BioMarin Pharmaceutical Inc. (BMRN) Q3 2024 Earnings Report, Transcript and Summary

Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time, I would like to welcome everyone to the BioMarin Pharmaceuticals third quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Traci McCarty, Group Vice President of Investor Relations. You may begin.

Thank you, Operator. 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 search and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. In addition, we will use non-GAAP financial measures as defined in Regulation G during the call today. These non-GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with U.S. GAAP, and you can find the related reconciliations to U.S. GAAP in the earnings release and earnings presentation, both of which are available in the Investor Relations section of our website. On the call from BioMarin management today are Alexander Hardy, President and Chief Executive Officer; Brian Mueller, Executive Vice President, Chief Financial Officer; Cristin Hubbard, Executive Vice President, Chief Commercial Officer; and Greg Friberg, Executive Vice President, Worldwide R&D. I will now turn the call over to BioMarin's President and CEO, Alexander Hardy.

Thank you, Traci, and good afternoon, everyone. Thank you for joining us today for our third quarter 2024 earnings call. The strategic and operational decisions we have made over the last nine months are driving strong performance and I'm pleased to report another quarter of record financial results with revenues reaching $746 million, marking a robust 28% increase compared to the same period in 2023. As outlined at Investor Day, we are implementing our new corporate strategy focused on innovation, growth and value commitment. During the quarter, we made significant progress on each of these pillars resulting in strong performance. We are structuring the company around new business units in skeletal conditions, enzyme therapies, and ROCTAVIAN to drive accountability, deliver stronger revenue growth and improve efficiency while reaching a growing number of patients around the world. We have set this company on the path to stronger performance and these results are evidence of our progress. Today I'm also delighted to welcome Greg Friberg and James Sabry to BioMarin. With Greg and James in roll and the addition of Cristin Hubbard earlier this year, we have incredible strength and depth in our leadership team with the right combination of scientific and business acumen. I'm confident that with these leaders in place, we are positioned to deliver the new strategy and innovate across all aspects of our business. Greg and Cristin will provide their updates on the call in a moment. Moving to the results in the quarter, strong financial performance was driven by a 50% revenue growth in VOXZOGO for the treatment of achondroplasia. This growth was supported by a significant level of new patient starts driven by increased penetration in the U.S. and new geographies that leveraged our Board, geographic footprint and capabilities. The growth is also being driven by our expanded indication into infants and the increasing evidence of VOXZOGO's benefits to the health of patients beyond height. As our global launch of VOXZOGO for achondroplasia continues to gain momentum worldwide, we have confidence in our sustained leadership across our Skeletal Condition's franchise over the long-term. Our proven capabilities of diagnosing, treating, facilitating market access and building the achondroplasia therapeutic area provide BioMarin the unique ability to sustainably lead this global market. The five key reasons supporting our confidence in growing and maintaining the achondroplasia market are first, a potential five-year commercial lead including the largest database in achondroplasia of long-term durable efficacy in greater than 6,000 patient years of safety and an emerging data set on benefits beyond height including quality of life. Second, global approvals from infancy and our plans to continue to deeply penetrate this market segment along with complicated potential switch market dynamics. The U.S. and EU markets comprise approximately 32% of the global total addressable patient population and therefore the majority 68% is more insulated from mid-term competitive threats because of our global capabilities and market leadership. Third, our global commercial, medical and market access capabilities built over 20 years as just described. Fourth, the prioritization and acceleration of BMN 333, our long-acting CNP that leverages the same CNP as VOXZOGO and fifth, our plans to vigorously defend our intellectual property. In summary, we maintain our confidence in the long-term growth potential of our Skeletal Conditions franchise. Beyond Skeletal Conditions, our global Enzyme Therapies portfolio continued to perform well and grow in the third quarter with 27% revenue growth in Q3 and 13% year-to-date growth. Q3 Enzyme Therapies revenue benefited from increased ALDURAZYME revenue as we delivered a substantial amount of product to Sanofi during the quarter. Excluding the ALDURAZYME revenue, the Enzyme Therapies still grew at close to 10% year-to-date. We're starting to deploy the new initiatives outlined at Investor Day and these together with a focus from the business unit structure give us confidence that we can grow this portfolio even faster than historical rates. We're pleased today to raise full year guidance at the midpoint for all items driven by our strong ongoing execution and focus on performance Alongside record revenues we have driven considerable profitability expansion with year-to-date non-GAAP EPS growing more than three times faster than revenue. As a result of our focused cost transformation program and leverage revenue growth we continue to drive substantial expansion of our operating margin. Our strong financial performance reinforces our confidence in reaching our mid-term and long-term outlook provided at Investor Day. Today we are reaffirming our long-term guidance and outlook which include achieving approximately $4 billion in total revenues by 2027, reaching 40% non-GAAP operating margin starting in 2026 and growing to the lowest mid 40% range over time, generating more than $1.25 billion in operating cash flow per year starting in 2027, targeting a mid-teen compound annual growth rate for total revenues through 2034, developing potential treatments for Skeletal Conditions that represent a greater than $5 billion revenue opportunity over time. And as a reminder, this $5 billion opportunity assumes only a very modest penetration into the Skeletal Conditions indications. In summary, our third quarter performance highlights the ongoing execution of our corporate strategy under BioMarin's new operational plan to achieve sustained and significant returns. These results should demonstrate our commitment to superior performance resulting from our laser focus on making an impact on the life of each patient we serve. I would like to thank our employees around the world for all of the work they've done during the third quarter to contribute to this progress and to their commitment to continuing to evolve the way we work to support the new strategy. Thank you for your attention. I will now turn the call over to Brian to provide an overview of our financial highlights for the quarter.

Thank you, Alexander. Please refer to today's press release summarizing our financial results for full details on the third quarter of 2024, including reconciliations of GAAP to non-GAAP financial measures. All third quarter 2024 results will be available in our upcoming Form 10-Q which we expect to file in the coming days. As Alexander just shared, our record setting performance that generated $746 million of total revenue drove robust growth year-over-year. VOXZOGO was a key driver of revenue growth, increasing 54% year-over-year and reaching $190 million in the third quarter. Please recall that Q2 VOXZOGO revenues benefited from order timing of approximately $20 million and this timing dynamic negatively impacted Q3 revenues. Turning to our Enzyme Therapies, which include VIMIZIM, NAGLAZYME, ALDURAZYME, BRINEURA and PALANZIQ, this portfolio contributed $509 million of combined net product revenues in the third quarter, representing a 27% year-over-year increase. ALDURAZYME was a large driver of revenue growth primarily due to the timing of order fulfillment to Sanofi as we recognize revenues when the product is released and control is transferred to Sanofi, who is responsible for selling ALDURAZYME into the market. We estimate that the impact of timing on ALDURAZYME revenue in Q3 is approximately $20 million to $30 million. NAGLAZYME grew 21% year-over-year, demonstrating increasing demand and benefiting from some order timing. PALANZIQ revenues increased 15% year-over-year driven by the strong patient uptake in the U.S., our largest market for PALANZIQ. Looking ahead, we are confident in the continued strong commercial performance of our portfolio driven by VOXZOGO and the Enzyme Therapies. As a result, we are narrowing our full year 2024 revenue guidance to between $2.79 billion and $2.825 billion, thereby raising the midpoint representing approximately 16% year-over-year growth at the midpoint. From an operating expense standpoint, GAAP R&D expense was $185 million in the third quarter and GAAP SG&A expense was $253 million. SG&A expense on a GAAP basis includes $45 million of restructuring expenses that we adjust out of non-GAAP income and after that adjustment, SG&A expense decreased slightly year-over-year, with R&D expense also declining year-over-year. Overall operating expenses are in a transition phase and trended lower in Q3 as we start to realize the savings from the various portfolio and organizational actions taken this year. We expect operating expenses to begin to increase going forward as we accelerate our commercial growth strategies and advance the R&D pipeline, albeit at a significantly lower expense growth rate than revenue growth, which will drive operating margin improvement over time. BioMarin has executed well in 2024. Our Q3 GAAP diluted earnings per share increased 162% over Q3 last year to $0.55 in the quarter. Our Q3 non-GAAP diluted earnings per share nearly doubled compared to Q3 2023, totaling $0.91 in the quarter. We achieved a non-GAAP operating margin of 28% for the third quarter, driven by a combination of robust revenue growth and our commitment to operational efficiency. It is important to note that these results have been achieved during a year of significant transformation for the company, including the previously mentioned portfolio prioritization decisions and the ongoing execution of BioMarin's enterprise-wide reorganization. BioMarin's strong execution on profitability in Q3 2024 also generated significant operating cash flows totaling $221 million in Q3, an increase of 63% compared to the third quarter of last year. We also settled the $495 million of convertible debt maturity in cash during Q3 as planned. This was the first time that BioMarin managed a convertible debt maturity without issuing a new convertible instrument, thereby retiring approximately $4 million potentially dilutive shares and returning that value to shareholders. Total cash and investments at the end of Q3 2024 were approximately $1.5 billion and we concluded the quarter with the balance sheet and at even stronger position as we continue on the trajectory to generate increasing operating cash flow into the future. As mentioned, given our strong year-to-date execution, we've raised our guidance at the midpoint across all items for 2024. In addition to the aforementioned revenue guidance raise, we now guide to a non-GAAP operating margin of 26.5% to 27.5%, representing a 7.6 percentage point expansion at the midpoint versus 2023. We have also increased our non-GAAP diluted earnings per share guidance to between $3.25 and $3.35, aligning with our goal to grow profitability faster than revenues. While we are expecting year-over-year revenue and profitability growth in the fourth quarter of 2024, it is important to reiterate that Q3 benefited from the ALDURAZYME timing previously forecasted in Q4 and to my comments a moment ago on operating expenses, we expect higher operating expenses in Q4 versus Q3 2024, also in line with historical Q4 trends. As a reminder, BioMarin's dynamic global business continues to experience quarter-to-quarter fluctuations and we point to our full year guidance and annual results as the best measures of our performance and growth. In summary, as we implement the revamped strategy, we drove strong results for the third quarter and year-to-date. This performance, along with our increased guidance for the year and reaffirmation of BioMarin's long-term outlook, underscore our confidence in delivering high growth and superior returns in 2024 and beyond. I will now turn the call to Cristin to discuss the commercial dynamics behind our strong quarterly performance. Cristin

Thank you, Brian. As you have heard, we are proud of our commercial performance, demonstrating continued momentum in the third quarter. The VOXZOGO results underscore the significant opportunity ahead in achondroplasia, where we have identified a total addressable patient population or TAP of 24,000 patients across BioMarin's global commercial presence. To provide some context on our expanding global leadership in achondroplasia, we've been pleased with the number of new patient starts, especially for the youngest patients who can benefit most from the longer VOXZOGO treatment. Supportive of this benefit, we expect that new global guidelines will soon be published based on early real world experience in clinical practice that recommends children with achondroplasia be referred as soon as diagnosis is suspected to enable early initiation of treatment. These guidelines reinforce our belief that beginning treatment soon after diagnosis provides the optimal outcome for children with achondroplasia, including for benefits beyond height and the comorbidities associated with the condition. Now, since VOXZOGO's approval in 2021, we've been extremely gratified to be able to provide families with the only approved therapy that treats the underlying cause of achondroplasia. Through our ongoing global expansion, supported by a growing dossier of supportive safety and efficacy data, we aspire to reach every family interested in VOXZOGO therapy. As we expand our global leadership in achondroplasia, we're pleased with the momentum behind VOXZOGO's awareness. We have continued to add significant levels on new commercial patients with over 3800 children being treated VOXZOGO worldwide at the end of the third quarter of 2024 compared to over 2300 children as of the same period last year. This represents approximately 65% growth year-over-year. Our global commercials are yielding significant new patient starts including in Europe and Middle East and Latin America. We're committed to leveraging our global commercial capabilities to expand VOXZOGO into more than 20 additional markets by 2027. We estimate that approximately 90% of the global achondroplasia total addressable patient population is outside of the U.S. which, considering BioMarin's ability to leverage its established global commercial footprint, is a significant competitive advantage. Moving to Dynamics in the United States, we are seeing robust patient growth across all ages, with the majority of new patient starts during the quarter from children under 5 years old. The expanded VOXZOGO age label from infancy approved late last year in the U.S. continues to be a major driver of new patient starts. And finally on VOXZOGO, consistent with BioMarin's prior product launches, VOXZOGO has now reached a level of global commercialization where it's appropriate to focus on revenue rather than patient numbers as the key metric of growth. As we launch into dozens of countries across multiple continents, patient level data by country becomes unreliable or even unavailable. So as a result, with VOXZOGO reaching its third full year of its global launch, this is the last quarter in which we will share quarterly patient growth, we will move forward using revenues as the key performance indicator. Now turning to our Enzyme Therapies, 27% revenue growth during the quarter was driven by robust demand across the portfolio. While Q3 benefited from order timing dynamics, particularly for ALDURAZYME, we also saw strong patient uptake across the brands that BioMarin commercializes, especially in PALYNZIQ. New patient additions in the U.S. and a strong ongoing launch in Japan drove 15% year-over-year revenue growth in PALYNZIQ during the quarter. Looking forward, we expect continuing growth of the Enzyme Therapies portfolio as we implement new initiatives over the coming quarters outlined in Investor Day. A few examples include focused investments in high yield patient finding initiatives, selective geographic expansion and patient support programs enabling long-term adherence to therapies. We believe these additional initiatives will drive long-term compound annual growth rate in the high single digits for the enzyme therapies. In our ROCTAVIAN business, we generated $7 million in revenue during the quarter supported by three new patient starts in Italy and three in the U.S. Recall that ROCTAVIAN price is weight based, so revenue per patient can fluctuate accordingly. So to add color to the three countries we are focused on, let's start with the U.S. The U.S. sites that have dosed patients have increased confidence in their abilities to successfully negotiate single case agreements and reimbursement. In Italy, patients have been treated across multiple regions thus far, and going forward, as new sites are added across the country, we expect to see increased patient uptake. And in Germany we continue to work with additional sub insurers to facilitate access for patients and we will provide further updates when we have progress to share. So in conclusion, our strong commercial performance in the third quarter, combined with the promising outlook for the remainder of 2024 has enabled us to raise our full year revenue guidance. We are excited about the opportunities ahead and are confident in our ability to deliver exceptional value to our patients and stakeholders around the world. Thank you so much for your attention. I'll now turn the call over to Greg to provide an R&D update. Greg?

Thank you, Cristin. I'm happy to speak with you on my first quarterly results call since joining the company in September. Since joining as the lead for worldwide R&D, I've been energized by the team's commitment to innovation and their emphasis on execution. I look forward to leading this organization as we target 11 high impact launches by 2034. These include two by 2027, those being VOXZOGO for hypochondroplasia and PALYNZIQ for adolescents. A few activities to highlight from the quarter I'm pleased to announce that our pipeline is progressing well, including our CANOPY clinical program evaluating the expanded potential of VOXZOGO in children with hypochondroplasia and with other genetic Skeletal Conditions. For hypochondroplasia, we completed the enrollment target for the Phase 3 eligible patients in our observational study. After six months of observation, we anticipate that these very patients will feed directly into our Phase 3 VOXZOGO interventional study to complete its enrollment in the first half of 2025. We can therefore reaffirm our expectation for pivotal data for the hypochondroplasia Phase 3 program in 2026 and an approval in 2027 if those data are supportive.

At the 16th Annual International Skeletal Dysplasia Society meeting in September, BioMarin and our external research partners contributed to eight presentations, including four orals, discussing the value of VOXZOGO and the burden of illness in the achondroplasia and related disorders. These data included showing that children with achondroplasia treated with VOXZOGO experienced meaningful improvements beyond height, such as gains in health related quality of life and maintained bone strength, while increasing bone length. Researchers also presented encouraging data from ongoing investigator-led studies in children with other genetic skeletal conditions. These included hypochondroplasia, Noonan syndrome and with genetic variants often associated with idiopathic short stature such as [indiscernible] deficiency and heterozygous NPR2 mutations. Our Phase 3 program with PALYNZIQ in adolescents age 12 to 17 has completed enrollment and is expected to read out in the first half of 2025. This will allow for a potential supplemental NDA filing midyear 2025. We believe this supplement for adolescents could offer patients and their families the opportunity to address the burdens of fetal ketonuria as well as the dietary restrictions early on and thus facilitate an easier transition to independent adult living. With our earlier stage pipeline, I am pleased to share that BMN 351 for Duchenne's Muscular Dystrophy, a potential best-in-class therapy, has completed enrollment of our first cohort of six patients with initial proof of concept data expected internally in quarter two of 2025. This will be in the form of muscle dystrophin levels after 25 weeks of dosing. With BMN 349, an oral therapeutic for Alpha-1 antitrypsin deficiency associated liver disease, we have completed the single ascending dose study in healthy volunteers and expect to begin the multiple ascending dose study by the end of the year. Finally, I'm happy to share that BioMarin's long-acting C-type natriuretic peptide BMN 333 remains on track for initiation of the first in human study in early 2025. I look forward to future opportunities to communicate our progress across the R&D organization over the coming quarters and to personally meeting many of you at an upcoming investor event. Thank you for your continued support and we will now open the call to your questions. Operator?

[Audio Gap] Second on business development, James welcome, congrats on the new position and great article in biocentric over the weekend. I'm curious, based on the presentation you noted you wanted target deals less than $1.5 billion. What phase of development would be ideal for BioMarin at this stage in the pipeline's maturity? Thanks.

Yes, I'll take the first question. Thanks so much for it. So with regard to VOXZOGO growth well into our third year here of the launch, you mentioned the call out on the age of patients being treated. So that is true that with the label expansion that we had in the U.S. only last year, we are seeing the majority of new patient starts in the 0 to 5-year-old age group. So, that is more for the maturity of when that what the label was expanded in the U.S. In other markets where we have really high penetration, in some of our early strategic markets where we have patient level data, we're seeing that many of the new starts are in the 0 to 2 population. So to your point, that's where we really do start to see that incident market be created where we have higher penetration.

Hi Phil. This is Alexander. I'll take the question on business development chain which is not only the Q&A today. With regard to business development, we will be focusing as you say, on transactions less than $1.5 billion in transaction size. We'll have two areas of focus that James will be prioritizing. One is really leveraging our scientific right to win our development, regulatory, manufacturing and commercial footprint across the globe in approximately 80 countries to identify potential deals. He is also working with research in terms of identifying earlier transactions in our pipeline to bolster our early research efforts and pipeline. So those are the two focuses that that James has. He's just into his first -- ending his first month in the role and you'll hear more from him in the future.

Perfect, thanks for taking our questions.

Your next question comes from the line of Salveen Richter with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking our questions. Could you just walk through the development strategy here for BMN 333? And how quickly you can move into other indications beyond achondroplasia with the long-acting CNP? And then separately, with regard to your IP strategy here and in the context of Ascendus and the long-acting CNP? Just help us understand where you stand on your IP and just the strategy on the forward here with regard to your franchise?

Thanks, Salveen. This is Greg Friberg. I'll take the first question. With regard to BMN 333, of course we're quite excited to be able to bring that into patients and we should be entering the clinic early next year. The strategy behind the molecule, of course, is to elongate the half-life and we're confident that the linker technology and the binding technology again are tried and true and we'll be able to do that. What that can afford, of course, is one of two things. The less exciting would be less frequent administration. But the more exciting aspect is the one I just want to focus on for a moment, which is if you can change the PK profile of this near native CNP and you can increase the delivery of that hormone into the body in a safe way, then we could think about actually increasing not only the pharmacokinetic exposure to CNP, but also the Pharmacodynamic effect. And our preclinical models would suggest that there's more to be gained there with regard to activity and bone lengthening. And the first set of data is going to give us a lot of important clues as to whether or not the PK profile is playing out the way that we had anticipated. That's data that we should have in-house next year. The healthy volunteer study is going to give us a good read on that PK profile. Depending upon the results there, we could go in a variety of directions. We do believe, as you point out nicely that this is a pathway that should be able to address genetic skeletal disorders beyond simply achondroplasia and hypochondroplasia, and the teams are working very diligently to come up with scenarios if that profile plays out the way that we believe it may to accelerate that approval, more to come there. But I think you've highlighted very nicely that there are opportunities here to accelerate the program, and we'll be looking for those actively.

And Salveen, with regard to your question around IP, I'm not going to elaborate further on IP beyond what we said on Investor Day, I simply put we're confident in the intellectual property we have, and we plan to vigorously defend our intellectual property.

And your next question comes from the line of Jessica Fye with JPMorgan. Your line is open.

Hey guys good afternoon. Thanks for taking my questions. And first, on the P&L, COGS looks elevated this quarter. The press release makes mention of the impact of ROCTAVIAN inventory reserves. How big was that? And would gross margin have been in line with more recent quarters without that effect? And then maybe following up on Salveen's question for 333, I think you've talked about single ascending dose data in 2025. Is it possible we could get a full dose data next year as well or if not, should we think of that in 2026? Thank you.

Hi, Jess, this is Brian, I'll take the first question on COGS and margin. Good pickup. Cost of goods sold here in Q3 2024 at about 25% of revenue and a 75% gross margin. That is a click down from where we've been trending close to 80%. Two things going on there this quarter. First is that Bolus of ALDURAZYME revenue that we had that we commented on in the prepared remarks. So ALDURAZYME revenue, again, Sanofi is responsible for marketing to third parties. We recognize revenue when we supply bulk inventory to Sanofi as delivered and control is transferred. So I had a number of lots delivered in Q3. And because we're recognizing roughly half of the ALDURAZYME revenue according to the revenue split with Sanofi, that means that ALDURAZYME is our lowest margin product, roughly half or less of the gross margin we earn across the rest of the portfolio. So high rate of ALDURAZYME revenue, lower gross margin, that's going to be dilutive to margins in the quarter. And then secondly, we did have some inventory reserves here in Q3 mostly related to some gene therapy raw materials that because we paused ROCTAVIAN manufacturing, we took a reserve on before they expire and nothing else going on. Those are just -- those two items account for roughly 5%, which would put us close to the 80% -- 79%, 80% that we've been tracking to this year. Thanks.

This is one or the other?

No, roughly half and half between those two.

Okay. Thank you.

Thanks.

And Jessica, with regard to BMN 333, the single ascending dose study, of course, is in healthy volunteers. Right now, what we're committing to in 2025 is that, that is the PK data that we'll have in-house. Of course, the data we are very eager to gather would be in patients and would be to see dose ranging and multiple ascending doses. As of right now, what we're committed to publicly is the 2025 data point, and we'll keep you updated as we move along.

Your next question comes from the line of Paul Matteis with Stifel. Your line is open.

Great. Thanks very much for taking my question. As it relates to your reiteration of guidance, I think the inference that many analysts and investors have made that if you're willing to or I guess, confident in reiterating your guidance in the face of made some surprising increased competition in achondroplasia. You must have thought originally that your guidance issued at the Investor Day was fairly conservative. Is that the right inference? And if so, on what points did you feel like your initial guidance was conservative? Around what points do you feel like – the Street is missing the big picture on your long-term vision around the size of these markets and your penetration? Thank you.

Thanks, Paul. This is Brian. I'll start and then Alexander has anything more to add. We would not describe the long-term guidance as conservative. What we have said is that when the new competitor data showed up, which was different than what most of us had seen leading up to that announcement. We took that additional data, went back and worked it through our model. We shared on Investor Day that our long-term revenue guidance did already have a competition assumption. We didn't go into detail, but fair to say it was based on data available to the world at the time, which was not that most recent data. And so when we went back and reworked our assumptions around both competitive share as well as, frankly, other levers available to us across the portfolio and within VOXZOGO, we were able to absorb and confidently reaffirm the long-term guidance. So again, we would not call it conservative, but we are confident in where we landed after that follow-on analysis.

Thanks very much, Brian. What I would add, Paul, is if you for the period into the longer term, beyond the 2027, we're talking about and we're reaffirming our targeting mid-teen CAGR and the 5 billion potential for skeletal conditions. Obviously, that very much factors in also the tap in these further indications beyond achondroplasia. And just to reiterate, we resumed very modest penetration levels in forecast that underpin that outlook. And additional competitors should they declare a development plan in those indications. They will be contributing to the growth of those markets, which we would share with them in some proportion. And then the last thing I would say is, of course, all of this excludes intellectual property and our confidence in our intellectual property position, which I've already talked it.

Great.

Your next question comes from the line of Eli Merle with UBS. Your line is open.

Hi. Thanks for taking the question. Can you give us a bit more color on what's driving the increase in the ERT business growth? And I guess your confidence that this can continue to grow in the high single digits for years to come. I think you mentioned some initiatives you're working on, if you can maybe elaborate a bit more on what those entail? Thanks.

Hi Eli, thanks for the question, it's Cristin. So yes, great question on our ERT business. So as we had said at Investor Day and stand firm behind we anticipate high single-digit growth for the years to come in that business. And primarily driven right now there are a lot coming from the PALYNZIQ market or the business there that you saw in the numbers, we have 15% growth in PALYNZIQ. And a lot of that is being driven primarily in the U.S. market, where we are seeing really great uptake not only for new patient starts that see the highly beneficial impact that PALYNZIQ can have both from an efficacy and lowering fee levels as well as a liberalization on their diet. So they don't need to do medical nutrition. That's driving a lot of new patient starts, but we're also focused on picking up on any patients who have discontinued therapy. And so we're seeing really great uptake there. So that's the PALYNZIQ business. But on the MPS CLN2 areas and our global footprint of over 80 countries, approximately 80 countries, what we're seeing there is that we're putting some new initiatives into place, which, as you had alluded to, I mentioned at Investor Day, and what those are, are looking at high-yield diagnostic efforts in markets where we think we can really move the needle as well as some adherence programs in a few select markets and expansion into new geographies where we think that the access marketplace is in the right place for us to move forward. Those are the initiatives that we've mentioned we're going to start, but because of the nascent stage of those initiatives, we don't have an update to give on those yet, but we'll commit to further showing the progress that we're making in those. I've seen early data that are looking very good, but we will be updating you in the future. Not to mention, as we've talked a lot about, we are moving as well in transforming the business – into business unit models, which we believe that, that alone will really help us to drive the urgency, the accountability and the real clarity of where we can move our resources in a quick way. So we'll be reporting on that in the earnings calls and investor days to come.

Great.

Your next question comes from the line of Cory Kasimov with Evercore. Your line is open.

Hey, good afternoon guys. Thanks for taking my questions. Just two from me as well. So for VOXZOGO, can you comment as to how many patients from your original pivotal Phase 3 trial have now reached their full adult height? And then just a clarification on the DMD program. You noted that you're going to have the data in-house in Q2 2025. Is that going to be publicly shared at that time as well? I just wasn't sure when you said it was going to be internal. Thank you.

Thanks, Cory. This is Greg. For the first question, we are tracking those patients from the Phase 3 program very vigorously. We're not going to release numbers with regard to how many patients have reached final adult height. Clearly, that is an endpoint that regulators are very interested in, and that is part of our commitment for post-marketing requirements to provide that data at a reasonable time. Part of the challenge, of course, is that these patients reach that final adult height in different timing based on what age they were when they entered the study. But suffice to say, we're, of course, following that very closely and continue to make progress year-to-year. With regard to the Duchenne Muscular Dystrophy program, yes, we're very excited that we will have muscle dystrophin data from the first six patients in-house midyear. We'll be looking at that. And just to take a step back for those who aren't quite as familiar, this is a molecule that's engineered to increase dystrophin levels in the muscle to levels that are dramatically higher than what we've seen with other molecules in the space. And there are a variety of engineering levers that were pulled to try to accomplish that. But the most important of which is addressing a novel binding domain in the nucleic acid that at least the preclinical models results in 30%, 40%, 50% dystrophin levels in the rodent models at a much higher rate than what we've seen with other molecules that we both synthesized and those that are available. So that data from the first cohort is going to give us a line of sight on whether or not we can hit our target. Our target is a 10% level or higher at steady state in the muscle of these boys who are on the study. Now it's important to remember that steady state actually is not at 25 weeks. It may be later than that. But we've done some modeling, and I think with our 13-week data and our 26-week biopsies, we'll have a good read by midyear where we're headed. Depending on what that data is, it may be worthy of release, it may be giving us information that also tells us that we need to adjust the dose but we will certainly be revealing that data when we feel that it's of a sufficient quality and volume that it would be meaningful to release. Beyond that, not much more to add at this point.

Okay. That’s very helpful, Greg. Really appreciate it.

Your next question comes from the line of Kostas Biliouris with BMO Capital Markets. Your line is open.

Hello, everyone. Congrats on the quarter and thanks for taking our questions. Two quick ones from us, one on VOXZOGO and one on PALYNZIQ. On VOXZOGO follow-up from a question before. Can you remind us what is the status of the transition to full approval from accelerated approval and what this may mean for the regulatory pathway of competitors that are behind you in development? And the second question on PALYNZIQ is any thoughts about -- any thoughts around competitive positioning given that some oral agents may enter the market in 2025? Thank you.

Thank you Kostas, this is Greg again. Why don't I take a stab at those two. With respect to VOXZOGO, we are committed to measuring final adult height on our patients who were on our clinical study, our pivotal study, and we have that agreement with regulatory authorities. Beyond saying that we're vigorously collecting that data and looking forward to reaching the critical mass that the regulators are interested in. I don't have much else to add. Of course, regulators with regard to full and accelerated approval, they always have their ability to use their judgment to decide when new agents come along. So we're very much focused on our own agent and being able to convert that to full approval for the good of, of course, the patients who are treated with. With regard to PALYNZIQ, the PKU space is one that BioMarin has a fortunate position to be able to serve these patients for almost 20 years now. And in that time, we've learned quite a bit about the space, about the patients, about the treating physicians and about what the needs of this group are. The big picture here is that these are a very heterogeneous group of patients. They have different ages. They have different needs. We know from the clinical studies that they respond differently to the therapies that are available. And because of that, we see the addition of new agents to this field actually is being good for patients. It will give physicians more arrows in their quiver. Not every patient has created equal a PALYNZIQ patient, for example. These are patients in our pivotal study that had fee levels that were over 1,000, for example. And this is a molecule that if you look at the treatment guidelines that are out there, the PALYNZIQ patient, the goal of that patient is to be able to reduce the fee levels as low as possible. And I believe the quote in many of the guidelines is with a normalized diet. That is a very different patient than perhaps the BH4, analogs may be able to address. That being said, it's a good thing for patients that they have multiple different options, and we're anticipating that these are the kind of advances that patient's need. In fact, we're developing a next-generation PALYNZIQ because we believe that we can help build upon that profile as well. So that standpoint, I think the only other objective data that's out there, there was an FDA ruling recently. One of the oral agents that was filed was given a standard review. By definition, the FDA has -- they use two criteria when they define that. One is that, is this a serious illness? We believe that PK is a serious illness by their definition. The other criteria they use is did this new applicant meet the criteria for a significant improvement in efficacy and safety compared to available therapies. They obviously chose to give a standard review. So I think from an objective standpoint that speaks for itself.

Your next question comes from the line of Joe Schwartz [Leerink Partners]. Your line is open.

Great. Thanks very much. I have a question on 333 and also 390. So at your Investor Day, I think you projected that 333 could come to market in 2030. But since your CNP patent expires in that year, that doesn't seem to give you much time to convert people to your own long-acting before generics arrive and then you'll probably also have a couple of branded competitors by then. So I'm just wondering if you can talk about the practical benefit of 333 is expected to be on the business? And then likewise, you noted there that your next gen PALYNZIQ with a novel PEG could expand the PKU market a lot, but the development path you laid out suggested it would take about 10 years to get it to market. I know PEG-PAL took that long, but I'm just wondering why should it take that long for BMN 390. Thanks.

Thanks, Joe. I'm going to hand it off to Alexander first, and then I'll.

Yes. Thanks very much, Joe. I just wanted to just start off with the first part of your question with regard to 333 and the rationale given the patent on the VOXZOGO. Actually, we estimate our patents, our IP will last to the mid-2030s, therefore, giving us plenty of time after the launch of 333 to convert the market over. Again, as you well know, Joe, we're the target product profile here is for a product that's more efficacious as well as offering the convenience of weekly dosing. We think that is a sort of proposition that's required to move patients off VOXZOGO. The hierarchy needs of both physicians and caregivers is, first and foremost, efficacy, safety, and then only those – if those are improved its convenience, seem to be important. So we're very focused on that. And if we're successful with that product profile with this time frame, we believe we can convert our business from VOXZOGO. And now I hand it over to Greg for the rest of your question.

Thanks, Alexander. With regard to BMN 390. I would just comment that we're very early in its development. We're pleased that we'll be able to file an IND targeting next year. The dates that you laid out indeed represent similar development time lines to the predecessor molecules. I would think of those as the upper error bar. We're going to be working very diligently not only has the profile reveals itself, but also as we learn more in the marketplace of developing PALYNZIQ as well to look for opportunities to accelerate that development.

Your next question comes from the line of Akash Tewari with Jefferies. Your line is open.

Great. Thanks so much. Can you talk about the dynamics between total patient adds and incremental revs for VOXZOGO? You had 300 patient adds from Q2 to Q3. You had a modest $7 million increase in revs. I know there was a $20 million stocking benefit. But number one, is 300 patient adds a reasonable assumption going forward for VOXZOGO growth in achon. And then number two, how should we think about reps per patient evolving as you expand into international populations? And then just on Ascendis and IP, how aggressive is your team willing to be here? Should we be thinking about some type of royalty payment? Or is the angle BioMarin going to pursue it's going to be a preliminary injunction, and you're aiming to stop attendance from launching the product altogether. How should we think about the – how aggressive you'll be on IP? Thank you.

Yes. Thanks so much. I'll start with your first question, Akash, about the incremental patient adds and really the question about VOXZOGO growth. So we have about 3,800 infant children's on Q3 – as of Q3, excuse me, which had a pretty big jump versus last year in this period, which is 2,300 patients. That's 54% growth in revenues and 65% in patient adds. Now interestingly, I think you asked the question kind of is that -- does that seem like the right number? Is that strong growth? And I will say that we are tracking exactly the plan on where we think we should be in terms of the growth of this product, well into our [indiscernible] of launch. Now what I think is important is to reiterate where we think we're going from here, and that is that we have said at Investor Day and still stands strong behind our projected CAGR of 25% growth for VOXZOGO through 2027. And really, the reason to believe and the reason that we're confident in the ability to deliver on that, which we do think is strong growth for a for a product at this stage in its life cycle, is really in and around the totality of the data that we have in the 6,000-plus patient years of efficacy and safety. And the notion that we have a really broad age label, which as we're seeing in new patient starts, this is really important because we know that treating early is absolutely critical. It's also in our ability to be in a very broad geographical reach. We talk about our 80 countries that we're in, we've already started with VOXZOGO 144, and we intend to expand to another 20 or greater countries by 2027. And this really is basing it on our expertise in our commercialization, our medical and our market access capabilities. And we're seeing that we're able to grow this expansion at a pace that we feel is very not only strong, but that we can continue in the years to come. So I just want to reiterate that strong CAGR into 2027.

Akash, just on your question on IP, I'm afraid I'm not going to elaborate further on our IP strategy or how this might play out. We'll keep you informed as and when we take action. But that is what we can share at this point.

Your next question comes from the line of Chris Raymond with Piper Sandler. Your line is open.

Yes. Thanks for taking the question. Just on the clinical premise behind BMN 333, I hear you guys talk about improved PK and PD with a long-acting CNP that could drive better growth metrics. But I get this question from investors. Maybe walk through the differences between 333 and TransCon CNP? And why – if we haven't seen a discernible growth benefit from that asset, why mechanistically would 333 be different? Thanks.

Thanks, Chris. This is Greg. Let me take a stab at that. First and foremost, we are targeting a free CNP level that is higher than not only what VOXZOGO can deliver from a time of a threshold AUC standpoint, but higher than published data for agents external to BioMarin as well. So in the preclinical models, that suggests if you can increase that 50%, 100%, that there are discernible changes in AGV in those animal models. Now the premise, of course, assumes that, that can be done safely. Again, our preclinical package suggests that, that is the case. But then that is an experiment that we do need to test in the clinic with those ranging studies in patients. the totality of evidence here is going to be something that absolutely is key. We still believe that VOXZOGO is an agent that not only is first-in-class, but has the best-in-class evidence package. There's a variety of reasons why we believe that. It's beyond just the 6,000 patients of data. It also it really touches on the durability of data. It's not just a single year AGV or proportionality. We see out to seven years of consistent data there. By building on that data, both with regard to growth velocity as well as the basket of data, which is evidence beyond just growth, the wellness and health of these patients. We think that if we can take that molecule and increase the exposure, if we can do it in a safe way, that, that will translate not just into increased growth velocity, but also we're going to start seeing benefits on the health and wellness of patients. And of course, there's a variety of those measures that we will continue to publish on not only for VOXZOGO, but also for the new agent.

Thank you.

Your next question comes from the line of Mohit Bansal with Wells Fargo. Your line is open.

Great. Thank you very much for taking my questions. Two, if I may ask. So one is – what is your base case assumption around the length of trial for BMN 333 at this point? Is it a two year controlled trial or one year controlled trial? I'm asking because if there's any room to expedite it and then maybe launching before 2030 here. Number two, it does seem like NAGLAZYME has done really well compared to what we have seen in prior years year-over-year basis. So can you talk a little bit about the strategy and what has helped here? And how should we think about the product going forward? Thank you.

So thanks, Mohit, for the question. For the Phase 3 study, the development plan for BMN 333, of course, there's two variables in play here. Any study, of course, needs to recruit the set of patients and the effect size that we would be targeting would absolutely drive not only the number of patients we need, but the amount of time that we take to recruit those patients. The profile is going to, again, reveal itself incrementally. I think the PK will be the first step. But if we believe that this is a molecule that can deliver much higher CNP exposure in the patients. And if we believe that, that translates into effect sizes, that would indeed change the endpoints that we'd look for in a Phase 3. I – there are far too many permutations to be able to go into additional details at this point of what the Phase 3 study might look like or might not look like. But inherent in your question is, can this be accelerated? I believe there are scenarios where if the profile plays out the way that we're anticipating that we will have the chance to try to accelerate those time frames. No promises today, but it's something we're actively looking at. And urgency to get to patients is one of our absolute core values here at BioMarin. And we understand that if we have a molecule that's delivering something more valuable than even our own product, we would want to bring that as quickly as we can.

Thanks. Mohit, this is Brian. I'll take the NAGLAZYME question. Appreciate the question. NAGLAZYME did have a great quarter. We did include in the prepared remarks, just to be clear, that NAGLAZYME did benefit from some timing that 21 patient – or 21% growth in the quarter did have some timing in there, but nothing where we would isolate a single country order like we have in the past. I think what you're seeing with NAGLAZYME over time on the market for nearly 20 years, is just a good case example of how we talk about the durability of this enzyme therapy portfolio and the durable growth potential this market is nearly fully penetrated, but this is a weekly infusion for life. Patients are doing well, being into adulthood, gaining weight, weight-based dosing. And it's just – it's the epitome of this franchise and how we see it growing going forward. But I'd also point to when we talk about some of the new initiatives and the promise of this business unit structure that Cristin touched on earlier, those aren't yet implemented. Those are all incremental for the future. That's what drives us the believe we can be more aspirational with the long-term enzyme therapy growth rate.

Thank you.

And we have reached the end of our call, and this will be our last question from the line of Gena Wang with Barclays.

So I would just ask one question regarding the BMN 333. Greg, you did mention that you wanted to have a higher – better efficacy hopefully, with a better exposure. But based on the VOXZOGO dose escalation study, there was it seems there was a ceiling effect regarding the efficacy. And so we will make you confident that could be with a higher dose or high exposure that can translate to better efficacy? And then related questions, I think, based on the Investor Day that one slide shared with investors we did see like the exposure plus concentration almost in the like two log or three log magnitude improvement compared to say, VOXZOGO or even TransCon CNP. And within that, frequency of dosing? Would that be also a very important component that you were taken into consideration?

Thanks, Gena. The your questions with regard, why don't I think first Investor Day figure. With a molecule like BMN 333, there are two species, of course, that we need to be talking about when we look at PK. One will be the native molecule. That will include the linker technology, the binding technology and so forth. And I believe that's what was shown in Investor Day, a much higher molecular weight. So again, if you're comparing the units, they will look somewhat differently. From a pull-through, what we, of course, care about is the liberated, the free CNP and we, of course, from our preclinical data in humans will be measuring very closely. That profile of free CNP and we do believe that we can safely and in a way that has a different shape to the PK curve. So it would rather than be a software tooth pattern of a shorter half-life molecule, would be able to increase AUC, again, increased time above threshold we believe not only can we increase the exposure of CNP there, but do so in a way we could see physiologic differences as compared to VOXZOGO in the way that it was given. I think of this similar to other peptides where – when you insulin, for example, is one that when given in its native form versus in a variety of constructs, you can see different biologic effects from the shapes of the curve that are more than just described by say, Cmax or AUC alone. And so we're absolutely excited to test this in patients. We're going into the clinic in the first – very early next year. And we should have a good read on both the native molecule, BMN 333 pharmacokinetics as well as free CNP in rapid order. So that will have that data in-house midyear.

And at this time, I will turn the call back over to CEO, Alexander Hardy for closing remarks.

Thank you, operator, and thank you all for joining us today. As you've heard, we have the team in place this quarter now to deliver on our new corporate strategy that you heard about at Investor Day, focused on innovation, growth and value commitment. And we've made significant progress on each of these. Today's strong quarterly performance highlights the ongoing implementation of this strategy under BioMarin's new operational plan to achieve sustained and significant returns for the benefit of all stakeholders. We're looking forward to keeping you apprised as we continue to execute on these plans. Thank you very much for your attention, and good day.

This does conclude today's conference call. You may now disconnect.