BioMarin Pharmaceutical Inc. (BMRN) Q1 2013 Earnings Report, Transcript and Summary

Eugenia Shen Jean-Jacques Bienaimé - Chief Executive Officer and Director Daniel K. Spiegelman - Chief Financial Officer and Executive Vice President Jeffrey Robert Ajer - Chief Commercial Officer and Senior Vice President Henry J. Fuchs - Chief Medical Officer and Executive Vice President

Tim Lugo - William Blair & Company L.L.C., Research Division Michael J. Yee - RBC Capital Markets, LLC, Research Division Cory William Kasimov - JP Morgan Chase & Co, Research Division Robyn Karnauskas - Deutsche Bank AG, Research Division Salveen J. Richter - Canaccord Genuity, Research Division Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division Ying Huang - Barclays Capital, Research Division Philip Nadeau - Cowen and Company, LLC, Research Division Kimberly Lee - Janney Montgomery Scott LLC, Research Division Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division Joshua Schimmer - Lazard Capital Markets LLC, Research Division Carol Werther - Summer Street Research Partners Kumaraguru Raja

Good day, ladies and gentlemen, and thank you for your patience. You've joined the BioMarin Pharmaceutical First Quarter 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference maybe recorded. I would now like to turn the call over to your host, Eugenia Shen of Investor Relations.

Thank you. On the call today is J.J. Bienaimé, BioMarin CEO; Dan Spiegelman, CFO; Hank Fuchs, Chief Medical Officer; and Jeff Ajer, Chief Commercial Officer. This nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, 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. And now I'd like to turn the call over to J.J., BioMarin's CEO. Jean-Jacques Bienaimé: Thank you, Eugenia. Good afternoon. Thank you for joining us on today's call. Sorry I have a broken voice. I was at the BIO meeting in Chicago and I talked to too many people. So in the first quarter, we continued to execute on our development goals as we head into another potential region's formative year for the company. We made good progress in a number of important fronts including commercial, R&D, regulatory and business development. And we hit all our stated milestones for the quarter and remain on track to meet our upcoming goals for the remainder of the year. Including potential approval and launch of Vimizim at the end of this year. On the commercial side of the business, our steadily growing sales has built a solid foundation for the company. To support our expanding commercial business, we now have a presence in over 40 countries worldwide and an infrastructure that is immediately leverageable for future product launches. On the development site, we continue to advance our pipeline to generate value for the company and our shareholders and work towards delivering breakthrough treatments for patients suffering from rare genetic diseases. By midyear, we will have 6 programs in the clinic, the most ever in the history of the company, and potentially 3 programs in Phase III trials by the end of the year. To recap our accomplishments this quarter, we announced that the Phase I/II for Pompe disease exceeded our pre-specified go/no go criteria and that we plan to could proceed to the next phase of development, a Phase II/III switching trial, by the end of the year. And we also announced encouraging data from PKU-016 trial. The data and better understanding of the disease will help strengthen our PKU franchise by allowing us to better execute our PEG-PAL's history study and could lead to further adoption approvance. On the regulatory front, we met our timeline of filing the BLA for Vimizim in the U.S. with a potential approval and launch before year-end. We also submitted the MAA to the EU earlier this week and have already received the accelerated assessment studies for the EMU. The 2 filings were a tremendous efforts on the parts of many BioMarin employees, and I would like to thank them for their dedication to the company and the Morquio community. We also filed the CTA in the U.K. for BMN-190 for Batten Disease. This indication lies at the core of our mission at BioMarin in developing first-to-market or best-in-class therapies for serious unmet medical disorders and we are eager to start enrolling patients by mid-year. In addition to developing our existing pipeline, we continue to look for strategic assets to augment our pipeline for future growth. In the first quarter, we acquired Zacharon Pharmaceuticals which has a leading glycobiology platform, and 2 programs in lead optimization. We also licensed a Factor VIII gene therapy research program for hemophilia A from University College London and Saint Jude's Research Hospital. Gene therapy represents the potential to change the treatment paradigm for many diseases and is emerging as a viable way to treat genetic disorders. These 2 assets further expand our pipeline as well as our expertise and reach in the orphan disease space. Looking forward, we have many important milestones ahead this year including upcoming BMN-673 data at ASCO and several trial initiations including 3 Phase II/III or Phase III programs in PEG-PAL and BMN-701 for Pompe and then our PARP inhibitor, BMN-673, all leading up to an expected approval of Vimizim by year end. Next, Dan Spiegelman will review the financials for the quarter and Jeff Ajer will then provide more details in our commercial portfolio. And Hank Fuchs will provide an update on our R&D programs before we open the call for questions. And now, I would like to turn the call over to Dan.

Thanks, J.J. Earlier today, we issued a press release summarizing our financial results for the first quarter and I refer you to that release for full details. Following are some key highlights. Revenues from our approved products continue to grow with a 9.7% increase in total revenue in the first quarter of 2013 compared to the first quarter of 2012. This result was driven by a large year-over-year increases in Aldurazyme and Kuvan product revenues, more than offsetting a relatively small increase in reported Naglazyme revenues. Jeff will describe the revenue results in more detail later, but the small year-over-year increase in Naglazyme was driven by a $7 million order from Brazil that was delayed from the fourth quarter of 2011 to the first quarter of 2012. This boosted the Q1 2012 Naglazyme sales and made the year-over-year comparison appear low. However, the Naglazyme business continues to grow nicely as there was an 11% increase in the number of patients on therapy year-over-year and a 10.2% increase in Naglazyme revenue in the first quarter of 2013 over the fourth quarter of 2012. Kuvan also continued to show strong growth in demand. While the first quarter is traditionally the weakest quarter of the year for Kuvan, which is why Q1 2013 sales lag behind Q4 2012 revenues, year-over-year sales showed a nice 17.5% increase. Aldurazyme reported revenues grew 39.2% driven in large part by a lower net product revenue transfer charge in the first quarter of 2013 compared to the same period in 2012. Importantly, Aldurazyme revenue reported by Genzyme increased 5.4% year-over-year. With respect to operating expenses, for the quarter, they were in line with our guidance and consistent with the growth and product portfolio and commercial operations we've discussed. One nonstandard financial item during the quarter was the partial exchange of convertible notes due in 2017 which we completed in the first quarter. In total, 13 holders of our 1.875% convertible senior subordinated notes agreed to exchange 215 million in aggregate principal amount of the notes for approximately 10.6 million shares of common stock, the shares that the notes convert into. Approximately 110 million of the notes remain outstanding as of March 31, 2013. The total combined cash payments made for the note conversions was 12 million with 18.1 million of total interest savings from accrued and future interest payments that will no longer be required resulting in 6.1 million total net savings to BioMarin. While this redemption results in a net P&L charge this year, the interest savings will be a benefit in the coming years. Turning now to guidance for 2013. We are reaffirming our previously provided guidance for all items and remain confident that we will meet these financial goals. Guidance is being reaffirmed and no changes to operating expenses or net loss are required even after taking into account the expenses with the newly licensed gene therapy program for hemophilia A and the full year impact of the convertible bond retirement expense. Now, I would like to turn the call over to Jeff, who will provide an update on our commercial programs.

Thanks, Dan. Starting with Naglazyme, Q1 2013 sales of $69.4 million increased 10.2% over Q4 2012 sales. This strong quarter-over-quarter growth reflects continued modest but steady growth in the underlying business coupled with the fact that Q1 is generally a seasonally strong quarter during the year. Regarding Q1 being a seasonally high quarter, as Dan mentioned, we usually see some big orders from certain countries that have large lumpy order patterns, in part determined by their fiscal year, including Kuwait, Qatar and Saudi Arabia. Brazil continued an unbroken string of quarterly orders without a miss since Q1 2012, but the Q1 2013 order was smaller than the big order received in Q1 of 2012. The combined effect of order timing is why revenue in Q1 2013 increased to only 1.2% over Q1 2012 even though the patient base has grown 20% over the last 12 months. Addressing more completely the growth in the underlying business, there was continued modest growth of patients on treatment, minor geographic expansion and continued high patient compliance without material supply disruption. First, commercial ships during the quarter were recognize to Israel and Libya. While important, these new markets will contribute only minor overall growth now and going forward. As per Kuvan, sales of $37.6 million in Q1 2013 were in line with internal expectations for the quarter, but a decrease of 6.0% from Q4 2012 sales of $40 million. This reflects the normal and expected seasonality with Kuvan. Q4 is usually the high quarter, followed by a dip in Q1. That does not indicate a dip in the underlying business. The Q4 to Q1 dip is driven by dynamics of the end of the insurance year, followed by the disruption in the start of the new insurance year. An upcoming event of note is PKU-016 data to be presented at ICIEM in Q3 2013. Turning now to Vimizim. Patient mapping continues and the number of patients mapped has grown to over 1,300. There is no material change in the relative proportion of the patients identified by region. Adult patients are relatively underrepresented in all regions except EMEA. We expect continued increases in the patient mapping for 2013, though no larger dramatic increases. New patients will come from disease awareness efforts currently underway and from our efforts to reach new call points this year, mainly skeletal dysplasia specialists and orthopedics. Commercial efforts this year focused on promoting disease awareness of Morquio A and highlighting the multi-systemic nature of the disease. We are conducting symposia, a genetics meeting, as well as attending and promoting symposia of skeletal dysplasia and orthopedics meeting. Also, there have been and will continue to be, numerous peer-reviewed publications about different aspects of Morquio A contributing to the overall understanding and natural history of the disease. On the marketing front, we are conducting market research and preparing branding and educational and support materials to be prepared for the first Vimizim launches anticipated to be in the U.S. followed by the EU. There will be modest hiring and training of new employees during the course of this year, particularly in the U.S. to be prepared to launch. Now I will turn the call over to Hank Fuchs who will review the pipeline.

Thanks, Jeff. As J.J. noted earlier, we have met our stated objectives for the quarter and remain on track to hit the remainder of our development goals for the year. Starting with Vimizim for MPS IVA, we submitted the DLA to the Food and Drug Administration at the end of the first quarter and the marketing authorization application of the European Medicines Agency earlier this week. Priority review status was requested in the United States and assuming an 8-month review timeline, we could receive approval by the Food and Drug Administration by the end of the year. In addition, European Medicines Agency has accepted our request for accelerated assessment based on the premise that Vimizim could satisfy an unmet medical need and is of major interest from the point of view of therapeutic innovation and public health. Vimizim is the first BioMarin product that has qualified for accelerated assessment which offers the potential to accelerate approval by over 4 months. However, we would like to caution you that most cases do revert to standard review timelines. As a result of our educational efforts and positive chatter in the Morquio patient and physician community, disease awareness is growing and along with it, demand for Vimizim. We're happy to announce that last week, we opened our first expanded access site in the United States. We will continue to add sites and enroll patients leading up to approval to allow for additional access to Vimizim. Moving onto the next data point in our development pipeline, BMN-673 for genetically defined cancers, we are finalizing the design of our first Phase III study in BRCA mutant breast cancer. We have successfully concluded our end of Phase II meeting with the FDA. We will have poster presentations with an update on our Phase I/II program in solid tumors at the upcoming ASCO meeting in early June in Chicago. And we plan to have this expansion data at 1 mg for approximately 10 additional BRCA ovarian and 10 additional BRCA breast cancer patients. We will also have enrollment updates on Ewing's sarcoma and small cell lung cancer. As for next steps, we're still planning to start the Phase III program by the end of the year and the data will ultimately drive our decision. Turning to BMN-701 for Pompe's disease during the first quarter. We announced results for our Phase I/II study. The results exceeded our prespecified acquirements for proceeding to the next phase of development. We have decided to initiate a Phase II/III program by the end of the year. The Phase II/III switching trial will be conducted in late onset Pompe patients who have been previously treated with alglucosidase alpha using full-scale material from our revised manufacturing process. Subject to discussions with health authorities the proposed steady design is a single run trial with treatment at 20 milligrams per kilogram administered every other week for 24 weeks. The respiratory parameter maximum inspiratory pressure will be the primary endpoint and secondary objectives will include maximum expiratory pressure, 6 minute walk test and safety. Through our discussions with the industry experts, we have gained increased confidence in identifying maximum expiratory pressure as the primary endpoint. There's an average annual decline in maximum inspiratory pressure of 3.2% and this gradually leads to death of the patient. Maximum inspiratory pressure and the maximum expiratory pressure are appreciated by many experts as the best measure of respiratory muscle strength and improvement in these domains represents an important benefit to the overall health status of Pompe patients. As for the remainder of our pipeline, all programs are advancing to the next phase of development and generating value for the company. We are on track to initiate the Phase III of PEG-PAL trial for PKU, phenylketonuria, in the current quarter and by midyear. And we plan to initiate the Phase II trial for BMN-111 for achondroplasia and the Phase I/II trial for BMN-190 for Batten's disease. These 3 opportunities are attractive for different reasons. PEG-PAL is largely de-risk clinically as the primary endpoint of lowering blood phenylalanines has been unequivocably demonstrated in the previous Phase II trials. In addition, the commercial Kuvan infrastructure is immediately leverageable, with Kuvan sales reps calling on the same trading positions and known Kuvan non-responders that could be ideal candidates for PEG-PAL. BMN-111 has a well-understood disease pathway and encouraging data from our Phase I study along with an attractive market opportunity. And BMN-190 lies in our sweet spot of enzyme replacement therapy and depending on the results from our Phase I/II study, may have an expedited regulatory pathway. Finally, as J.J. mentioned, we are very excited by our recent license agreements starting with hemophilia A gene therapy and the acquisition of Zacharon, both ideal strategic fits which develop our core competencies, fuel our pipeline and continue to future growth. And with that, operator, we would now like to open the call for questions.

[Operator Instructions] Our first question comes from Tim Lugo of William Blair. Tim Lugo - William Blair & Company L.L.C., Research Division: Actually, I had a question on Vimizim. I saw at the enrolled meeting, a poster on patients with attenuated disease and these were essentially almost adult patients. I assume they'd be heavier. Will these patients be on the Vimizim label and are you planning on starting any studies specific in this patient population in the near-term?

So I'll start,this is Hank. Our expectation -- obviously, we're not in labeling discussions yet. But I think that regulatory practice has been to apply relatively general criteria to the package inserts of the product when it's launched. And so we don't have an expectation that the label will, or won't include specific subsets of patients. And as to whether we need to do additional studies to address the medical need, our belief is that the results of our trials will indicate that Vimizim should be used early in the course of illness, independent of either genotype or phenotype and exactly how that turns out, will be the subject of future conversations with health authorities. Tim Lugo - William Blair & Company L.L.C., Research Division: And I know J.J.'s voice isn't great now but -- maybe you can talk about this, Hank. In the past, it has always been discussed that Vimizim would be the largest product or one of the most successful products for BioMarin. Obviously, expectations are a little bit greater than that. Can you maybe benchmark Vimizim versus some of the other successful launches we've seen such as Cerezyme, Replagal, some of the other products outside BioMarin? Jean-Jacques Bienaimé: J&J here. I can talk about it. Again, I mean, this is based on the relative size of the market population for MPS IV as compared to MPS I and MPS VI. And we believe that there is a good chance that the market is 2 times as large as the MPS VI market or maybe more. And this is why we believe it exceeds $600 million plus in market opportunity but that's all we can see at this time. As you know, we only finally discover the true size of the market once we start marketing the drug and we have boots on the ground in different areas of the world to identify patients. So we did underestimate the market for Naglazyme at launch. We thought at launch, it would be a $150 million product. Big sales it's already close to $300 million. I think the underestimation here is going to be lower because we have more people already around the world. But at this time, it's only -- if the market until the patient is only 2 times Naglazyme I guess, $500 million to $600 million products which will double the sales of BioMarin.

Our next question comes from Michael Yee of RBC Capital Markets.

In terms of 673 at ASCO, can you just better frame our expectations for what data we'll get in breast ovarian, as well as understanding how much data we'll get in Ewing's and small cell? And the follow-up to that is I know there's guidance to start a pivotal study in Q4. Can you better explain which of those indications is most likely to go, I mean, you basically said you're finished discussions or design of a Phase III in breast, so is that what our expectations should be? And maybe comment on the fact that there was another competitor out there, Norapred, that today, basically, announcing the move in to Phase III as well. So put that all in context.

I think the first one is to better frame the ASCO expectations in terms of the BRCA mutant population. And then -- and as I've said, we've enrolled at least 10 additional ovarian BRCA patient -- ovarian patients on and 10 additional BRCA breast patients and we'll provide a snapshot at that point of best response to date, which could include the number of immediate progressors, the number that has stable disease and are ongoing treatment, the number who have experienced partial responses, confirmed partial responses, complete responses, confirmed complete responses. A little difficult to predict the distribution of those outcomes because the studies are still ongoing but we'll give you as current an update on those as soon as we can. As regards to Ewing's and small cell, I think it's a pretty early for those tumors for us. So I think the right expectation to have there is that you'd get an update on enrollment numbers and of course, if the enrollment numbers are meaningful and the data readouts are meaningful at that point, we'll provide an update as to outcome, provided that the outcomes are reasonably clear. As you said -- as you pointed out, we did -- we are saying that our first Phase III trial is going to be in BRCA mutant breast cancer. We are aware that there are competitive molecules out there in the clinical development arena. And I'd say -- as we sit here today, we feel pretty confident about our asset and just to remind you, the greatest fit about that confidence are: number one, it was designed to have better potency, selectivity and pharmacological properties; number two, in the clinic, it has shown by far, the greatest potency in terms of the doses at which you first observe response activity; it has the highest ratio between the MTD and the lowest dose at which you first observe activity. So it's selectivity design appears to have translated into the clinic. And none of this would be possible without having to predict its pharmacological properties of good absorption, long half-life, perfect for daily administration. And so we think that we have the best PARP inhibitor. We will be presenting probably the most current -- I don't if the other companies are going to present at ASCO, but to our knowledge, basically, we have the most recently enrolled patients and the highest number of recently enrolled patients. I think you'll get the freshest look from our ASCO update about our compound. What we've seen and what we've talked about so far is pretty dramatic response activity at pretty dramatically low doses with a pretty acceptable safety profile. But other than that, I can't really say more competitively. So we look forward to ASCO and we'll provide you a lot more details and you'll get a lot more insight into our specific development program. Hope I didn't put Mike to sleep. Mike, are you still there?

Okay, we'll go to the next question. Jean-Jacques Bienaimé: Actually, I would like to add, also, that as far as we know, the Serono has not implemented new studies in breast since they acquired the product from Merck. So whatever triggered the disease, it's probably Pfizer moving in breast today as far as we know, if not based on a new data. We'll take the next question.

Our next question comes from Cory Kasimov from JPMorgan. Cory William Kasimov - JP Morgan Chase & Co, Research Division: First of all, maybe to ask Michael's question in another way, with regard to 673. How much are your development decisions driven by what the competition is doing in terms of competing for sites, patient, et cetera? And then also on 673, are you going to have a meaningful amount of data in the abstract for ASCO? Or is that just more of a placeholder at this point? And then on Vimizim, I may have missed this, but did you say whether or not you've heard from the FDA yes on priority review status? I know you have accelerated assessment in Europe.

Haven't heard from the FDA priority review status. The abstract is a placeholder abstract. And how much of our development decisions are driven by a competitor? Not so much. I think the way I've looked at it is, in the way that I think, we and our expert colleagues have looked at it is, to try to match the biology and the drug in the most optimal fashion and we just have a real strong belief that it makes a lot of sense for the first indication to be in BRCA mutant cancer for a variety of reasons. And so, we're aware of the competitive situation. And we're going to try to let, a, data speak about that and b, at the end of the day, the trial results will determine which of the compounds ends up being first and which of the compounds ends up being best.

Our next question comes from Robyn Karnauskas of Deutsche Bank.

Just a quick question on your strategy now for going ahead in breast first, and I know that you made some comments on the last call about how maybe breast might have a higher chance of success. I was wondering, now that you're making that decision, if you could give more color on your thoughts around that and whether or not you are going to completely rule out not going in ovarian or what are your thoughts? Just help me understand the strategy behind the order of the pack?

Well, as you know, cancer drug development often involves a series of activities. And I think what we're talking about today is what's the first thing the company is going to sponsor. I've been fairly explicit about, in the past not ruling out, for example, BRCA ovarian cancer. And today, even still, I wouldn't rule that out. I'm not saying anything about our decision, about Ewing's or small cell because I'm saying explicitly we don't have enough data to decide one way or the other. The thing that I think we find compelling about breast cancer as a development opportunity are probably, first and foremost, a relatively low amount of platinum use in breast cancer, in general. I believe that platinums are active, but they're not approved. And therefore, because of the relationship between the mechanism of platinum's activity and the mechanisms of PARP inhibitor's activities, therefore, a high believe in the likely activity of a PARP inhibitor and a relatively low worry about either confounding of platinum use or potential for cross resistance. So it's an indication that unlike ovarian cancer, it's unconfounded by platinum use. Secondly, sadly, breast cancer is a terrible disease and there is a short time to endpoint readout. And thirdly, it's known that good PARP inhibitors, like ours, have good single agent activity in BRCA mutant breast cancers. And I think the medical community is really keen on developing a relatively well-tolerated therapeutic option, a single agent therapy in the molecularly-defined space. Now, none of that compare contrast says anything bad about ovarian cancer as a target indication. It's all to say that breast cancer, BRCA breast cancer has a lot of features that cause it to pop to the top our list as a development -- a company-sponsored development opportunity. And I'd say stay tuned as to -- at ASCO about further decisions that we'll make, in what's, obviously, a very competitive area and also an area that is really ripe for investigation.

Our next question comes from Salveen Richter of Canaccord.

My question's just another one on the PARP data. So for -- the data we'll see at ASCO, how long will the 10 patients in the BRCA breast arm have been on 673 at that time point? And then also, when you look at running a Phase III, are the patients -- or is the study going to be in all BRCA breast patients, or are you looking at a sub-population such as triple-negative patients within BRCA breast? And then just a question on Ewing's sarcoma and small-cell lung, if they work, are you thinking of running a parallel path here with a couple of different indications, going forward?

Well, we could imagine a path that has a couple of indications proceeding simultaneously. But, and so we're not ruling anything in today or anything out today. I think data are going to really drive a lot those decisions. As to the included patient population, I think it's fair to say that I believe that the majority of BRCA mutant breast cancer patients are, in fact, triple negative, but there's not an explicit strategy to say that you must be triple negative. The eligibility criteria are likely to be simply around confirmed BRCA mutant status. And as to duration of follow-up at the time of ASCO, it kind of depends on the activity. And as I sit here today, that could encompass a range from as short as 3 or 4 months of duration in some patients, to as long as well over year in some other patients. So it kind of depends on the activity of the drug and the buns are still in the oven, as they say.

Our next question comes from Chris Raymond of Robert Baird. Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: On 673, just a couple questions. So I know it's different disease setting, but AstraZeneca's decision to file for a conditional MA with Olaparib in Europe, has that changed your thinking at all in terms of, is there a chance perhaps, you can have a package you could pull together, for example in breast?

Well, what I know about what AstraZeneca has is a couple of completed randomized controlled clinical trials in a triple-digit number of patients. We'll have a dozen and a half signal arm patients. So I'm sure that J.J. would love for my answer to this question to be in the affirmative. Yes, Chris, we can pull that together, but I think that's reasonably unlikely. And I -- was there another part to your question? Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: Yes, and just also, in terms of -- on the conduct of the breast trials. So can you just confirm it, are you going to be testing every patient for mutational status or, will you rely perhaps on prior diagnosis? Or what's the protocol there?

Probably a little bit of both. I don't know that it's a ubiquitous practice to test all patients who have breast cancer for BRCA mutant status around the world, and -- but some patients who have very strong family history or who are institutions who have an interest in genetically defined cancers or have strong cancer genetic services, we'll be keen to participate and we'll have some pre-identified patients. So probably mixed. Very difficult to predict how much of one, and how much of the other at this point. Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: If I can sneak one more in. On 701, so can we assume then, if you start the trial with MIP as your primary endpoint, that FDA has absolutely signed off on that as the endpoint?

Well, absolute sign off in FDA only occurs in 2 cases. One is, when you're absolutely on clinical hold, or when you've absolutely received approval of your drug. So in so far as the start of the Phase III trial, it's somewhere between those 2 extremes. I don't think there will be any absolutes to anything. But I think we'll talk about what requirements for registration are, and why we believe that maximum inspiratory pressure is a reasonable and acceptable primary endpoint. And I think you'll have to determine, sort of for yourself about the likelihood that, that becomes an acceptable outcome from a registration perspective when that trial is concluded.

Our next question comes from Ying Huang of Barclays.

So not to beat a dead horse again but, Hank, can you remind us, is it fair to assume that you won't have much more mature data for BMN-673 at ASCO for the ovarian cancer patients versus breast cancer patients? Secondly, out of the 1,300 patients you have already identified for MPS IVA here, can you remind us how many of those are actually in the United States versus x U.S.?

So the answer to your first question is, yes, that we will have more data on BRCA ovarian cancer patients. That's just a consequence of the fact that one of our PIs has had a very long interest in BRCA, PARP inhibitors and in ovarian cancer, specifically. So while AstraZeneca was in undecided mode about what to do with ovarian cancer, there was this huge demand for participation in clinical trials with PARP inhibitors, in England, in particular. And when we showed up with our Phase I/II study, we were the supply to satisfy that demand. And for that reason, our Phase I/II trial, and to our good fortune, was really filled quickly with a lot of ovarian cancer patients during dose escalation. So, yes, it's a fair assumption to say that we have more data and more mature data on ovarian cancer at the coming ASCO update. And the second question, I believe is for Jeff?

So we've previously disclosed that approximately 20% of the identified Morquio A patients reside in North America. That's principally the United States, secondarily, Canada, and I believe that we have previously guided towards approximately 15% for the United States. Worldwide.

And then if I may, I have a follow-up here. When do you guys you think you might get some sort of feedback from both FDA and EMEA on this proposed MIP endpoint for BMN-701, here?

Closer towards the end of the year than where we sit today. There's a process. We've got a, as you know, a cell line, to talk to them about, and a Phase III trial to talk about, and so those conversations will be ensuing, probably over the summer and into the beginning of the fall.

Our next question comes from Phil Nadeau of Cowen & Company.

First, one on Naglazyme's performance in the quarter. You mentioned several factors that led to a strong quarter-over-quarter growth. Could you give us some sense of the 10% growth? How much was contributed by each factor? And then, second on Vimizim, could you give us some idea of the number of patients that you could have on expanded access at the time of the approvals in the U.S. and will you have a similar program in Europe and I'd be interested to hear the similar -- a similar figure for that program as well?

Okay. So this is Jeff. I'll cover the growth in Naglazyme. So 10% quarter-over-quarter. So 10%, Q1 to Q4 of 2012, and relative to the modest growth over Q4 -- sorry, Q1 of 2012. So what we've noted is that there's order timing. The differences are principally related to order timing. So on the positive end, we have a number of countries that typically order big in the first quarter. I mentioned a few of them in the opening remarks. And we also mentioned that while we have contiguous orders from Brazil, this year's Q1 order was smaller than last year's Q1 order. We also mentioned about 11% growth in patients year-over-year, and relatively modest quarter-to-quarter growth in patients. So if you take your 11% and divide it by 4 quarters, that's roughly what we're talking about quarter-to-quarter from Q4 of last year to Q1 of this year. So I would boil that down and say, good growth dynamics in the underlying number of patients on therapy. The year-on-year, quarter-to-quarter analysis, compounded by a mix of big orders, some coming larger than last year and some coming in smaller than last year. So that much on Naglazyme, and sorry, would you mind clarifying your second question?

Sure it was on Vimizim, can you give us some sense of the number of centers and number of patients you could have on capicitate use or expanded access by the time of the FDA approval?

Okay. So Hank mentioned that we've had our -- opened up our first expanded access site in the United States. And it's very early to tell how many patients will get enrolled in this expanded access program. But if you think about the United States being around 15% of the total number of identified patients worldwide at 1,300 plus, and taking into account the fact that the United States is a principal country for clinical trial participants, you can kind of do the math and take a guess. Let's say, something in the mid-double digits might be an appropriate expectation.

Okay, and can you remind me, can you do similar programs in Europe, and if so, have you begun a process to implement this?

So the expanded access program that is set up in the United States is relatively unique to the United States. Outside of the U.S., France has a program, we refer to it as ATU, Italy has a program, the moniker for that is the 648 program. These are programs that we are intending to submit to and which could possibly enroll pre-EU approval patients on Vimizim. Outside of those programs, principally, what we're talking about are name patient sales opportunities which could potentially open up after a major market, meaning either the U.S. or the EU registrations.

Our next question comes from Kim Lee of Janney Capital.

Just a question on PEG-PAL here. One, would you decide whether or not you would go for accelerated approval? And when would we find out about that update?

Kim, I think a way to think about this is, we're -- we have been and we will continue to do the full development program. It's our belief and expectation that we'll demonstrate a neurocognitive benefit, and so we've -- and that would be compelling for patients, and it would be an outcome that's worth having. And so we're going for a full approval. Now what I think the good news of the FDA's decision that blood Phe could serve to support a conditional/accelerated approval, is that if we don't hit it in our first trial, it doesn't mean all is lost, because in that circumstance they'd be willing to let -- I think what they're saying is they'd be willing, subject to the review of the data, they'd be willing to let PEG-PAL get on the market with a postmarketing commitment to further corroborate the neurocognitive benefits. So we're going for full approval, and accelerated approval is a good guy, if you will, in the event that our full approval studies don't quite get there in terms of a neurocognitive benefit.

And when you -- and just a follow-up, when you refer to your first study that, if you don't hit that study, are you talking about the open label one or the randomized control one, or do you think you need to hit both those studies?

Well, that -- the open label one is really a safety study that's essentially a feeder for the randomized study. So it's -- to get the full accrual in the randomized study, we need to funnel patients through, if you will, the feeder studies. So we're really talking about full approval being driven by the randomized trial, which necessitates the feeder study.

Our next question comes from Brian Abrahams of Wells Fargo Securities.

I had a question for Hank on 701. Hank, you got good KOL feedback on the criteria for moving 701 forward from Phase II. I'm curious if you can maybe talk a little bit about any discussions you might have had with thought leaders post the Phase II data, to get their impressions on how they might want you to further elicit potential differentiation the next studies, such that they'd be convinced to use the agent. Is it all about MIP, or are there other differentiating features that they might want to see as well?

Well, like to see and are achievable -- I think the feedback post-call has been fairly consistent with the pre-call feedback which is, Pompe Disease is a myopathy. Respiratory impairment is one of the most profound abnormalities in patients with Pompe Disease across the entire spectrum of illness severity and length of the disease. And therefore, it's not surprise that a better glucosidase alpha shows up as having improvements in respiratory muscle strength. So I think if there's anything that they'd like to see that's sort of not -- that's sort of an extension of what we talked about when we first talked about the data are, it's helped us understand all the different ways in which the improvement of respiratory muscle strength might be clinically observable in terms of, for example, independence from continuous ventilation or improvement in sleep disorder breathing, or help us to understand the quality of life impairment that results from respiratory muscle weakness, or the validity of using maximum inspiratory pressure as a end point for registration trial. So I don't think there's been any kind of substance change -- substantive change since we've announced the data, but more of an elicitation of a yes, this makes sense biologically and now let's see how this applies in the most profound way to the population of patients who have Pompe Disease. Jean-Jacques Bienaimé: If I may add, we -- I think one of your competitors, we check with an opinion leader in New York. We said that if indeed in the [indiscernible] Phase III, we demonstrate that we improve MIP as compared to all other patients who were on Lumizyme, he would switch all his patients to our products. Ourselves, we are going to do some advisory boards in the coming weeks to actually confirm this with a larger number of KOLs. Shall we talk about it a bit, Jeff?

Yes. So we have some work ongoing, checking in with KOLs. We have a couple of mechanisms to do that. One is checking individually, and the other is in an advisory board setting. So we have a series of 2 advisory boards coming up in May and June, one focused principally on European physicians, one focused on U.S. and Latin American physicians. And the first advisory board is really going to get into some of the clinical trial aspects and feedback from the advisors on our clinical trial program. The second of those 2 series will focus more on some of the commercially relevant questions that we have, gain a better understanding of how physicians will evaluate their patients, and make a decision between different agents.

One more quick question, if I may. You've obviously moved quickly with the Vimizim, BLA and EMA filings. Just wondering if you could remind us of the status of the rest of world filings for the drug, where you stand relative to the plans that you laid out at your Analyst Day a few months ago.

Yes, I think we had said that we have a tiered approach that's driven, to some extent by the requirements for registration, as well as market size. I don't remember that we gave a very specific number of what the target for this year was. I think you think about that as a handful or so, and we are very much on track of meeting our submission expectations. I think that as J.J. said, and as I repeated in the prepared comments, we really moved through the U.S. and the European submissions, which were, by a very large factor, the largest submissions that BioMarin had ever undertaken. We're a pretty experienced submissions group. We've got health authority approvals in more in a couple of dozen countries around the world. And so, taking on something very much larger as we are with the Vimizim application, these guys just did a great job of it. So we're optimistic on the filing timeline front.

Our next question comes from Josh Schimmer of Lazard capital markets.

For the 111 program, would you expect to see an increase in alkaline phosphatase or collagen cross-linkers with therapy? If so, how soon might you see them after dosing, and did you see them in Phase I, and then maybe you can give some color on other early signals of activity you might be able to see in BMN-111.

I think its a reminder about achondroplasia, and it doesn't get enough necessary play related to the fact that its a little bit earlier in the pipeline. But the biology of this has been really pretty well elucidated in disease models in healthy animals, treated with BMN-111. We've seen biological responses to therapy in the form of, say, alkaline phosphatase as early as 3 months after the initiation of therapy. And we can see a widening of the growth plates on MRI in animals treated with BMN-111 in as early as one month. So we do expect to see biochemical and anatomical changes potentially fairly quickly. And that, like our other skeletal dysplasia programs in mucopolysaccharidosis is that's a little like the gags in MPS, where you get an actually fairly quick read on whether you're on track or not. And that I think is one of the things that makes the 111 program a very exciting program from a development perspective. On the bad news side, and there's bad news, and you don't get the efficacy and you do get the toxicity, and you now have to waste a lot of money. But what's happened for us more practically is, that on the good news side is that you start to see action even in advance of seeing the clinical outcomes happen. So thanks for the reminder about 111, it's a really exciting program.

Our next question comes from of Carol Werther of Summer Street.

So I was just wondering, are you thinking about having the same pricing for Naglazyme with Vimizim?

Yes, and so this is Jeff, I'll take a first swipe at that one and let J.J. fill in, if he has any further comments. We've guided previously that the price for Vimizim is expected to be between, at the low end, our annual pricing for Aldurazyme, Genzyme's annual pricing for Aldurazyme, which would be approximately $250,000 per patient, per year, and $400,000 per patient per year at the high-end of the equation, which would roughly equate to current Naglazyme pricing. So in general, Vimizim is an enzyme replacement therapy that treats a very small population of patients around the world. So that puts the Vimizim price into that kind of a ballpark range. We are currently assessing the benefits that can be expected to patients. Some of those answers we've seen from the MOR-004 study. We are looking at the other studies ongoing, 005, 006, 007 and 008, which have not yet completed, to see if they add anything else to the story. We're also considering the relative size of the patient populations and we're considering the global environment for introducing a new product. Recall that the last global product BioMarin introduced in price was in 2005. That was 8 years ago. And the last regional major product was 2007, that was Kuvan. So we haven't completed all of that work, but I think that we can define that range pretty well. Jean-Jacques Bienaimé: The only thing I'd like to add is that we will continue to do all we've announced, and we will communicate the price when the product is approved.

Okay. And then, if I could just follow up. Do you think there'll be a panel meeting in the U.S. and is there any reason not to get accelerated approval in the U.S.? Jean-Jacques Bienaimé: I mean as far as Hank elaborate, I mean, it's likely there will be a panel meeting, because that's kind of where the FDA's moving now, you have panel meetings most approval for new molecular entities. So I'll let Hank, see if he has another opinion.

That's right. On the one hand, that's where they're moving, and on the other hand they've been reviewing and approving things without panel decisions, also. And I think we're in the good situation of having hit statistical significance on our primary endpoint, so if there was some that was going to escape the panel, then it would be this. But if it -- if the FDA does pop-up and say they want to have an advisory committee, I wouldn't be surprised, either, because that's their norm. And as far as accelerated approval in the U.S., I mean that's a very specific term. And so, I think if you're asking, do we expect priority approval, priority review, which would be the mechanism that's relevant here, I think it's a reasonable expectation to have, given the rare disease urgent unmet medical need. But until they give you that designation, you don't have that designation.

And just one last question. Do you expect to have sales in the EU next year?

Oh, yes. This is Jeff. I can answer that question. We expect to have an approval in the EU, and to be able to launch early in 2014. The process of getting price and reimbursement approved in Europe is complex, market by market, and does take time. But the answer is, yes. We do expect to have sales generally in the EU next year.

Our next question comes from Kumar Raja of Citi.

This is Kumar Raja in for Yaron Werber. My question is, what are the next steps in development of Factor VIII gene therapy, and when can we expect it to enter the clinic?

Well, the next steps are the selection of a development candidate, and a development candidate in our case would be -- the elements of selecting a development candidate would be to select the specific gene construct, the specific promoter and there are some other sort of nuance technical aspects of the delivered gene therapy. I think we've been saying that we hope that -- to have our candidate in the clinic either at the end of '14 or at the beginning of '15. We're on track for that. But as to more specific updates, I think it's a little early to give.

At this time, I'd like to turn the call back over to Mr. Bienaimé for any closing remarks. Jean-Jacques Bienaimé: Thank you. So in summary, we are pleased with the steady growth of our commercial portfolio and the advancement of our pipeline, which is resulting in a value generation for the company. We are looking forward to many legal milestones in the coming year. In June at the ASCO meetings, we will be presenting data from our ongoing Phase I/II trial in solid tumors and initiate 8 Phase III trial likely in BRCA breast cancer by the end of the year. BMN-111 and BMN-190 are all moving to the next phase of development. We also look forward to a possible FDA approval feat for Vimizim by the end of the year. This will be a transformative event for the company. We have potential to double the revenues of BioMarin, and bring us to the next phase of growth and maturity. Thank you for your continued support and for joining us on today's call, and goodbye.

Thank you, sir. Ladies and gentlemen, that does conclude your program. You may disconnect your lines at this time. Have a great day.