BioMarin Pharmaceutical Inc. (BMRN) Q4 2022 Earnings Call Transcript

BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) Q4 2022 Results Conference Call February 28, 2023 4:30 PM ET

Company Participants

Traci McCarty - Group VP, IR

JJ Bienaimé - Chairman and CEO

Jeff Ajer - EVP and Chief Commercial Officer

Hank Fuchs - President, Worldwide R&D

Greg Guyer - EVP and Chief Technical Officer

Brian Mueller - EVP and CFO

Conference Call Participants

Salveen Richter - Goldman Sachs

Geoff Meacham - Bank of America

Phil Nadeau - Cowen and Company

Jessica Fye - JPMorgan Chase

Chris Raymond - Piper Sandler

Matthew Harrison - Morgan Stanley

Paul Matteis - Stifel

Lachlan Hanbury-Brown - William Blair

Josh Schimmer - Evercore ISI

Operator

Welcome to the BioMarin Fourth Quarter Investor Update Call. Hosting the conference call today from BioMarin is Traci McCarty, Group Vice President of Investor Relations. Please go ahead, Traci.

Traci McCarty

Thank you, Paul, and thank you all for joining us today.

To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin’s financial performance, commercial products and potential future products in different areas of therapeutic research and development.

Results may differ materially depending on the progress of BioMarin’s product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors, and those factors detailed in BioMarin’s filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. We do plan to end this call promptly at 5:30 Eastern Time. So, please reach out if you have questions.

On the call today from BioMarin’s management team are JJ Bienaimé, Chairman and Chief Executive Officer; and Jeff Ajer, Executive Vice President, Chief Commercial Officer; Hank Fuchs, President, Worldwide Research and Development; Greg Guyer, Executive Vice President, Chief Technical Officer; and Brian Mueller, Executive Vice President and Chief Financial Officer.

I will now turn the call over to our Chairman and CEO, JJ Bienaimé.

JJ Bienaimé

Thank you, Traci, and good afternoon, everyone. Thank you for joining us on today’s call.

So, as we communicated throughout 2022, a truly transformative year for BioMarin. We have built the foundation for accelerating growth, double-digit revenue growth and the successful pivot to GAAP profitability. In 2022, we achieved all of our top and bottom line guidance items, further underscoring our commitment to creating value for our patients, our employees and our shareholders.

Our high performance in 2022 will flow through 2023 and beyond, driven by our strongest global commercial launch on record with VOXZOGO and our profitable base enzyme business and the addition of ROCTAVIAN, a truly disruptive onetime gene therapy for those with severe hemophilia A.

While the process of finalizing reimbursement in Germany has taken longer than expected, given the novelty of the approach, at the patient level, we are very encouraged by the interest we are seeing for ROCTAVIAN. And patients have gone through a companion diagnostic testing in Germany as an important first step in the patient journey toward treatment. And in the United States, we are pleased to share that roughly 300 patients from the bleeding disorders community have engaged with BioMarin directly to learn more about ROCTAVIAN. Many of them may not ultimately be eligible for treatment, but it is a good indicator of awareness and interest in ROCTAVIAN ahead of potential approval this year.

And Jeff will provide more detail in a moment, but suffice it to say that once the reimbursement side of the equation has been finalized, we are confident in both prescriber and patient interest in ROCTAVIAN.

We are extremely pleased to have delivered $2.1 billion in total revenues for the full year 2022, a record financial achievement for BioMarin. We will build on this result in 2023 with an intention to deliver over 15% top line growth and significant operating leverage, driving approximately 30% growth in bottom line profitability based on the midpoint of our GAAP and non-GAAP guidance provided today. As planned, we have made the transition to an earnings growth story, a unique accomplishment in the biotech industry, and we thank you for your continued support.

And I will now turn the call over to Jeff to discuss the commercial business update. Jeff?

Jeff Ajer

Thank you, JJ.

Very pleased with our record performance in the fourth quarter, resulting in $538 million in total revenues, representing close to 20% growth year-over-year, including KUVAN and 27% growth, excluding KUVAN. The strength of our enzyme brands provides more than a $1.6 billion foundation from which to layer on both, VOXZOGO and ROCTAVIAN larger market opportunities.

Turning to 2022 VOXZOGO contributions. Full year global revenue totaled $169 million, with growth expected to accelerate in 2023. Full year 2023 VOXZOGO guidance of between $330 million and $380 million represents over 100% growth from the midpoint as compared to full year 2022 results. With only 6% of the total addressable patient population receiving VOXZOGO treatment as of the end of the fourth quarter of 2022, there is significant room to grow from a combination of continued market penetration, new markets coming on line and potentially expanding the approved label indication for younger ages.

The global launch of VOXZOGO exceeded even our high expectations for the brand in its first full year. We are pleased to share that as of the end of January 2023, an estimated 1,264 children with achondroplasia were being treated with VOXZOGO under the currently approved age ranges, including in Europe for children two years and older, the United States for children five years and older and in Japan where VOXZOGO was approved for all ages from birth.

The urgency to treat based on the finite window of therapeutic benefit while growth plates are open, is an important driver of interest from families seeking treatment with the only approved medicine targeting the underlying genetic cause of achondroplasia. We look forward to learning later this year of European and U.S. health authorities, are supportive of extending access to VOXZOGO to younger children, which would make it available to more than 1,000 children in those regions.

Briefly on our new product guidance categories in 2023. As we have turned the corner to sustainable GAAP profitability and with 8 marketed products, we have aligned the product guidance categories with our framework for growth. First, we now combine our enzyme products, including VIMIZIM, NAGLAZYME, BRINEURA, PALYNZIQ, and ALDURAZYME and exclude KUVAN. Second, we will provide individual product guidance for both VOXZOGO and ROCTAVIAN since they represent our new larger market opportunities and significant growth drivers.

Going forward, we will still provide actual results for individual product revenues as listed on the first page of our press release issued today and we will continue to comment on the key commercial drivers at the brand level as appropriate. We believe combining our enzyme products from a guidance perspective will make it easier to delineate the steady growth of our mature products as compared to the more rapid growth from our new larger brands.

To that end and briefly on our enzyme products, there were no surprises in either fourth quarter or full year results across the brands. As we have said previously, large irregular orders placed in 2022 and prior periods impacted growth rates for the full year. As a result, VIMIZIM ended the year closer to the lower end of full year 2022 guidance and NAGLAZYME ended at the higher end of 2022 guidance.

We were pleased to see our efforts to drive new patients initiating PALYNZIQ therapy in the U.S. and Europe, results in net product revenue growth of 7% in 2022 as compared to 2021 and achieved $255 million for the full year. In 2023, we will continue to maintain our base patients on PALYNZIQ and continue to drive growth through new patient starts, primarily in existing markets.

Turning now to ROCTAVIAN, for which we have guided to 2023 full year revenues of between $100 million and $200 million based on the current uncertainty of U.S. approval. Echoing JJ’s enthusiasm for ROCTAVIAN prospects ahead, there are numerous encouraging signals from the hemophilia community in both Germany and the United States. Data privacy regulations in Europe preclude us from having patient-level data, but we know that 10 people have completed companion diagnostic testing to determine eligibility for ROCTAVIAN. Based on seropositivity work previously reported, we have an expectation that a portion of these patients would be AAV5 negative and otherwise medically eligible for treatment.

As JJ mentioned, in the United States, where we have had time and opportunities to engage with the hemophilia community in advance of launch, we have had direct contact with roughly 300 patients taking more information about ROCTAVIAN treatment. These are adults with hemophilia A who we plan to follow up with directly upon launch. As the patient-focused organization, we are thrilled to see the growing interest in ROCTAVIAN, and we look forward to updating you on progress treating patients commercially.

Turning now to the reimbursement side of the process. In Germany, we are pleased to have a major payer agreement in place to enable reimbursed treatment with ROCTAVIAN, a process that was more extensive than anticipated. As a result, the commercial ramp for ROCTAVIAN in Germany has been hindered by the lengthy process of finalizing additional outcomes-based agreements with insurance organizations while we pursue a federal agreement on reimbursement.

Recall that the timing for achieving federal reimbursement takes approximately one year. So, these outcomes-based agreements have been a gating step to facilitating reimbursed access to treatment in the free pricing period following approval. We are pleased with our progress with a significant percentage of hemophilia patients now covered by the executed outcomes-based agreement and negotiations well underway with insurers covering essentially 100% of the German population.

An important and upcoming milestone is March 15th. The new free pricing period in Germany is now 6 months, down from 12 months historically and ends on March 15th. That means that the terms of federal reimbursement will be retroactively applied to any patient treated after March 15. That has the practical impact of derisking for insurers the price and terms or any patients treated with ROCTAVIAN after March 15. Beyond reimbursement, we’ve made steady progress in other important aspects of the launch in Germany, including patient eligibility, testing, site readiness, medical education and promotion of ROCTAVIAN.

Building on this progress, we were pleased to attend two key congresses in Europe in February, which provided significant opportunities to engage with the hemophilia community and promote ROCTAVIAN for the first time. BioMarin’s presence at EAHAD, the European Association of Hemophilia and Allied bleeding Disorders, included a well-attended promotional symposium highlighting efficacy and quality of life data for ROCTAVIAN. At GTH, which is the German Society for Thrombosis and Haemostasis, we have an opportunity to engage with German physicians directly, many of whom shared feedback reflecting confidence in both the clinical outcomes and the safety profile of ROCTAVIAN, indicating that their centers are ready to dose ROCTAVIAN. We will continue to pursue similar opportunities to engage with the European bleeding disorders community going forward.

In anticipation of U.S. approval this year, whether on our current targeted PDUFA date of March 31 or later, the U.S. commercial team is preparing for launch. The activities underway include site readiness, payer discussions, warranty refinement and promotional materials preparation. The supply of ROCTAVIAN to meet both European and U.S. demand has been manufactured. So, we stand ready to go upon potential approval.

Relative to site readiness in the U.S., we have identified and are focused on a relatively small number of the largest and most capable hemophilia treatment centers to be ready to treat with ROCTAVIAN at or shortly after launch. We are committed to the concept of hemophilia treatment centers being the site of treatment for ROCTAVIAN for appropriate patient selection, post-treatment follow-up and monitoring and more generally due to the complexity of hemophilia management.

Relative to reimbursement, our team is actively meeting with payers in the U.S. in advance of launch, addressing both clinical aspects of hemophilia and the potential value of ROCTAVIAN and business discussions focusing on the warranty structure for an outcomes-based agreement. The value of the warranty is the simplicity and speed of implementation. It allows us to offer a uniform outcomes-based agreement to all purchasers without the need and time required for negotiating contracts. Our expectation following the U.S. approval and with a warranty that comes with purchase is that we will be able to navigate payer approvals based on medical exception for initial patients, similar to our experience with previous launches.

In conclusion, in 2023, we anticipate increased demand for all our brands included in our guidance line items, including our enzyme products, VOXZOGO and ROCTAVIAN. Combined, and from the midpoint of full year 2023 guidance provided today, we expect total revenues would be 15% growth this year, underscoring our commitment to growth and sustainable profitability.

Thank you for your attention. And I will now turn the call over to Hank to provide an R&D update. Hank?

Hank Fuchs

Thanks, Jeff, and welcome. Thanks, everybody, for joining the call.

In 2022, BioMarin’s R&D organization was extremely gratified to see the enthusiasm from families interested in VOXZOGO treatment for their children with achondroplasia. We look forward to engaging with the health authorities to potentially expand the label in the United States and in Europe. With VOXZOGO accessible to children of all ages in Japan starting from birth, we are hopeful that the younger children and infants under the age of two years in Europe and under the age of five years in the United States, will have the same access should health authorities be supportive.

The thing on the demonstrated safe and persistent growth-promoting effects of VOXZOGO and achondroplasia, given its mechanism to stimulate endochondral bone growth at the genetic level, we are very encouraged about the potential for VOXZOGO to benefit those from other stature disorders.

Later in the year with VOXZOGO, we look forward to results from the investigator-sponsored trial evaluating VOXZOGO’s potential to treat other genetic forms of short stature, including hypochondroplasia, NPR2 deficiency and Noonan, just to name a few. We plan to engage health authorities and align on the best path work for clinical development in new potential indications later in this year.

Moving to ROCTAVIAN, as JJ said, 2023 regulatory milestones are tracking to plan. Having recently submitted the three-year Phase 3 ROCTAVIAN data as requested by the FDA, we continue to expect the PDUFA target action date of March 31st until further notice. Should the FDA determine that the three-year data submission does represent a major amendment and thereby extending the PDUFA action date, we will share that update publicly. In the meantime, we continue to experience a high level of engagement with the agency as we are still under active review. The pre-licensure inspection of our gene therapy facility was conducted in December. BioMarin has provided responses to comments and observations received at the close of the inspection and the Company believes that all findings are addressable. The FDA has also planned some clinical study site inspections that will take place this quarter prior to the PDUFA date. So, the review process is tracking to expectations.

In January, we were pleased to share the three-year Phase 3 results from the ROCTAVIAN pivotal program. Based on the dramatic and sustained reductions in bleeding rates with no new safety signals, Factor VIII utilization of Factor VIII utilization rates observed at year three, we’re confident in ROCTAVIAN potential to be an important treatment option for those with severe hemophilia A interested in gene therapy.

Briefly on the earlier stage pipeline, we shared some recently available data from both BMN 255 and BMN 331 in January as a preview of what we plan to present at R&D Day in New York in September.

BMN 255 is for the treatment of progressive renal failure and recurrent kidney stones in patients with hyperoxaluria. We’re targeting a well-established therapeutic pathway for which there is already an approved drug. A genetic form of hyperoxaluria associated with AGXT mutations demonstrates that elevated levels of urinary oxalate are associated with renal calculi, recurrent stone formation and progressive renal disease.

With the goal of reducing oxalate to normal levels in patients with hyperoxaluria, we are encouraged by the potency of this molecule in healthy human studies where we have observed increased plasma glycolates to levels predicted to normalize oxalate excretion. We hope to be able to translate this result to the subset of patients with chronic liver disease who have been observed to have an acquired deficiency of the same enzyme. We are very excited about these data and look forward to sharing more later in this year.

Turning briefly to our next gene therapy, BMN 331 for hereditary angioedema, which is like hemophilia in the sense that it posts a chronic lifelong burden of therapy due to the risk of breakthrough attacks that are extremely burdensome and potentially life-threatening. The disease is due to genetically determined loss of a key protein regulating the inflammatory cascade responsible for these decks. The available therapies on the market confirm the effectiveness of replacement, much like in the case of replacement Factor VIII therapy in hemophilia.

We have shown in three studies with BMN 331 gene therapy that mutant mice and nonhuman primates that a similar to that employed in the clinical studies of ROCTAVIAN can provide ample and constant expression of C1 inhibitor protein within the therapeutic range to patients. We expect that continuously expressed levels of protein will provide improvements in the disease course of hereditary angioedema over the available existing therapies.

The first patient who was treated with the 6e13 dose has had an early increase in C1 inhibitor levels that may ultimately be therapeutically relevant, which is exciting. We look forward to enrolling the second subject to this dose and following the response of the first. We have many other assets moving forward in the early-stage pipeline, including BMN 351 for Duchenne Muscular Dystrophy, BMN 349 for alpha-1 antitrypsin deficiency and BMN 293 for myosin-binding T3 hypertrophic cardiomyopathy, all of which we intend to update in more detail at R&D Day in September.

Thanks for your call. And I’ll now turn the call over to Brian to update financial results from the quarter. Brian?

Brian Mueller

Thank you, Hank.

Please refer to today’s press release summarizing our financial results for full details on the fourth quarter and full year 2022. As usual, all results will be available in our upcoming Form 10-K, which we are on track to file later today. In addition to some of the changes to our key external financial reporting metric, I’m also pleased to share that today and going forward, we are also publishing a set of quarterly investor slide on the BioMarin Investor Relations website. We hope that consumers of our financial and business information will appreciate this material, which is intended to summarize and visualize the key elements of our report each quarter.

Since JJ and Jeff have touched on many of the specific financial highlights in Q4 and full year ‘22 and expectations for 2023, I will primarily focus on other important aspects of BioMarin’s 2022 financial performance and 2023 guidance.

As we turn to the page on 2022 and look forward to 2023 and beyond, we are observing that BioMarin is executing on its growth strategy over the last several years. BioMarin’s durable and growing enzyme products business has helped BioMarin reach GAAP profitability, we are launching two of the highest potential products in company history with VOXZOGO globally and ROCTAVIAN outside of the U.S. and we are investing in BioMarin’s largest ever early-stage research pipeline intended to fuel growth throughout this decade and beyond.

Specific to Q4 2022, BioMarin’s revenue growth of close to 20% in the fourth quarter and continued focus on managing operating expenses helped us achieve our financial goals of double-digit revenue growth and leverage, GAAP, net income and non-GAAP income growth. It is noteworthy that we recognized approximately $23 million of charges to SG&A expense in 2022, mostly in Q4, resulting from our organization, optimization announced last October, which drove a small GAAP net loss in Q4. Importantly, we were able to accommodate that charge without adjusting our profitability goals for the year.

For 2023, the highlights of our guidance include continued double-digit revenue growth, 16% at the midpoint of our guidance and continued leverage with profitability growing at a rate roughly double our revenue growth rate. As recently announced, beginning with the first quarter of 2023, we are changing our methodology for calculating our non-GAAP income to recognize the maturity of BioMarin’s profitable business and better align with our peer group. Details of the revised method are in our press release, and a full reconciliation of prior reported periods for 2021 and 2022 is available on our website.

Another noteworthy change is the grouping of our revenues now that we have eight approved products, which Jeff touched on earlier. By grouping our enzyme products together, we have the opportunity to guide investors to the “base business” that we’ve referred to over the last couple of years in its entirely. This is also an opportunity to recognize that while KUVAN for PKU has been an excellent product for BioMarin for more than a decade, KUVAN is no longer a source of growth and is a decreasing focus for BioMarin.

We are now in the third year of U.S. generic competition and are expecting new generic competitors in Europe, and we feel that now is the right time to cease providing specific annual revenue guidance for KUVAN. While we are not specifically guiding to KUVAN for 2023, total revenue guidance still includes KUVAN, and we thought in this transition year that it would be helpful to share that our assumed contribution in 2023 for KUVAN is about $125 million globally. As Jeff mentioned, we’ll continue to report actual sales for each brand on a quarterly basis.

The last noteworthy change to our external reporting metrics is increasing the prominence of earnings per share on a GAAP and non-GAAP basis. While we expect it will take the anticipated growth over the next few years to scale our earnings per share, as a profitable enterprise, we recognize the importance of this financial metric and believe it will be helpful for investors to both, measure our performance and understand our planned future financial growth.

We appreciate your flexibility through these changing financial metrics. While reporting consistent metrics for many consecutive years was important, it is equally important that BioMarin’s reported information reflect the current and future state of the corporation which we are pleased to observe as a unique double-digit revenue and leveraged bottom line profitability biopharma growth story.

Thank you for your attention. And we’ll now open up the call to your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Salveen Richter from Goldman Sachs.

Salveen Richter

With the 10 patients that have gone through the companion diagnostic test here to be administered ROCTAVIAN, I just want to confirm that they’re in Germany. But then my question really is on the end-to-end aspect here. So, one, you’ve negotiated with one of the key payers but you’ve got this retrospective aspect that comes in on the federal side. So, should we assume that really the use is going to play out from a reimbursement standpoint more in 2Q onwards this year? And then, where does the infrastructure aspect play -- come into play with regard to getting infusion centers ready and so forth? Help us just understand when we could really start to see revenue flow in for these patients.

Jeff Ajer

Hi Salveen, thank you for the question. Happy to address that. First, to confirm, yes, the 10 CDx tested patients are all in Germany. And I think you’re raising an important issue about kind of the end-to-end nature of -- and timing of getting revenues. We’re super happy to have one of the outcomes-based agreements, one of three large umbrella groups signed up with our outcomes-based agreement. And what we think is that’s certainly a proof of concept or the principle of going out and negotiating these agreements while we’re pursuing a full federal reimbursement that will take about a year to get in place. And indeed, the fact of having one of those insurance contracts in place, facilitated really the uptake of what through last week was about 10 patients CDx tested. So that train is starting to roll, and that’s an important one. Because having a patient CDx tested indicates all of the following.

It indicates interest on the part of the patient and the prescriber. It’s an important step in checking eligibility. And as we’ve gleaned from the German prescribers in particular, they’re not really CDx testing just to find out kind of informationally about AAV5 seronegativity, they’re testing because it’s an important step to confirm on the way to writing a prescription. So, all of those signals are important. I do think that once we get our first patients treated commercially, it will be an important proof of concept eagerly watched inside of Germany, and I think that we’ll be able to push additional patients through.

I mentioned the March 15th date, that’s when the free pricing period ends. From a practical perspective for the German insurers, all of what we eventually negotiate at the federal level will be retroactively applied to patients treated after March 15th. So from a practical perspective, this is a derisking date for the German insurers. And kind of a qualitative comment on the German insurers. These are government entities and they behave like bureaucracies and they move with the speed of bureaucracies, one of the things that we’re learning.

So, on infrastructure readiness, I’ve talked before about the hub-and-spoke model. And I would say, just like my comments about the United States, having targeting a small number of the largest and most capable hemophilia treatment centers to be ready at or shortly after launch in the U.S., I would say that’s the status of those hub centers in Germany. They’re essentially ready to go. We need to start pushing patients through for treatment. Thank you.

Operator

Our next question comes from Geoff Meacham from Bank of America.

Geoff Meacham

I had one clinical and one commercial on ROCTAVIAN. I guess, Hank, for the three-year data, is it just having to go through the details, for example, in all the case reports or was there any real new information at the three-year time point? I guess I’m trying to figure out on what the hurdle is that constitutes a major amendment in your view. And then commercially, just a follow up on the last question. When you think about testing being a gating factor in Germany. Is there a strategy to maybe to streamline this? And are there lessons to be learned in Germany that you can roll across the big five and broadly across EU that may help onboard patients a little bit more efficiently? Thank you.

Hank Fuchs

Yes. Hi. Geoff, it’s really a subjective assessment as to whether any submission constitutes a major amendment. And I can’t really give you any kind of guidance one way or the other about how to interpret any action they do or don’t take at this point, it would be all speculative. I mean it’s -- we’ll let you know if we hear that it’s going to be amended and otherwise, we’re going to stay preferably quiet.

Jeff Ajer

And over to the companion diagnostic question, this was certainly a learning set for us in Germany. In fact, optimally, we would have preferred to see patients coming through for companion diagnostic testing faster and in more numbers. And had that happened, we would have used that to put as a point of leverage to put pressure on the insurers to get these outcomes-based agreements signed.

The logic of the German physicians to say, well, we want to make sure that patients have access to commercial ROCTAVIAN before we push them through for companion diagnostic testing and the reality, which we knew was that German physicians would bear some financial responsibility potentially if they were prescribing and treating with ROCTAVIAN before these outcomes-based agreements supporting reimbursement were completed. It makes logical sense but it reduces the pressure on the health insurers to act.

So, how could that apply to other key markets in Europe? Probably not very much because if we took France and Italy as our priority other strategic markets in Europe that we’re really focused on, the reimbursement process takes about a year to get through. So, we’re anticipating we could have reimbursement approved in Q4 of this year. And really, in those markets, we have to have the reimbursement in place before we can start promoting and moving on patients. So, it’s a different environment that we will be working through in other markets in Europe.

Operator

And our next question comes from Phil Nadeau from Cowen and Company.

Phil Nadeau

A couple of follow-up questions on German reimbursement and then one on the U.S. for ROCTAVIAN. In terms of the outcomes-based agreements, Jeff, it sounds like what you’re saying is anything that is negotiated now will sort of be almost invalidated when there’s federal reimbursement that will be retroactive to March 15th. So I guess we’re kind of curious why would one of these bureaucratic insurers spend the time and effort to negotiate something if it’s not going to be relevant for them much longer? And what implications would that have on patients starting on therapy in Germany over the next couple of quarters before you are within a short period of time from federal reimbursement being clear? That’s the German question.

Then in terms of the U.S., Hank, are there any guidelines as to when the FDA needs to let you know whether the submission is deemed a major amendment? Can they go right up to the PDUFA and send you a letter than that before, or is there a certain amount of time before PDUFA they have to let you know? And then also in the U.S., when you guys know when you’re labeling discussions?

JJ Bienaimé

Now we start with Jeff.

Jeff Ajer

Yes. Thanks for the question, Phil, about the contracting process in Germany. Having these outcomes-based agreements provide a framework for CDx testing and other aspects of patients gaining access to therapy. So, there’s still value in these agreements coming together even after March 15th. The terms of the federal reimbursement will supersede but there are other aspects that add value. But you’re absolutely right. I mean, the urgency to act was probably higher in Q4 of last year when there was a substantial gap in time between then and the end of the free pricing period as we’re approaching March 15th, the urgency around those outcomes-based agreements goes down.

But similarly, the risk for the insurers also goes down. So, they’ll have the benefit of retroactively applying whatever we wind up with for federal reimbursement, which a reminder, that takes about a year in Germany to get to. So, there will be the six-month period where it will be helpful to have those agreements in place to treat patients and the risk for those insurers on the financial terms is markedly reduced.

JJ Bienaimé

If I may add, I think having also these discussions on outcome of these agreements should help in terms of the final reimbursement price for Germany in general, because if we believe that the likelihood you have a better reimbursement price at the federal level in Germany is higher if we have outcome-based agreements in place than if we don’t. So, that’s why they are...

Hank Fuchs

And then the second part of your questions, Phil, there are guidelines or desk constructions, I guess the agency might call them, around time to process submissions. But bear in mind that these guidelines are kind of lower in enforcement and visibility than, say, PDUFA. And they don’t always hit their PDUFA. So, I don’t know that there’s any real enforcement or tracking around guidelines. So, I would plan that it’s possible that they could notify us at any time. And as far as our communication, back to you of the coming milestones, we don’t plan to inform yet about when we enter -- when or if we enter labeling conversations. There’s a lot of back and forth. I think the thing that everybody is trying to figure out is what the action that the agency is going to take. We won’t know what that action is until they tell us, and then we’ll share it with you. But I do want to commend the agency around their diligence. I mean, they’re clearly working very hard on this application. We’re almost in daily contact with them. And we, like you, look forward to their decision on or before the PDUFA date.

Phil Nadeau

That’s very helpful. Thanks again for taking our questions.

Hank Fuchs

And hopefully, they don’t delay the PDUFA.

Operator

Our next question comes from Jessica Fye from JPMorgan Chase.

Jessica Fye

A couple more, sticking with ROCTAVIAN. First, how many U.S. centers do you expect to be ready to go on day one? And second, when you say the FDA’s findings of the -- on the ROCTAVIAN manufacturing site are addressable, can you comment on whether they have been addressed at this point? And if not, when you expect them to have been addressed by? Thank you.

JJ Bienaimé

Maybe we can start with that, Greg, our Head of Technical Operations, can answer the question.

Greg Guyer

So thanks for the question, Jessica. So yes, we responded pretty closely after the inspection in December. There was one additional clarification which they wanted, which we gave them. And since then, it’s basically been radio silent. So, we -- as Hank said, we’re in communications with the agency a lot. But we have heard nothing more since several weeks from -- ago, probably late in December. So, we believe almost all the issues have been resolved. Most of them are procedural. Those SOPs and things have been updated, and we are preparing for launch.

Jeff Ajer

And relative to your question on the U.S. centers, Jessica, there’s approaching 150 hemophilia treatment centers in the U.S. and those range from very large comprehensive care centers, you might call them to much smaller hemophilia treatment centers. So ,our intention is, as we noted in the prepared remarks, is to have a small number of the most capable and largest centers ready to go on or shortly after launch. We haven’t guided to a specific number, largely because we don’t think it’s that relevant. But we’ll be targeting a focused group of the biggest, the most capable centers to be ready to go.

Operator

Your next question comes from Chris Raymond from Piper Sandler.

Chris Raymond

Hey. Thanks guys. And if you’ll bear with me another ROCTAVIAN question -- or two of them actually kind of related. So I just want to square a couple of things. JJ, at the beginning of last month, I think I heard you when you’re talking about this dynamic, you project that German commercial patients would be treated in the first quarter, if not this month, which I took as January. This March 15th date when insurers are derisked, is that a new learning for you guys? Because I don’t think I’ve really heard that date before, sort of that dynamic. And then maybe a related question, and I know you guys don’t give quarterly guidance. But I guess a clumsy way of asking is this setup would seem to maybe make pretty negligible Q1 ROCTAVIAN revenue. Is that -- am I making the correct assumption there? Thanks.

JJ Bienaimé

Yes. I think we said -- I remind you, I think we see in the coming weeks back in January, we didn’t say in January. This March 15th date is not a new date. We knew that this would be coming. So, we still hope to have some patients in Q1. But Brian, do you want to pick from there?

Brian Mueller

Yes. Thanks, Chris. It’s Brian. I think that you’ve interpreted correctly. Jeff described the current dynamics, we’re closing in on those first patients with the patients undergoing testing. Here, we are February 27. So 2/3 of the way through Q1. So, I think JJ is right, we’ll hope for a few patients, but not the material trend that the guidance would imply, if you will.

Operator

And our next question comes from Robyn Karnauskas from Truist Securities.

Unidentified Analyst

This is Nishant [ph] on for Robyn. Just a couple of questions, one on VOXZOGO. So with regards to launch dynamics, now that you have the drug approved in Japan and it’s for all age populations. Can you provide more color on the demand in unit population? How is it -- how are people or patients are responding to it? And in terms of -- I’m asking this question because I know you’re expecting expanded approval in U.S. and EU. So just to give us a clear sense of more demand in the younger patient population.

And one question on pipeline. I know with the BMN 331 gene therapy, you had presented some data last time in January. So, with the highest dose, 6e13, I think the C1 level was approaching like a normal range. So, do you have any more color on the data beyond week nine? And do you expect to like dose at a higher concentration considering like for some of the patients in...

JJ Bienaimé

It’s getting too long, if I may. So why don’t we start answering that question.

Jeff Ajer

For VOXZOGO launch trajectory, I think the question was about what are you seeing in terms of age distribution and uptake. You specifically mentioned Japan. And so I would comment that Japan indeed has been -- we’ve seen rapid uptake in Japan since we got reimbursement approval last August. Remember, Japan is an established market for treating achondroplasia. So, it’s unique in that aspect. And we’ve been fortunate to tap into that established care model for achondroplasia in Japan.

In addition, Japan is a -- VOXZOGO is approved for all aged patients in Japan. There is no younger limit. And indeed, we’ve seen a lot of interest and uptake in the younger patient segments in Japan. In other markets to the extent that we have visibility into this data, which is somewhat limited in Europe because of data privacy regulations. A year ago, I was commenting on the diversity of the age segments that we’re seeing patients start at. We’re seeing very young patients and even patients that were key majors starting treatment. Today, I would say the data looks like it’s concentrating towards younger patients starting therapy, which we think is a good dynamic and bodes well if we can get approval for younger age segments in Europe and the United States. And finally, a note just a little bit of a plug, what the data that we have would suggest really high compliance with patients being treated so far, which is encouraging.

Hank Fuchs

And on your question on 331, there’s really no further update to give. I mean, in the past, what we talked about at JPMorgan, we have an individual patient who is beginning to express, moving into the normal range. But there’s a lot of variability in week-to-week visits, and we have another patient to treat before we can make a determination about whether this dose level appears good enough or we want to expand to another dose. So encouraging start, but stay tuned for more.

Operator

[Operator Instructions] And our next question comes from Matthew Harrison from Morgan Stanley.

Matthew Harrison

I guess just one follow-up on VOXZOGO. Jeff, can you just maybe talk in a little bit more detail about how you’re thinking about the contributions to guidance this year? Is this mainly geographic expansion and new patient adds? Or are you also expecting as part of guidance to see younger patients be added into the label and therefore, drive uptake? And then, just a corollary to that, Hank, can you just talk about some of the things you’re thinking about in terms of other indications for VOXZOGO and sort of the progress there? Thanks very much.

Jeff Ajer

Hi Matt, I’ll start off and then turn it over to Hank. The guidance for VOXZOGO reflects the current trajectory that we’re on with respect to new patient additions and the base of patients remaining pretty compliant and contributing to revenue this year. So, we’re following the overall trajectory of that launch. It is true that a global launch is really the sum of individual markets launching. So, it’s a very dynamic situation. We’re in 32 markets now including all of our strategic markets.

And like I mentioned a minute ago, we’ve gotten a lot of rapid uptake in Japan. That’s a big strategic market for us, and we’re relatively early into that launch cycle. Other big markets like Germany and the United States, we’ve been in longer, but we’ve still got plenty of room for growth. We do anticipate that we would see the benefit of having expanded labels this year, but that’s not fundamental to the guidance range, I would say. That would be helpful, but not fundamental.

JJ Bienaimé

Yes, because if we do get approval regarding age extension, it’s not going to happen before probably Q4. So it’s not going to have a major impact on our revenue this year, but it will be good for ‘24. Hank?

Hank Fuchs

Yes, to say a little bit more about VOXZOGO indications, we’ve covered this briefly, and there’s not really a ton more to update about other than to say that based on genetic data, the expectation is that a natural regulator of bone growth like VOXZOGO would be relevant in conditions beyond just that mutation that causes achondroplasia. Most -- like to achondroplasia is a condition called hypochondroplasia, which affects the same gene but with different mutations that cause achondroplasia. And we’ve got some interesting preliminary data that an investigator has been working up at DC Children’s in an open-label investigator-sponsored trial.

In addition, there are a number of other mutations, both in the same pathway or related pathways that also should be amenable to therapy with VOXZOGO, and he is now -- Dr. Dauber has expanded his clinical trial to include patients with a variety of other mutations, including Noonans or NPR deficiency. And one could imagine a conversation with regulators in which we’re talking about the eligibility criteria for a pivotal trial as either being directed at specific mutations or at a basket of mutations. And we plan to have further discussions with the agency about eligibility for trials as well as discussions about endpoints, duration, confirmatory requirements, et cetera.

So, I think this process will unfold over the course of the year and we’ll keep you updated as we learn more in terms of the specifics about a program that could lead to expanded label claims for VOXZOGO. But at this point, we’re still at the beginning of the regulatory portion of the journey.

Operator

And our next question comes from Paul Matteis from Stifel.

Paul Matteis

Just two quick ones. I wanted to just clarify on JJ’s comments that you’re hoping to treat some ROCTAVIAN patients in Germany this quarter still. Is that contingent upon executing these other OBAs with the two important regional insurers? Maybe just clarify what has to happen for that to play out this quarter to start actually generating uptake? And then, more broadly on your annual ROCTAVIAN guidance, what’s your assumption on how back-end loaded the number might be, especially at kind of the mid- to high end of the range? And maybe comment just a little bit on your expectations for U.S. reimbursement and how long it will take for that to get on board?

JJ Bienaimé

I can start it and Jeff can. So, we already have, as we communicated for a while back, we already have one -- in Germany that’s signed up. So, it’s one of the patients that is eligible after the competitive diagnostic is a patient that’s under -- the umbrella under that fix fund, [ph] that patient could be treated any day. But hopefully, if we do end up signing another OBA or two other OBAs with the other fix funds, then it increases the probability that a patient will be treated this quarter. So with this, Jeff?

Jeff Ajer

The next part of the question was back-end loaded guidance and maybe...

Brian Mueller

Yes. I’ll handle it. Thanks, Jeff. Thanks, JJ and thanks, Paul, for the question. So first of all, maybe just a quick color comment on this ROCTAVIAN guide. It’s a wider range than you’ve seen in our other established products, but that’s because it’s a launch year in Europe. And as we touched on already on this call, the timing and of course, approval itself has some uncertainty in the U.S. So the way you can think about the guidance generally is the earlier we can get more of those German patients and then other European markets later in the year, fully on line, and then the earlier U.S. approval that we get that would push us towards the higher end of that guidance. And the longer or later that those things happen would push us towards the lower end. And specific to your question, you’re exactly right that given the uptake trends given both those European and U.S. dynamics would suggest that it is back ended and you’d expect the larger portion of the revenues to come in the second half of the year.

Jeff Ajer

And then back to the third part of the question about U.S. reimbursement. And you’ve seen this from BioMarin before, right? When we get approvals in the U.S. and we’re able to -- for high value and high value-added therapies, we’re able to get reimbursement going in the United States pretty quickly. That’s based on a couple of dynamics. One is we’ve got an experienced team out there. And we know how to get through the medical exception process while we’re waiting for coverage policies to be issued. And for ROCTAVIAN anyway, there’s always going to be -- are likely to be always prior authorization process steps there that we know how to navigate.

The U.S. system is highly diversified. That’s both a challenge and an opportunity for us relative to going through federal reimbursement process, like we are in Germany and France and Italy, where at least in France and Italy, you have to get all the way through the process before you can treat patients and that takes a year. Relative to the U.S., I mentioned in the prepared remarks, the warranty is a key aspect of facilitating rapid patient uptake.

The warranty is something we offer with purchase. It’s an outcomes-based agreement. It covers risk for insurers. We offer it with the purchase of ROCTAVIAN, means we -- there’s no negotiating the terms, and we don’t have to negotiate and get to contract signature with lawyers involved in rounds of review and that sort of thing. So the warranty is an essential element.

And finally, pricing correctly to give U.S. payers a financial incentive to support ROCTAVIAN is important. And to that end, we had the final report from ICER in the United States. It said ROCTAVIAN is a dominant choice relative to Hemlibra. And they previously concluded that ROCTAVIAN was a dominant choice relative to Factor VIII replacement therapy at a presumed price of $2.5 million. So that gives us a lot to work with in terms of lining up price and the financial incentives. Thanks.

Operator

Our next question comes from Tim Lugo from William Blair.

Lachlan Hanbury-Brown

This is Lachlan on for Tim. Hank, I understand you can’t give specifics. But can you just confirm if you have sort of clear alignment with the FDA on the requirements for devoting VOXZOGO’s accelerated approval to approval -- full approval and potentially any guidance on like when you might be able to share more details around that? And then also, as we look towards the steroid prophylaxis study for ROCTAVIAN in Q2, can you just maybe talk about like what you need to see there to, I guess, feel like you’re confident that the steroid prophylaxis either does or doesn’t really impact therapy?

Hank Fuchs

Yes. So I think the first part of your question was about VOXZOGO requirements for full approval have clearly aligned. We have a very specific understanding what the agency as the requiring to full approval. And we haven’t really given specific time line guidance largely for competitive reasons, although we do think that we are meaningfully far down the road, having initiated this Phase 3 trial a while ago. To be able to follow patients to a final adult height that I think would scratch the agency’s itch to confirm their determination that AGV is an intermediate endpoint. So, feeling pretty good about that and feeling pretty good about the time line of that.

On the prophylactic steroid study, I think a key reminder there is that this study is -- so still underway, and we don’t have a precise date yet for when we’re going to share the information with you. But the concept was twofold. One wants to evaluate weather starting corticosteroids therapy prior to the initiation of the liver inflammatory response, whether that could lead to a higher Factor VII expression initially -- that was one key part that’s being tested. And just to remind you that as part of the story of the first bit of few patients we have treated trying to understand whether the difference in the Phase 1 results and the Phase 3 results has anything to do with the corticosteroid regimens. So one part of the study is to address that question. But the other most important part of that is to see if that in simplifying the corticosteroid regimen and evaluating overall durability, whether there’s an even simpler approach to take with corticosteroid management. And I think it will take probably a few years actually for that story to really fully be understood. So, early days in the journey around prophylactic steroids.

Operator

And our last question comes from Josh Schimmer from Evercore ISI.

Josh Schimmer

For the patients in Germany who are undergoing the AAV antibody screening, do you have an estimate for how many will be eligible and how many would drop out? I think in the U.S., you’ve said it might be around 20 to 25% of patients who failed the screening criteria. And then for those patients who fail, are they going to be eligible for the AAV5 existing antibodies trial that you’re running? And when might we get those data?

Jeff Ajer

Hi Josh, I’ll start. We have published data on seroprevalence in our key markets, and that’s guiding our overall thinking. We are not allowed to get patient-level information in Europe due to GDPR. You’re aware of that. So we’re really blocked except from some aggregate data. With 10 patients going through the CDx testing process, that’s a small end. I don’t know how that’s going to line up against a larger population when we get there.

JJ Bienaimé

I will also I add, the U.S. is around 25%, correct, remember. But what we did when -- we did some analysis on AAV5 seroprevalence around the world, Germany was higher, was more like 35% plus. So, there are differences around the world in terms of AAV5 seroprevalence. And on top of that also some patients might not be eligible for all the reasons that AAV5 antibodies are like, for instance, they could have active liver disease or kind of stuff. So, Hank?

Hank Fuchs

And as far as eligibility, yes, these issues could conceivably subject to other eligibility criteria. But yes, they would be eligible for a trial in the AAV5 study that we have up and running.

Operator

And we have no further questions in queue. I’ll turn the call back over to our Chairman and CEO, JJ Bienaimé.

JJ Bienaimé

Thank you, operator. Thank you for joining us on today’s call. We are very excited about all the developments occurring at BioMarin today. Obviously, we don’t know what the FDA decision is going to be on ROCTAVIAN. But needless to say, we are actively preparing for the launch of ROCTAVIAN in the U.S. Thank you. Bye.

Traci McCarty

Thank you, everybody. Bye, bye.

Operator

That concludes today’s conference call. Thank you for joining, and have a pleasant day.