BioMarin Pharmaceutical Inc. (BMRN) Q2 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

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division Cory William Kasimov - JP Morgan Chase & Co, Research Division Navdeep Singh - Goldman Sachs Group Inc., Research Division Joseph P. Schwartz - Leerink Swann LLC, Research Division Jonathan M. Aschoff - Brean Capital LLC, Research Division Matthew Harrison - UBS Investment Bank, Research Division Andrew Goldsmith Ying Huang - Barclays Capital, Research Division Yaron Werber - Citigroup Inc, Research Division Tim Lugo - William Blair & Company L.L.C., Research Division Shin Kang - Wells Fargo Securities, LLC, Research Division Charmaine Chan - RBC Capital Markets, LLC, Research Division Kimberly Lee - Janney Montgomery Scott LLC, Research Division Lee Kalowski - Crédit Suisse AG, Research Division Joshua Schimmer - Lazard Capital Markets LLC, Research Division Nicholas Bishop - Cowen and Company, LLC, Research Division

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

Thank you. On the call today is J.J. Bienaimé, BioMarin's CEO; Dan Spiegelman, CFO; Hank Fuchs, Chief Medical Officer; Jeff Ajer, Chief Commercial Officer; and Robert Baffi, Executive Vice President of Technical Operations. 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 program, 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, and thank you for joining us on today's call. In the second quarter, we continued to make progress as we head into the second half of the year. Our commercial business continued to perform well, with double-digit growth in product sales for all our products, the 3 products that we commercialized and the royalties we earned from Genzyme for Aldurazyme. In addition, we remain focused on executing on our development goals and advancing our pipeline programs, all leading up to the potential approval and launch of Vimizim in the first quarter of next year. I am pleased with the company's momentum, particularly with the pace at which we are developing first-in-class or best-in-class therapies and with the pace at which we are building our markets for our existing products portfolio. Starting with the commercial business. All 4 products contributed to the 10% year-over-year increase in our total revenues. This stated rate of growth continues to strengthen the foundation of the company and helps fund the development of our R&D programs. In addition, our commercial presence spans over 40 countries worldwide and is highly leverageable for several pipeline programs, including Vimizim and PEG-PAL. As for the development side, we continued to invest in our pipeline to generate value for both the company and our shareholders, and we are working toward delivering life-altering treatments for patients suffering from rare genetic diseases worldwide. By yearend, in addition to prosecuting approved applications for Vimizim, we will have 5 other programs in clinical development, including 3 programs in Phase III trials. During the quarter, we have made good progress on the Vimizim regulatory front globally. We received priority review status from the FDA and a PDUFA date of February 28, 2014. The EMA has validated the Vimizim MAA and has granted accelerated the review status, which could lead to a CHMP opinion before the end of the year. And during Q2, we also submitted a marketing application in Brazil for Vimizim. In terms of other highlights for the second quarter, we initiated the Phase III PEG-PAL trial for PKU. We also presented interim data for the Phase I/II trial for our PARP inhibitor BMN-673 at the Annual ASCO Meeting. And based on this encouraging data, we announced our plan to initiate a Phase III trial in BRCA breast cancer patients, which we now expect to do in the current quarter. Since ASCO, the data on 673 has continued to improve, and Hank will have some more recent data to share on this ongoing study a little later. In addition to maturing and improving data from our ongoing BRCA breast study, based on the increasing response rates we are seeing and the growing interest from key opinion leaders in earlier use as an alternative to chemotherapy, we are now exploring the possibility of a neoadjuvant study. This is a testament to the potential of PARP inhibitors as frontline therapy and also bodes well for the commercial opportunity of 673. Of the approximate 225,000 newly diagnosed breast cancer cases in -- each year in the U.S. alone, roughly 5% to 8% or 12,000 to 18,000 cases are germline BRCA mutated. So being able to use BMN-673 as frontline therapy in breast cancer patients represents a larger market opportunity than originally anticipated, though it is still orphan. We have many important milestones ahead this year, including Phase III trial initiations for BMN-701 for Pompe disease and BMN-673 for BRCA breast cancer, all leading up to an expected FDA approval of Vimizim in February of next year. Next, Dan Spiegelman will review the financials for the second quarter; Jeff Ajer, who will then provide more detail on our commercial portfolio; and Hank Fuchs, will provide an update on our R&D programs before we open the call for questions. And 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 second quarter and first half of the year, and I refer you to that release for the full details. Following are some key highlights. Revenues of our existing commercial products continued to grow nicely, with a 10.3% increase in total revenue in the second quarter of 2013 compared to the second quarter of 2012. This result was driven by double-digit growth in sales of all 3 of our major products: an 11.1% increase in Naglazyme net product revenue; a 17.9% increase in Kuvan net product revenue; and a 15.2% increase in Aldurazyme royalty revenue. As we've discussed previously, Aldurazyme net product revenue recorded, which was $17.5 million in the quarter, consists of both Aldurazyme revenue royalty, the royalty earned on Genzyme's product sales of Aldurazyme in the quarter, and net product transfer revenues, which was a negative $3.7 million in the quarter. This negative product transfer revenue was due to differences in the timing of our product shipments to Genzyme and their ultimate sale to patients, and it's not reflective of product demand, which is best measured by the royalty revenue we earn. One measure of the total growth and demand for our products is to look at total revenues excluding these net product transfer revenues, which increased by 16.5% this quarter year-over-year. For the first 6 months of the year, total revenues excluding the effects of Aldurazyme product transfer revenue increased 11.2% for an annualized rate of over 20%. Based on these growth rates, we remain on track for our full year revenue guidance of between $530 million and $550 million. Operating expenses for the quarter were in line with our prior guidance and consistent with the growth in our product portfolio and commercial operations. Though revenues in the second quarter grew faster than expenses, resulting in a GAAP net loss of $21.5 million versus a loss of $32 million in the second quarter of 2012. Non-GAAP adjusted EBITDA, which we believe reflects the best measure of our operating results because it excludes major noncash expenses, such as stock compensation, as well as extraordinary items, was breakeven for the quarter. Consistent with our breakeven adjusted EBITDA quarter, our cash balance was essentially unchanged from the prior quarter. And we ended the second quarter with cash, cash equivalents and short- and long-term investments of $524.4 million. Turning now to guidance for the full year of 2013. We are reaffirming our revenue and R&D spend guidance for the year, but bringing down slightly our projected SG&A expenses and consequently, reducing our full year projected net loss. As previously noted, we are reaffirming our revenue guidance. Similarly, R&D expense guidance is unchanged, but we expect R&D expenses to accelerate substantially in the second half of the year as multiple Phase III programs start to ramp up. Our PEG-PAL Phase III, initiated in the second quarter, will be in full swing for the second half of the year. In addition, our 673 Phase III is ramping up and, as J.J. mentioned, is expected to start at the end of the third quarter. The 701 Phase III is planning for a yearend start and, as Hank will describe in more detail, we've already been producing material for that study. Finally, we are getting ready to initiate studies in our achondroplasia and Batten disease programs as well. All of these study starts lead to a projected R&D spending increase in half 2 2013, contributing to full year guidance of between $340 million and $380 million from a first-half actual of $169.4 million. On the SG&A side, preparation for Vimizim launch continues, which leads to some limited hiring and additional marketing spend in the second half of the year. However, we are lowering our SG&A guidance from $220 million to $250 million for the full year slightly to $220 million to $240 million. Similarly, we are improving guidance for our full year loss by $10 million, dropping the range from $170 million to $195 million down to $160 million to $185 million. And there was a corresponding improvement in adjusted EBITDA, a measure of operating performance, to a loss of between $40 million and $65 million. Now I would like to turn the call over to Jeff, who will provide an update on our commercial program.

Thanks, Dan. Starting with Naglazyme, Q2 2013 sales of $69.9 million increased 11.1% over Q2 2012 sales and sales in the first half of 2013 are at 5.9% over sales in the first half of 2012. These figures are roughly in line with growth of the underlying business defined as patients on Naglazyme. We believe that this growth rate is sustainable, driven by a base of patients that are doing well on Naglazyme and a high level of disease awareness that results to new patients being diagnosed and referred for therapy each quarter. Later this year, we look forward to the resurvey study, which is a 10-year follow-up from the original MPS VI survey study. This long-term follow-up will contribute valuable information regarding the natural history of MPS VI, including the impact of Naglazyme ERT. A poster will be presented at the International Congress of Inborn Errors Of Metabolism, ICIEM, Meeting and publication in a peer-reviewed journal will follow. Moving on to Aldurazyme. Sales continue to grow at healthy rates. Total sales reported by Genzyme in the second quarter of 2013 increased 17% over the prior quarter -- prior-year quarter. As for Kuvan, sales of $40.9 million in the second quarter 2013 increased by 17.9% over the prior-year quarter. The underlying driver of Kuvan growth is new patients on therapy, although revenue growth exceeded patient growth. Primary reason for this is that new patients are predominantly adult patients, relative to the existing base of patients. Because Kuvan is based on weight, growth from the adult patients segment has a slightly higher impact on sales than on the actual number of patients. There are several potentially material positive forces for our Kuvan business going forward, one of which is the PKU-016 ASCEND study. Study results evaluating neuropsychiatric outcomes will be presented that the ICIEM Meeting and will be submitted for publication in a peer-reviewed journal. Turning now to Vimizim. Patient mapping efforts continue. The numbers are increasing slowly and steadily, largely as a result of new patients being recorded by our current customer base of geneticists and metabolic specialists. Morquio A patients identified to date number well over 1,300. We expect patient identification to continue between now and launch. We've made quite an effort and will continue to expand our reach to new call points, mainly skeletal dysplasia specialists and orthopedists. This is and will continue to pay off with additional incremental increases. Other launch preparations continue. We are planning to launch in the U.S. and EU in Q1 2014, but will be ready to launch in the U.S. in late Q4 of 2013 in case the action date moves up. The U.S. early access program is active, with a small number of patients enrolled. We have applied for the French and Italian early access programs, and if approved, we could start generating our first commercial revenues in one or both of these countries in the fourth quarter of this year. As for upcoming meetings, an international Morquio expert meeting will take place later this month in Amsterdam, with a smaller follow-up meeting to take place the following month in Barcelona tied to ICIEM. The objective of these 2 meetings is to facilitate the development and publication of expert treatment guidelines for Morquio, which could be published shortly following the initial launches. Now I will turn the call over to Hank Fuchs, who will review the pipeline.

Thanks, Jeff. Starting with Vimizim for MPS IVA, we made great strides in the regulatory front during the second quarter. We received priority review status from the FDA, with a PDUFA date set for February 28, 2014. The FDA appears to be fully engaged with reviews and inspections underway. The advisory committee meeting date has not yet been set, but we expect it to be sometime this year. During the quarter, we also received validation of the Vimizim MAA, Market Authorization Application, from the European Medicines Agency with the potential CHMP opinion in November or December 2013 if we remain on the accelerated review status. We also recently submitted a marketing application in Brazil, an important milestone in the worldwide regulatory process, especially as Brazil, along with the United States, are expected to be the largest market opportunities for Vimizim. Adequate quantities of Vimizim had been produced and are available to support initial launch. Ongoing production of both drug substance and drug product will allow for a robust global launch quickly following approvals in multiple countries. Adequate manufacturing capacity exists to support Vimizim, Naglazyme and Aldurazyme in our currently licensed facility. Significant progress is being made in preparation of our Shanbally facility to add additional capacity to augment our production capabilities and to initially license the facility for product testing and release. Both the FDA and EMA have conducted or scheduled preapproval inspections associated with the review of the marketing applications. Based on the feedback to date from agencies, we believe that the inspections and review are going well and should not negatively impact the timing of the approval decisions. Moving on to BMN-673 for genetically defined cancers. As of July 24, the RECIST response rate from the ongoing trial is 9 out of 18 breast cancer patients or 50%, including 1 confirmed complete response. This response rate includes confirmation of the 3 responses presented at the last ASCO Meeting, and 2 new additional patients who are yet to be confirmed. 4 patients are ongoing with stable disease and with the potential for additional responses. The study is still ongoing, and the company will provide additional updates later this year, including data on ovarian cancer, Ewing's sarcoma and small cell lung cancer. BioMarin now expects to initiate a Phase III trial for BMN-673 in deleterious germline BRCA mutation metastatic breast cancer in late third quarter of 2013, earlier than previously announced at the ASCO Annual Meeting in early June. We are encouraged by a few program developments since the ASCO Meeting in early June. We have completed discussions with regulatory authorities with the following favorable outcomes: we've confirmed progression-free survival can serve as the primary endpoint in the Phase III trial; we've confirmed use in early line patients; and we've confirmed that we can make a direct comparison to chemotherapy to support registration. Based on this and other positive interactions with opinion leaders, we are exploring the possibility of a neoadjuvant study. As we announced today, we are very pleased by the support of the National Breast Cancer Coalition, led by its well-regarded President, Fran Visco. The National Breast Cancer Coalition has indicated they will partner with BioMarin on trial enrollment initiatives globally and serve as a resource on study design, implementation and execution. We're excited to work with this world-class health organization in the execution of our Phase III program. Relevant medical meetings to note for the PARP inhibitor program include the San Antonio Breast Cancer Symposium in December and possibly the European Society of Medical Oncology Meeting in late September in Amsterdam. Now turning to BMN-111 for achondroplasia. As announced today, we are modifying our clinical program based on a request from the Food and Drug Administration for more pharmacokinetic and safety data in children. The FDA acknowledges that we have identified a range of doses that are relatively well-tolerated short-term. It has now requested additional pharmacokinetic and safety data in children with achondroplasia before proceeding to extended dosing in children. The FDA has placed the program on partial clinical hold. We will work with the appropriate health authorities on the implications for the program. We anticipate that we will initiate the clinical study in patients with achondroplasia in Q4 '13 or Q1 '14. Despite this minor delay, we are very much committed to this program and eager to proceed to the next phase of development. As for the remainder of our pipeline, all programs are advancing to the next stage of development and generating value for the company. We initiated the Phase III PEG-PAL trial for phenylketonuria in the second quarter. Enrollment is progressing well, and we expect to report top line data in the fourth quarter of 2014. We plan to initiate the Phase I/II trial for BMN-190 for Batten disease in the current quarter and the Phase II/III trial for BMN-701 for Pompe disease in the fourth quarter of this year. The meeting with regulatory authorities on the planned endpoints of maximum inspiratory and expiratory pressure will occur in the coming months. We've completed a full-scale production campaign using our new higher producing cell line and process. We have verified the expected 5 full higher production yields. Characterization testing is currently ongoing, and it is expected that regulatory filings to support the introduction of this material into clinical studies will be submitted in the fourth quarter of 2013. We are planning our next Research and Development Day for September 17th in New York. Please note that this date is subject to change based on Vimizim regulatory meeting dates, which are yet to be determined. And with that, operator, we would now like to open the call for questions.

[Operator Instructions] Our first question comes from Chris Raymond of Robert W. Baird. Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: Hank, I wonder if you could provide a little bit more color on FDA's reason for the clinical -- partial clinical hold for 111. Was there something that they saw that was new? Was there just a change of direction or change of mindset by the agency? Any more color you could provide would be great.

Chris, pleased to take your call first. The -- as far as the FDA's reasoning, we have not had an opportunity to meet with them. We've gone back over the notes of the meetings that we've had in quite a bit of detail. We covered this topic with them at a pre-IND meeting, at which time, they verified that if data from the healthy volunteer study indicated safety that it would be okay to proceed to a repeat dose, extended dose study in achondroplastic children. In the present communication, they indicate that we've identified that safe dose and they've made their request for additional PK and safety data in achondroplastic children. So I can't say that I know precisely what's on their mind, and that's why I look forward to meeting with them and with the ex-U.S. health authorities to discuss the program, at which time, we'll have a lot better clarity about what steps to take forward. I think it's important to recognize that what we're saying -- what I'm saying here is that there isn't a new issue or a problem with the achondroplasia program. It's just that we're working through an interaction with the U.S. health authority to determine the next steps of the program. Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: So this is data that you'll need to generate, correct?

Well, that's what we want to understand in our interactions with both the U.S. health authority, as well as ex-U.S. health authorities.

Our next question comes from Cory Kasimov of JPMorgan. Cory William Kasimov - JP Morgan Chase & Co, Research Division: I wanted to ask about 673. The 2 new unconfirmed partial responses that you're reporting today, were those patients that were previously among the 4 with stable disease as of your ASCO presentation? I guess, I'm wondering whether those stable disease patients are indeed turning into responders.

We have 4 ongoing now, so I don't know the full -- I can't -- I don't have it in my fingertips, Cory, the full accounting. What I can tell you is, we have 9 ongoing partial responses, including 1 complete. 7 of which have confirmed, 2 of which are awaiting confirmation. And there are 4 ongoing patients who are headed in the right direction, I should add. And so we're presently sitting at 50%, and the study is continuing. Hope that's helpful.

Our next question comes from Navdeep Singh of Goldman Sachs.

I just want to gauge your confidence on how comfortable you are that the FDA will remove the partial clinical hold on the achondroplasia program. And then I have a quick follow-up.

Well, as I said, the -- we have the minutes, which I've basically gone through with you. From their interactions, it doesn't give any more insight precisely than what I've given you just now. And the mechanism for interacting with them is to have a meeting, and they take it -- there's some time that's required to take that meeting, and I won't know more until we have that meeting. So unfortunately, I can't give you more insight about that. What I can tell you is that we've made plans all along to conduct the study globally, and we'll also be very transparent with health authorities outside the United States, of course. But we don't know that health authorities outside the United States have the same recommendation for additional safety and PK data in children before proceeding to extended dosing. So the best I can offer at this point is stay tuned. We believe that we can start back into patients in the fourth quarter or shortly thereafter. And we'll know more after we've interacted with health authorities. Jean-Jacques Bienaimé: If I may add, Navdeep, there is no new data or new information that would've resulted in the FDA changing their mind here. None. And so, it's not they they don't want us to move in patients, they just -- I mean, pediatric patients. Remember, this is a drug for children. I think it's just that they want us to do -- to go a bit more slowly and do something with our pharmacokinetic dynamics in children before, as Hank said, we move to longer-term therapy in children. But they have no issues with us doing the next step in achondroplastic patients.

Okay. And just a quick follow-up. Any updates on discussions with the FDA or the EMA on MIP as the primary endpoint for the switching study for BMN-701?

We're just undertaking those now. I think we indicated that the regulatory interactions would be kind of in 2 phases. The first phase would be to discuss our plans for introducing the new process material. The second phase would be the clinical interactions around the support of the registration enabling trial. We're feeling good about the requirements for bridging and are on schedule on that basis to begin the trial at the end of the year, but we are not to a point of talking about health authority feedback on the primary endpoint of the registration enabling program. And we'll keep you posted as that unfolds.

Our next question comes from Joseph Schwartz of Leerink Swann.

I wanted to actually to follow up on BMN-701 and make sure I understand your logistics exactly regarding the new cell line material. Since I think in the press release, you said that you would introduce this material into clinical studies in the fourth quarter. So are you planning on only using the new material in the trial and no bridging of any sort?

Yes, that's right, Joe. So bridging that I referenced in my previous answer would be preclinical toxicology testing of a relatively concise sort, that would support the introduction of what amounts to the IIb commercialized product process in the pivotal trial from the beginning. Again, remember, our strategy all along has been that we want to avoid major changes in the production of the product, either during or after the Phase III trial. That, as you know, has been tried before and can be very complicated, especially in this setting. So the goal all along has been to introduce the IIb commercialized product in the Phase III clinical trial and use it and only it through that trial, and we're on track for that plan.

Okay. And then BMN-111 showed some acute blood pressure effects in the Phase I studies for adults, if I recall. Wouldn't it be logical to think that, that might be something the FDA might be focused on? And if so, do you think they might just be wanting to ensure that it's no greater in kids?

It's a reasonable speculation. As I said, what they said to us was, "You have identified a safe dose." I think, as J.J. said, I think the -- a reasonable interpretation is, they just want us to go slow in pediatric patients. The important emphasis point is there's no barrier to going into pediatric achondroplastic patients. And as to the specifics of how to proceed next in the United States, that awaits further conversation with them.

Our next question comes from Matthew Harrison of UBS.

I wanted to ask about the PARP and your potential neoadjuvant study that you're looking at. Some other people -- obviously, Roche has recently filed for their neoadjuvant indication, some other people are potentially looking at accelerated approval there. I wonder if you could maybe comment on what kind of study you might be thinking about and sort of what kind of -- if you -- if we could think about accelerated approvals as a potential study there. And then, I guess, the other question is, what's the comparator or what do we know about BRCA patients in a neoadjuvant setting.

Yes, well, as you might know, Dr. Pastor [ph] had written a piece in the New England Journal of Medicine, making a call for companies to place more emphasis on approaches to the neoadjuvant treatment of breast cancer in the spirit of trying to keep the cancer confined to the breast because, as you know, breast cancer doesn't kill if it stays in the breast. It only is a killer when it travels outside the breast. So his -- that was his medical and scientific motivation and his platform was New England Journal of Medicine. And he has since held a couple of roundtable conferences in which he has indicated that the FDA would consider registration, accelerated approval on the basis of an endpoint that could be relatively readily obtained called the pathological complete response rate. And I think in the main, the world has been thinking about that as an add-on kind of design approach. What's been interesting about our development of 673 and the communications that we've had with both the FDA and the European Medicine Agency is that they see the tremendous opportunity that targeting with an oral and relatively well-tolerated drug represents for a segment of the population where we could be viewed as an alternative to chemotherapy. So I -- without having had the -- without having designed the program and without having had the conversation with the health authority, our anticipation is that we could envision this as a trial in which 673 is evaluated as monotherapy, as an alternative to chemotherapy. Whether that needs a control arm at what the expected BRCA response rate to standard chemotherapy is, I think is yet to be fully fleshed out. But the key messages, I think, are the tremendous response activity that we're seeing in late-line patients. The great and uniform reception that we're getting from health authorities about 673 is that we're a well tolerated oral alternative to chemotherapy as a single agent. And opinion leader mounting enthusiasm for moving 673 into an even earlier setting points to the opportunity of making even greater medical impact with 673 than we were planning, even as recently as several months ago.

And anything you can say what we should think about more information around timing or how we should think about when you could start such a study?

No. Beyond -- the initial focus right now is the Phase III clinical trial and launching. And as I said, we're moving that up a quarter. I think the health authority conversations went great. The physician investigator enthusiasm for the program has been great. There are a number of clinical trial sites that are moving heaven and earth. They're in basically in a race with each other to be the first on the press release announcing this, the start of the 673 program. The National Breast Cancer Coalitions, they don't -- the National Breast Cancer Coalition has a strong initiative and interest in participating in the research process. They're very selective about what projects they'll work on, and we really appreciate the fact that there are about 3,000 research-trained advocates all over the world prepared to facilitate the investigation of potentially breakthrough therapies in cancer. And so that's keeping us pretty busy, and we'll work on the design of the neoadjuvant program as quickly as we can. Jean-Jacques Bienaimé: So we'll probably provide you with an update on this -- or the R&D date in September.

Our next question comes from Salveen Richter of Canaccord.

This is Andrew on the line for Salveen. My question is also on 673 and just to gather indications, if you can give us any kind of sense of how those are enrolling and then if we can get that data at the R&D day or at ESMO or San Antonio.

Yes, they are enrolling in Ewings and small cell. I don't have an update for you today nor do I have a timetable to set in terms of when to expect an initial report of activity. I'd -- What I mentioned on the call was relevant medical conferences could be ESMO, could be San Antonio. More specific than that, I can't give you right now.

Our next question comes from Ying Huang of Barclays.

So first of all, I want to drill down a little bit on the BMN-673 data here. Hank, can you remind us what is the response rate from the patients who were actually treated at the 1-milligram dose, which is the dose you guys have taken forward for Phase III here?

Oh, Ying, I don't have that breakdown right at the tip of my tongue. As you know, we treated, I think it's 12 of the 18 patients at the expansion dose cohort, and so that's where the preponderance of data are. And I just can't give you that further breakdown.

And then I have a follow up on BMN-111 here. So in the Phase I healthy adult trial, have you seen anything that -- a DLT, dose limiting tox, or anything that could be suspicious?

I'm sorry, for BMN-111?

Yes, in healthy adult volunteers in Phase I. What kind of side effects have you observed?

Yes. So what we've observed is generally asymptomatic orthostatic hypotension. And we've identified doses below which that doesn't occur. Those are expected pharmacologic effects of BMN-111. We haven't seen any side effects that are not cardiovascular related. And as I've said, the FDA, in their letter to us, agree that we have identified a safe and well-tolerated dose. So that's all the information that we've already reported essentially.

And, Hank, was that dose dependent in Phase I?

Yes. There were doses above which you observed mild generally asymptomatic orthostatic hypotension, and then there were doses below which you did not observe it.

Our next question comes from Yaron Werber of Citi.

I have a question about Batten Disease, and I'm just kind of curious. It's a broader question, a little bit about orphan drug pass to market. I mean, there's this one other company in the phase, not competing with you, but is talking about potentially getting the FDA to agree on a surrogate marker by which they can get approved to the market very quickly. And it's sort of -- it's a part of the new FDA, so to speak. I'm just kind of wondering because... Jean-Jacques Bienaimé: He is a Director?

I'm not going to comment. The -- you know where I'm going with this. The question is, is there a venue by which FDA will accept, let's say, a situation where you give an enzyme and you lower the metabolite in a very well-known biochemical reaction in the body, that there's no question of it going to be due to the enzyme that you're giving, is that going to be acceptable in any way, the surrogate marker, without having clinical data?

It's hard to comment on the context of our 190 program because there isn't a similar biological marker that's -- substrated PTP I is not precisely identified. What I would say about PTP I is that the health authorities that we've interacted in general have been unbelievably receptive to expediting development of BMN-190 for Battens Disease. And in lieu of clinical data, I could see a pathway wherein they accept radiographic evidence of improvement or preservation of brain function. That's a little different than a well-described biochemical marker in the pathway. But it is, I think, indicative of when surrogates are reasonably likely to predict severe clinical outcomes in serious diseases, health authorities around the world have been pretty facile in mobilizing approvals, and I think Battens Disease is an excellent example of when that might be expected.

So a path to market could be what? Kind of a Phase I/II dose escalation that rolls into a treatment phase with the potential of some kind of an MRI endpoint?

Yes, we call that our Phase I/II/III study.

Our next question comes from Tim Lugo of William Blair. Tim Lugo - William Blair & Company L.L.C., Research Division: A question for 673, you mentioned both agencies signed off on PFS as an endpoint. Were there any discrepancies in maybe what either agency was looking for in terms of magnitude of benefit in PFS?

No, the -- both agencies do the computations and they both note that essentially, you're -- we're making the assumption -- that we're making the assumption that this profile -- the safety profile of PARP inhibitors is substantially different than the safety profile of chemotherapeutic agents in common use. And I think that if that assumption holds true, then it's not unreasonable to expect that plain old superiority without much consideration of the magnitude of that superiority will carry the day. I can be -- I'm very confident that a large fraction of clinicians, given the choice in patients, given the choice between a more effective oral PARP inhibitor that is safer than a chemotherapeutic will not be asking how much more effective before they make their decision to take the oral well-tolerated PARP inhibitor. Tim Lugo - William Blair & Company L.L.C., Research Division: That makes sense. And can you confirm the blinding of the trial?

Could it be done through independent radiologic review of the primary endpoint, which is standard in all regions of the world. This is not an uncommon -- this is a very common element of comparative clinical trials in oncology medicine today. And so the methodology for independent facility review is well described and well accepted, and we're going to just do what everybody else has been doing in that regard.

Our next question comes from Brian Abrahams of Wells Fargo.

This is Shin calling in for Brian. If the FDA agrees to the MEP/MIP endpoint for 4701, do you plan or do you expect to be required to include the 6-minute walk test as a secondary endpoint to support the primary endpoint? And how important do you think it would be for the study to hit on the 6-minute walk test endpoint as a secondary endpoint?

Well, first of all, that discussion hasn't happened yet, so it's a little difficult to speculate on what they might or might not say. I would remind you that from a design perspective, we're going to take patients who are stable on Myozyme or Lumizyme and then switch them to 673. So our expectation is that there will be essentially 0 change on the 6-minute walk test because we don't believe that improving delivery of the enzymes to the muscle is actually what limits the ability to improve the 6-minute walk test. Rather our belief is that where improved delivery matters is in respiratory muscle strength, and our expectation is that the improvement in respiratory muscle strength will show up as an improvement in those tests. So the conversation with the Food and Drug Administration is going to be not so much around, "Well, what can you do just as good in?" It's going to be around, "Isn't it desirable to offer patients an alternative to an existing therapy that offers you a better outcome in a dimension that ultimately causes your demise, day to day causes a substantial amount of disability, which is incompletely satisfied with current therapy, which is why your pressures are stable on Myozyme and Lumizyme and which can get better with the new drug and can get better to a degree that makes people feel and function better." And I think that conversation -- that's just the kind of thing that health authorities want to see when it comes to new drug development. And what I'm hopeful of is that the conversation gets into the "okay, how do you dot your Is and cross your Ts about showing that?"

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

This is Charmaine in for Michael. My question is on the NPP application that you put in for France and Italy. When do you expect to hear an update relative to the CHMP decision? And secondly, if I may, can you speak to the concordance of pricing for orphan drugs in Europe for an indication like yours?

This is Jeff. I'll take that one. So our applications for APU and 648 early access program in France and Italy, respectively, went in, in June. We expect to get a response back from both of those markets in the early fourth quarter. And anticipating a positive response, we could be treating patients and recording initial revenues in either or both of those markets in the fourth quarter. So I think that the fact -- with respect to timing, we have the application filed in the EU. It allows us to file in each in France and Italy. So I don't think that there is a direct correlation now with the registration timing going forward. In terms of pricing these types of products in the EU, there is well-established pricing for products in the EU. We've given guidance that we expect Vimizim to be priced in the range between Aldurazyme and Naglazyme. More recently, we've guided that we think that the Vimizim pricing will be in the higher end of that range, probably closer to Naglazyme than to Aldurazyme. And so I'm wondering if there is anything additional on pricing that I'm missing for you here.

No. It's just that with NPP, you probably have had a price in France and Italy, and most companies usually start with German pricing. So just the difference there and whether -- how that would translate to your -- right...

So each of those prices, if approved, will not constitute a formal and referenceable price for the discussions that we will have with pricing authorities following registration. However, they -- either or both of them will be a price in fact. And if not official, we think it will be a relevant comparator for when we submit our pricing application. So you won't be surprised to hear that we're very interested in obtaining a price that we think will be in line with what we want to commercially price this product at post registration.

Our next question comes from Kimberly Lee of Janney Capital.

Just a quick one. Can you go over exactly what you think the design for BMN-673, the Phase III design, would look like besides the primary endpoint of PFS that you've already stated? How many patients do you think you will need in the study and what could be the possible secondary endpoint?

Yes, so the design of the pivotal registration enabling trial, obviously, to be finalized now that we've included health authority interactions with the criticaltrials.gov soon to get it exactly. But a thumbnail of it is it's a randomized controlled trial, the sample size is approximately 430 pa- women will be -- patients will be randomized to receive, randomized 2:1 to receive either BMN-673 or a physician's choice of chemotherapy consisting of gemcitabine, vinorelbine, reglan [ph] and -- or capecitabine. Patients will be eligible if they've had no more than 2 prior cycles of chemotherapy in the metastatic setting. We will work hard to try to get as many patients who are being treated for the very first time in the metastatic setting. Patients will have -- had to have had a prior anthracycline or taxane-containing regimen, presumably that will have occurred in the adjuvant setting. As you mentioned, PFS is the primary endpoint. Secondary endpoints will include objective response rate and overall survival. Additionally, we'll look at patient well-being as reported by a standard well-being battery questionnaire.

Our next question comes from Lee Kalowski of Crédit Suisse. Lee Kalowski - Crédit Suisse AG, Research Division: Maybe a bigger picture R&D question for you, Hank. As I look at the listed upcoming milestones, through the next data release that you've listed in Q4 '14 for PEG-PAL, I understand that we'll have some 673 data at San Antonio or maybe ESMO. Is there anything else we should be looking at or should be thinking about as far as potential data releases between now and Q4 '14, whether it's anything from 111 if things go well with that progressing, or 190 or anything else we should be thinking about before then?

Well, I think in our release, we detailed the upcoming milestones. I think those are the ones that we pulled out in terms of where we expect major new clinical data. But obviously, the #1, #2 and #3 value-creating milestones on the radar screen between now and the end of '14 is going to be the Vimizim regulatory actions on a worldwide basis. I mean, I think the R&D engine of the company has been very much focused on getting that thing across the finish line. As I said in my prepared comments, we're working very closely, very hard. First and foremost, with health authorities around the world. We have our U.S. application underway. We have our European application underway. We submitted in Brazil. We have an aggressive schedule this year, enrolling in the next year for applications worldwide. I'd say the continuing current data updates on how that's going are going to be the real R&D driving updates between now and '14.

Okay, so you would think -- so most likely not for -- anything on 111 or 190 or other sort of more modest updates?

Well, 111 at this point, as I said, is going to be the start of the clinical trial and finalizing the design. I think your question was in the data frame. And 190 is going to be the start of the trial. I don't anticipate that. It depends in terms of how fast that goes. By the way, interest in the Battens Disease trial amongst the Battens Disease community is phenomenal. We've pre-identified almost the entire cohort to enroll. And so that will really be more startup study kinds of things.

Our next question comes from Josh Schimmer of Lazard Capital Markets.

I guess just a quick question on BMN-111. What was the rationale in the first place for not having done PKPD or safety studies in kids before going into that population? And I mean, I guess, in retrospect, is that something obvious that should've been considered?

Well, it wasn't that we were not going to do PKPD in kids in the first place. The strategy -- and, again, we discussed this pretty extensively with the U.S. health authority in advance was to do very detailed assessment in adults and then move to more abbreviated assessments in achondroplastic children as part of an efficacy study. And what they've asked us to do is to provide more PK data than what was in the protocol that we had originally agreed to them with. The strategy was -- that we have discussed with them initially was how to expedite getting to the real definitive readout because the expected sort of pharmacological effect on the cardiovascular system can only be judged in terms of what risk it presents in the context of what impact this has on normalization of the dysmorphic syndrome. So -- and all of that was discussed in advance. And as I've said before, what is different between then and now awaits our more detailed discussion with them because the FDA's report back to us is we asked you to do this, you did this, we found the safe dose. And although we had agreed to progressing with the second study, we now want you to do a different second study. So we just have to meet with them and find out what's on the [indiscernible] in a bit greater detail. And we have to meet with ex-U.S. health authorities and be transparent with them on the one hand, but on the other hand, review with them what the original plan was and why we still think that's an appropriate plan.

Have they asked for, specifically at this point, any other modification other than taking what you're going to do as part of Phase III and doing it independently now ahead of the rest of that multi-dose trial? Or you haven't specified that?

It's only been as -- it's only been awarded as additional safety and pharmacokinetic data on the short term in children before proceeding to the longer-term study.

Our next question comes from Nicholas Bishop of Cowen and Company.

Just a quick one on 673. Can you comment on the number of the responding patients that remain in response, and give me a quantification of median duration of response?

I can't actually, I don't have that data suite. But what I'd say is, having anticipated this question, is it remains too early, that is to say there are a lot of patients that are still ongoing with treatment to quantify duration of response or PFS, still ongoing. So that's not -- that's actually not new compared to ASCO other than it's 2 months later. Kind of what is new compared to ASCO is that our response rate is now at the 50% number, that's due to be confirmed, and we're really excited about that.

Right. But at ASCO, a couple other patients had responded and progressed already, so I guess I'm just wondering were there any more patients that responded to have subsequently progressed?

Well, that's the interesting thing. There were 3, at ASCO, of the 7 that had either been confirmed or were awaiting confirmation. We were 3 for 3. So those first 2 who we responded and didn't confirm are now the minority of the response happenings at ASCO. We didn't know whether that was going to be the rule or the exception. Right now, it's looking like the exception. Not an uncommon finding or expectation, I should mention. Those occur during the dose escalation phase. And if you can -- if you -- I'm sure you can imagine that those escalation Phase I trials are difficult trials to do, and therefore, often recruit the sickest and most eager to get experimental therapy patients. So it's fairly common for the response outcomes of the early escalation portion of a trial to include patients who are at very advanced stage and very aggressive stage of disease. And actually, if you think about it, where we are really is that we have these 9 responders [Audio Gap] That 11 out of 18 is not only more impressive, but potentially more relevant to what's going to happen in the earlier line patients. So we've been relatively conservative to report the confirmed and ongoing numbers. But you're right to point out that there have been responders of shorter duration. But those responders are patients of a much more advanced disease.

Our next question comes from Chris Raymond of Robert W. Baird. Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: Just another one on 673 and more of a strategic question. I know you guys have talked in the past about a variety of options to commercialize this molecule, including potentially partnering it or doing something else. A question now with the neoadjuvant opportunity, this appears -- even though it's still orphan to be a bigger population more of a mainstream oncology product. Can you maybe update your thoughts on where things stand on your decision making there? Jean-Jacques Bienaimé: Chris, J.J. here. I mean, that's a good question. I would say, I mean, neoadjuvant, I think I'd say we're talking about 15,000, 18,000 patients in the U.S. That's almost all orphaned, so that's definitely something we could do. But we do believe that 673 can actually potentially be infective in many other tumors. And that's where -- and also in combination therapy. And I would say this is where the partnering questions become or will be more relevant. So I would say, as long as we're dealing in BRCA breast, whether it's -- whatever lies in therapy or whether it's neoadjuvant or further down the road, we believe we can definitely drive the development of the product there and likely commercialize it in the U.S. I mean, ex U.S., ex Europe is a very relevant question. I would say it's unlikely we're going to deal with an oncology organization, a commercial organization in the Asia-Pacific. So we're just thinking about it right now, but there is absolutely no urgency for us to do that.

And at this time that, I'd like to turn the call over to Mr. Bienaime for any closing remarks. Jean-Jacques Bienaimé: So in summary, I think we're pleased with the steady growth of our commercial portfolio of products and the advancement of our pipeline, which is resulting in significant value generation for the company and its shareholders. The PEG-PAL Phase III trial is progressing well, and we will initiate Phase III trial for 701 and our PARP inhibitor in cancer by the end of the year, actually, hopefully, this quarter for 673. So we are looking forward to possible FDA approval and European approval of -- by the first quarter of next year, which will be a transformative event for the company. And with the potential to double the revenues of BioMarin and bring us to the next phase of growth and maturity. So thank you for your continued support and for joining us in today's call, and goodbye.

Thank you, sir, and thank you, ladies and gentlemen, for your participation. That does conclude the program. You may disconnect your lines at this time. Have a great day.