Biomarin Pharmaceutical Inc at Morgan Stanley Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vikram Purohit - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>And with that, Brian, let's dive right in obviously, BioMarin held an Investor Day yesterday here in New York City. So maybe the best place to start is if you could just recap and some of the financial guidance you provided? And then also some of the highlights you feel came out of your revised view on pipeline strategy and corporate strategy going forward. Brian Mueller - Biomarin Pharmaceutical Inc - Chief Financial Officer, Executive Vice President - Finance Great. Yes. Thank you, Michael, for having us and thanks, everyone, for joining pleasure to be here generally and given the timing with our Investor Day. As you mentioned, exactly 24 hours ago, we were across the street at the NASDAQ site, delivering the result of many months of work to revamp BioMarin's strategy for the near term and long term. It is a very exciting Alexander Hardy, our Chief Executive Officer officer, started the presentation by outlining all of the progress that we've made already in 2024. Again, the key objective that he set out for the company back in January when he was just one month into his role at the time, it does include establishing the Voxel logo opportunity. We know it's a large potential growth driver with all of these indication expansion. So getting that work mobilized and accelerated, establishing the rock TV, an opportunity, we made a decision on what PBMs place in our portfolio earlier than anticipated. We announced this over the summer on our Q2 earnings call where well, the initial launch and mostly reimbursement processes globally are taking hold for Octavia and we rightsized and significantly reduced the level of operating expenses for Octavian that can afford us to wait for the launch to come more online, if you will, and we prioritized our R&D pipeline. There were a number of assets that may have had promising science, but may have had more either a long and expensive development timeframes or didn't fit well with the competitive landscape in that particular therapeutic area. So we did back in March and April, discontinue a number of our research programs. And then lastly, is accelerating profitability, where we were growing both non-GAAP operating margin and earnings per share at a rate higher than last year and executing on that. Again, you see it already in the first two quarters of actual results. So part of the driver for outlining the progress there is that we haven't been just developing this new strategy and looking at the future, we have been executing and by the way, implementing parts of this strategy along the way, we'll come back to that when we talk about some of the financial guidance. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:45PM, BMRN.OQ - Biomarin Pharmaceutical Inc at Morgan Stanley Global Healthcare Conference And then in terms of the new strategy, there's three key pillars innovation, which for a high science, highly innovative company like BioMarin eight internally developed approved products. That's going to continue to be a key part of our strategy going forward. We've taken what has been a very successful research platform with what we refer to refer to our core four criteria for developing assets. We now have added a fifth criteria, similar to my comments on the pipeline prioritization. The fifth criterion is aimed to measure the commercial potential and competitive landscape for our development compounds, but maintaining our innovative culture growth. The key drivers there are our enzyme therapy business is the what's known as a stable and durable business, but we actually believe we can continue to grow it over time. We spent a lot of time our new Chief Commercial Officer, Kristin Hubbard outlined that strategy yesterday. And then of course, vaccines go, there's a significant level of growth opportunity still within its first indication, achondroplasia, which is the most common form of dwarfism. And that indication globally is still under 20% penetrated. So a lot of room to grow just in that first indication. And then there's a number of other indications that we're doing clinical studies on that have a chance to Grove at Sogo in what is now a newly branded. We'll come back to this as well there from a growth conditions, a business unit within BioMarin, we believe Exalgo has the potential to be greater than a $5 billion revenue asset across these indications. And then lastly, is value commitment in the new strategy where we did put out for the first time for BioMarin long term financial guidance, we have a plan to significantly grow revenue over the next several years. And over the rest of this decade as well as expand operating margin. We have a goal by and I'll come back to the guidance in a moment, but we have a goal by 2026 to more than double operating margin from last year. In that high, higher level of revenue and profitability would then translate into a significant level of cash flow generation over time. So those are the three key elements and that would allow us to have a capital deployment strategy that we think will involve the ability to bring in external assets. We've not been very active over recent years on the business development front, but we have a new Chief Business Officer, James Saab, rejoining us in again, this increasing capacity to do business development transactions do this increasing cash flow. But back to the financial guidance, again, BioMarin's first time putting out financial guidance, we anchored to 2027 as a milestone year because we believe these next three years are both strong growth years for BioMarin, but will also provide the momentum in executing on our long-term strategy over the next decade. So by 2027, we believe we can reach $4 billion in revenue and again, achieve an operating margin, non-GAAP operating margin of 40%. It is early 20 starting in 2026. And then the long-term guidance on operating margin is low to mid 40% over time and then also in 2027, back to my cash flow comments, we expect to generate more than $1.25 billion of operating cash flow in 2027. So that's the guidance here that we anchor to being a long-term strategy that we've spent a lot of time and energy developing to help BioMarin grow sustainably over the long term. We did give long-term revenue targets where beyond that $4 billion revenue guidance for 2027. We believe that we can continue to grow revenue on a compound annual growth rate basis in the mid 10s through 2034.(inaudible)

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it. And then long term, again, we believe that we can continue to grow the enzyme therapies. So similar growth rates over time and then the vaccine will go indication expansion then becomes a larger growth driver in that long-term revenue guidance in that mid teen kegger because we are expecting multiple indications and again, even modest penetration. If you look at our slides yesterday, we started to show specifics behind the other indications and the total addressable patient population. These are very large indications, achondroplasia, where, if October was approved today is just 22,000 patients. We're talking about patient populations in these other growth conditions that are multiples of that. What that translates to is we only or even if we only modestly penetrate those other indications, it translates to a very large base of revenue. We said greater than $5 billion yesterday, again, with just modest penetration, and that's the $5 billion for a box of pipeline expansion?

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it. That's helpful. When thinking about the 2034 target, help us get a sense of what types of risk adjustments. And I guess the but general flavor of uptake assumptions that are kind of being built into Box Argo pipeline indications and then also some of the earlier stage programs like three five ones that are contributing to that long-term financial picture.

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it. Okay. Great. Outside of BD, what could surprise to the upside for the long-term revenue target? Let's talk about it on a non-risk adjusted basis?

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it. Great on staying on your long-term revenue targets. How much on competition to Rockstar growth implied in kind of your base case thinking for achondroplasia, both from weakly in development and then also from the oral?

Question: Vikram Purohit - Morgan Stanley - Analyst : Yes.

Question: Vikram Purohit - Morgan Stanley - Analyst : Understood. I didn't want to touch on that program a little bit. So I'm glad you brought it up. And I think you mentioned yesterday in your presentation that for the long-acting CNP, you're looking for POC data from your program in 2026. And so given that we know that the mechanism is viable in skeletal disorders of what would POC look like, are you just looking to establish what the dosing interval is going to be for your longer-acting program? Is that what you see? That's what the guidepost is. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:45PM, BMRN.OQ - Biomarin Pharmaceutical Inc at Morgan Stanley Global Healthcare Conference

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it. So similar efficacy sentiment, safety, potentially weekly dosing, I'm guessing you mentioned IP. So let's talk a little bit about that. How is your longer-acting CMP program? Steve, from the program in development from Essentis? And how could the IP you just talked about create complications in the space for potentially two longer-acting CMP agents that could be trying to come to market in the coming year?

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it kind of. Okay. Great. next question, I understand that the full response to this may be data-driven, but if the POC data were to hit the threshold that you're looking for for three, three three, would there be an aspiration of the company to pursue like a life, a broad kind of lifecycle management program where everything that locks elbow may be approved for at that point is slowly switched over two, a potentially longer acting agent or are you okay with a daily and a weekly, assuming that we are coexisting together for different types of indications?

Question: Vikram Purohit - Morgan Stanley - Analyst : Got it. We have less than a minute left, so I'll leave you with maybe one final question on the cost side. Again, please, your guidance yesterday. So I think you mentioned them, but $0.5 billion in cost savings phased in over in the next two years through 2026, where do you expect the bulk of that cost discipline to come from in the company? And from a cadence perspective, how lumpy or not do you expect that that cost savings to be when it's fully phased-in?

Question: Vikram Purohit - Morgan Stanley - Analyst : We're unfortunately out of time. So we'll have to close it out there. But Brian, thanks so much, everyone. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:45PM, BMRN.OQ - Biomarin Pharmaceutical Inc at Morgan Stanley Global Healthcare Conference