Hi, guys. Good afternoon. Thanks so much for joining us at the UBS Healthcare Conference. Very happy to have BioMarin here with us today. I'm Ellie Merle, one of the Biotech Analysts here at UBS. And joining us from BioMarin for a fireside chat is Brian Mueller, Chief Financial Officer, and Cristin Hubbard, Chief Commercial Officer. Thank you both so much for joining us. Maybe just a high-level question before we go into all things ERT and Voxogo. You guys underwent a large strategic review and presented some of these findings at the Investor Day. Maybe high-level recap, sort of where you see the trajectory for the business and your confidence in this trajectory in light of some of the debates around competition.
Yeah, thanks, Ellie. Appreciate you having us. And thanks, those in the room, for joining. Yes, it was a very exciting and dynamic first three quarters to 2024, commencing with Alexander Hardy joining us. He took over his role on December 1 of last year as J.J. Bienaimé retired. And that was, frankly, right around the time where we entered into our settlement agreement with Elliott. And I bring that up because that involved the establishment of a Strategic and Operating Review Committee of the board. This is a committee underneath the board of directors. It didn't have decision-making authority, but made recommendations to the full board. And that committee oversaw the comprehensive strategic review that we completed through September of last year. And we looked at every bit of the company strategically and where we could both extract and grow the most long-term value for shareholders.
First, looking at, from a capability standpoint and from an asset standpoint, all of the great things that BioMarin has today that we can look towards leveraging more in the future and get additional growth potential. And then there's those what I perceive to be value accelerators, like the growth potential for Voxogo into these other indications, where from a total addressable patient population, the approved indication achondroplasia and our planned second indication hypochondroplasia are just 10% of the total potential addressable patient population. So there's 90%. And we'll get more into the other indications over the course of the conversation, I'm sure. But my point is that was a major growth opportunity that we wanted to make sure we were accelerating as much as possible. Another area is cost structure and operating structure. Again, examined it deeply, looked at opportunities.
We found some very beneficial mechanisms to both balance and improve the cost efficiency of the company, but also get better operating effectiveness. The primary example there is our establishment of new business units, which are centered around certain of our products. You could think of these, and other companies use the term therapeutic areas. But for us, that's the enzyme therapies, which includes the five mostly enzyme replacement therapies, skeletal conditions, which at the moment is Voxogo, but could grow into BMN 333, our long-acting CNP, and other skeletal conditions, indications, and products. And then a small focused business unit on ROCTAVIAN, the gene therapy for severe hemophilia A. So that level of revenue and revenue analysis and growth potential work that we did, as well as the cost structure examination, really allowed us to confidently give significantly improved profitability guidance for the future.
So over time, we'll be targeting non-GAAP operating margins in the low- to mid-40%, starting with 40% in 2026. That would be a doubling of last year's operating margin. For 2023, our operating margin was a little over 19%. So targeting 40% in 2026. We'll be targeting $4 billion of total revenue in 2027 and a mid-teen revenue growth CAGR from there for the next 10 years through 2034. This is the first time BioMarin's given long-term guidance. We've historically been a high-growth company. But after doing all that strategic review, which included, by the way, the other core element was the innovation pillar of our strategy, really prioritizing our R&D. Perhaps we'll get more into the pipeline, but we historically had a core four research and development strategy, which is known causation of disease, a targeted therapy, accessible endpoints, and disease transformational, not just marginal improvement.
We added a fifth core element. So now we talk about the core five, which is commercial competitiveness. We want to make sure that assets can both access the markets, compete in the markets if it's a competitive market by being first in class or best in class, and have revenue potential that provides a return on the investment that it takes to get those drugs to market. So that was a new element. That led to the termination of five programs over the course of 2024, but the prioritization of three programs, which did meet that new high bar. So all in, it was a very busy time for the company. There were also other changes to the management team, including Cristin joining us in May, which was great as Chief Commercial Officer. Hank Fuchs, our longtime head of research and development, recently retired.
Greg Friberg has taken over that head of R&D role. Greg just been in the role a few weeks now, but is off to a great start. He had a really progressive and diverse broad career at Amgen over 18 years. Our new Chief Business Officer, James Sabry, who was formerly the head of external partnership at Roche. During a time when BioMarin plans to prioritize and have an opportunity to accelerate our value through being more deliberate with business development, it's a great time for someone with James' track record to join the company. It really was end to end and top to bottom strategic review with a lot of great outcomes. We're now implementing the strategy, and it's going well.
We still have a bit to go, and we have a lot of ambition, but it was a great process, and we're excited about the future.
Great. And I know everyone here is probably eager to talk about Voxogo, but something I do want to talk about first is the ERT business. And in particular, something I think that's not talked about enough is the mid- to high single-digit growth that you expect, which does imply somewhat of an acceleration, but is also notable considering the ERT revenues are probably some of the most durable that we see in biotech. But let's talk about the specifics here. What gives you the confidence that this is a business that can grow in the mid- to high single digits for years to come?
Yeah, maybe I'll start with some of the underlying drivers of how we are thinking about this as a continued growth business. And I'll ask Cristin to comment on some of the specific tactics. So we believe that investors understand that the enzyme therapy business is a durable business and stable, meaning that it's not getting smaller and may have a small level of growth. And that's because its chronic dosing for life is beneficial to patients and their health and livelihood through their condition and high barriers to competition in a number of areas. However, we think it's underappreciated that that business actually has been growing substantially and has the potential to continue to grow substantially. From 2020 to 2023, the enzyme therapy business grew at 8%.
Some of these products have been on the market, most of them have been on the market a decade or more now, some almost 20 years. There's a number of factors that not only drive that historical growth, but give the potential to grow further. Maybe that's a good point to hand over to Cristin.
Yeah, and I think that probably we're talking about the value of the portfolio over time. And I think, honestly, the most valuable thing we can do in this business area is for patients, for society, and for the business alike is to find new patients. And so one of the areas that we're really focused on, and I think that the notion of having these business units that can now look at the full P&L and understand where best to make these trade-off decisions, what we're doing is we're looking at where we believe we can really put some investment into high-yield diagnostic efforts to find those patients.
It's something that we have done really well for the last 20 years that we've been in this business and something that we can learn from those or take those learnings and move forward and really invest in a targeted way in high-yield diagnostic efforts to find patients in different regions, especially those regions where we know that there's likely higher prevalence. We're also working on investment in patient support programs because we know adherence to these therapies is really important. And sometimes you have patients in more rural areas that have to travel to get their therapy. And so we're working on patient support programs therein.
And then, based again on the learnings from our 20 years of experience here and understanding not only how to find patients, but get them on therapy and make sure that the access environment is set up, we're taking those learnings and now trying to expand into very select markets where we think it's ripe for that type of business. And so we're really kind of targeting. Now, these are newer initiatives and some that we'll be reporting on in due time as we have more information on them.
Maybe just if you can give us any more color on the product mix as well as the geographic mix of where you expect this growth to come from?
Just to remind you of our geographic mix, I mean, we've been very successful and have a commercial footprint of approximately 80 countries. So we're looking very specifically in certain regions, whether they be in Latin America, in the Middle East, et cetera, where we can do this, where we know that we can ensure that we're doing the right types of diagnostic efforts to find these patients and something that, yeah, we're just looking to build on the successes that we've had.
I'll add on the brand side, while these products have significant penetration because it's ultra rare disease, we're in the 80 markets, and they've been on the market a long time. However, there is still an undiagnosed patient market, and we are still finding new patients. That's more the case for Naglazyme, Vimizim, and maybe a bit Brineura. Brineura is still early in its launch. But Palynziq, while that product has grown a lot for BioMarin, that is larger rare. There are thousands of adult PKU patients in the U.S. and in Europe that are not on any therapy, but they're in the clinic. They're interested in getting their PKU treated. And Palynziq has shown to be safe and effective with the ability to lower Phe phenylalanine, the amino acid that is toxic to the brain in PKU, to normal levels and allow diet liberalization.
We appreciate that there's increased competition in the PKU space, but that ability for Palynziq to both get Phe into the normal range and allow full diet liberalization is unique. It's a large market, and we're pursuing the adolescent market. So right now, Palynziq is indicated for adults. We're doing a trial for which we're expecting results next year in 12 to 17-year-olds. So that, again, is an attractive market. This is when these adolescents are at home under the care of their parents. The brain is still developing. So to be able to bring a product with a profile of Palynziq to that population is a significant growth lever back to the original question.
Great. Exciting things to come. Pivoting to Voxogo. Now, competition here has been a major topic of conversation. How do you see the trajectory for Voxogo putting together both the opportunity in achondroplasia where you're currently growing, but then also with expansion indications and seeing the recent Ascendis data? How should we think about sort of the mid and long-term trajectory of Voxogo?
Should I start there? So as we showed at Investor Day, looking at the total lifecycle plan that we have for Voxogo alone, including BMN 333, the long-acting CNP, we stand behind the notion that we can build this into an over $5 billion opportunity overall throughout the next decade. And that really is in large part on expansion and new indications beyond achondroplasia, which I'll get to here in a moment, but the first one being hypochondroplasia, then a launch hopefully, of course, should the data pan out in idiopathic short stature in the U.S., in Noonan syndrome, Turner syndrome, and SHOX deficiency. So a total of six indications for Voxogo alone, and it's something that we are really excited about. Now, you asked the question about competition, and I'll be the first to admit that if anything, more options for patients isn't a bad thing.
As well, competition can help raise share of voice around disease awareness and understanding kind of that there's treatment options out there. It's not necessarily always a bad thing. Speaking specifically to where our ambition lies in terms of building on our leadership position, starting with, of course, achondroplasia with hypochondroplasia being the next, we think we have a really differentiated value proposition here. In achondroplasia, if you think about it, we have what I love to hear Greg Friberg speak to our evidence package as being best in disease. We have over 6,000 patient years and growing of safety and efficacy data. We're focusing quite a bit on publishing the substantial data that we have on what matters to this community, and that's looking at beyond height. Looking at the overall health of these patients, we're really working on publication therein.
And then what we're doing, of course, with our head start that we have in achondroplasia, which will also lead into hypochondroplasia, we're building on this incredible network of 80 countries that we currently have a commercial footprint in. Now, we've launched achondroplasia in 44 countries. We intend to launch into another over 20 over the next 24 months, so by 2027. So we're really leveraging as well the commercial, medical, and access capability that we have in a very broad footprint. And just to give you a sense, I mean, achondroplasia, when we look at the total addressable patient population, if you look outside of the U.S., Europe, Australia, you really have 68% of the total addressable patient population that lives in all of those other countries where our commercial footprint is.
And so we really think that we have a real strategic advantage there that we'll continue to build on. Anything you'd add to that?
Yeah, I might just say two other things. One is we plan to vigorously defend our intellectual property. I won't get into details today here. Ellie, I'm sure you can appreciate why. And there's enough public discourse, I think, on this topic by now, but this is also an element of our competition strategy. And then lastly is BMN 333 being prioritized under that portfolio prioritization process that I mentioned as a high potential asset and a potential successor to Voxogo as a long-acting CNP in itself. And one of the strategic benefits there is that the underlying active ingredient, if you will, for BMN 333 is Voxogo. So this is truly a long-acting version of Vosoritide.
Therefore, even if there were a situation where we lost some share to any potential competitors over the next three years, the presence of BMN 333 after that, and then back to Cristin's comments about all of those other indications and the potential there, as well as most of the markets being outside of the U.S., this is all what underlies our confidence when we were able to reaffirm our long-term guidance after seeing the recent competitor data.
Interesting. And when it comes to BMN 333, I guess you are maybe beginning to dose very soon or already have, perhaps?
We're planning to start clinical trials early next year.
Okay. How should we think about when we could see initial data and maybe just how confident you are in this program and its ability to materialize?
Yeah, thanks. Again, given our excitement about it, I know it's exciting to learn more externally as well. A couple of things I'd say there are, one, we're focused on getting into the clinic and proceeding the program along. That's the top priority currently. But two, with Greg Friberg coming in, our new head of R&D, just a few weeks into the job, this is a top priority for him among others. I know he'll be eager to speak publicly about our entire portfolio, but specifically BMN 333, and we'll see if that includes opportunities to share what and when we'll be able to get some data before that study concludes.
Okay. I won't press you more on that for now. Maybe just turning back to the near-term Voxogo growth and thinking about the sort of overall TAM size in achondroplasia, maybe just what have you been seeing recently? You've been doing some geographic expansion, but then also you've mentioned growth in the U.S., particularly under age five or up to age five. Maybe just what's the mix that you've been seeing in terms of growth? And then from here, particularly without these supply constraints in the near term, kind of the contribution of growth from those geographies?
Yeah, so speaking specifically to the U.S. first, that is clearly our biggest single market opportunity where we still have room to grow. Given that we had our label expansion into the zero- to five-year-old patient population, we've seen the bigger bullets or the majority of new patient starts being in that age group. We only got the approval expanded label, I should say, in that age group at the end of last year. So we're still seeing a bigger majority of patients that are starting today being in that age group. Now, we do know, and guidelines will likely be issued very soon, we do know that the earlier that you can treat these children with achondroplasia, the better.
They have the longer treatment, the benefit of a longer treatment window, and we do think that consensus guidelines will show us exactly that is the right thing to do. We'll, of course, be targeting there. However, it's not to say that all of the five-year-old plus patients have already been treated. A lot of our efforts in the U.S. right now are about driving general awareness because many of these children are being treated for their regular health by their general pediatricians. What we're working on are various campaigns, including digital awareness, where we can ensure that general pediatricians understand that there's a treatment out there today that can treat patients with achondroplasia. We, of course, want to get as much of the data out there that we can to make it a compelling value proposition.
But then, importantly, we want to make sure that they know where those patients can then be treated. So then that's about creating a referral pattern back into pediatric endocrinologists who are more familiar with treating these types of conditions. And we want to make sure that those treaters are then ready to go. Of course, the geneticists as well are treating with Voxogo. And so that's an area that we'll continue to focus on. But currently, in the U.S. alone, our biggest growth in terms of prescribers is in the pediatric endocrinology specialty. And that's an area that we'll continue to focus. So I think that there's a lot of opportunity that we're really laser-focused on in the U.S. specifically.
Looking outside of the U.S., where you look at some of our various markets that are currently highly penetrated, Japan and Germany being examples, this is where the way that patients are treated there is very different. It's much more centralized. And so we've seen penetration grow quite quickly in those regions. That's an area where we're seeing the zero to two population being the most numerous in terms of new patient starts. And that basically means in those highly prevalent geographies, we're creating an incipient market, which is precisely what we want to see over time. And then in the areas that are under-penetrated, either we haven't yet launched or that are just getting started, that's where we're really just trying to focus on getting off the ground in those specific regions.
We have various strategies by region that we think will be successful over time.
In terms of hypochondroplasia, I mean, this is something that theoretically could be launching right at the same time that you would be facing increasing competition in achondroplasia. So just putting those two dynamics together, how are you thinking about the hypochondroplasia market and specifically what we could see in terms of how many patients are currently diagnosed? Is this something we could see a bullet upfront for?
Yeah. And do you want me to start on this one? And I think you called it out nicely. When we look at the total addressable patient populations, we expect genetically that achondroplasia and hypochondroplasia are likely very similar in terms of prevalence. But the reason that we've put out, we have 24,000 as our total addressable patient population for achon, but for hypochondroplasia, 14,000. And the reason for that is exactly what you've just said, Ellie. And that is that we know that the diagnosis rate for this condition is much lower than that of achondroplasia. It has much more heterogeneity in terms of the phenotype. It is oftentimes diagnosed later. So on average, five- or six-year-old children are being diagnosed.
Our efforts there, our go-to-market strategies, is really in and around awareness on diagnosis, on making sure that these patients are in fact diagnosed so that they can then get on the appropriate treatment. A lot of our go-to-market strategy is going to be focused on precisely that.
Maybe I'll add, this is an area where BioMarin has a significant level of expertise and experience. It's not uncommon when you have a rare disease that's complicated to diagnose and there's no treatment available. Those patients, those physicians didn't go any further because there was no further to get. However, with a therapy available, you can start to build the marketplace, build the treatment home. We've already had to do this to some extent with achondroplasia. But the anecdote that comes to mind for me is BioMarin's experience with MPS IVA. This is the condition that Vimizim treats. BioMarin had already had products for MPS I and MPS VI approved and on the marketplace. When we ventured into MPS IV, there were a lot of questions at the time because that disease was very misunderstood, significantly underdiagnosed, many different phenotypes.
And that drug is now. I'll get to the end. It is a roughly $700 million product and is our largest enzyme therapy. So going from the circumstances of a rare disease, hard to diagnose, to a therapy available in a market that's built globally, given our footprint, it comes to mind for me when I think about what we can go after in terms of our efforts and strategy on hypochondroplasia.
Great. Pivoting for a moment to the pipeline. So for 351, you've said that you will have the 26-week dystro and data internally in the second quarter next year. How should we think about when we will see this data and specifically what you're looking for in terms of potentially moving the program forward?
Yeah, thanks, Ellie. I'll do my best to answer a little bit, but again, I'm going to put that generally in the category of let's get Greg Friberg settled. I know he's going to be excited to talk about the entire pipeline, and that includes not only 333 from a couple of minutes ago, but 351 as well, and that will include a little more on the when. Part of the strategy there, and this was part of our evolution of our own publication strategy over the last couple of years, was to try to respect all the important science that happens at the key medical and scientific congresses, less science via press releases as soon as it's available.
That's why we comment based on the timing of the enrollment and when the data will be available, when we'll have it, but when we share it and what we'll get from it is important. For those of you that aren't close to it, this is BMN 351, a next-generation exon skipping indicated for Duchenne muscular dystrophy, where there are a couple of approved products, but there's still a significant unmet need. Both the research and scientific profile of BMN 351 and its potential to compete commercially through that prioritization process that I mentioned earlier did meet this high bar to move forward. We've enrolled the first two cohorts in the dose escalation study. This is two of three, three patients each. That 26-week data would be the first six patients from the two cohorts.
But we think BMN 351, and again, for those of you that may not be close to it, the target product profile here is not just microdystrophin or heavily truncated dystrophin that we've seen with some of the existing products. It's near full-length dystrophin. And in the biology, for the patients that have the level of dystrophin expression at, let's say, 10%, which is our target, noting that we've seen in our animal studies, dystrophin expression levels at 30%-50% of normal in the animal models. But our target for BMN 351 and this proof of concept is 10%. And patients that have that 10% level of naturally occurring dystrophin tend to be in the more Becker muscular dystrophy phenotype, which is significantly less severe than Duchenne's. Becker patients are often ambulatory well into their 40s and 50s and just have less overall burden of disease. So we're excited about this.
I know you are too. Again, we'll look forward to introducing Greg to you soon and getting more on this.
Awesome. Yeah, we're looking forward to it. I know you have mentioned at Investor Day looking at business development. How should we think about the size and potential timing?
Yeah, thanks. Referencing again the strategic review over the course of this year, whether it be the long-term growth potential of BioMarin, which, by the way, our long-term guidance excludes any contributions from business development. So that $4 billion in revenue, that mid-teen revenue growth CAGR for the next decade, that's all based on our currently approved products, plus some of the indications to come with Voxogo. So any opportunities to do business development would only augment that already existing impressive growth. And then scientifically, we realized where there's opportunities to augment the R&D portfolio. And financially, our venture into profitability has come with increasing available cash flow as well. I think I mentioned that part of our long-term guidance in 2027 is operating cash flow exceeding $1.25 billion. And that's 2027. So we're cash flow positive today.
We expect it to grow next year and in 2026 as well as increments up to that $1.25 billion plus. But we just handled a $500 million debt maturity. We just put in place a $600 million revolving line of credit, have ample organic, if you will, balance sheet firepower. So BioMarin has the ability to do deals. Where in the past, I would say we were more opportunistic on business development. So that's kind of the circumstances of how it fits into the growth profile, the portfolio, and the financial profile. But back to the actual strategy, a few things I'd say there are. First of all, we're excited to have a new chief business officer in James Sabry. I think if he wasn't part of my new management team member commentary at the beginning, James also joined us just a few weeks ago. Yeah, I did.
I met you as head of partnering at Roche. So James' track record in identifying the right deals and value-accretive deals is unquestioned. And what's great about James so far, and again, he's been in the role just the first few weeks and getting settled in, he goes deep on the science early, which is not the common attribute for folks whose key part of their role is deal-making. James' first few weeks, he's spending digging in with our scientists to understand BioMarin's scientific capabilities, philosophies, and where we can use all of that as the ability to, or as a leverage point to bring in external assets. And I'll share with both Greg and James being in their roles just a few weeks to see them partner early is very exciting. And then you come into some of the areas where we should have a right to win.
So whether it be our clinical and regulatory experience, where BioMarin has navigated very novel regulatory pathways and clinical endpoints because we're working on these diseases that previously had no treatment, complex genetic disorders. It's a different clinical and regulatory space. And we've shown the ability to be excellent there. And then the global commercial footprint. So not just the 80 countries where we sell our products today, but obtaining and maintaining market access and preserving value for a decade plus on some of these products is a unique capability. So we think we should be the partner of choice in what we also believe to be a target-rich environment right now for many companies who may be in the near term or midterm launching a genetic disease asset that would fit in and be more valuable in BioMarin's hands. That's the objective, right, for things like this?
Absolutely. It looks like we are at time, but thank you both so much for joining us.
Thank you for having us.
Thanks, Ellie. Really appreciate it.
Thank you.
Thanks, guys.
Thanks, everyone.