Q4 2023 Biomarin Pharmaceutical Inc Earnings Call

Participants

Alexander Hardy; President, CEO & Director; BioMarin Pharmaceutical Inc.

Brian R. Mueller; CFO & Executive VP; BioMarin Pharmaceutical Inc.

Henry J. Fuchs; President of Worldwide Research & Development; BioMarin Pharmaceutical Inc.

Jeffrey Robert Ajer; Executive VP & Chief Commercial Officer; BioMarin Pharmaceutical Inc.

Traci McCarty; Group VP of IR; BioMarin Pharmaceutical Inc.

Akash Tewari; Equity Analyst; Jefferies LLC, Research Division

David Neil Lebowitz; Research Analyst; Citigroup Inc., Research Division

Eliana Rachel Merle; Analyst; UBS Investment Bank, Research Division

Geoffrey Christopher Meacham; MD; BofA Securities, Research Division

Huidong Wang; Research Analyst; Barclays Bank PLC, Research Division

Jack Kilgannon Allen; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division

Jessica Macomber Fye; Analyst; JPMorgan Chase & Co, Research Division

Joseph Patrick Schwartz; Senior MD of Rare Diseases & Senior Research Analyst; Leerink Partners LLC, Research Division

Konstantinos Biliouris; Director & Biotechnology Analyst; BMO Capital Markets Equity Research

Luca Issi; Research Analyst; RBC Capital Markets, Research Division

Mohit Bansal; Senior Equity Analyst; Wells Fargo Securities, LLC, Research Division

Nishant Shailesh Gandhi; Research Analyst; Truist Securities, Inc., Research Division

Olivia Simone Brayer; Research Analyst; Cantor Fitzgerald & Co., Research Division

Philip M. Nadeau; MD & Senior Research Analyst; TD Cowen, Research Division

Salveen Jaswal Richter; VP; Goldman Sachs Group, Inc., Research Division

Timothy Francis Lugo; Co-Group Head of Biopharma Equity Research, Partner & Research Analyst; William Blair & Company L.L.C., Research Division

Unidentified Analyst

Vikram Purohit; Equity Analyst; Morgan Stanley, Research Division

Presentation

Operator

Thank you for standing by, and welcome to the BioMarin Pharmaceutical Fourth Quarter and Full Year 2023 Conference Call.
I would now like to welcome Traci McCarty, Head of Investor Relations to begin the call. Traci, over to you.

Traci McCarty

Thank you, Mandy. Thank you, everyone, for joining us today. To remind you, this nonconfidential 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 SEC 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 on the Investor Relations section of our website.
On the call from BioMarin management today are Alexander Hardy, President and Chief Executive Officer; Hank Fuchs, President of Worldwide R&D; and Brian Mueller, Executive Vice President, Chief Financial Officer; Jeff Ajer, Executive Vice President, Chief Commercial Officer; and Greg Guyer, Executive Vice President and Chief Technical Officer, are here with us to answer questions during the Q&A portion of the call.
I will now turn the call over to BioMarin's President and CEO, Alexander Hardy.

Alexander Hardy

Thank you, Traci, and good afternoon, everyone. Thank you all for joining us today. As I said in January and reiterate today, the opportunity at BioMarin to positively impact patients' lives through transformative therapies while delivering value creating revenue growth and profitability to shareholders has never been more evident.
Touching on today's financial results. Total revenue grew 20% in the fourth quarter of 2023 compared to the fourth quarter of 2022. And total revenue grew 15% for the full year of 2023 compared to the prior year. This is a very strong performance.
On a constant currency basis, total revenue growth was 25% in the fourth quarter and 20% for the full year, equally as important to BioMarin's growth story of bottom line results. Non-GAAP earnings per share increased 48% in the fourth quarter versus the fourth quarter of 2022, an increase by 36% year-over-year.
These 2023 results along with our growth expectations, as implied by our full 2024 financial guidance provided today, solidifies our position as a financially self-sustaining business that can grow revenue, expand operating margins and accelerate earnings per share. Brian will provide more details on the financials in a moment.
So I will now turn to update you on our progress on the priorities I outlined in January. The first, to accelerate and maximize the VOXZOGO opportunity remains front and center. As demonstrated by the VOXZOGO financial results today, 178% growth year-over-year, with close to 300 new patients added in Q4. The launch in achondroplasia is on a path to blockbuster status.
We were pleased that 70% of new U.S. prescriptions in Q4, with the children under the age of 5 following FDA's age expansion approval last October. The U.S. and EU approvals last quarter, allowing treatment from infancy sets VOXZOGO up to be a major multiyear growth driver.
Beyond having an expanded age label, VOXZOGO's profile benefits from more than 1,000 patient years of long-term safety and efficacy data beyond just height. We believe this substantial clinical track record will encourage families to pursue VOXZOGO treatment as early and for as long as possible to enable maximum potential therapeutic benefit.
As a result of the growing global demand for VOXZOGO treatment and the scope of our extensive long-term clinical data, we're seeing an increase in the breadth of our prescriber base. Our world -- our work to build prescribing confidence and relationships with pediatric endocrinologists in the United States has been extremely well received.
With recent VOXZOGO uptake for children with achondroplasia under 5 being twice as fast as launch uptake in children over 5, our plan to drive earlier and longer intervention, with the goal of greater therapeutic outcomes is on track. We plan to build on our established leadership in achondroplasia treatment to expand into multiple other statural conditions.
In the fourth quarter, BioMarin began the enrollment in the 6-month observational run-in portion of the pivotal program of VOXZOGO for the treatment of children with hypochondroplasia, and we are actively engaging global health authorities regarding development programs in idiopathic short stature and multiple genetic short stature pathway conditions, with plans to begin pivotal studies later this year.

As Hank will discuss later, we believe that there is strong proof of concept and indications beyond achondroplasia. As we expand into these indications, we hope VOXZOGO treatment will empower patients and families across a spectrum of statural conditions to live their lives to the fullest. For this reason, VOXZOGO acceleration in achondroplasia and expansion into other indications remains the top priority of BioMarin.
The second priority is establishing the ROCTAVIAN opportunity. As I said in January, we believe 2024 and 2025 will inform ROCTAVIAN's uptake curve and long-term potential. We have been very pleased with the strong and positive payer response to the value proposition associated with ROCTAVIAN and how this has translated into published payer policies and lives covered.
Furthermore, we continue to be confident with the clinical profile of the product, is evidenced by the warranty agreement, which has been equally well received in the marketplace. We have also continued to make good progress -- activate in the global marketplace, including the recent publishing of the Italian ROCTAVIAN price. We want to reiterate, however, that the complexity of aligning the required pre-infusion checklist will take time.
As I outlined last month, for successful ROCTAVIAN treatment, we need a motivated patient, a supportive payer, and a treatment site with a physician who is willing and able to use the product. For a pioneering new therapy, this isn't a surprise and is the reason why we intend to let the results do the talking for ROCTAVIAN uptake. We do expect patients to be treated with ROCTAVIAN in 2024 as implied by its inclusion in our 2024 total revenue guidance.
In the meantime, we will continue our work to activate the global marketplace and look forward to reporting ROCTAVIAN revenues on a quarterly basis.
The third priority is our focus on the most productive R&D assets, those with transformational benefits for patients and high commercial potential. I've been spending a lot of time with the R&D team to understand the unique profile of each pipeline asset currently under development. I've been impressed by the level of innovation and expertise in developing transformational therapies. But in keeping with our ambitious financial goals, we intend to hold a very high bar in terms of disciplined spend and prioritization of the most impactful medicines.
To that end, we are undertaking a strategic portfolio review to determine which pipeline assets will advance and which will not. A complete update on prioritized R&D assets, those with the highest potential patient impact and the highest potential value creation for shareholders will be communicated at our Investor Day later in 2024. In the meantime, we have a number of promising candidates advancing, and Hank will provide an update on those in a moment.
And lastly, our fourth priority is increasing profitability faster than originally planned. Our 2023 results and our full year guidance for 2024 both demonstrate our transition to growing profitability and significant operating leverage. Our full year 2024 guidance reflects double-digit revenue growth regardless of ROCTAVIAN contributions, and non-GAAP earnings per share growing faster than revenues.
VOXZOGO is expected to be a major driver of year-over-year growth, and is reflected in our streamline guidance, total revenues guidance item, which includes all BioMarin commercial products.
Non-GAAP operating margin is a new line item put into BioMarin's 2024 full year guidance, primarily because it reflects our focus on leverage across the P&L and an anticipated margin expansion this year, as well as providing you with a clear line of sight into our business performance. We believe the streamlined full year guidance items will allow you to track our financial progress as we strive to achieve the 4 strategic priorities I just described.
So in summary, it's truly an exciting time at BioMarin, and I see tremendous opportunity to create value for patients and for shareholders. The entire leadership team is hard at work on shaping the future corporate strategy, which will include views on R&D and capital allocation, as well as setting and taking steps to achieve ambitious long-term financial targets. The entire organization is mobilized and approaching this work with a sense of urgency.
We will be making significant progress that we will want to share externally on a timely basis. That could be incrementally, and at the Investor Day, for which we are evaluating the specific timing. Please stay tuned for additional updates.
Thank you for your attention. And I will now turn over the call to Hank to provide an update on key R&D highlights. Hank?

Henry J. Fuchs

Thank you, Alexander, and good afternoon, everyone. The R&D organization is gratified by the productivity achieved on behalf of those who benefit from our innovative therapies.
As we take BioMarin into the future and align our drug development capabilities with our ambitious financial goals, we will continue to prioritize the most high-impact medicines for patients. What will change is the level of spend and the rigor of the criteria used to determine which assets advance.
As Alexander mentioned, we are undertaking a strategic assessment of our portfolio with the goal of ranking, prioritizing and then advancing only those assets that represent the highest value to patients. The assessment will evaluate the amount of time and investment required to determine proof-of-concept through global approvals as well as the market opportunity and competitive landscape for each asset. The higher bar is designed to expedite development, increase the probability of success and improve cost effectiveness. We look forward to sharing the results of the strategic investment -- assessment at our Investor Day later in 2024.
Touching briefly on a few clinical updates, we intend to open the treatment study of the pivotal trial with VOXZOGO for hypochondroplasia in the middle of this year. Results from Dr. Dauber's 52-week Phase II study with VOXZOGO in hypochondroplasia were recently posted to the ACMG website ahead of his oral presentation at the meeting in Toronto next month.
We are encouraged to see an increase in the 12-month annualized growth velocity of 1.81 centimeters in VOXZOGO-treated children treated with hypochondroplasia, and a safety and sustained durability profile observed in achondroplasia at 6 months and 12 months. These data provide further support for our imminent plans to initiate the treatment phase of our pivotal program in hypochondroplasia expected to begin in mid-'24.
Regarding our development programs in idiopathic short stature and multiple genetic stature pathway conditions, we are in discussions with global health authorities with plans to begin the pivotal studies later this year. We look forward to Dr. Dauber's ISS update at the Pediatric Endocrine Society meeting in May. BioMarin is securing our leadership position for treating multiple genetic stature conditions, and we look forward to updating you on our progress across the 3 pivotal programs just described.
Turning briefly to other assets in the early stage pipeline. We're pleased to share that the Phase II proof-of-concept study of BMN 351 for the treatment of Duchenne muscular dystrophy is open for enrollment. The 52-week study will enroll 18 boys with Duchenne muscular dystrophy, with the potential to expand enrollment as needed and is designed to assess both dystrophin levels and functional measures.
BMN 349 is an early bioavailable, small molecule designed for the treatment of alpha-1 antitrypsin deficiency liver disease. Our nonclinical studies indicate 349 enables secretion of the mutant protein and prevents its polymerization in liver cells which if unchecked, drives the progression of liver disease. The single ascending dose study in healthy human volunteers is progressing with no safety signals observed thus far. We look forward to providing an update on our other pipeline assets following the strategic assessment described by Alexander.
Thanks for your attention. Thanks for your support. And I will now turn the call over to Brian for financial updates. Brian?

Brian R. Mueller

Thank you, Hank. We refer to today's press release summarizing our financial results for full details on the fourth quarter and full year 2023, including reconciliations of GAAP to non-GAAP financial measures. I will provide my comments on a GAAP basis for 2023 results and will comment on key financial updates and guidance for 2024. All 2023 financial results will be available in our upcoming Form 10-K, which we expect to file within the next few days.
In the fourth quarter of 2023, BioMarin generated strong total revenue of $646 million, representing 20% year-over-year growth, including KUVAN, and 26% growth, excluding KUVAN. As expected, the strength of our enzyme products generated more than $1.7 billion of net product revenues for the full year 2023, an increase of 4% year-over-year.
Looking more closely at performance in the fourth quarter, VOXZOGO revenues of $146 million represented 118% quarter-over-quarter growth. We've previously discussed the supply constraint on VOXZOGO revenue in 2023. Our plans for supply to satisfy forecasted commercial demand around the middle of this year remain intact, and our fourth quarter revenue result being higher than guidance was driven by some incremental supply that became available late in the quarter.
Double-digit revenue growth of both VIMIZIM and PALYNZIQ in the fourth quarter was partially offset by anticipated lower KUVAN revenues, and were also an important contributor to total revenues exceeding $2.4 billion for the full year 2023 and in line with our expectations.
R&D expenses in the fourth quarter were $206 million, up $34 million year-over-year, primarily due to increased early stage research activities as well as increased activity in our clinical program.
SG&A expense in the fourth quarter was $275 million, up $29 million from last year. Please note, we had a number of unique expenses during the fourth quarter of 2023, including impairment charges related to the discontinuation of our first-generation VOXZOGO pen. The devaluation of the Argentinian peso along with incremental G&A expense related to corporate governance matters and leadership transitions. Together, these items combined to total over $40 million in Q4 2023.
Moving to the bottom line. GAAP net income for the fourth quarter was $20.4 million, contributing to $168 million of GAAP net income for the full year, representing GAAP diluted earnings per share of $0.87 per share. GAAP net income for the fourth quarter was also impacted by the recognition of a loss on an impairment recorded in the other income and expense line.
I will note that on taxes, similar to the third quarter, we recognized some incremental discrete tax benefits in the fourth quarter that lowered our effective tax rate for the full year. We continue to project, on a consolidated global level, an effective tax rate in the low 20s for 2024 and beyond.
Non-GAAP income for the fourth quarter was $95 million and $405 million for the full year, representing full year non-GAAP diluted EPS of $2.08 per share, and growth over 36% over 2022.
As we move into 2024, please note that there are select changes in BioMarin's P&L geography becoming effective in 2024. We are expecting to classify foreign currency revaluation in other income and expense going forward, instead of its prior classification within SG&A expense. And idle plant time-related costs will be classified in cost of sales going forward instead of their prior classification within SG&A expense.
These changes, which again are classification only and do not impact the bottom line are being made to provide greater clarity on our core operating results as well as to better align with industry peers. Details of the revised presentation of idle plant costs and foreign exchange gains and losses from previously reported 2023 and 2022 periods to conform with the presentation that we'll use going forward are available on our website.
As Alexander mentioned, for 2024, we are guiding to total revenues, non-GAAP operating margin and non-GAAP diluted earnings per share. For the full year 2024, total revenues, we expect between $2.7 billion and $2.8 billion, which at its midpoint represents approximately 14% growth compared to 2023.
To provide some additional context, since this is the first time that we are not guiding to specific brand revenues, our 2024 revenue guidance is driven by continued strong growth in VOXZOGO, with expansion into younger age groups being a key driver of anticipated 2024 new patient starts, mid- to high single-digit growth across the 5 brands in our ERT portfolio, and offset by the continued decline of KUVAN due to the loss of market exclusivity.
While ROCTAVIAN is definitively included in our total revenue forecast, the revenue contribution from ROCTAVIAN is relatively modest and risk-adjusted based on our recent experience. Going forward, we will let the actual ROCTAVIAN results speak to the performance.
Also, one comment specific to the first quarter of 2024, that we are expecting a Q4 to Q1 dynamic with respect to order timing and volumes, whereby Q4 included some modest incremental revenue that will impact Q1 growth. We stand behind full year 2024 total revenue guidance provided today, and we expect most of the 2024 total revenue growth to be weighted to the second half of the year.
With respect to non-GAAP operating margin for the full year 2024, we are guiding to between 23% and 24%, which represents 4 percentage points of expansion versus the 2023 non-GAAP operating margin of 19.4%. This is inclusive of our G&A reclassifications that I just mentioned.
Over the last 3 years, including through our 2024 guidance, our non-GAAP operating margin is projected to increase by approximately 13 percentage points, from approximately 10% in 2021, to the 23.5% midpoint of our 2024 guidance. This demonstrates our commitment to growing profitability, however, it's not the end of the story as we are working through our cost efficiency and resource allocation priorities to help set ambitious long-term financial targets to be communicated this year.
And for non-GAAP diluted earnings per share, we expect between $2.60 and $2.80 per share for the full year 2024, which at the midpoint represents 30% growth over last year.
As we move into the next chapter of BioMarin, we are executing on our growth strategy with impressive performance driven by VOXZOGO in achondroplasia, in pursuit of new indications, a durably growing enzyme products business and the potential to realize the value of ROCTAVIAN.
Thank you for your continued support, and we'll now open up the call to your questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Salveen Richter with Goldman Sachs.

Salveen Jaswal Richter

I just wanted to better understand your EPS guidance for 2024 and what that assumes? Are there some OpEx and overall R&D cuts that are basically baked into the assumptions there? And help us also understand that you do -- your strategic portfolio review of the R&D program, what the criteria is for further investment in advancement?

Brian R. Mueller

Yes. Thanks, Salveen. This is Brian. I appreciate the question. So first of all, we're pleased that the non-GAAP EPS guidance midpoint implies 30% growth over this year. And this year, as noted, was over 30% growth over 2022.
There are a few items that impact the year-over-year non-GAAP analysis. One is those -- some of those tax benefits that I mentioned in 2023. So now that tax since the beginning of '23 is in our non-GAAP income to the extent those benefits don't recur, that would be a headwind, if you will, to 2024 non-GAAP. There's also some unique -- I mentioned the unique SG&A charges in '23. We've got some incremental SG&A in '24. We're implementing a new ERP system which is commanding some G&A resources in '24. So those are some of the dynamics.
And to the part of your question about how much of our strategic savings or cost efficiency opportunities are included, just a modest amount of the known items at this point that we were already working on. We are embarking on the cost efficiency and operating model efficiency exploration as we speak, this is going to be part of the more ambitious financial target setting for the future to be communicated later this year. So we ask you to stay tuned on that part. But I will say that there's not a substantial amount of savings related to that in this guide.

Henry J. Fuchs

Salveen, in response to the second question about prioritization of the R&D portfolio. We are undertaking a strategic assessment of our portfolio with the goal of ranking, prioritizing and then advancing only those assets that represent the highest value to patients and shareholders.
The assessment will include considerations of time and money involved to prove concept or to advance to global approvals as the case may be, as well as consideration of market opportunity and competitive landscape. And the concept of having a very high bar for going forward, is to foster expedited development. When things happen early that are impressive and important subsequent development, and registration and market access happens much more quickly. And so with those higher bars, we can also see that subsequent events have a higher probability of success and also contribute to improving the cost effectiveness of programs.
We look forward to sharing the results of the strategic investments later in 2024.

Operator

Our next question comes from the line of Akash Tewari with Jefferies.

Akash Tewari

Alexander, in the past, BioMarin spent a lot of time and resources building up its gene therapy capabilities, but we haven't really seen that translate to shareholder value.
For example, it looks like you're spending almost identical amounts on VOXZOGO or ROCTAVIAN but with different results. What are your thoughts on potentially divesting your gene therapy platform or even ROCTAVIAN, in order to cut costs and focus the story is that option out of the question in your mind?

Alexander Hardy

Thanks very much for the question. As I mentioned in terms of our priorities, we're still very much at the early stage with ROCTAVIAN. We really want to establish the opportunity there. We are seeing progress in terms of market access, market activation. So we wanted to see that run through 2024, we also think probably into 2025 is when we'll be able to really determine.
In the meantime, we're spending wisely and cautiously supporting the launch. But we're very mindful of the return on investment that we're currently seeing from ROCTAVIAN. At the same time, we referenced in this conversation today a strategic review. So we're also thinking about the future strategy of BioMarin. We're looking at the R&D portfolio. We're looking at our own experience with gene therapy, the scientific challenges, regulatory market access, market uptake, and also taking note of what's happening in the world outside BioMarin's walls.
And as part of that, we'll assess do we have the right exposure to gene therapies in our pipeline. Is it something we want to double down on, stay the course or take a lower exposure to gene therapies. So we'll continue to keep you updated. We'll provide more information at our Investor Day later this year.

Operator

Our next question comes from the line of Jessica Fye with JPMorgan.

Jessica Macomber Fye

A couple on VOXZOGO. First, on the financial side, you mentioned 4Q revenue, I think you're seeing sort of broadly 4Q revenue reflected modest incremental revenue that would impact 1Q growth. Can you talk to whether the 4Q VOXZOGO number specifically benefited from any channel inventory changes or lumpy international orders? And if so, just quantify what was out of the ordinary?
And then on the pipeline side, can you do basket trials with multiple indications for some of these additional potential VOXZOGO development areas. How likely is the FDA or other regulators to sign off on something like that, that type of approach?

Brian R. Mueller

Jess, it's Brian. I'll take the first part of your question. Good question. And the way I'd respond is, nothing excessive with respect to the channel and nothing broad across the marketplaces. I made that comment because when we gave our full year guide, essentially Q4 guide back on the first of November, the high end was $455 million, and we talked about how that high end was supply constrained. And so here we are reporting close to $470 million for the quarter.
So I want to explain that the circumstances there were some additional commercial supply that became available. So we used it to meet demand that was out there. And the point is that with respect to Q1, we don't necessarily expect or guarantee that, that same dynamic can recur. So that's the Q4, Q1 dynamic, that plus decrease in KUVAN in Q1 is just an overall comment that Q1 is not going to be our strongest quarter, and we're going to see most of the growth in the second half of the year.

Henry J. Fuchs

Thanks, Jessica. As regards to the concept of basket, one of the great benefits of having Dr. Dauber do his study is, we actually have really good regulatory feedback on that question already. And in fact, you could see that his study is itself a basket of things that might be formerly known as subsets of idiopathic short stature or hypochondroplasia.
So the concept of basketing has already been in front of the FDA and has already gained a little bit of acceptance. And having said that, though, as reflected in our prepared comments, we are in the stages of finalizing our game plan after our last interactions with health authorities around the world, and we'll communicate final design decisions when those studies come online.
All that said, we're not waiting for any of that because we're also implementing our theater studies, the baseline run-in studies that are essential for enrolling these baskets of studies, and so that we can expedite the start and completion of these additional registration activities.
So in sum, I think we're trying to be as cover as we can be about getting studies underway and working with health authorities around the world to ensure that they meet the demands of regulators.

Operator

Our next question comes from the line of Phil Nadeau with TD Cowen.

Philip M. Nadeau

A follow-up question on VOXZOGO. In the past, BioMarin had talked about converting VOXZOGO's approval from accelerated to full and that potentially changing, what would be necessary for the competition to be approved. Is there any update on the process of converting VOXZOGO's approval to full, and at this point, would it have any impact on the regulatory requirements for the potential competition that's in pivotal studies already?

Henry J. Fuchs

Phil, no particular update on the regulatory status or strategy or read-through on competitors. But one of the things that's really exciting about the update that we can report is that every so often we look at ongoing studies to assess the durability of VOXZOGO's effect, and we continue to be reassured that VOXZOGO, unlike other growth-promoting types of drugs has this -- been a remarkable benefit of sustaining its effect. And that's really one of the key features of benefit of VOXZOGO patients.
And I think it's going to be an important bar for any future innovation in this space, to ensure that patients can resume a physiologically normal growth rate safely and through the entire period of their growth, starting from earliest diagnosis all the way through the closure of the growth play. So good on VOXZOGO so far.

Operator

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

Geoffrey Christopher Meacham

Another one on VOXZOGO. I know it's a centerpiece of growth and the pipeline -- the major pipeline investment for the year and beyond. I wanted to ask you, what's been the impact of your commercial investments so far in terms of the pace of new starts or broaden the prescriber base looking into the second half of last year? And then what do you think about what does success look like for 2025? I'm just trying to figure out a couple of metrics that we can kind of evaluate over the course of this year for VOXZOGO.

Jeffrey Robert Ajer

Geoff, it's Jeff here. Let me take a shot at that. So I think we've had some good returns on our commercial investments to date. You mentioned new starts, new starts were accelerated starting late last year following the label expansion, as noted in the prepared remarks. Expanding the prescriber base, particularly in the United States, to pediatric endocrinologists is a particular area of focus, both last year and into this year. We're making good progress.
And in terms of metrics, I would say we're dialing back from specific quantitative metrics on these launches and turning more towards revenue. I might suggest that was a post-launch revenue base for VOXZOGO in particular, the best metric I would recommend now and going forward is the revenue line.

Operator

Our next question comes from the line of Ellie Merle with UBS Financial.

Eliana Rachel Merle

At the ISS VOXZOGO data update, you mentioned will be coming in May. What should we expect from that in terms of the patient numbers and what you're looking to see?
And then just as you look across the many different short stature conditions, how are you thinking about prioritization across the indications and which you'd move forward versus not? And any threshold in terms of efficacy?

Henry J. Fuchs

Okay. As regards to Dr. Dauber's ISS, the anticipated update, this is his study, and so it's very much under his determination as to what he's going to update. My understanding is that he's enrolled more hypochondroplasia patients than other indications. But I think he wouldn't be reporting unless he felt that there was useful information to be reported, I think the things to be looking for really are corroboration of what, I think, most scientists fundamentally believe, which is that CNP as a master regulator of bone growth is going to work across a wide variety of indications.
And so as we had seen with the hypochondroplasia program, so it's actually sort of the first half of the cohort at the 6-month mark that enabled FDA to gain confidence that we could go directly into Phase III and that's predicated on a lot of this biology. And therefore, I think the important outcome of the ISS presentation at PES is going to be are we seeing basically the same effect that we expect to see in the different types of stature disorders.
And as regard to your second question, I think the prioritization process has been described, really boils down to fairly conventional metrics around time and cost to proof-of-concept or to global registration, value that gets created for patients and for shareholders. With the idea of by setting a high bar for something like proof-of-concept, then you really only advance your winners. And by focusing on those, we hope that will expedite development and bring faster and higher value to patients and shareholders of the undertaking.

Operator

Our next question comes from the line of Joseph Schwartz with Leerink Partners.

Joseph Patrick Schwartz

Welcome, Alexander. I think I heard you say that the outcomes of the strategic and operating review committee could be communicated incrementally as well as at the Investor Day in the third quarter. So I was wondering if you have a sense of which updates might emerge sooner and which updates could require more time to formulate?

Alexander Hardy

Thanks, Joe. Thanks very much for the question. The [SORC] is proceeding extremely well. We've met frequently and we're making progress on the financial guidance, long-term financial guidance and the capital allocation strategy. We also have a lot of other work underway, as you get a sense from the cost optimization, the acceleration of VOXZOGO, even faster R&D prioritization, et cetera, et cetera.
And right now, we're figuring out what is the best timing to update the external world on our progress on these points. Obviously, the benefit of the Investor Day is, allows us to put this all together with a strategic context of where we're going to take BioMarin into the future. At the same time, we're keen to share the information we can as soon as we can on the progress we're making.
So as I said in my prepared remarks, please stand by for more information. The latest possible day will be Investor Day for all of those that information. If it makes sense, we'll communicate other information sooner.

Operator

Our next question comes from the line of Robyn Karnauskas with Truist Securities.

Nishant Shailesh Gandhi

This is Nishant. I'm on for Robyn. One on VOXZOGO. So I know you have spoken on competitors' overall treatment for achondroplasia. Can you give us any color, anecdotally about how patients on VOXZOGO or prescribers think about the orals. Is there room for both if it gets approved?

Henry J. Fuchs

Yes, we've shared robust and highly significant growth data from VOXZOGO in our clinical trials. And as I just referenced, the accumulating data on height gain is really quite positive and informative. And you'll see more of that at ACMG, demonstrating these long-term positive effects on growth, importantly, also on improvements beyond height. For example, improvements in the physical domains of quality of life types of scores.
And so we're really focused on us building our leadership position in the genetic statural conditions where we see an incredible potential for VOXZOGO, again, to normalize growth to sustain that normalization of growth through the entire growing period and having the greatest possible impact in patients' lives.

Operator

Our next question comes from the line of Mohit Bansal with Wells Fargo.

Mohit Bansal

And congrats to Alexander, and welcome. Maybe one question for you. In general, what is your general thought on gene therapy as a therapeutic modality? I'm asking because a significant portion of your pipeline is investing in gene therapy and would love to understand how you think about gene therapy in general for rare diseases? And what are the puts and takes there?

Alexander Hardy

Thank you very much for your question. As I referenced a little bit, but let me go in a little bit more detail. We've got a very broad and exciting pipeline across multiple modalities, including gene therapies.
Gene therapy has offered obviously significant potential benefits for patients, transformative benefits. We have an expertise and ability to develop, manufacture and now commercialize gene therapies in multiple geographies. That is a unique set of capabilities that BioMarin has.
As we look at our pipeline, as Hank was talking about, we're going to be assessing at a program-by-program basis. What is the transformative potential of the program, together with the commercial potential? At the same time, we're also looking at the overall strategy of BioMarin. What are we really, really good at? And where we're confident we're going to have a sustainable competitive advantage going forward. And that will include asking and answering the question about our exposure to gene therapy, which will and form also the prioritization of our portfolio. So more to come on this. Please hold your question. We'll have a clearer idea of this, and we'll share it at our Investor Day later in 2024.

Operator

Our next question comes from Gena Wang with Barclays.

Huidong Wang

I have two very quick questions. The first one is regarding VOXZOGO. There, in your press release, you said you already treated 2,613 achondroplasia patients across 41 active markets. What is the total market opportunity in terms of achondroplasia patient numbers for these 41 active markets? And also what is the pricing dynamics there?
And then second, very quickly regarding ROCTAVIAN. I think, the last earnings, was mentioned that 6 patients were ready to be dosed in 4Q '23. Should we expect the remaining 5 patients to be dosed in first quarter '24?

Jeffrey Robert Ajer

Gena, it's Jeff here. I'm going to take that first question on VOXZOGO patient numbers. So essentially, those 41 markets represent kind of the core of the commercial footprint that we usually use to quote eligible patient numbers and market potential. And for that group of patients, that would now total about 20,000 patients eligible, and that's essentially matching the lower age limit in the different labels, which are 0, on a 4 months or 6 months depending on where you are in the world.
And in terms of the ROCTAVIAN question, back to Alexander.

Alexander Hardy

Thanks, Gena. Yes. Let me take your second question. We're going to provide details on Q1 including product revenues at our conference call in April. We're tracking progress on site readiness at hemophilia treatment centers with payers, completed positive CDx tests. But clearly, these metrics so far have not yet correlated directly to patient uptake. So we're no longer going to be providing specific updates on these metrics.
Once again, just to reiterate, we're going to let the actual experience with actual commercial patient infusions to form our future expectations and we'll report at the end of the quarter about our progress this year with infusions and revenue.

Operator

Our next question comes from the line of Paul Matteis with Stifel.

Unidentified Analyst

This is Julian on for Paul. I guess just in terms of thinking about capital allocation moving forward. Obviously, you're reviewing the pipeline. But could you just provide a little bit of color on -- do you anticipate reinvesting in the pipeline, perhaps after [cooling] programs that don't meet that high bar that you speak of for advancement? Or are you sort of more focusing on growing the commercial business for VOXZOGO? I guess just any color you can provide on future capital allocation for 2024 and beyond, would be super helpful.

Brian R. Mueller

Yes. Thanks for the question. This is Brian. We'll ask you to wait a bit longer for the outcomes of our strategic review to give you details on our capital allocation strategy. I mean, we can say that internal innovation, given our track record and value created in the current business is going to continue to be a priority. But we also recognize that BioMarin not only carries a substantial amount of total cash and investments today, but we are now cash flow positive.
So we are committed to developing a capital allocation strategy that's in the interest of maximizing shareholder value. That work is in process, and we will look forward very much to sharing it with you, but we'll just ask you to stay tuned until we finish the work.

Operator

Our next question comes from the line of Vikram Purohit with Morgan Stanley.

Vikram Purohit

We had a follow-up question on ROCTAVIAN, a bit of a broader one. So your release mentions and you also just mentioned a couple of different areas of work that you're going through to help progress commercialization here, from patient education to site readiness, but I was wondering, now that you've had a few months of experience with the process for ROCTAVIAN, what do you see as the 1 or 2 specific factors or drivers of uptake that you think you have the most near-term leverage within and control over that could support the trajectory here in 2024?

Jeffrey Robert Ajer

Vikram, this is Jeff here. I'll talk a little bit about that. What we've said is that we've seen very nice signals of patient demand, for example, in the United States, much of last year, we talked about the buildup of a patient funnel in the strategic market and priority market of Germany where we had gotten good uptake of CDx testing. We've also talked about the importance of site readiness and having reimbursement approvals that kind of clear that important reimbursement gate.
As Alexander noted, we haven't seen a direct correlation. So we haven't been able to say, hey, this or that, or are these leading indicators are good predictive indicators of patient infusion and revenue uptakes. And so I think the idea from here is instead of trying to better tune that model we're going to let the actual revenue do the speaking for ROCTAVIAN.

Operator

Our next question comes from the line of Tim Lugo with William Blair.

Timothy Francis Lugo

You introduced operating margin in your guidance and you have a nice step-up year-over-year, what are the initial impressions on whether BioMarin will be able to continue to expand operating margins and eventually reach north of 40%, like some of the other rare disease-focused companies?

Brian R. Mueller

Yes. Thanks a lot, Tim. I appreciate the question. It's a great one. So again, we are pleased to be able to report and deliver over the last few years kind of year-on-year operating margin improvement. We've been talking about it for a while, and it is -- we're pleased to be able to actually deliver upon that.
I'll give a two-part answer to your question. On one hand, we know there's a lot of opportunity with the type of revenue growth that BioMarin has, not to mention the outcomes of the strategic work that we've talked about a lot today, and potential impact on revenue into the future. We also recognize that we've got operating model and cost efficiency opportunities.
We built this global infrastructure that now we're leveraging to support the strong launch of VOXZOGO for example, in a very deliberate and organic way over the years. We've reached a lot of scale. We've got world-class capabilities across manufacturing, R&D, commercial, business support.
But we've been focused on growing and scaling for years. And what that means is now we have a real opportunity to optimize, and optimize the business model and make the cost structure more efficient. That's the work we're doing together with SORC. And by the way, the entire leadership team and enterprise, these are enterprise-wide initiatives that the company is really rallying behind.
And the second part of my question is, for that reason, we'll have to ask you to stay tuned. But by all means, you can picture the work that we're doing to design what the appropriate and deliverable financial targets for long-term guidance purposes will be for the company. And we'll be sure to not just share those numerically, but the rationale, the strategy and our plans to deliver upon them. So that's just going to take a bit more time. Thank you, though, for the question.

Operator

Our next question comes from the line of Olivia Brayer with Cantor Fitzgerald.

Olivia Simone Brayer

Wanted to ask about life cycle management for your VOXZOGO franchise. Obviously, you have a lot of expansion opportunities within that product. But could we see any efforts to maybe better optimize the dosing schedule or maybe any other avenues to keep that product as competitive as possible?

Henry J. Fuchs

Yes, thanks. That's a good question. And yes, in fact, we do plan to undertake some further dose optimization. Right now, our thinking is to try to do that in parallel with registration-enabling trials. But again, details to be communicated when study designs are final, after regulatory authority alignment.

Operator

Our next question comes from the line of Kostas Biliouris with BMO Capital Markets.

Konstantinos Biliouris

Congrats on the progress. Given that your R&D day is planned for the third quarter of 2024, which is about a year after Alex took over, and likely, this is when you will potentially share pipeline prioritization details. I'm wondering whether you will continue to progress all pipeline programs, full steam until this third quarter, or you are going to pause the progression of some of the programs until you decide on their fate?

Henry J. Fuchs

Thanks, Kostas. The -- I think a big part of the purpose of the early part of the year of prioritizing the R&D portfolio ties to the conversations that Brian was just having around capital allocation, Alexander was having around longer-term financial outlook. The way I think about that is that it's a real -- it's a great thing that our company can generate cash that can be reinvested in our R&D portfolio. And we have to earn that through developing assets that have value to then reapply to generate new medicines. So we have to do that in a business context.
And so as soon as we can make decisions about what's going to go forward, we want to invest in expediting that and also things that are not going to go forward, we want to make sure that we don't spend money on things that are not going to go forward.
So that's very much the intention, and it's, I think, ties to Alexander's statement of how the progress of our process through to Investor Day could be potentially incrementally informed over the course of the year.

Operator

Our next question comes from the line of Jack Allen with Baird.

Jack Kilgannon Allen

And congratulations on all the progress made over the course of the quarter. I wanted to ask one on VOXZOGO. You mentioned that about 70% of the new U.S. starts in the fourth quarter were from the younger patients and the label expansion. I guess, could you provide some more context around how penetrated the older patients are? And how should we think about growth of VOXZOGO moving forward? Is it mainly expected that it will come from younger patients? Or is there still opportunity to expand uptake in the older patients in the U.S. as well?

Jeffrey Robert Ajer

Thanks for the question, Jack. In the United States, we haven't disclosed penetration rates and we're not going to introduce that metric. Overall, with reported numbers of about 2,600 patients, and you heard me quote the question to Gena earlier of an eligible patient population of 20,000, you can do the quick arithmetic on that yourself.
Specifically from the United States, which is one of our largest and highest value markets, we're really encouraged by both the continued uptake in the older children, those ages 5 and up from the original approval and also the new demand from the younger patients. So I think we're pretty confident that we've got an opportunity for increased uptake there going forward.

Operator

Our next question comes from the line of David Lebowitz with Citigroup.

David Neil Lebowitz

Just following up on that, with 70% of patients on VOXZOGO from new scripts being young patients. Is it [a way] to assume that, that number would be maintained next year? Or should that dial back as the year goes on?

Jeffrey Robert Ajer

David, let me take that one on. I don't think we have enough data to specifically say that we're going to maintain that mix. But that's a onetime metric, intended to give you a little bit of color on how things are going in that key market since we got the younger age label expansion. But it's an important signal, and I think it's a good one, good and encouraging looking forward.

Operator

Our final question comes from the line of Luca Issi with RBC Capital Markets.

Luca Issi

Alexander, at the R&D Day last year, which I appreciate was before your time, BioMarin talked quite extensively about life cycle management for Valrox, including testing in patients with neutralizing antibodies to AAV5 patients with Factor VIII inhibitors, younger patients and so on.
Given the relatively slow launch, is that still a plan? Or is there a scenario in which don't invest that capital, just you prioritize operational efficiency to really make the story here, driven primarily by VOXZOGO, (inaudible), and Valrox. any color there, much appreciated.

Henry J. Fuchs

We do intend to include a review of those studies in our portfolio assessment and prioritization. And so we'll communicate the plans for each of the additional potential ROCTAVIAN indications that we did outline at R&D Day that you did just list, and as we complete our portfolio prioritization process as well as our overall corporate strategy. And so we'll follow up then.

Alexander Hardy

And I would just add to that, that as we've said that R&D prioritization is looking at the potential benefit in terms of the medical impact together with the commercial potential. So we'll be taking into mind our experience with the commercial uptake of ROCTAVIAN to inform the business case around those life cycle developments.

Operator

I would now like to turn the call over to Alexander Hardy, President and CEO of BioMarin, for closing remarks.

Alexander Hardy

Thank you very much for joining us today. As you've heard, we are really hard at work here on shaping the future corporate and R&D strategy as well as setting ambitious long-term financial goals.
As you've heard, these are on -- about accelerating revenue and also profitability. We're approaching this work with a sense of urgency, and we're making significant progress. We're looking forward to sharing that with you on a timely basis. So as you heard, please stay tuned for additional updates. Thank you very much for your attention and your questions, and goodbye.

Operator

This concludes today's call. You may now disconnect.