strategic changes versus how the company's been operating to date?
I think just to elaborate on those last couple of points that, so a focused R&D strategy with specifically identifying which assets will be the priority to move forward in R&D and can we accelerate those? And what is the clear and convincing commercial prospects of those assets? So that's the refined R&D strategy. And then we can probably expect that some of the programs won't meet that high bar as well. So then if that frees up resources, how much of those are reallocated? How much of those could be recaptured as operating cost efficiency? And then on the operating model things, we are deep into this work. We've got an internal project teams that are deep into these handful of work streams to touch on all those priorities that I mentioned. And this is an enterprise.
We're truly rallying the enterprise around this and beyond Alexander and the leadership team and the board. So you can imagine, as I talked about that organic growth over many years, our global operating model, which tends to be a regional-focused model. Are there different ways to do the work that we do? End-to-end business processes, leveraging our systems. There's a lot of levers.
Right. Yeah. Okay. Interesting. So can we talk about your new communication strategy? I think Alexander said at the beginning of the year that you'll primarily communicate on a quarterly basis unless something is very, very significant in the interim and scientific data will just be shared at medical meetings and not with investors first. What's the thinking around the shift in communication strategy?
Yes. Thanks for the questions. Important for everyone to understand this. So twofold. I think on one hand, it's the overall maturation of the company, especially on the first one about saving our material updates for the quarter or business updates for our quarterly reports or other proper forums. Again, just a bit different from how we grew up where as a fast-growing biotech, we were always trying to get any news out there as it happened, if you will, but a more thoughtful and mature communication approach. We feel like we've grown into that now. And on the data at scientific conferences, that's really just respecting the scientific community. They take their conferences seriously and want to stimulate interest for their attendees.
And so if companies are putting out full data press releases as part of their corporate communications plan in the conferences and for another couple of months, it just front-runs them a little bit. Good example is ACMG. The data will be at their conference and then perhaps we'll press release around the same time, but not in advance.
Yep. Okay. And then similarly, are there reasons why you're no longer giving guidance on a product-level basis for the commercial business?
Yes, yes. Thanks. Again, I might just reference the overall maturity of the company. We've got these eight products. One of them, we have just one small molecule product, Kuvan, that is in an LOE situation and has waning revenues. But the rest of our products are growing, just different rates. And it can be distracting for investors and analysts to try to track across all those different brands what the different puts and takes are. When in fact, as part of our overall growth strategy for the future, we want to focus on robust top-line growth and robust bottom-line growth. So if we're guiding to those and focusing on those, we hope that will be clear and meaningful and not get lost in what could be quarter to quarter, year to year, different brand dynamics.
Okay. All right. And then diving into some of the individual products, VOXZOGO has been doing fantastically well since it's been launched. And now that it's approved in children under five, I think we saw that almost three-quarters of U.S. new treatment starts were in small children. So what is the age distribution within this group? And how many patients do you think that are in this age group? And how much have you penetrated? And how much growth is there in this small age group that seems to really be driving most of the growth you've seen for VOXZOGO lately?
Yes, yes. Thanks for the question, Joe. So first of all, not a surprise. We are encouraged to see the robust uptake in what was just the first quarter of launch into this age label expansion. For those that may not be aware, VOXZOGO is daily injectable for the treatment of achondroplasia, which is the most common form of dwarfism. VOXZOGO has shown in its clinical studies to restore growth rates in achondroplasia children to close to normal rates of growth. Our clinical studies were run in ages four or five and up. That was the initial label. We just received last October approval in the U.S. and Europe to treat infants in the U.S. from any age. As Joe mentioned, we reported in our Q4 report that in fact, 70% of the new prescriptions in the U.S. were in this under-five group.
So first, if you think about the potential and the potential benefit of this early age group, two things. First of all, for a growth disorder that impacts the children throughout their whole life while their growth plates are open, which is how VOXZOGO is indicated, the earlier intervention and the more and longer benefit that the child can get from an early age, the hypothesis would be that the better the outcome over the course of their childhood. And second is diagnosis. So achondroplasia is often diagnosed peri-birth, so either in utero or shortly after birth. And for many years, if parents asked, is there a therapy available? The answer was no. And even with VOXZOGO approved, when the age label was at four or five, the answer was yes, but at four or five.
And so now you can just envision a conversation between parents after they get the diagnosis to get their referral into a geneticist or pediatric endocrinologist. So lots of reasons to understand why uptake in that age group would be high. In the U.S., it's a 3,000-patient market. It's the largest individual market for VOXZOGO. And so if you think about the age stratifications, the under-fives are 1,000, approximately one-third of those. I don't have a breakdown of how it breaks up further than that, if that was part of your question. But in terms of the market size, because it's a genetic disease, it tends to be proportional to the overall ages. And that's not to say, by the way, that the older than five population still won't be growing. It's just it's been more complicated in the U.S. where we actually have to find these patients.
Because there wasn't a treatment home for achondroplasia, those patients were seen by a number of physicians. It could be a geneticist. It could be pediatric endocrinologist, which is where we're trying to establish the medical home, treatment home. Or it could be your pediatrician if you're not experiencing comorbidities that require seeing a specialist. So that's why, despite the U.S. being the largest market, it is one of the laggards, if you will, in terms of some of the other global markets where VOXZOGO has been deeply penetrated. Those include Germany and Japan. So great to see the VOXZOGO growth story as it is, but to have also the dynamic of the largest market have the most room to grow, we're motivated by. And we've been hard at work at this in the last couple of years of the launch.
It's actually building the market and establishing pediatric endocrinologists as prescribers. We saw that turn recently where they are the larger majority of prescribers, different from the beginning of the launch where it was geneticists, which typically aren't high prescribers. There's not as many of them. There's 350 pediatric endocrinologists in the U.S. So that's where we're building this market. And for those older fives, if they're in their pediatrician's office, there's 2,400 pediatricians in the U.S. We've got a strategy where we're going to go target them as prescribers or referral into a ped endo.
Okay. Interesting. So there's a few competitors behind you nipping at your heels in achondroplasia. And they have slightly different strategies in some cases, either combining with growth hormone or emphasizing the non-bone-related aspects like muscle and you mentioned other comorbidities. What is BioMarin's strategy to hang onto this market, which you're doing such a great job establishing?
Yeah. Thanks, Joe. Definitely watching the competition. In terms of the current key strategy is just to take advantage and leverage this significant lead we have in building the marketplace and becoming the leader in achondroplasia. By the way, as we get into developing VOXZOGO for these other indications, having the potential to establish BioMarin as the leader in genetic severe short stature impairment disorders. When you think about the hierarchy of priorities for pediatric rare disease, safety is at the top of the list. VOXZOGO at ACMG will have 7 years of data from our phase II study, four years of data from our phase III study. We've got over 1,000 patient years of data. VOXZOGO has an excellent safety profile. The next level down is efficacy and durability. Again, we'll be putting out this data.
It's actually, some of the abstracts are up on the website already. So in the fourth year of the phase III study, the patients have grown almost 6 centimeters. And in the seven years in the phase II study, it's over 11 centimeters. And this is over several years. So again, these parents, if they are having years of experience with VOXZOGO where they are comfortable with the product's safety profile and they're seeing efficacy. And by the way, it is more than just bone growth. And we're working on publishing and establishing more quality of life data and real-world evidence. But anecdotally, you hear about the things that the child could do that they couldn't do before. You hear about more energy, those sort of things.
So if the family and the parents are having that experience, then when you get to the third priority, which would be convenience, it's not a given that they would switch. The typical pharma model of switching therapies for convenience is not at the same level in pediatric rare disease. In fact, one of your colleagues from another bank recently did a survey or an interview with a key opinion leader who, in fact, kind of confirmed that hypothesis in that discussion that if parents are having that experience, he doesn't think they would switch. So watching the competition, acknowledging that long-term safety and efficacy data should carry the day here. And we hadn't seen that from the competition. So leveraging our lead.
Yeah. It's a significant lead for our patients. Right. And then obviously, you're also developing VOXZOGO and hypochondroplasia indications. Can you bring us up to speed on those plans there and talk about how that opportunity could compare?
Thanks. Yeah. So the reason why or the hypothesis around VOXZOGO working in these other indications is CNP is the peptide and is a natural regulator of bone growth. So it's interacting biologically at the genetic level with the growth plate. And therefore, beyond achondroplasia, there's other disorders that have other growth plate-related impairments where CNP has the potential to benefit. And then beyond that scientific hypothesis, there's been an investigator-sponsored study, Dr. Dauber, at Children's National Hospital in Washington, D.C., who's also putting out his data this week or at ACMG. And we're looking forward to seeing his long-term data. But in his annualized or six-month data from a couple of years ago, it showed improvements in growth across patients in hypochondroplasia as well as a number of other genetic pathway short stature disorders.
So with hypochondroplasia being similar to achondroplasia, by the way, roughly similar prevalence, about 22,000 patients. Hypochondroplasia differs from achondroplasia a little bit in that it does have a sort of severe and then less severe phenotype. So we would be focusing on the severe portion of the population. But because of that similarity to achondroplasia, we've gotten alignment with the FDA to proceed directly into a phase III study with hypochondroplasia. So we began the six-month run-in portion of that study in Q4 of last year. And we'll expect to begin the VOXZOGO dosed 52-week double-blind placebo-controlled portion of the study middle of this year. So that's hypochondroplasia. And in these other pathway conditions and in idiopathic short stature, so this would be non-monogenic short stature, unexplained short stature, if you will, that's the indication that growth hormone is approved for in the U.S.
We're still talking to the regulators and aligning on the development plans there. Again, don't have that same luxury of hypochondroplasia being similar to achondroplasia, but still good thesis for VOXZOGO.
There's some data there. It looks like.
Yeah. Same thing. Dr. Dauber will offer a benefit. Exactly. Exactly. But study design, duration, endpoints, these are things we want to make sure we get alignment on. If you recall from the VOXZOGO achondroplasia development story, it was a windy road because the FDA held an advisory committee meeting after we had started our phase III on what trial design should look like. And it was different than ours. And we ended up satisfying regulators with the totality of our package, the phase II study, the young children study, and the phase III study, but therefore important in these other indications to get a direct line to registration to align on the development plans before we firm. But as soon as we have it, we'll be sharing.
Okay. Makes sense. So shifting gears to ROCTAVIAN, it seems like you're taking a more disciplined approach when it comes to this program now. And Alexander mentioned recently that several things need to come together, like motivated patients, supportive payers, and treatment sites and physicians that are willing to use the product if it's going to be adopted. So can we talk about those things and what will it take to overcome each of these bottlenecks?
Yeah. I think the way I'd frame it in terms of when we didn't get the robust commercial patient uptake that was initially expected last year, and some of that is continuing to persist in early 2024 as we work through all of the launch dynamics. Yeah. I think I'd put it at sort of five locks that need to open: interested patient, interested physician, an interested and ready infusion site, payer coverage, and then actual reimbursement channels. So across those first four, we are seeing good progress in momentum. Our teams have been out there since the approval in Germany. Well, going back all of last year or most of last year in the U.S. for the second half of the year, our teams have been out in the field educating patients, interacting with the hemophilia community. And we continue to see patient interest as well as physician interest.
There were a number of physicians who were involved in the clinical study. That's another key part of the launch is physician education, key opinion leader influencing and educating. So that's gone well, as has site readiness. We've had a site readiness plan where there's a logistical piece because ROCTAVIAN is a very delicate, complicated product to administer. So you have to make sure that the site is ready. And then there's the operational reimbursement piece that I'll come back to. Payer coverage policy has gone well. So approximately 250 million lives, payers representing approximately 250 million lives have issued payer coverage policies for ROCTAVIAN consistent with the label. So those top-level payers understand the value proposition for ROCTAVIAN, the cost offset, the possibility to actually return value to the system. It's that last piece, which is the actual reimbursement flows.
So between the sites and that payer, and sometimes within the healthcare systems themselves, many hemophilia treatment centers are part of a larger healthcare system, if you will. So if a certain university healthcare system has its entire footprint, which includes a hemophilia treatment center, you could picture the level of negotiation and contracting that needs to happen within that specific healthcare system and then back up through the actual payer. Most of the early commercial patients would be under a single-use single-case agreement. That's not unique. It's the same for CAR-Ts as I understand it. So that level of contracting, also in light of the fact that these patients are reasonably well controlled today, there's just less of a sense of urgency.
They're proceeding along, but it differs from other gene therapy launches where there's a really significant unmet need, therefore a sense of urgency in the system to get this contracting done. That same sense of urgency doesn't exist. It's uncertain as to when we'll get through it. That's why we're going to let the actual revenues do the talking from here.
Okay. And then what's the situation in Europe? Because you're obviously operating in a different environment there. You have existing relationships with ministries of health. And it took a while, obviously, to get the system ironed out in Germany. But is it much different over there? Because it seems to me like some of these locks might be different.
little different, but some similarities. So the challenges and delays in uptake in Germany last year were largely the price negotiation. We had good momentum and success and were close to finalizing a price, frankly, over the course of 2023. At one point in time, we were negotiating with the sub-health insurers and we were trying to establish outcomes-based agreements. But when we pivoted to negotiating with the single German national payer, we ended up not getting the final price published until December. So that opens up pricing. So the two things in Germany now in 2024 are overall site readiness. So there was some sites. We did dose two patients in Germany in 2023, but getting additional infusion sites ready.
And then for the patients that were ready and had gone through the companion diagnostic testing for the AAV5 antibodies, if a few months pass, they need to go through their same level of testing. So that will take some time. And then we're still learning about even some of the dynamics within the site. So even though we have this national price, in some instances, there could be some level of prior authorization, if you will. So there's just it's a complicated, novel pioneering product. And that means the systems are just taking additional time to work through.
Yep. Okay. Great. Well, I think we're out of time, but thank you, Brian. We appreciate the update.
Thanks a lot, Joe. Thank you, everyone.