BioMarin Pharmaceutical Inc. (BMRN) Q2 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the BioMarin Pharmaceutical Inc. Second Quarter 2014 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Traci McCarty. You may begin.

Thank you, operator. With me today from BioMarin's Management Team are J.J. Bienaimé, CEO; Dan Spiegelman, CFO; Hank Fuchs, CMO; Jeff Ajer, Chief Commercial Officer; and Robert Baffi, Executive Vice President of Technical Operations. To remind you, this nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, Inc., including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product 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 Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. Now I'd like to turn the call over to BioMarin's CEO, J.J. Bienaimé. Jean-Jacques Bienaimé: Thank you, Traci, and good afternoon, and thank you for joining us on today's call. So the second quarter of BioMarin's global teams continue to advance our commercial development and operational objectives for 2014. The commercial team provided VIMIZIM to an increasing number of patients with Morquio A Syndrome and drove significant revenue during the first quarter of sales since U.S. approval. We are extremely pleased with the strong U.S. launch, and continues steady progress of our commercial rollout in Europe. In the quarter, we saw the majority of U.S. clinical and EAP patients transition to commercial VIMIZIM and made substantial progress moving pricing and reimbursement submissions forward throughout Europe. We have now identified nearly 1,600 patients, which translates into potential annual revenues of over $600 million in revenues. We are confident that VIMIZIM will contribute to significantly to BioMarin, generating more than $1 billion in total revenues over the next 2 to 3 years. In addition to robust VIMIZIM uptake, we delivered another quarter of significant growth across our established commercial products. We achieved total BioMarin revenues growth of 44.1%, including 40.6% in year-over-year revenue growth of Naglazyme. Robust Naglazyme growth in the quarter was driven by both continued underlying patient demand and a large order from Latin America. Turning to Kuvan, we saw growth of 14.7% year-over-year, an important driver of our strong performance in the second quarter. We are seeing an increasing PKU patients taking Kuvan and growth in demand for both the powder and the tablet formulations, and we expect these trends continue. In summary, there is high demand for our commercial products, supporting our driving principle that BioMarin can have a large and sustained impact across the orphan drug market. Turning to development activities, we are progressing toward our next clinical milestone over the coming quarters. Across our pipeline are 7 new potential products. During the quarter, we dosed our first patients with BMN 701 in the Phase III INSPIRE trial for the treatment of late-onset Pompe disease. Our other 6 product candidates in the development portfolio continue to move forward, positioning BioMarin to a data rich 2015. Next year, we expect to have pivotal clinical data on 3 programs. PEG PAL for PKU, BMN 701 for late-onset Pompe's disease, and BMN 190 for Batten disease. In addition, we expect to have proof-of-concept data in patients for BMN 111 for achondroplasia to complete enrollment in 673, our PARP inhibitor and to file an IND to start clinical work in Sanfilippo B syndrome and our hemophilia A [indiscernible] program. You're going to get more details from Hank on that later. In addition to the great quarterly results, announced today, we are pleased to announce that we sold the rare pediatric disease priority review voucher, or PRV, that was secured in February distribute approval of VIMIZIM. This voucher which is fully transferable allows the holder to convert a standard FDA review into a priority review. In exchange for this voucher, we will receive $67.5 million from Regeneron, that's Regeneron Ireland, an indirect wholly-owned subsidiary of Regeneron Pharmaceuticals. This is not only a significant nondiluted source of capital but another example of how BioMarin can leverage its leading position in the orphan drug industry. Looking forward, based on the very good first half of the year and expected positive results in the second half of the year, we are raising our full year revenue guidance and also revising downward our R&D expenses or GAAP net loss -- and our known GAAP net loss for the full year 2014. Dan will now discuss these updates in more details, as well as our expectations for the remainder of 2014. Dan?

Thanks, J.J. Please refer to our press release issued earlier today for full quarterly results. We are pleased by our strong performance in the first half of 2014. I would like to review specifics of the quarter, expectations for the remainder of the year and the key factors driving the guidance revision for the remainder of the year. The second quarter won us particularly strong growth, with total BioMarin revenue of $191.7 million, an increase of 40.1% over the second quarter of 2013. This result was driven in part by VIMIZIM, recording over $14 million in revenues in its first full quarter of sales, plus double-digit growth in sales of all 3 of our other major products. In particular, a 40.6% increase in Naglazyme, 14.7% increase in Kuvan and 15.1% increase in Aldurazyme royalty revenue. The growth in Naglazyme revenues was driven in part by unusually large government orders from Latin America that are not expected to reoccur in the same size in the second half of the year. Nevertheless, we expect growth in total revenues to continue during the second half of the year compared to the first half, primarily due to continued market penetration of VIMIZIM in the U.S. and in other regions. We also expect continued growth of Kuvan revenues, as well as growth in the number of patients using Naglazyme. These positive long-term trends are expected to more than offset potentially lower sales of Naglazyme to governmental agencies in Latin America in the second half of the year. Based on these drivers, and also reflecting the revenue from the sale of our priority review voucher in Q3, as J.J. mentioned, we are pleased to be increasing our 2014 revenue guidance. Strong performance across our established core products, as well as the successful commercial launch of VIMIZIM and even before the PRV voucher, would have been the basis for us to raise total revenue guidance from the previous range of $650 million to $680 million to $680 million to $700 million. However, after taking into account the sale of the PRV voucher, our full year total revenue guidance is further increased to $745 million to $765 million for the year. In terms of the specific products, we are increasing Naglazyme net product revenue from the previous range of $290 million to $310 million, now to a higher range of $305 million to $320 million. For VIMIZIM, we are reiterating our full year guidance of $60 million to $70 million and believe that we will be at the high end of that range. Turning now to operating expenses. R&D expenses of $107.7 million in the second quarter increased about 25% compared to $85.7 million in the second quarter of 2013. This was primarily due to the timing of pivotal study starts. And consistent with our prior R&D guidance, we anticipate R&D expenses will continue to increase during the second half of the year compared to the first half as enrollment in BMN 701, 673, 190, 111 and our other programs continues to ramp up. Though we expect R&D expenses to continue to increase in the second half of the year, we are lowering our R&D expense guidance for the full year by almost 10% due to a combination of factors. Across all of our development programs, we have spent a little less than originally budgeted, and we have also held back on spending on some earlier stage preclinical programs. In addition, we had reserved funds from a more rapid ramp up of enrollment in our 3 pivotal studies than we have experienced. Very importantly, we remain on track to achieve our previously announced enrollment completion and data readout timelines for the candidates in the clinical development pipeline. Based on the these spending dynamics, we are revising our research and development expense guidance downward for the year from the prior range of $500 million to $530 million, to the lower range of $460 million to $480 million. In terms of SG&A expenses in the second quarter, they increased to $68.1 million compared to $50.7 million, driven primarily by increased VIMIZIM sales and marketing activities and increased noncash stock-based compensation. We are revising SG&A expenses upward for the full year of 2014, mainly due to a forecasted increase in these noncash long-term stock compensation expenses and to the ramp up of our ongoing commercial VIMIZIM launch activities in Europe and other regions. Our SG&A guidance will increase from the prior range of $265 million to $285 million, to $280 million to $295 million for the year. Turning to bottom line operating results, we reported non-GAAP net income of $10.8 million for the second quarter compared to non-GAAP breakeven in the second quarter of 2013. We believe non-GAAP net income or loss is the best measure of our operating results because it excludes noncash accounting expenses such as stock-based compensation, noncash interest expense and certain nonrecurring items. Note for the first half of the year, we reported non-GAAP net income of $9.1 million, indicating that operations for the first half of the year was slightly ahead of breakeven. In addition to our non-GAAP results, we also reported a GAAP net loss for the second quarter of $33.5 million versus a GAAP net loss of $21.5 million in the second quarter of 2013. The increased non-GAAP net income for the second quarter compared to the same period the prior year was primarily due to strong uptake of VIMIZIM in its first full quarter of commercial sales and significant growth, as previously discussed, in revenues from our other commercial products. GAAP net loss increased while non-GAAP net income also increased due to increased income tax expenses and interest expense, which are included in GAAP net loss, but excluded from non-GAAP measurements. Based on an expectation of increased revenues and reduced expenses, we are revising our non-GAAP net loss and the GAAP net loss guidance downward for the full year. We are lowering non-GAAP net loss guidance for the year from the prior range of $100 million to $130 million, to the lower range of $60 million to $80 million. We are also lowering GAAP net loss guidance for the year from the prior range of $255 million to $285 million, to the lower range now of $180 million to $195 million. Please note that the PRV voucher sale is not included in the non-GAAP guidance because of its not necessarily recurring nature, but does contribute approximately $50 million after-tax benefit to the GAAP loss guidance. As a final note, we ended the second quarter with cash, cash equivalents and investments of over $1.1 billion. Now I would like to turn the call over to Jeff, who will provide an update on our commercial program.

Thanks, Dan. We are extremely pleased with the pace of the VIMIZIM commercial launch, which is now in motion across major markets around the world. VIMIZIM sales totaled $14.3 million in Q2. Sales were recorded in 11 countries and reflect 132 patients on commercial therapy at the end of the second quarter. Last quarter, we reported initial sales in U.S., France and Argentina. To that list in the second quarter can be added Germany, Austria, Denmark, Saudi Arabia, Qatar, United Arab Emirates, Israel, Colombia and just this month, Italy. In the quarter, we were pleased to have received registration approval in Canada, our first international registration. In total, VIMIZIM commercialization is proceeding at the high end of our expectations. Accordingly, we remain confident that we can achieve the high end of our revenue guidance for full year sales of between $60 million and $70 million. In just 5 months since approval, U.S. market penetration has been rapid and expansive. The majority of early access and clinical trial patients have now been transitioned to commercial VIMIZIM. In addition, we have seen a steady rate of naïve patient referrals, many of whom have already transitioned to commercial therapy. To date, the market access landscape in the United States has proved to be generally favorable with no material surprises. For the remainder of the year, in the United States, we expect an incremental increase in existing and new patient referrals transitioning to commercial VIMIZIM. Turning now to the EU. We have made substantial progress launching VIMIZIM across this region since gaining approval in late April. As previously discussed, many markets require a formal price and reimbursement submission, and we are happy to report that this process is moving ahead as planned. We currently have numerous patients on commercial VIMIZIM across Europe, including a mix of both clinical trial patients transitioning and naïve patients. We expect continued uptake of commercial patients throughout the EU for the remainder of 2014, including from additional new markets. In other non-EU markets in our EUMEA region, we are seeing steady uptake of commercial VIMIZIM through named patient sales, and we expect continued strong growth in these markets. In Latin America, we are also making good progress through renamed patient sales and expect this trend to continue. Recall that in this region, there is typically a required start-up timeframe for patients to work through local approval processes. We are still waiting for marketing approval in Brazil but expect to receive the first commercial orders for VIMIZIM beginning in this quarter. Overall, the commercial launch of VIMIZIM has met the high end of our expectations, particularly the pace at which U.S. patients have transitioned to commercial therapy. The European launch is tracking to plan, and we have submitted pricing and reimbursement documents on our timeline. Outside of the U.S. and Europe, we have seen significant interest in and acceptance of VIMIZIM by patients and physicians, and we expect this trend to continue. Now turning to our base commercial products. Naglazyme revenue growth of 40.6% to $98.3 million in the quarter exceeded our expectations and was driven by a large order from Latin America, coupled with continued growth in numbers of patients on therapy. The upward revision of full year Naglazyme guidance reflects our expectation that new patient growth will continue along its current trajectory and will ultimately pace revenue growth for the year of 12% to 18%. Turning to Kuvan. Growth of 14.7% to revenue of $46.9 million in the quarter reflects expected seasonality compared to results in the first quarter. Growth in the number of commercial patients taking Kuvan was consistent with the increase in sales. New Kuvan business continues to benefit from steady levels of new patients being referred for a response trial and the positive impact of the field-based clinical coordinators that support patients for effective trials. Kuvan powder for oral solution, launched earlier this year, has proven to be a contributor to sales growth and will be a growth driver going forward. We remain bullish on Kuvan growth prospects throughout 2014 and are maintaining our previous full year guidance of $180 million to $200 million for the year. In closing, I'm very pleased with the level of demand we are seeing for VIMIZIM, both in the U.S. as well as in other regions. The commercial launch of VIMIZIM has met the high end of our expectations to date, and we look forward to continuing our commercial efforts in the U.S., EU and other international markets. The results we are seeing from the VIMIZIM launch and our overall quarterly results are testament to our broad and deep experience in bringing ultra-orphan drugs to patients. For the remainder of 2014, the commercial teams will focus on driving market penetration of VIMIZIM and substantially, all marketed regions, and continuing to deliver strong revenue growth across our other established products. Now I will turn the call over to Hank who will review the pipeline.

Thank you, Jeff. Overall, our clinical and research programs are progressing as planned, and we are on track to meet our previously announced enrollment and data readout timelines across our development portfolio. To remind you, we anticipate numerous clinical milestones over the coming 18 months, including data readouts on PEG PAL to treat phenylketonuria, BMN 701 for the treatment of late-onset Pompe disease; and BMN-190, to treat Batten disease. We expect proof-of-concept data for BMN 111 for the treatment of achondroplasia, and we expect enrollment completion of BMN 673, a talazoparib, for the treatment of BRCA, breast cancer, and the filing of 2 IND candidates, BMN 270 gene therapy to treat hemophilia A and BMN 250 for the treatment of Sanfilippo B syndrome. As you may have read in today's release, we announced that the World Health Organization has approved the international nonproprietary name, talazoparib, for BMN 673. The acceptance of the INN marks the continued evolution of talazoparib toward the goal of improving outcome of patients, with genetically defined cancer and marks an important milestone for BioMarin as we proceed along the path to regulatory approval of this product. Also in the second quarter, we are pleased to enroll our first patients in the pivotal study with BMN 701 for the treatment of late-onset Pompe's disease. As a reminder, patients in the study who have been previously treated with alglucosidase alfa, the primary endpoint is maximal expiratory pressure as we believe this is a direct measure of respiratory muscle strength and likely, an important indicator of 701's effectiveness in this setting. The study is being conducted using our new higher producer cell line selling and expect the study to complete in the first half of next year 2015. In closing, our development pipeline is unparalleled in the orphan drug industry. I believe our track record of developing and commercializing therapies to treat serious medical conditions is also unmatched. We are energized by the prospect of moving all of our development compounds forward, and look forward to keeping you apprised of our progress over the coming months. And with that, operator, we'd now like to turn the call over to you to open up the line for questions. Thank you.

[Operator Instructions] And the first question is from Navdeep Singh of Goldman Sachs.

So I'm just trying to better understand the underlying demand for VIMIZIM. If used in 132 patients around VIMIZIM for the entire quarter at about $95,000 a quarter, you get to about $12.5 million for the quarter, which is below the $14 million that you posted. So I'm just trying to get a better sense of underlying demand and trying to figure out if there was any one-time effects there. So any color on that would be helpful.

This is Jeff, I'll try to take that one on. So we've got patients that are adding and going on the therapy in the quarter. And in different places, the United States, European countries, Middle East and Latin America. And our general guidance on VIMIZIM and Naglazyme and Kuvan is there's very little channel stocking for these products. And so sales effectively reflect patient demand. But keep in mind that there are orders for product which may not exactly all come 1 week at a time. So for example, we might see, what, weekly or biweekly order patterns typically in the United States, but in some of the other markets, for example, Saudi Arabia and Qatar, we might see orders that reflect more than 1 or 2 weeks coming in for patients starting therapy. And then those orders proceed those patients being on therapy. So we might shift product and recognize revenue 1 week, and depending on where in the world the patient is, the patient might go on therapy several days to several weeks later. Also worth noting that patient size varies and the number of vials ordered to get those patients started in can vary too. Jean-Jacques Bienaimé: I mean, general comments. For all of our products, we do not go through whole sellers. They are distributed, all of those, to specialty pharmacies. There is no possible channels stocking.[ph]

That's very helpful, J.J. and Jeff. Just another question on your achondroplasia program. So I assume that you're currently dosing up that second dose of the dose escalation portion of the trial. Preclinically, do you think you can see an adequate efficacy signal in humans at the second dose? Or do you believe you're going to have to go up to the third dose? And then this is a small sub part to that question, do you expect to have any achondroplasia data ready by the R&D Day in December?

Hank here. So yes, we're at the second dose level. This is the dose level based, preclinically, that we do expect to see some signs of growth, but, of course, until we treat humans and follow them long term, we don't know how much growth. And I do expect that we will go to the third dose level. I think that's a reasonable expectation to have. And no, I don't expect that we'll have updated growth data at R&D Day. Jean-Jacques Bienaimé: And if we go to the third dose, it's not only for efficacy reasons, but I mean, if it's a second dose, it's shown to be safe enough. Why not go after the third dose? So my point is that, the second we go to third dose, if we do, it's not a reflection on the lack of efficacy in the second dose.

And the next question is from Phil Nadeau with Cowen and Company.

My first one's on the R&D guidance cut. In your prepared remarks, Dan, you mentioned that there was money set aside for fast enrollment but the enrollment's on pace, but you don't need to spend the money. Could you go through that again? How was -- I guess how are you enrolling patients at the same pace but with less money?

Well, I mean, the -- as the trials always enroll very back-ended. And when we model these things, we have a model for how many patients are going to be in it any time. We can be off a little bit in terms of the number of front end patients we get, and hence, the spending this year is a little off, but it's not material enough to affect when we think we're going to finish the study.

I got it. Okay. And then... Jean-Jacques Bienaimé: Also, if I may add also a general comment. When we make projections on budgets on cost of clinical studies, they're estimates. And it's not always easy to get the estimates very accurate as compared to actuals even with respect [ph] enrollment rate.

Okay. And then second question, and it's related to one of the earlier ones on VIMIZIM. The average price per patient guidance that you gave us at the time of the launch or before launch, there were certain assumptions about the weight of the patients and compliance. Do you have any sense for how -- weight and compliance are trending early in the launch? Are they In line with what you incorporated in your guidance? Or either of those factors also going somewhat better than you had initially assumed? Jean-Jacques Bienaimé: I think we can comment on the patient weight dimension, which is going right along with what we expected when we provided initial guidance. It's too early to tell about compliance rates. It'll take us several quarters to be able to see and collect some data and make some comments or conclusions about that.

Okay. And then one last question on VIMIZIM. What are the next countries that are likely to come online? You listed a lot that came online up until now. What are the next ones that you're -- where you think you'll start to see sales?

Well, we mentioned in the script that we have not yet received a registration in Brazil, but we are expecting some orders to come through for first patients on a named patient basis this year, so that would be one material market I would expect to come online. Jean-Jacques Bienaimé: And also, another point on the VIMIZIM launch, I don't see we've made before. So in addition to whatever quantitative results we're getting in terms of patients treated and all [ph] that, we are doing marketing research to get some feedback -- qualitative feedback from our customers as to how the patients are reacting to VIMIZIM. And that feedback has been very positive so far. I think Jeff [indiscernible] color [indiscernible]?

The drug is perceived by our prescribers and the physicians that participated in the clinical trials to be very effective. That's had an impact on the robustness of the initial demand for the product and reinforces our confidence in both the near-term prospects and also the long-term commercial prospects for VIMIZIM.

And the next question is from Cory Kasimov of JPMorgan. Cory William Kasimov - JP Morgan Chase & Co, Research Division: So first question is on VIMIZIM launch as well, and it sounds like you've had a lot of early success converting patients to commercial product in the U.S. Wondering how you expect this process to be similar or different than the rest of the world? And I have one follow-up.

Okay. So yes, we've been really pleasantly surprised -- not surprised, but pleased with the progress of uptake in the United States, both with the clinical trial and the EAP patient transitions, which have moved right along and with the pace of naive patients coming on board. Outside of the United States, as you now, the timelines are a little bit different and the timelines are driven by 2 major factors: the first is registration in those markets where we require registration; and the second is negotiating price and reimbursement approvals. So the U.S., I think we all have an expectation, would be the more rapid market. The other markets are going to be coming on individually and gated by those registration and price and reimbursement factors as noted. That would be for both naive and clinical trial patient transition generally. And we may had mentioned of the markets that we are so far through the gate on for commercial orders, and we're expecting more to follow. Cory William Kasimov - JP Morgan Chase & Co, Research Division: Okay, great. And then the follow-on is more of a bigger picture strategic question. Just curious what you do with $1 billion of cash. Jean-Jacques Bienaimé: Well, let me -- I would give you the financial perspective and I will come back on this.

Yes, I mean, as you know, we're continuing to drive our portfolio forward. We expect to incur some losses over the next several years until we get to sort of a $1 billion and above in revenues. We're also investing a portion of the capital into building out our manufacturing plant and the bulk of it is in reserve. Jean-Jacques Bienaimé: Yes, and I will say we are nearing, in 2 to 3 years, we should have $1 billion or so in revenue, so I think $1 billion of cash. We don't believe its excessive. Although we want to have some reserve in addition to the fact that we are likely to utilize some cash this year or next year to be able to move fast in case we see some significant opportunities that are right priced or set of opportunities in the orphan disease field and also the gene therapy field. As you know, we're getting involved in gene therapy. But as you know, we've had this $1 billion of cash now for over 7 or 8 months. It's obviously not burning our pocket.

The next question is from Andrew Peters of UBS.

I was just wondering, last quarter, you gave some very helpful detail in terms of number of patients in the BPPS and number of patients prescribed in Latin America. So I was wondering if you are going to be providing those numbers again? Or if you can provide those numbers again? And then, I just have a follow-up on the PAR program. Regarding the recent announcement with the Sarah Cannon Research Institute and kind of the enrollment there, is that a result of slower enrollment as expected? Or had that been planned ahead of time? And it's just kind of more of a global rollout?

Yes, this is Dan. I'll take the first question. During the course of this year, we're going to be providing some information and sort of in-detail on the launch as we did last quarter, but transitioning to where everybody ends up, which is giving revenue guidance. You can already see in the first quarter, you start to get into little -- people started getting confused about disconnects on 132 patients and 13 million in notes and those types of things. So the guidance we gave this quarter, which is number of patients, number of identified VIMIZIM potential patients, Morquio A patients and revenues is what we will do for the remainder of the year. And by the time we get to the end of the year and going forward, we'll just be doing revenues.

On the rollout question on talazoparib, in some cases, we'll go to Europe first and the U.S. will follow. In other cases, we'll go to the U.S. first and Europe will follow. This is the case where we plan to go to the U.S. first and Europe coming online shortly thereafter, so this was part of the planned rollout.

This question is from Yaron Werber of Citi.

So I just had a question. The -- one question in VIMIZIM and one question about hemophilia. And so on VIMIZIM, you've diagnosed already over 1,600 patients, which is honestly very impressive. And it sounds like it's been up 100 or so over last quarter. And you're almost kind of tracking at about 100 a quarter, so I'm just trying to understand the diagnosis. Where are the patients? And I don't know if you can help us understand within the next year or 2, what percentage of those do you think you can get to, I guess, over next 2 years? And then secondly on hemophilia, you've now commented that it's going the AAV 8 vector. I wanted to know if it's a modified vector. And if not, did you get a license from somebody for the vector itself?

Jeff here. I'll field the first question. Yes, we're really pleased to have the number of identified patients around the world up now to 1,600. Actually, that hasn't moved for several quarters from our figure of 1,500, and so that's kind of a slower rate of increase relative to the prior couple of years. I think the reason for that is we've been really focused on and very busy launching VIMIZIM, which is a related but slightly different activity than trying to find new patients. As we guided at R&D Day late last year, our expectation is that once we get past the acute launch phase, we'll be continuing to do patient identification activities. Our people are out there. We'll continue to keep turning over new patients at the rate that we've seen over the last couple of years. That's our expectations going forward. In terms of getting to all of those patients there's a lot of markets around the world, and we're selling in 50 markets presently with all our products. So we try to give a little bit of guidance as to when those 50 markets are coming along. We've got a registration now in the U.S., EU, Canada, certain other markets we can get into without a registration or prior to a registration on an invasive basis, and many of them are now gated by the pace of our international registrations, which you will hear about on a quarterly basis. Jean-Jacques Bienaimé: And one thing to add on this before I let Hank answer the question on hemophilia. It's also -- based on what we are observing, we're pretty confident that there are at least 2,000 MPS IV A patients. We will be able to find at least 2,000 and maybe up to 3,000, so it's somewhere in between. So this is -- so if we find 2,000 patients, that will be close to $800 million of business. So this is starting to be a pretty significant product.

And then on the hemophilia project, I don't believe we've disclosed the serotype of the transfecting capsid. Maybe there's some confusion because it's hemophilia A factor VIII, but we haven't said what the capsid serotype is. And we've -- other than the original licensing deal that we've undertaken that we announced with UCLA, [ph] there have been no additional material licenses that we've entered into. And as a reminder, that original license pertained to the expression cassette. So maybe a little bit of confusion out there, apologies. Factor VIII is the protein and the capsid serotype has not been identified.

And can I -- do you mind if I just follow? So back in your R&D Day you mentioned, you identified about 1,400 and it was bout -- I guess it was up 200 from a year before that. But I guess what I'm trying to key into was 1,400 going to 1,500, going to 1,600 for the diagnosis, right? It is going up, I mean, fairly substantially over the last 6 months. Jean-Jacques Bienaimé: Yes, it is still on steady pace. But however, as Jeff said, we are not focusing on finding new patients. And in fact we do find new patients, but that's not the primary area of focus of our representatives right now. Their focused on getting the identified patients on commercial therapy.

Well, and we have expressed that some of the patients that are on therapy were not in that identified group. We even have a few -- but you're right, Yaron, it's been about 100 new identified every couple of quarters for a little while now. Jean-Jacques Bienaimé: That's why we're pretty confident we will find at least 2,000.

The next question is from Lee Kalowski of Crédit Suisse. Lee Kalowski - Crédit Suisse AG, Research Division: Question on the VIMIZIM launch. You had said that you were seeing some conversion of expanded access and such to commercial in Q2. There would also be some additional country launches, obviously. So I guess as we think about the Q3 patient adds and obviously, we're now midway through the quarter, I'm wondering if you can comment or give us some sense of the pace of adds that we might think about in Q3 relative to what we saw in Q2 ending with 132?

Yes, so we'll report next quarter, obviously, on the number of patients at the end of this quarter. We have a revenue guidance that we're reinforcing to be at the high end of $60 million to $70 million. And I guess, qualitatively, I would add to that statement, that the U.S. launch went really fast, and we penetrated really fast and really well that patient population. We're going to have more new growth from the United States going forward, but that's going to slow down. It has to. And Europe is in process and it's a bigger pool ultimately but it will be coming along steadily and probably a little slowly relative to the U.S. launch. Jean-Jacques Bienaimé: But again, at the same time, we -- Daniel, we're tracking to the upper end of the guidance, and we just told you that we have more and more countries where patients are being treated. And we have named patient sales in France and Italy and Germany. Germany's not quite a named patient but we have -- without having an official price in any European country yet, we are starting to generate some significant sales in these countries. And same for Latin America, same for the Middle East. Lee Kalowski - Crédit Suisse AG, Research Division: Okay. And quick question on BMN 701. I think in the past, you had said that we could see data next year. I didn't see that in the press release as far as events, as for as the data release. I'm wondering if you can confirm if that would -- if the expectations are for something around second half '15?

Yes, that's right. Apologies. Good catch. Enrollment completion Phase II/III trial for BMN 701 for the treatment of Pompe's disease first half of the year, it's a 6-month trial, so that data should be -- we have included this data in the next 18 months. So good catch.

And the next question is from Tim Lugo with William Blair. Tim Lugo - William Blair & Company L.L.C., Research Division: I guess the question for Hank. We saw some VEGF and PI3K combo data that looked interesting with PARP inhibitors at ASCO. I just wanted to get your updated thoughts on potential combos for 673. And maybe looking at partners for accessing some other combo -- I guess, combo products.

Yes, so we've started -- the National Cancer Institute, I should say, has started an investigator-sponsored trial in combination with temozolomide and patients with Ewing's sarcoma. That's very interesting because we -- that's an area where we're seeing very strong synergy. And similarly, University of California in Los Angeles has started a combination with temozolomide or irinotecan in 2 different cohorts. And so those are some of the -- let's call them lower tech combo of talazoparib. And as to the more novel model types of combinations, we haven't announced any initiation there, but we're keen to -- we follow that data as well and we're keen to explore and exploit potential synergies of talazoparib in other emerging cancer therapies. Tim Lugo - William Blair & Company L.L.C., Research Division: That's good to hear. Are you also looking at small cell in pancreatic or any additional tumor types?

Well, there's -- in BRCA, other tumors, there is ongoing recruitment. And I think it's a little too early to say what our plan in nonbreast BRCA is. And beyond the BRCA -- germline BRCA, we do have a plan to initiate trial activity, hopefully, towards the back end of this year in patients who are not BRCA-mutant, but who are potentially sensitive to talazoparib by virtue of molecular signatures. And I'd say stay tuned to this channel for more details as that rolls out.

Next question is from Robyn Karnauskas of Deutsche Bank.

This is Evan on for Robin. A question on Naglazyme. I noticed that there was a significant increase quarter-over-quarter from $80 million to about $98.3 million. You said the majority of this is driven by late order in Latin America. How much as a percent was actually driven by Latin America, just so we can understand kind of what's going to happen in the next quarter and the quarter after?

Yes, so we don't give that sort of individual specifics, but I think we've given you everything else, which is if you have the first half actuals and we've given you the full year guidance. Jean-Jacques Bienaimé: I mean, this is not the first time it's happened. I mean, since we've launched this product, we've had a lot of variability quarter-to-quarter because Latin America, mainly Brazil, so it's another -- a few other countries do order in a lumpy way. But there is growth in patients -- underlying growth in patients, real growth, for Naglazyme. So the increase is not just due to the order, there is underlying growth in patients.

And when you take out the quarter-to-quarter variability and if you look at our guidance for 2014 Naglazyme sales, sort of which gets that lumpiness out, and you compare it to 2013, we'll be between 12% and 18% growth in a product that's in its, I think, ninth year on the market.

Great. And then one more about VIMIZIM. In terms of reimbursement in Europe, what's the progress on some of the more permanent agreements with the governments, in Germany, France, and even in the U.K.?

Yes. So previously, we've guided a little bit to the process on this, and we've also guided that if the full reimbursement process takes between 6 months in some of the more rapid countries to what we expect could be a couple of years in the U.K. We've also announced this quarter that we've seen initial commercial sales into some of those countries. So those would be in the countries that either don't require a robust price and reimbursement process like Denmark, or countries like Germany, Italy and France that have a mechanism for selling while we're going through the full reimbursement process. Also, we guided that all of our submissions that needed to be into these various countries are in, they're in process. And I think the best indicator for you to follow along on that will be the quarterly reported sales and when we report sales in the new countries.

So no more color as to when we'd see sales in the U.K.?

Well, we've submitted, and we're in process. And when we get through the gates, we're going to report that to you. Jean-Jacques Bienaimé: But you know that the U.K. is not the fastest country in Europe to price new drugs.

Of course, but there's no early access program that we're seeing?

Correct, so far.

The next question is from Brian Abrahams of Wells Fargo.

This is Shin calling in for Brian. In terms of extrapolating VIMIZIM uptake in the U.S., I was wondering how reliable IMS data is. According to IMS, June -- month-to-month growth dropped from 100% plus in the prior months to about 13%. I was wondering if this is a trend that you guys are observing on the ground and whether we should be thinking about this as we model out rest of the year. And maybe a follow-up on -- a question on pricing in Germany. By my calculation, it looks like the launch price of VIMIZIM is on par with that of the U.S. price or even slightly higher. Where do you think the price will eventually settle in a year when you get the final negotiated price? Is it going to be significantly higher, lower or somewhere in between?

Okay. So this is Jeff. I'll try to take those in pieces. We've guided that the U.S. uptake has been rapid and expansive, and frankly, above our initial expectations. And that we've got additional naïve patients that are continuing to get referred into our system and make their way onto commercial therapy, and that we expect that trend to continue. So the curve in the United States, you should draw conclusions from those remarks is pointing up. I would not... Jean-Jacques Bienaimé: I meant data for products distributed to specialty pharmacies is relatively unreliable, so...

Yes, we wouldn't advise using that. Jean-Jacques Bienaimé: Yes, you wouldn't [indiscernible] want to [indiscernible] .

And then we have guided that generally, our pricing in the EU after expected discounts, that we expect we'll have to give through the whole pricing reimbursement process is expected to be on a par with our announced U.S. pricing, which also will be subject to discounts to the government. And so yes, I think you are correct in concluding that the pricing in Germany is and will be on a par with what we get in the United States.

The next question is from Kim Lee of Janney Capital.

Just a brief one on VIMIZIM. Can you delineate how many patients on drug now in the U.S. versus ex-U.S.? And then a second question on BMN 190. When do you expect data from that program?

So Jeff here. No, we're not splitting up the numbers of patients on commercial therapy between U.S. and ex-U.S. And on BMN 190, we expect enrollment completion by the end of this year and 1-year follow up and hence, results the end of 2015.

Okay. And then as far as the patients on VIMIZIM, I mean, it's safe to say that the majority are in the U.S.? Or can you give any clarity on that?

Yes, qualitatively, should follow along from the remarks that the majority presently are in the United States. Jean-Jacques Bienaimé: But that will change over time because the U.S. market is only 15% of the world market. So we are probably peaking in terms of the share of the U.S. for world sales right now.

The next question is from Michael Yee of RBC Capital Markets.

2 questions for Hank. On the achondroplasia, the data is not that far around the corner. You've kind of gotten over sort of some of the numbers and some of the clinical meaningfulness as to what you're looking for based on natural history. But I mean, do we -- should we fully expect then is it powered for statistical significance? Do we need to see that? And since we're going right into humans here, we're trying to convert from animals, can you dose higher than the cohorts that you have already outlined if it doesn't hit what we need as a backup? And then, a similar question firing off on Batten's. You're enrolling patients and our understanding is that these patients can progress pretty quickly. So although I wouldn't expect much of a placebo effect there. What are you really looking for there to get excited?

Yes. So the 8 patients per cohort has ample resolution ability to see the targeted doubling or more of growth velocity. Assuming that the variants of growth is what we expect it to be, based on the natural history studies that we have done and others have published. And yes, we would be interested to go to higher doses, and we do have the ability to evolve the protocol based on safety at lower doses to go to higher doses. Of course, we're not there yet. And again, we're guiding towards the middle of next year to see 6 months data for the 15-microgram dose. And in terms of what we're looking for in Batten's disease, the patients that are being entered into the clinical trial are at the beginning of the steep portion of their decline in neurological function as evidenced by language and motor ability, talking and walking. And I think what we'd expect to see is stabilization of brain disease. I mean, it would be great to see reversal of brain disease, but I think that's maybe a too high expectation to set. And rather, I think if we can prevent patients from losing further function, that would be a very large clinical benefit for people.

The next question is from Ian Somaiya of Nomura.

I'm sure we're running out of VIMIZIM questions, but I want to try at least and get one I there. And I was really hoping to get maybe a feel for a sense for what the patient benefit is in the real world versus what you saw in the clinical trial setting? And maybe how much -- get a sense for how much of that is driving the uptake?

Well, so the clinical trials and the benefits that have been reported from the clinical trials drive our expectation of what patients will see in the real word, largely because the patients in the clinical trial are very representative -- or in the collection of clinical trials are very representative of what the real world is for Morquio A. The investigators and early treaters that we've talked to so far, as J.J. mentioned, we've done market research, those physicians have reported back that their experience so far is very consistent with what was seen in the clinical trials. That's our expectation. Probably early in the commercial experience to have deep comments now. Maybe a year or so from now, we will regroup and take that question on.

And just as a follow up, I know you've touched upon this from the prior questions. But as you think about the overall market size, the question, really, that I have is, do you think you can get to that peak number a lot quicker now, based on some of the initial experience? And I'm just not referring to the U.S. where, I guess, the expectations should have been for rapid adoption. But just kind of initial market experience you're gaining outside the U.S.

Yes, so as J.J. says, we've got -- we're very pleased with the number of patients that have been identified and continue to be identified. That really determines the market potential, which is growing. We have a great deal of confidence in the long-term prospects for this drug. We're getting great uptake so far. And to get to those long-term numbers, we're going to have to get into 50 or so markets again, which will take a little time. And we're expecting this process will take something like 4 to 5 years, which reinforces quicker than it took for us to get that deeply penetrated into the global MPS VI market.

The next question is from Liana Moussatos of Wedbush Securities.

Out of the 132 patients at the end of Q2, how many were from clinical trials and how many were naïve?

We haven't really disclosed that number. I would say it's a mix. We've gotten good conversion of clinical trial patients in places like the United States and early other markets where we can, and we've gotten also really great up -- early uptake for patients that are naïve to treatment. So it's a mix, really.

Would you say it's 50-50?

I wouldn't go beyond that qualitative statement.

And the next question is from Stephen Willey of Stifel. Stephen D. Willey - Stifel, Nicolaus & Company, Incorporated, Research Division: I'm probably going to hit you with a couple of nitpicky VIMIZIM questions as well. But -- so I just wanted to clarify that when you say 132 patients on commercial product, that also includes patients who are part of the NPT [ph] program?

What do you mean patient? Jean-Jacques Bienaimé: You mean named patients? Stephen D. Willey - Stifel, Nicolaus & Company, Incorporated, Research Division: Yes, correct. Jean-Jacques Bienaimé: Yes. Because again, in U.S., I mean, ex-U.S., we're basically only selling on named patient basis so far. Stephen D. Willey - Stifel, Nicolaus & Company, Incorporated, Research Division: Understood. And then when you characterize kind of the rate of uptake in the U.S. as kind of being aggressive, is that aggressiveness in terms of patients on commercial product? Or is that the aggressiveness in terms of patients going into BPSS (sic) [BPPS]? So I'm just trying to get ideas to whether or not there's maybe still a bolus of U.S. patients who are kind of sitting in BPSS (sic) [BPPS] at the moment who have kind of not yet hit the model?

So the answer is both. In the United States, to get on the commercial therapy, you need to come into our BPPS case management hub and it takes awhile for patients to make it through and on the commercial therapy. For some patients that's literally a week or so and other patients can take several months. And so we do have a pool of patients that are being case managed. And as we mentioned in our prepared remarks, we're expecting both more naïve patient referrals into BPPS, and during the course of this year, more of those patients getting out of BPPS and on the commercial therapy.

And there are no further questions at this time. I'd like to turn the conference back over to Mr. Bienaimé for closing remarks. Jean-Jacques Bienaimé: Thank you. As I summarize where we stand. So clearly, our BioMarin revenue delivers very strong growth in the quarter, increasing 40% compared to the second quarter of last year. And combined with a $67.5 million of revenue from the sale of the priority review voucher to Regeneron, we now expect total BioMarin revenue of $745 million to $765 million for the full year. So between now and end of the year, we expect to have pivotal clinical data on 3 programs -- outside the end of next year, next year, sorry. PEG PAL for PKU, 701 for Pompeii and 190 for Batten's disease. So in addition, we have -- we anticipate to have proof-of-concept data in patients for BMN-111 for achondroplasia and to complete the enrollment in our talazoparib Phase III trial and to file the IND and start clinical work in Sanfilippo B and our hemophilia A gene therapy program. So we will have 7 new molecular entity in the clinic next year. We're extremely pleased with the pace of the U.S. launch of VIMIZIM as we discussed, and we expect the EU launch to be just as strong. We believe that VIMIZIM will contribute to BioMarin generating more than $1 billion in revenues -- in total revenues over the next 2 to 3 years, which will be driving us towards profitability -- operating profitability and beyond. So thank you, again, for your continued support. And for joining us on today's call, and goodbye.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.