BioMarin Pharmaceutical Inc. (BMRN) Q1 2015 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the BioMarin Pharmaceutical conference call to discuss first quarter 2015 financial results. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Traci McCarty, Senior Director Investor Relations at BioMarin. Please go ahead, ma'am.

Thank you, Sayeed. On the line today from BioMarin are Jean-Jacques Bienaime, Chief Executive Officer; Dan Spiegelman, Chief Financial Officer; Hank Fuchs, Chief Medical Officer; 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, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially, depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. Now I would like to turn the call over to BioMarin's CEO, J.J. Bienaime.

Thank you, Traci, and good afternoon, and thank you for joining us on today's call. So we start 2015 having already completed one of our key goals, which is the filing for approval of drisapersen in the U.S. And we are preparing to execute a number of other significant value drivers over the coming quarters. On the operational side in the quarter, we delivered $203 million in total BioMarin revenue, representing 34% growth year-over-year. This accomplishment was driven primarily by the continued strong global launch of our most recently approved commercial product, VIMIZIM, for the treatment of MPS IVA. Today, and for the third time, since it was approved a year ago, we increased full year VIMIZIM guidance. Japanese team are doing an outstanding job launching VIMIZIM around the world, and this achievement speaks to BioMarin's established global commercial footprint and leadership developing and commercializing orphan drugs. Turning to regulatory catalysts in 2015 as we previously communicated, the last module of the rolling NDA for drisapersen was submitted a few days ago. To remind you, drisapersen is for the treatment of approximately 13% of the Duchenne muscular dystrophy patient population that may be amenable to exon 51 skipping. The anticipated next steps are acceptance of the filing by the FDA and, thereafter, we expect an advisory committee meeting in the second half of this year. We're energized by the prospect of potentially bringing the first approved therapy in the U.S. to boys with Duchenne muscular dystrophy. We believe the totality of the data suggest that drisapersen has a very clinically meaningful long-term effect, sustained over 3 years. And I just want to remind you also that drisapersen is the only DMD product in development that has received Breakthrough Therapy designation from the FDA. Hank's team is now focused on the submission this summer of the marketing authorization application for approval of drisapersen in Europe. And with the near-term approval of drisapersen, we believe that we could reach profitability on a non-GAAP basis in 2017 and to actually further our substantial profitability in the years after that. Another highly anticipated milestone this year will be the results from the first 3 cohorts of the Phase II proof-of-concept study of BMN 111, for the treatment of achondroplasia. We plan to release this data before the end of June, and we remain on track for meeting that milestone. Additionally, later in the year, we look forward to sharing full data results from the ongoing Phase I/II study of cerliponase alfa for the treatment of CLN2 disorder, a form of Batten disease, and we continue to be encouraged that this study could support registration, and we will keep you apprised as material development becomes available. And finally, we did file a CTA in Europe for our first gene therapy product for hemophilia A and as done, we'll describe more fully, we're increasing full year guidance for VIMIZIM revenue and total BioMarin revenues in 2015. Given the strength of the VIMIZIM launch and the steady progress of our other 4 products, we are well positioned to continue to grow the base business, while executing a variety of value-creating clinical, regulatory and commercial milestones just described. So in conclusion, with this introduction, we begin 2015 with a strong balance sheet, a portfolio of 5 marketed products and a pipeline of 10 clinical and preclinical programs from which we expect significant value creation over the coming quarters. With the complete rolling NDA now submitted for the U.S. approval of drisapersen, and shortly thereafter, submission of the MAA in the EU this summer, BioMarin is poised for substantial growth upon near-term approval. Achievement of these milestones will be transformational to the company and, more importantly, to the patients who rely upon us to develop products where there is no approved treatment options like Duchenne muscular dystrophy, achondroplasia and CLN2 disorder respectively. We feel fortunate to have the opportunity to serve our patients, and we look forward to keeping you and them apprised of important clinical and regulatory events over the coming quarters. Now we'll turn it over to Jeff, who will discuss progress of our commercial products in the past quarter. Jeff?

Thanks, J.J. In the first quarter, we continued to make good progress moving VIMIZIM into new commercial markets as well as leading additional patients on the therapy. VIMIZIM revenue in the first quarter was $50.6 million or 37% higher than revenue of $36.9 million in the fourth quarter of last year. Growth in the quarter was driven by strong sales in Latin America and our EMEA region. We expect continued growth as VIMIZIM becomes an established brand globally, and we remain very bullish on the growth trajectory expected this year. As J.J. mentioned, based on these expectations, we are increasing full year VIMIZIM guidance to between $200 million to $220 million. Sales of VIMIZIM were recorded in 26 countries at the end of the first quarter. In addition, we are very pleased to share that in Q2, the first 2 patients in Japan have received commercial VIMIZIM, an exciting accomplishment in the second largest pharmaceutical market worldwide. This is also significant because it is the first brand registered and commercialized by BioMarin in Japan. Because we have Japanese rights to all future products currently in our development pipeline, we expect to have multiple opportunities to benefit from our established infrastructure in that market. Clearly, physician and patient acceptance of the only therapy to treat Morquio A has been strong, and we expect this fact to be an important driver of success going forward. Finally, we have continued to identify additional Morquio A patients, effectively expanding the available market. Looking toward the next few quarters of 2015, we expect more progress as the global commercialization of VIMIZIM proceeds. Specifically, we expect to further build out sales in established markets and continue opening new markets to VIMIZIM each quarter. We are confident in our ability to maintain VIMIZIM's current price corridor in both new and existing markets and have important work to conclude negotiating final price in markets such as France and Germany. Price and reimbursement negotiations have recently been concluded in Italy under favorable terms. New registrations and the conclusion of price and reimbursement processes in certain countries will allow us to make further progress converting clinical trial patients to commercial. In short, the commercial opportunity for VIMIZIM this year is high, and we expect continued success in year 2 of the global launch of VIMIZIM. Now turning to our base commercial products, and starting with Naglazyme. Continued sustainable growth in patient numbers, coupled with high rates of compliance and persistence are driving increased demand. Importantly, patient growth continues, as demonstrated by the 12% increase in number of patients on therapy at the end of the first quarter of 2015 compared to the same period last year. The base of patients on Naglazyme remain impressively compliant and persistent, supporting the underlying strength of the business. However, foreign exchange headwinds and lumpy order patterns from Latin America resulted in a flat quarter. As we said last quarter, the unpredictability of ordering patterns in Latin America is expected to result in lumpiness throughout 2015, a dynamic that has existed since Naglazyme was launched 9 years ago. Of our products, Naglazyme has the largest exposure to foreign exchange fluctuations, but we remain committed to previously provided full year guidance of between $315 million to $340 million for 2015. Turning to KUVAN. Following a seasonally high fourth quarter last year, we are pleased to have achieved the year-over-year revenue growth of 11% to $50.2 million for the first quarter of 2015 compared to the same quarter in 2014. Continued growth in patients, coupled with high rates of compliance and persistence, drove a 20% increase in the number of patients on therapy in the first quarter of this year compared to the first quarter of 2014. Recall that we typically see a drop in KUVAN sales from the fourth quarter to the first quarter as insurance policies are reset. Favorable market conditions seen in 2014 for KUVAN are continuing to play out in 2015. These include a revised label and professional PKU treatment guidelines favorable to KUVAN. For KUVAN in 2015, we expect continued steady growth, but at a slower pace than last year. In closing, the commercial team delivered strong results so far in 2015. First quarter results drove net product revenue of 35% higher than the same period last year. I am 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 continues to meet or exceed our expectations to-date, and we look forward to continuing our commercial efforts in the U.S., EU and other international markets. For the remainder of the year, the commercial teams will focus on driving market penetration of VIMIZIM in substantially all marketed regions and continuing to deliver revenue growth across our commercial portfolio. Now I will turn the call over to Dan, who will review the quarterly results. Dan?

Thanks, Jeff. Earlier today, we issued a press release summarizing our financial results for the first quarter, and I refer you to that release for full details. Today, I will discuss the results for the quarter, review updated 2015 guidance since last quarter and discuss the accounting treatment and future impact on our financial statements from the acquisition of Prosensa, starting with topline results. As Jeff and J.J. described, total BioMarin revenues for the first quarter of 2015 were $203.3 million, an increase of 34% year-over-year, driven primarily by strong VIMIZIM sales. Operating expenses, consistent with our guidance for the year. R&D expenses increased to $142.1 million in the first quarter compared to $86.2 million in the first quarter of 2014. The year-over-year increase was primarily due to continued advancement of our clinical programs across the board, including BMN 111, cerliponase alfa, talazoparib, BMN 701 and pegvaliase. In addition, R&D expenses for the first quarter of 2015 included drisapersen and other DMD-development expenses, while the prior year comparison period does not. In a similar fashion, SG&A expenses reflected the continued expansion of VIMIZIM, an increase to $92.8 million in the first quarter of 2015 compared to $60.1 million in the same quarter last year. Recall that VIMIZIM launch was just beginning in Q1 2014, with Q2 '14 being the first full quarter of sales. Turning to bottom line operating results. Non-GAAP net loss in the first quarter was $25.1 million compared to non-GAAP net loss of $1.7 million in 2014's first quarter. We reported a $67.5 million GAAP net loss the first quarter this year compared to GAAP net loss of $38.1 million in the first quarter last year. We also ended the first quarter this year with cash, cash equivalents and investments of over $1.2 billion. Driven by the continued robust launch of VIMIZIM, I am pleased to say that we are in a position to increase our full year revenue guidance for VIMIZIM to between $200 million and $220 million and from -- from $170 million as well as increasing total BioMarin revenue guidance to between $850 million to $888 million from the previous range of $840 million to $870 million. All other guidance remains unchanged. Importantly, while Naglazyme and KUVAN revenues in Q1 2015 were slightly lower than Q4 2014, the continued expansion of patients on therapy for both these products drives our expectation that full year revenue growth for both these products is achievable. It is also worth noting that our results are impacted by the same foreign exchange headwinds that other growable companies are facing. In the first quarter, the strength of the dollar had a significant impact on our revenues. And if exchange rates stay at their current levels, we'll have a material impact on full year revenues. On a constant currency basis, total BioMarin revenue in the first quarter of 2015 was impacted by foreign exchange headwinds by about 6% to 7% or approximately $14 million. For the full year, our constant currency revenue guidance would be approximately $50 million to $60 million higher than our current guidance. I would now like to spend a moment reviewing the accounting treatment for the acquisition of Prosensa and the potential future impacts on our financial results. We completed the acquisition in the first quarter of 2015, and as shown in the top table on Page 4 of the release, from an accounting standpoint, there are 2 components of the $751.5 million purchase consideration: consists of $680.1 million in cash for the shares and outstanding options; and $71.4 million associated with the estimated fair value of the contingent value rights we might pay down the road. In the second table, we show a breakdown of how the $751.5 million is allocated on the balance sheet. Now let me review the main components of these allocations and the future impact on the income statement. Intangible assets in the amount of $772.8 million represents the fair value of the in-process R&D for drisapersen and 2 of the other exons, with 95% of it associated with drisapersen. There will be no expense amortization of this until the products receive regulatory approval. And hence, for the 3 months ended March 31, 2015, no noncash amortization expense has been recognized. When regulatory approval for drisapersen is received, the intangible assets will become subject to amortization, but of course, noncash, over an estimated remaining useful life. Should estimate that noncash amortization expense for this related to drisapersen will be approximately $65 million annually based on approval worldwide. In terms of the Contingent Value Rights, as of March 31, 2015, included in the short-term contingent acquisition consideration payable line on our balance sheet is $71.4 million for the fair value of these at the date of acquisition. We will be obligated to pay an aggregate future payment of $160 million for the CVR as if we received regulatory for approval of drisapersen in the U.S. by May 15, 2016, and by February 15, 2017 in the EU. As we advance toward achieving approval by the required timeline, we update the estimated probability and timing of both the U.S. and EU milestones. We would recognize an additional $88.6 million of contingent consideration expense in future quarters. In closing, despite some impact from foreign exchange, BioMarin delivered a solid quarter and VIMIZIM, in particular, started the year strong. With the filing for drisapersen behind us and the European filing in process, we continue to believe that early approval will take us to profitability on a non-GAAP basis in 2017, with growing profits after that. Now I'd like to turn the call over to Hank to provide an update on our pipeline products and plans for 2015. Hank?

Thank you, Dan. Our development and regulatory teams work tirelessly to submit the New Drug Application for drisapersen. I want to thank them for their dedication, achieving the goal of becoming the first to submit in the U.S, while continuing to move the rest of the platform acquired from Prosensa forward. We are grateful for the support of patients, families, physicians and health authorities around the world who have contributed immensely. We continue to feel very encouraged by our interactions with the Food and Drug Administration. We were pleased that no new clinical studies were requesting -- were requested following our pre-NDA meeting. We believe that there is an opportunity for near-term approval of drisapersen in the U.S. because we believe the totality of the data demonstrates a favorable benefit to risk profile. Boys with Duchenne muscular dystrophy are in desperate need for effective therapy. A recently filed NDA includes the largest data set collected in Duchenne's muscular dystrophy, comprising 3 placebo-controlled studies and 2 long-term open-label studies in over 300 patients, some of whom have received treatment for well over 3 years. Drisapersen is administered once weekly by subcutaneous injection at a dose of 6 milligrams per kilogram and may address up to 13% of Duchenne's patients or 10,000 patients worldwide. The most common side effects drisapersen consist of injection site reactions at the site of delivery and subclinical proteinuria, the majority of which were mild to moderate and did not lead discontinuation of study medications. One of the hurdles we faced in getting first pass approval of drisapersen is the equivocal results of the Phase III study. We believe these results must be seen in the context of the total body of evidence, including 2 randomized Phase II studies, in which stronger evidence of effectiveness was obtained. Eligibility for inclusion in Phase III was wider than in Phase II, specifically, patients in Phase II were generally required to have a rise from floor time of less than 7 seconds, whereas, patients from Phase III were allowed to rise from the floor in under 15 seconds. As a result, our Phase III patients were older and had more advanced disease than those patients included in Phase II studies. Several other issues of study conduct have also been identified. Specifically, the inclusion of clinical sites who are new to the management of Duchenne's muscular dystrophy, potential suboptimal dosing and suboptimal measurement of the primary endpoint. In addition to the breadth of data that is now under review for approval of drisapersen in the United States, it is also important to note the strong track record the Food and Drug Administration, along with sponsor companies has had working together to get orphan drugs approved. Even considering the many challenges faced by companies seeking approval of therapies to treat small patient populations, the FDA has demonstrated flexibility and open-mindedness when presented with unconventional evidence of effectiveness. In the well-documented study by Sasinowski, it is noted that of a 135 orphan medicines approved over a 12-year period, 2/3 of them were approved without conventional evidence, including many that have missed their primary endpoint. And example is our own product, Aldurazyme, which was approved having missed its primary endpoint. The next steps in the approval process will be FDA acceptance of the filing and, thereafter, a potential advisory committee meeting in the second half of the year. With the U.S. submission behind us, we now set our sights on submission in the summer of the Marketing Authorization Application for approval of drisapersen in Europe. We have engaged in constructive communications with European regulators, and look forward to the submission process moving forward in that region. One observation I would like to share is the incredible commitment by health authorities worldwide to understanding Duchenne muscular dystrophy, both the ailment and the needs of patients and their families. It has underscored the collective focus of the regulatory authorities, patients, parents and employees at BioMarin on providing treatment options to patients who have serious life-threatening unmet medical needs. Moving on to BMN 111 for achondroplasia. We expect to share data from the first 3 cohorts of patients from the Phase II study with BMN 111 for the treatment of achondroplasia late in the second quarter. As we have said previously, we believe an increase of growth velocity of about 50% would put kids back on track for normal growth rates. Anything above that rate may enable kids to experience catch-up growth, an outcome that would be an added win-win for patients and BioMarin. Recall that based on natural history, children of an average height grow about 6 centimeters per year. Compared to children with achondroplasia who grow on average about 4 centimeters per year. Stay tuned later in the quarter as we look forward to answering yours and our own questions about the BMN 111 based on the Phase II findings. We believe there are a variety of options available to us once we have an understanding of efficacy and safety at doses currently being studied and once we have met with health authorities thereafter for input. As J.J. mentioned, we also look forward to sharing full results from the ongoing Phase I/II study of cerliponase alfa for the treatment of CLN2 disorder, a form of late infantile Batten's disease. The preliminary data shared in January from patients in our ongoing Phase I/II study far exceeded our internal expectations, and we are increasingly confident that this study could support registration. To remind you, patients treated with cerliponase alfa experience stabilization of their neurodegenerative disease, whereas, untreated natural history controls progressively lost language and motor function. We are in communication with international health authorities on the most efficient path forward while concurrently completing the ongoing study. All patients will have completed treatment for at least 48 weeks by the end of this year, and therefore, we expect to share full data results thereafter. We will keep you apprised of material developments as they become available. Turning to an earlier-stage accomplishment in the quarter, we are pleased to have filed the clinical trial application or CTA in the European Union for BMN 270, our gene therapy product for the treatment of hemophilia A. Our next step for this program is to receive regulatory authority and hospital ethics approval to enroll our first patient. We will let you know when the first patient is enrolled, which we anticipate to occur this summer. Our other pipeline products continue to move forward as expected, and I believe I've hit the highlights for this quarter and have laid out our expectations for the remainder of 2015. So with that, operator, we'd now like to open the call up for questions.

[Operator Instructions] First question comes from Mark Schoenebaum from Evercore.

Congratulations on the continued success of VIMIZIM, guys. It looks like VIMIZIM sales grew about 37% quarter-on-quarter. What would growth have been x -- if you excluded the foreign currency impact? And then just thinking about VIMIZIM sales for the year, it looks like you need only about 5% sequential quarter-on-quarter growth for the year to hit the top end of your '15 guidance even after the guidance raise. Does this reflect your expectations for the rest of '15, given how well the launch has been going? Or should we consider it conservative? Or alternatively, is there just a problem with my math?

Okay. So I'm going to -- this is Jeff. I'm going to turn the question over to Dan for the ForEx impact in just a moment. In terms of the quarter-to-quarter growth, you're right, we -- the quarter-to-quarter growth going into Q2, Q3 and Q4 to meet the revised sales guidance would slow down from the quarter-to-quarter growth we've seen more recently coming from Q4 into Q1. I think what's going on there is, as I've stated, we're very bullish on continued growth, but starting from a smaller base of sales, it's going to be harder to match that kind of percent increases going forward. What we also know is that as many patients have been on-boarded onto VIMIZIM therapy in 2014, some of those patients had inventory purchases that you might consider to be forward buying. We've done an estimate of what we think that looked like in Q4 of 2014. We think that was about $5 million of forward buying. That's totally normal and nothing to do with inventory stocking. But as the rate of patients going on the therapy start to slow down, we're going to be paying back for that. So if you think about a quarter in Q4 without that inventory, we would have been about $45 million not $50 million, that still allows and calls for continued quarter-to-quarter growth of demand sales for VIMIZIM throughout this year. Now I'll turn it over to Dan on the ForEx impact.

Yes. So I think you were asking about the sequential quarter FX impact. Of course, you'd already started to see FX declines in the fourth quarter. So it's -- so anyways, the sequential impact, we would have been in the mid-40% range instead of in the high-30% range growth.

And Mark, to answer further your question on guidance, I mean, we are careful despite the solid quarter because of the extreme volatility of the foreign exchange market. And then current difficulty to predict where the euro and the dollar are going to go in between now and the balance of the year. So we're just still careful.

Our next question comes from Salveen Richter from SunTrust.

So just to follow up on the previous question, and I recognize FX has an impact here on guidance. But how should we think about compliance? And in terms of patient identification, how has that progressed since your prelaunch, I think over 1,600 patients identified? And in addition, when you mentioned earlier, I think that you have a country coming on board each quarter. Maybe you could just walk us through which countries. That would be helpful. And then a second question for Hank. I know there's been some confusion about growth velocity, and you just walked us through that 50% gets us with -- this is regard to BMN 111. But 50% growth will get -- or growth in normal -- in growth velocity improvement will get us to normal velocity and over 50% to catch up. But how do we reconcile this going forward with the ability to titrate the drug around this? And then also how to think about what's meaningful when you have many facets here with the disease and you're looking at clinical effects as well as safety?

Salveen, this is Jeff. I'll take on the first part of your question. So related to VIMIZIM, compliance, experience to-date, patient ID efforts and countries now and going forward. So starting with compliance, and I would say that it's really compliance and persistence that are at issue here. The first thing I'd say is, we've got a number of patients that have long-term history being on VIMIZIM through the clinical trials. And I've been really impressed at the rate that we've been able to transition those long-term patients onto commercial therapy. So things are looking pretty good there so far. We have a much larger, or a larger now, base of commercial patients that were previously naïve to therapy. Some of them have been on therapy for -- on the order of 12 months, many less. And we're watching them carefully to see what compliance and persistence is going to look like, but there's nothing materially new or worrying that we're seeing so far. In terms of patient identification, I think we said last year that our commercial efforts have swung over to getting patients on therapy from what we had been focused on in prior periods, which was identifying patients that would be eligible for therapy. But as our team is out in the 53 markets that we presently do business in, we continue to identify new patients. So that effort has been going on. It's gratifying. We closed the end of first quarter at over 1,700 patients identified. And I think we had provided guidance at J.P. Morgan several months ago that we were identified on the order of 1,650 patients. So I would expect that kind of trajectory to continue. Mentioned in the script that we are now commercial in 26 markets with VIMIZIM. So we're about 50% of the way through the list of countries that we're presently in for Naglazyme. And that is up 6 countries from the end of the fourth quarter. Also, in the script, we mentioned, for example, that we've created a couple of commercial patients in Japan. So I would characterize the mix of countries going forward as a handful of first-tier countries that we still need to get into a number of second-tier countries and probably a long list of tertiary countries individually, which are small but collectively, will continue to contribute nicely to the commercial success of the product going forward. And so with that, I'll turn it over to Hank to answer your other question. Hank?

Salveen, so the question was how do we reconcile the numbers that we've given that a 50% increase in growth velocity restores a patient from achondroplasia growth velocity to normal growth velocity and higher increase in growth velocity returns a patient, not only to normal, but can enable catching up for lost time, so to speak. How do we reconcile those numbers to -- and ability to titrate those in -- I assume, you mean in a subsequent real-world's kind of setting. And I think the short answer to that question is, that's the whole idea behind exploring a range of doses as we have in our other -- for example, in VIMIZIM in our Phase III trial we had 2 active doses. And then we also had an ancillary study going on at a higher dose. And we want to think about the program as one in which we generate a range of information to help guide safe and appropriate use of the product. And the second part of your question is, what's meaningful in regard to outcomes in achondroplasia. And I want to remind everyone, I know you know this, of course, that we're still in an early-stage trial. This is our first in-patient clinical trial. And it's not a Phase III clinical trial. And what I mean by that is that we're using growth velocity here as the primary indicator of pharmacological activity of the drug, and we're using the study to collect additional evidence, for example, on proportionality of body parts, potentially other clinical effects of 111 on achondroplasia and, of course, safety. It's a little early to talk about how we'd put that total package together to talk about how to define clinically meaningful outcomes. But I go back to the primary objective is to establish the relationship between dose and response, and response being measured by -- and efficacy of response being measured by increase in growth velocity, a restoration towards normal.

Our next question comes from Chris Raymond from Robert Baird. Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division: Another question on BMN 111. So I just wanted to understand sort of, I guess, the sequence here in terms of -- moving forward once you have your data later this quarter. You guys have articulated, I guess, the proclivity to go to a fourth dose cohort. And I think I've heard you say that you want to really understand that sort of dose-limiting toxicity that really, you'd get. Can you talk about, first of all, why you have to wait until you get the first 3 cohorts and why you can't just start that fourth cohort now? And is there a scenario where you would not go to a fourth cohort?

Chris, I like the word "proclivity." I had to look it up in the dictionary. I think we were just simply indicating that if dose was higher than 15 micrograms per kilo, a third cohort was required. We had agreed with the health authorities that we would look at the complete package of safety efficacy PK and PD data before deciding on -- before implementing a fourth cohort. And I -- we talked about that simply to set an expectation that the time intervals between cohorts 3 and 4 might be different than the time intervals between 2 and 3. I think it's important to underline that we haven't looked at -- we don't have all the data. And so I want to just encourage patients it's around the corner. And the team is doing scenario analyses in terms of how to interpret the data and how to make decisions about going forward. But until we have the data, I think it would be premature to try to indicate any one way or another which way our proclivities are lying. Hope that addressed your question.

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

This is John on behalf of Michael Yee. So just following up on the previous question. What are the potential safety risks to the study you are watching for? I do you remember that there were some signs of hypotension in Phase I. So is that the key risk? Or are there other risks that you may be watching for?

Yes. I think cardiovascular effects of natriuretic peptides have been previously described that could consist of hypotension. It could consist of tachycardia or fast heart rate. And in addition to those effects, which may be shorter term and onset, we're also evaluating the potential for there to be bone-related toxicities. Achondroplasia dwarfism is a disease in which there's disproportional growth of bones. And so we want to ask the question, first of all, do we make proportionality problems worse? Are there clinical sequelae related to this proportionality changing? Do we make disproportionality better that might be an efficacy sign? But if we make it better, could there be safety signals related to making it better? For example, in shifting around spinal cord, for example -- the spinal canal, for example, want to make sure that's safe. And finally, a consideration might be to make bones more fragile by increasing the velocity at which they grow. For example, can calcification and mineralization of bone keep up as we, if you will, step on the gas pedal in stimulating growth? So that's a flavor of the kind of, if you will, expected pharmacological activities, which might get -- if -- might appear in the context of administration of natriuretic peptides. And again, because this is first exposure in patient population, of course, we're keen to collect data of all kinds about safety to look at potentially unanticipated side effects as well. And that's why it's important to get all the data before trying to put it in context and to decide what to do next.

Got it. That's helpful. So with the upcoming data, will we get most of the answers to those questions?

I hope so. I'm not 100% sure. I know what your denominator is to be able to provide most. Yes, I think it's a study that addresses the main questions that I just outlined. And gives us an opportunity to collect additional safety data that goes beyond the anticipated side effects. And of course, clinicians are going to be paying attention to their patients. And they're going to be describing changes that they're -- that are observed in the patients during treatment. And so I think it'll be a nice opportunity to put together the package that we have so far and just to see where we are.

Got it. On -- and just last on a different topic. The total revenue guidance is raised by $10 million, yet I see that VIMIZIM was raised a lot more by around $20 million to $30 million, while others remained unchanged. So could you just help us connect the difference? Does it just imply that the other products are trending towards the low end of their guidance?

It has to do with the mix of products through the remainder of the year and FX effect, which are also, if you noticed, the difference between the high end of the guidance, the FX effect looks bigger now than it did in the first quarter. Where we thought it was $45 million, we now think the full year FX effect is $55 million. And so that drags down the impact on the ability to increase the total revenue guidance.

And as I said earlier, the FX is unpredictable between now and the end of the year. So we want to be careful. But however, if I may, I just want to reiterate what I think I stated and just did during the prepared remarks is that Naglazyme patients are growing up to 12% year-over-year and KUVAN 20% year-over-year. So the baseline business and demand is still very strong.

Our next question comes from Andrew Peters from UBS.

Was wondering if we can expect any additional updates on the cerliponase alfa program similar to that data we got in January as kind of that -- those initial patients continuing to mature and we get more patients beyond kind of that 6-month cutoff that you had. And then a similar question, with the 270 program hoping to start enrolling patients over the summer, is it possible that we can also get kind of an early read from that program, either on its efficacy or safety, possibly at a venue like ASH?

Hank?

Andrew. The -- we don't plan to provide any further data updates than we did earlier this year. And as we said previously, the main purpose in providing an update of data in the early part of the year was in anticipation that we would be implementing a study in presymptomatic affected siblings. And wanted to put everybody on the same page as to why we did that, why that came about. But we've been consistently guiding to the next data readout being the completion of treatment in all the patients. Completion of treatment will occur in the fourth quarter this year, and we'll provide data shortly thereafter. As regards what to expect from data for the hemophilia program, I think it's premature to talk about a medical meeting like ASH. But I think the next key milestones are, as I said in the prepared comments, the clearance with the health authorities and ethics and then enrollment of the first patient into the dose-ranging clinical trial, which we are anticipating will occur around the middle of this year. And then as to when potentially efficacy or safety data from that study might emerge, I would point you back to the results of the hemophilia B trials in which, on the one hand, when efficacy is observed, it is observed fairly quickly. However, the main toxicity of the hemophilia gene therapy was shown to be liver-related, which occurred about 2 to 3 months after the treatment. And so -- and it took 3 cohorts of doses to get to that efficacious dose and that dose in which some safety signals were seen. So in terms of earliest available data, could be by the end of this year. But it also could be later if we're required to go to higher doses or if other signals emerge. And I do think it's a little premature to talk about what medical meeting the data will appear at.

Our next question comes from Cory Kasimov from JPMorgan. Whitney G. Ijem - JP Morgan Chase & Co, Research Division: This is Whitney on for Cory. Speaking with CLN2, if I'm not mistaken, you guys had indicated you would go to the FDA with the interim data you announced earlier this year. Is that still the plan? Or any updates there?

Well, what I said in my prepared remarks is that we're making progress with the regulatory authorities. We haven't finished all the detailing. And so we can't give you a specific plan timetable yet for completion of the -- or the initiation of health authorities' approval applications. But on the basis of the interactions that we've had so far, we're pretty encouraged. I'd say, stay tuned. As soon as material development in the program, for example, a specific plan to file emerges, we'll share that information with you. So -- but I think the -- really, the news of the day is progress report, we're making progress. We're encouraged by the progress, both encouraged that this study could be a sole study to support registration, encouraged by the progress of our dialogue with health authorities that they are generally favorably inclined by the results, but not at a place yet where we can guide to a specific timeline for submission.

Our next question comes from Terence Flynn from Goldman Sachs.

This is Cameron filling in for Terence. First of all, can you comment may be broadly on pricing trends you've been seeing across your portfolio in the U.S. and Europe? And secondly, are you still pretty comfortable with your estimated worldwide figures from Morquio A patients? Or do you think they could potentially be a little like, conservative for VIMIZIM?

Terence, (sic) [ Cameron ] this is Jeff. I'm going to take your first question and then ask you to repeat the second question, which I didn't fully understand. So you asked generally about pricing trends across the portfolio, and I would say that generally, things are stable. It's a fierce environment out there in general, but our prices have held pretty stable on our base brands. And probably the more important piece is getting our desired pricing for VIMIZIM within the target price corridor. We're in 26 markets now, and I've been awfully satisfied with the results of being able to get a new price to have that price come in where we want it to be. So that much on that one. And do you mind, sorry, to repeat the second part of your question?

Sure. Do you have any updated ideas of how many Morquio A patients there are worldwide? Do you think your previous guidance has been conservative? Or pretty much in line with what you're thinking right now?

Yes. So just a few minutes ago, I think we disclosed that we're at over 1,700 patients identified to-date. That's an update from the 650 that we reported at J.P. Morgan. That number has -- or the increase in that number has slowed down from the increases that we were reporting a couple of years ago. Based on our experience with Naglazyme, I'm expecting that kind of rate to continue going forward. We previously guided that we think the number that we will eventually find worldwide is around 3,000 patients. That will take us a number of years to get to, but I think that's probably still an accurate full market estimate.

And our next question comes from Phil Nadeau from Cowen & Company.

Hi this is Jeff [ph] on for Phil. For VIMIZIM, if we can follow up on that, so do we expect the future patient capture to come from more of the untapped market or the current existing market? And one on drisapersen, should we expect to see the initiation of the 2 confirmatory studies for the accelerated approval?

So this is Jeff. I'll take the first part of your question, Jeff, and then I'll turn it over to Hank for the drisapersen confirmatory study part. As it relates to VIMIZIM, we've said that we're now in 26 markets commercially. That's about half the number that we are with Naglazyme. And I said we've got small number of top-tier markets, slightly larger number of second-tier markets and a larger number of tertiary markets in front of us to get into. In the 26 markets that we're in, I would say we're not fully penetrated or close to fully penetrated in any of them. So I'm expecting a mix of both in the coming quarters; so new markets and additional penetration in the markets that we're already in. And I'll turn it over to Hank for the other question. It's actually -- yes.

Hank?

Yes. In terms of initiation of confirmatory studies and timing, I think the key message there is that the design and timing conduct of confirmatory studies occurs as a result of review of a marketing application. It's not determined prior to or at the initiation of review. It's determined as a result of review. And there's no specific requirement as it pertains to starting follow-up measures or post-marketing requirements or confirmatory studies that I just described a range of possible next steps of activities. So I'd say, stay tuned, again. And right now, we're not guiding to timing or specifics about the design of confirmatory studies because those have to emerge as a result of review, and we just submitted.

And also, potentially the need for conservatory studies. I think is just -- so it is a change from I think, what Prosensa used to communicate because they had, had discussions mainly with the FDA on design of confirmatory studies, and that has not been there.

And our next question comes from Robyn Karnauskas from Deutsche Bank.

This is Evan on for Robyn. So going back to 270, when will we have more color regarding the study design? And to move it to the United States to study it here, what are -- can you remind us what some -- what are the steps that you'll have to take to start dosing patients in the United States?

Yes. As to the [indiscernible] design, we just initiated our filing. And certainly health authorities and ethics can have some influence on study design. So I would say wait until we've cleared health authority review and ethics, at which time I would anticipate that the main features of the study design will appear both in ClinicalTrials.gov, and we'll be able to talk about it more. As to the requirements for initiating studies in the United States, I think at this point, what I want to say is that we don't plan immediately to start studies in the United States. We have an excellent clinical trial network and -- up and running with a lot of experience in hemophilia research. And where you implement studies geographically can vary from product-to-product, company-to-company. And I'll just remind you that our last approved medicine, our most recently approved medicine, VIMIZIM, first patient in was actually in the United Kingdom, not in the United States. So it's a fairly conventional thing to do to start studies in one geographic area before expanding necessarily worldwide.

Our next question comes from Ying Huang from Bank of America Merrill Lynch.

This is actually Catherine for Ying. Two on drisapersen. Outside of what you mentioned in the prepared remarks, what else did you include in the submission, any natural history data? And also, are there -- do you expect any differences between the submission and what you plan to submit to the EMA? And then secondly, when do you plan to start the trials for the other exons? Or do you think you can include them in a confirmatory trial?

Yes. So what else do we include in the submission? The submission was over 1 million pages, the clinical component of it. So there was a lot of stuff in the submission. But you asked specifically about natural history and, certainly, natural history data are incredibly important elements of interpreting the data. For example, in my prepared comments, I made reference to the fact that boys in the Phase III trial had longer rise from floor time, and longer rise from floor time is associated with an older population of more advanced walk impairment population and a poor prognosis population survived in regard to ambulatory capacity. It's also associated with poor functional outcomes and poor upper extremity complications as well as respiratory complications. So a lot of that is delineated in the academic literature and then summarized in the New Drug Application. In terms of differences between the submission in the U.S. and the EMA, we're guiding to submit in the summer for the marketing authorization application. And we're working very closely with the health authorities overseas as to their requirements for content and format. I would hope that the submissions would be substantially similar. And one of the main reasons for that is that in the discussions that pertain to what's next, whether a confirmatory study is required as J.J. just alluded to and of what type, will be best served by multilateral, multinational review of the health authority by the health authorities of fairly constant piece of -- a fairly similar piece of the data sets. So we're working really hard to submit as quickly as we can to line things up internationally and to make the most efficient use of patient resources of rare disease. So you don't have infinite possibilities in terms of what you can do next and, therefore, efficiency of utilization of patient resources becomes an important consideration, especially in the multinational environment. A good -- quick summary of the current status of the regulatory process, so thank you.

So Hank, there's question on when do we start studies with other exons?

Thank you, J.J. So yes, so have 3 other exons that have been in the clinic already. And we're making progress with those, and in fact, we plan extension studies for exon 44, where patients who have participated in studies of 44, 45 and 53 have themselves also generated a fair amount of data. And we are looking at that data very closely to guide the design of potential next studies to address potentially key issues around dose, schedule, safety, pharmacodynamics, clinical activity. As to what specifically those studies will be, it's premature to talk about those. We need to complete the data review process, complete interactions with academic experts as well as complete interactions with health authorities. We're working as hard as we can on that as well. Because of Duchenne's across the board is an underserved population. We're addressing the largest segment of that in the 13% of boys who have exon 51 amenable mutations, whose mutations would be skippable by drisapersen. But we want to do as much we can as quickly as we can for as many patients with Duchenne's muscular dystrophy. So we're going to work hard on those others exons as well.

Our next question comes from Yaron Werber from Citigroup.

This actually June Lee [ph] dialing in for Yaron. Just want to make sure that I heard correctly that the NDA submission was 1 million pages?

Yes.

Yes.

And of those -- of that material, what do you think will be the key area of discussion at the AdCom panel in the FDA? And how does the approval of PTC's Translarna in your -- help review in the approval process for your drug?

Well, it's a little early to talk about what could come up at panel. But I have a feeling that as this question comes up between now and the issuance of the FDA briefing book, my answer is going to be fairly general to say that the usual considerations the advisory committees pertain to safety and efficacy in general and reviewing the various bits of nuances of data. As to the impact of ataluren on the health authority review process, the -- it's a good question. It's a little cattywampus to where -- opposite of the situation we're in now. Right now, we've submitted in the United States, we're the first molecular medicine -- we're the first medicine to submit an application for approval in the United States. So ataluren actually doesn't have bearing, from a regulatory precedent perspective in the United States, from a review and approval point of view, because ataluren's not filed in the United States. We haven't -- where ataluren could be a relevant regulatory precedent, we haven't submitted yet. So as to how interpret ataluren's impact on the subsequent review in Europe, I'd say, wait until we submitted in Europe, and then we can talk about what the relationship, if any, exists between the EMA's action on ataluren and how that might read on actions on drisapersen.

Our next question comes from Tim Lugo from William Blair.

This is Raju Prasad in for Tim. For BMN 190, can you just give us a sense of how you guys view the market for that product? And the data you guys would need to see for the study to be used as -- for the regulatory filing? And then on BMN 111, we've done some preclinical digging and seen some studies, particularly the Nature paper on rosuvastatin and a soluble FGFR3 protein used. Can you just comment on the potential for alternative pathways? Or even combo therapies, given statins and the cardiovascular safety profile you spoke about earlier?

So, Raju, this is Jeff. I'm going to take your first question about the cerliponase alfa and CLN2 disorder market, and then I'll turn it over to Hank for your other 2 questions. We've guided that we think there are about 400 to 600 prevalent patients with CLN2 disorder in the markets that we serve globally. That's an estimate based on some pretty thin epidemiology data. As usual, for these very rare disorders, we're going to put our own team onto the task of finding those patients and characterizing the patient opportunity more granularly. What we've also said is that we think of this as a disorder of incidence, not prevalence as it relates to commercial opportunity. And let me explain that. Kids, by the time they get diagnosed with this disorder, they start declining, and then they decline really rapidly. So they go from full functioning to 0 neurology in something like 3 to 4 years. So that's a lifetime when you're waiting for cerliponase alfa to finish being developed and registered. So what we think is, we're going to have to go out and find those patients and bring them rapidly to therapy when this becomes a commercial product. And we will characterize better the patient opportunity as we get deeper into this. With that, I'll turn it over to Hank.

And I got your question about 111. And -- but I think I missed the second part. Did you have a question about 190 from a development perspective?

Just the data you'd want to see for -- to have that trial support regulatory filing for 190.

Right. Yes. Well, that's the nature of the discussion that we're having with health authorities now. And so the trial's going to readout. It's going to complete treatment in -- 48 weeks at the end of the year. And we're in discussions with -- what specifically is going to be required to support an application for registration. I think it's premature to answer the question concretely as we're still in discussion. As far as the 111 opportunities for -- or, I should say in achondroplasia, publication of some statin data. I believe those are from murine experiments. Or the idea of soluble FGFR3, we're certainly aware of some of these other ideas. Some of these things could be useful combination therapies for achondroplasia, depending on how well 111 addresses the problem or how well these agents may be combinable in some future. The biology of soluble FGFR3, we keep a close eye on it. But we think that the receptor is on autopilot. And so we think the approach that we're taking makes a little bit more biological sense. Statins have been demonstrated in murine species to have a variety of different activities, some of which are corroborated in humans and some of which are not. We're very -- based on the biology of what's known about achondroplastic dwarfism in humans and preclinical models, we're very confident that the approach using natriuretic peptides to stimulate the NPR-B receptor and correct the always-on mutation that causes achondroplasia is a very direct approach to address the fundamental molecular defect. So we're keeping an eye on other ideas, but at this point, we're sticking with the candidate that we have in the clinic. Thanks.

Our next question comes from Joseph Schwartz from Leerink Partners.

I was wondering how much attention do you think that the FDA AdCom and agency itself will pay to -- within the drisapersen review, how that might set some precedent for the follow-on exon. Do you have a strategy to keep the review focused enough that the FDA is comfortable with the risk benefit of drisapersen approval, but also broad enough that you could accomplish some de-risking of the entire platform potentially? How much do you think that their focus could stray? And do you have a strategy to keep that attention on drisapersen versus a little broader?

Well, that's an interesting question. I mean, I think the FDA is -- they're pretty laser-focused on what's in front of them, not what might come in front of them, but what's in front of them. And so they're going to make their decision on the risks and benefits of drisapersen based on the data that's been developed using drisapersen. At least that's the application that we submitted so far. And I would say that in most circumstances that is the most substantial contribution to any marketing authorization application or New Drug Application. Now your question about how these interpretations of the data, review issues and follow-up or confirmatory or post marketing studies read on what is going to be required for subsequent exons, it is clear that once a regulatory precedent pathway has been established, you have a framework for having discussions. Do we need to do the same? Or have we learned enough about the biology in general, that we don't need to repeat certain steps? I think the successful completion of the drisapersen application and review would actually be a great enabler in general, for pathways for other exons. But I don't know that -- I don't know how specifically today that one will relate to the other. I think the nut of this is, right now, we've convinced ourselves that we believe that the data indicates -- the totality of the data indicates that drisapersen merits a review by health authorities, and that we believe the sufficient package of data has been generated to make a favorable benefit to risk conclusion. And we are, ourselves, very focused on that, and we know that the health authorities will be very focused on that. That's the matter that is immediately in front of them. Thanks.

I'm showing no further question at this time. I would like to hand the conference over to Mr. Bienaimé for closing remarks.

Thank you, operator. So in summary, this year, we are poised for achieving a number of significant value-creating commercial clinical and regulatory goals. And we believe that the strong foundation that we put in place last year puts us in paths to many different milestones here. One being the -- driving significant growth with the near-term approval of drisapersen and build a broad DMD franchise, with the progression of the additional exon skippers in our pipeline we just talked about. We believe we can grow and broaden the commercial markets for our newest product, VIMIZIM. We will be seeking also the clinical advancement of BMN 111 for the treatment of achondroplasia and pursue the most efficient regulatory pathway for the approval of cerliponase alfa for the treatment of CLN2. We also hope to enroll our first gene therapy patient with hemophilia A by the end of the summer, and also cultivate our legacy products like Naglazyme and KUVAN. And finally, enable our pathway to profitability by accomplishing the goals we have set for ourselves this year. So we thank you for your continued support and for joining us on today's call. Goodbye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.