BioMarin Pharmaceuticals Inc Canaccord Genuity's 46th Annual Growth Conference

Yes. Thanks, Whitney, for having us. Really glad to be here. Thanks everyone joining in person and those online. So I do think there's some folks that may not be familiar with BioMarin, so I thought I'd give a little bit of maybe the past, present, and future, and then we can get into more details in the business. BioMarin Pharmaceutical is one of the largest rare disease-focused companies. The company's been operating for a bit over 25 years, and it's interesting, back when we started our journey, there were only a handful of rare disease companies. There was BioMarin, there was Genzyme, Shire, Transkaryotic Therapies. However, those other companies are now part of larger pharmaceutical companies because they were acquired over the years.

While now there's hundreds of other rare disease companies, BioMarin's spent the last couple of decades plus growing and scaling while retaining that rare disease focus. We've got six first-in-disease medicines, nine approved therapies overall. We've got higher than average success rates in the biopharmaceutical sector, and that's largely because of our focus, not just rare disease, but genetically defined conditions. So we ensure when we embark on research programs that we understand the underlying genetic causation of the condition, and then we design a precision medicine aimed directly at that genetic cause. That comes with a number of competitive advantages in biopharma. First of all, rare disease patient populations are often smaller, which means smaller studies, which can be run in shorter amounts of time. There's certain regulatory incentives like Orphan Drug Act protection and other accelerators in the regulatory pathways. A lot of community support.

Rare disease patient advocacy is very strong. So we partner with regulators, the patient communities, and that's been a significant part of our success. But now we've grown and scaled the business into close to an expected $4 billion of revenue this year. We've built global world-class biopharmaceutical capabilities. We have in-house manufacturing, end-to-end research and development, and commercial capabilities. We operate in over 80 countries worldwide. So again, rare disease at scale, and one of the leaders. Shifting into the present, we just reported our Q2 financial results last week. We had nearly $1 billion of revenue for the quarter, which was 20% growth year-over-year. We raised our guidance to $3.875 billion-$3.925 billion for total revenue. We also raised our non-GAAP earnings per share guidance from $4.90 to $5.10.

Another significant announcement last week was in closing the acquisition of Amicus Therapeutics during the quarter. We shared our plans for the Amicus business. Amicus is a rare disease-focused company based here on the East Coast. They had two commercial assets, Galafold for Fabry disease and Pombiliti and Opfolda for Pompe disease. These are both high-growth assets and very complementary to BioMarin's business. We announced the acquisition back in December and closed it during Q2. Part of the strategic rationale for this transaction was taking these two high-growth medicines in a small company into the BioMarin infrastructure and global platform, where they should actually be more valuable. What we shared last week was our aspirations for the Amicus business. We shared our view on peak revenues for Galafold, which is $1.4 billion, and for Pombiliti and Opfolda, $1.2 billion, both in the mid to late 2030s respectively.

We shared our view on synergies. We believe that we can synergize approximately 50% of the legacy Amicus operating cost base. Again, two companies together, BioMarin at scale. We have the platform, so when it comes to infrastructure, most of the synergies are coming from general and administrative expense and other business support. That is where the bulk of this 50% synergies comes from. Very importantly, we preserved and left intact. If anything, we are investing in the Amicus sales and marketing, all of those customer-facing capabilities. Again, these products are in their high-growth phase, so it was important that we preserve that growth and invest in it. We were not aggressive with any synergies within sales and marketing.

With that revenue growth profile of the Amicus business and with some of those cost synergies, what that results in is a substantially accretive business over time and significantly increased cash flows. We shared that we accelerated our de-leveraging target. BioMarin took on leverage debt for the first time to do this acquisition, and at the time of the acquisition, we shared a leverage ratio target of less than 2.5x within two years of closing the transaction, which was again, just back in April. After doing our work on both that revenue growth and the synergies, we accelerated that de-leveraging target by roughly a year. We think we can be at that less than 2.5x by the middle of next year.

The last thing on the accretion is, again, the combination of the revenue with those cost synergies over time, over the next few years, say, by 2030, we think the Amicus business can operate at a 60% operating margin, also contributing to what is already a healthy BioMarin operating margin. That is some of the present. In the future, our strategy is to realize the growth potential of the business. Lots of commercial execution to do, both on our base legacy business and in successfully growing and completing the Amicus integration. I should have mentioned in the sort of past to present, we also transformed the company over the last couple of years. Significant changes in our focus, in our operating model. We substantially improved our profitability and cash flow.

It was great timing that we did that because now when we layer on the Amicus business, it is on top of this re-engineered, transformed BioMarin operating model. We are expecting to generate significant growth in revenue, earnings per share, but most importantly, cash flow, because cash flow is the vehicle to be able to reinvest in the business. Our top capital allocation priority is to continue to invest in future growth and thereby shareholder value. We talk about sometimes this virtuous cycle where we are growing and reinvesting in the right assets, both our internal innovation and inorganic business development external innovation, continuing to grow and reinvesting. This virtuous cycle with a flywheel effect, that is the strategy.

Yes, of course. Thanks, Whitney. Great question. It is multiple levers. I might start with where I kind of finished the opening remarks with that transformed BioMarin base business. We have gotten to a level where we are generating not just significant levels of operating cash flow, free cash flow, but that EBITDA base for leverage debt. Even without the Amicus business, we have got a healthy, growing, solid base of cash earnings, if you will, and growing into next year. On the leverage target itself, I will share that, with BioMarin as a first-time debt issuer, it was very important that we go on the record at the announcement of the transaction with a sound financial policy. That was that less than 2.5x within two years. I will share that there was some room in that.

If you were to model out our EBITDA and the debt we raised was about $3.6 billion. We also have a $600 million convertible note on the books, but that actually matures next May, so that helps de-leverage a bit in itself. It was a healthy situation to begin with, is my point. Then to your question, once we layer on the Amicus business, because we are growing revenues, we think there is more of an opportunity than, again, Amicus standalone. We can get more into what those levers are as well. With the cost synergies, the combined EBITDA profile over the next 12 months really got us comfortable that we can accelerate that de-leveraging target.

Sure. I might as well.