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

Robyn S. Karnauskas - Deutsche Bank AG, Research Division Tim Lugo - William Blair & Company L.L.C., Research Division Yaron Werber - Citigroup Inc, Research Division Andrew R. Peters - UBS Investment Bank, Research Division Salveen J.

Richter - SunTrust Robinson Humphrey, Inc., Research Division Matthew James Lowe - JP Morgan Chase & Co, Research Division Joseph P. Schwartz - Leerink Swann LLC, Research Division Philip Nadeau - Cowen and Company, LLC, Research Division Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division Michael J.

Yee - RBC Capital Markets, LLC, Research Division Lisa Zhang - Goldman Sachs Group Inc., Research Division Stephen D. Willey - Stifel, Nicolaus & Company, Incorporated, Research Division.

Good afternoon, ladies and gentlemen, and welcome to the BioMarin Pharmaceutical Inc. conference call to discuss third quarter 2014 financial results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Traci McCarty, Director of Investor Relations at BioMarin.

Please go ahead, Traci..

Thank you, operator. On the call today from BioMarin's management team are J.J. Bienaimé, CEO; Dan Spiegelman, CFO; Hank Fuchs, CMO; Jeff Ajer, Head of Commercial; Robert Baffi, Executive Vice President of Technical Operations.

To remind you, this nonconfidential presentation contains forward-looking statements about business prospects of BioMarin, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development.

Results may differ materially, depending on the progress of BioMarin's product program, actions of regulatory authorities; availability of capital; future actions in the pharmaceutical market and developments by competitors; and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports.

Now I'd like to turn the call over to our CEO, J.J. Bienaimé..

Thank you, Traci. Good afternoon, and thank you for joining us on today's call. So in the third quarter, we delivered strong financial results and successfully advanced our entire development portfolio. The commercial team drove over $25 million in VIMIZIM revenues during the second full quarter of sales since U.S. approval in February.

The rapid uptake of VIMIZIM in the U.S. continues ahead of plan, and we are making substantial progress on reimbursement and early patient initiation in both European and Latin American markets. Jeff will provide more details on launch dynamics in a moment.

In addition, we continued robust uptake -- in addition to the continued robust uptake of VIMIZIM, we delivered another quarter of strong performance across our established commercial products. Kuvan new patient starts drove over 22% growth in the quarter and just under 20% for the first 3 quarters of the year.

Similarly, Naglazyme sales growth over the first 3 quarters had exceeded 21%. The excellent VIMIZIM launch and the sustained strength of our established commercial products has allowed us to gain -- to again raise revenue guidance this year. We now expect total BioMarin revenues to be between $700 million and $710 million for the full year.

As a reminder, at the start of the year, we had originally projected full year revenues of between $650 million and $680 million. As we noted before, we have identified over 1,600 potential VIMIZIM patients, which translate into potential annual revenues of over $600 million.

Combined with continued growth in our 4 commercial products and other commercial products, we are confident that BioMarin will be generating more than $1 billion in total revenues over the next 2 to 3 years. Turning to development activities, we are preparing for a data rich 2015. We expect pivotal and/or proof-of-concept data in 5 programs.

Next year will be very productive for BioMarin, and we look forward to sharing updates on all our pipeline programs at analyst -- Research and Development Day in December and over the coming quarters. Hank will provide a more detailed update in a moment. In early October, we received a Paragraph IV certification from Dr. Reddy Laboratories.

We did it to our Kuvan 100-milligram tablet. We have been preparing for this event for the last several years. We expect to file an infringement suit against Dr. Reddy within the 45-day study to a period after receipt, and thereby, initiate the automatic 30-month stay as provided for -- by the Hatch-Waxman Act.

We believe that our patents are valid and enforceable and intend to vigorously defend our position. In summary, we had another quarter of strong financial results. We have laid the groundwork for a busy and data-rich year in 2015. Now Dan Spiegelman will discuss our quarterly financial updates, as well as our expectations for the remainder of 2014..

Thanks, J.J. Please refer to our press release issued earlier today for full quarterly results. I would like to review specifics of the quarter and provide updated guidance for the remainder of the year. Total BioMarin revenues grew to $176.8 million, an increase of 29.1% over the third quarter of 2013.

This result was driven primarily by continued robust uptake of VIMIZIM and strong Kuvan sales. VIMIZIM delivered $25.2 million in revenues in its second full quarter, and Kuvan grew 22.5% year-over-year to $53.4 million in the third quarter.

As we had discussed on the call last quarter, we expected lower sales of Naglazyme compared to the prior quarter due to governmental agencies in Latin America in the second half of the year. Nevertheless, Naglazyme sales for the quarter were $67.5 million, an increase of 6.8% in the quarter compared to the third quarter last year.

More importantly, both Naglazyme and Kuvan have grown substantially over the first 3 quarters of the year, recording sales gains over the same period last year of 21.5% and 19.2%, respectively. Based on the trends we have seen in the first 3 quarters of the year, we are updating our revenue estimates as follows.

We now expect total BioMarin revenues to be in the range of $700 million to $710 million, an increase from the prior range of $680 million to $700 million and an even bigger increase from the range of $650 million to $680 million at the start of this year.

This total BioMarin revenue increase is driven by the fact that all of our products are performing at the top end of the guidance range. In particular, VIMIZIM, in its first year of launch, is on track to perform at the higher end of our initial guidance range.

And hence, we are narrowing our guidance for VIMIZIM to $65 million to $70 million for this calendar year.

Since VIMIZIM revenues are on track and because attempts to reconcile patient numbers with revenue tends to create investor confusion, consistent with the information we provide on all of our products, our future guidance and information reports for VIMIZIM will be on GAAP-recorded revenues and not patient numbers. Turning now to operating expenses.

R&D expenses of $125.7 million in the third quarter increased compared to $88.1 million in the third quarter of 2013 and $107.7 million in the second quarter of 2014 in both cases due to initiation and continued progress of our multiple clinical programs.

In terms of guidance for the full year, we are slightly revising our research and development expense guidance downward for the year from the prior range of $460 million to $480 million to a lower range of $455 million to $470 million.

But very importantly, we still remain on track to achieve our previously announced enrollment completion and data readout timelines. As we noted last quarter, across all of our development programs, we have spent a little less than originally planned and we have also held back on spending on some earlier stage preclinical programs.

These trends continued in the third quarter and are the basis for this quarter's guidance adjustment. Turning to SG&A expenses. in the third quarter, they increased incrementally to $74.6 million compared to $61.8 million in the third quarter of last year.

Again driven primarily by increased VIMIZIM sales and marketing activities, and increased noncash stock-based compensation. There is no change to our SG&A guidance. Turning to bottom line operating results. We reported non-GAAP net loss of $22.9 million for the third quarter compared to non-GAAP net loss of $16.7 million in the third quarter of 2013.

Non-GAAP net loss has increased in the quarter compared to the third quarter of last year primarily due to increased R&D expenses across our development pipeline.

Based on our expectation for increased total revenue and decreased R&D expenses, we are lowering our non-GAAP net loss guidance to between $50 million and $65 million, a change from the prior guidance of a loss of $60 million to $80 million.

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 and noncash interest expense. It also excludes one time revenue or expense items, such as the Priority Review Voucher.

Our projected near breakeven operating results for the year is a key factor that contributes to cash balances of $1.1 billion at the end of Q3 2014, being essentially unchanged from cash balances at the end of Q4 2013 notwithstanding the GAAP net losses during that time period.

Now I would like to turn the call over to Jeff who will provide an update on our commercial programs..

Thanks, Dan. We were extremely pleased with the pace of the VIMIZIM commercial launch, which is in motion across major markets around the world. VIMIZIM sales totaled $25.2 million in Q3. Sales were recorded in 15 countries at the end of the third quarter. In total, VIMIZIM commercialization is proceeding at the high end of our plans.

In the second full quarter of VIMIZIM sales in the United States, market penetration continues to be strong. The majority of early access patients and clinical trial patients have now been transitioned to commercial VIMIZIM.

In addition, we continue to see a steady rate of naive patient referrals, many of whom have already transitioned to commercial therapy. To date, the market access landscape in the U.S. has proven to be generally favorable with no material surprises.

For the remainder of the year in the U.S., 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're 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 naive 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 the EUMEA region, we are seeing steady uptake of commercial VIMIZIM through a named-patient sales and we expect continued strong growth in these markets.

In Latin America, we continue to make good progress and expect this trend to continue. We are still waiting for marketing approval in Brazil, but are pleased to report that we have recorded the first commercial orders for VIMIZIM in the third quarter. Overall, the commercial launch of VIMIZIM is ahead of plan, particularly the pace of 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 time line. Outside of the U.S. and Europe, we have seen significant interest in and acceptance of VIMIZIM by physicians and patients, and we expect this trend to continue.

Now turning to our base commercial products, starting with Naglazyme, continued sustainable growth in patient numbers, drove more than a 21.5% increase in year-to-date sales despite unpredictability of ordering patterns in the Latin American region. Compared to Q3 of 2013, sales grew by 6.8% due to the lumpy order pattern in this region.

Turning to Kuvan, growth of 22.5% to revenue of $53.4 million in the quarter reflects strong growth over the third quarter of 2013. Growth in the number of commercial patients taking Kuvan were consistent with the increase in sales.

New Kuvan business continues to benefit from steady levels of new patients being referred for 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 we believe that this will be a growth driver going forward. 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 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.

Third quarter results, driven by the strength of the VIMIZIM launch and our established brands, remain a 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 in substantially all marketed regions and continuing to deliver strong revenue growth across our commercial portfolio. Now I will turn the call over to Hank who will review the pipeline..

Thanks, Jeff. Our clinical and research programs are progressing as planned, and we are on track to meet our previously announced enrollment and data readout time lines across our development portfolio. As J.J. mentioned, we look forward to seeing you at our Analyst and Investor Day in New York on December 10.

2015 is going to be a data-rich year with lots of programs progressing. So to get you ready for that data, we plan to provide updates on all our pipeline and commercial programs. At Analyst Day, you'll hear from 3 opinion leaders who treat patients with phenylketonuria, Batten Disease and achondroplasia, respectively.

We then will provide you with access to these experts and a chance to learn about the current treatment options and how PEG PAL, BMN-190 and BMN-111 may potentially play a role in treating patients in the future.

Please keep in mind that this is our regularly scheduled annual update, and we're not planning to present any unexpected data during the event. During the third quarter, we continue to enroll all 5 of our development programs.

Next year, we expect to have pivotal clinical data in 3 programs, PEG PAL for PKU, BMN-701 for late onset Pompe disease and BMN-190 for Batten Disease.

In addition, in the first half of next year, we expect to initiate our Phase I/II study with BMN 270, our gene therapy product for the treatment of hemophilia A, which will not only provide safety data on this new molecule, but potentially provide proof-of-concept information regarding factory production in these patients.

In addition, in the second quarter of next year, we expect to share data for the first 3 cohorts of patients treated with BMN-111, our new treatment for achondroplasia.

We also expect to complete enrollment in our Phase III study with talazoparib, our PARP inhibitor for the treatment of metastatic breast cancer, and to start clinical work in Sanfilippo B syndrome with BMN 250.

From a development perspective, we're excited by the prospects of potentially delivering 3 to 4 new products to the market over the next 3 to 4 years. Our track record of developing and commercializing therapies to treat serious medical conditions supports our belief that this is an achievable goal.

We look forward to advancing all of our development compounds and to seeing you at Analyst Day in New York in December. And with that, operator, we would like to now open the call for questions..

And our next question comes from the next line of Robyn Karnauskas of Deutsche Bank..

I just -- my question is really on BMN-111 and the cohorts data that we could see next year.

Can you just help us understand a little bit more on what kind of data we could see and what things we will not see in that data set? And then how much information will you have as far as making a decision for going forward with development? What would be good data? What would not be data that you would like to see if you didn't want to take the drug forward?.

Yes, Robyn. So middle of next year, we should have data on the first 3-dose cohorts. To remind you, that's 2.5 micrograms, 7.5 micrograms and 15 micrograms. And the main information we'll have at that point is 6 months of treatment data at the high-dose cohort.

We'll have longer data from the earlier cohorts because they're -- the cohorts are enrolled sequentially. Obviously, we'll also have safety data. And what would be good data? Good data would be to establish if there's a therapeutic index at the dose range tested.

Meaning that the doses that we use neither -- don't cause any cardiovascular side effects but do stimulate an increase in growth velocity. The principal measure of growth velocity is just going to be change in height.

Now it's possible that we'll see growth data in the middle of next year, and that's also possible that it will take higher doses or longer treatment to observe increases in doses. But what we're guiding to is data from the first 3-dose cohort levels in the middle of next year..

And as a follow-up, so preclinically, would you expect to see change in height at the highest dose?.

Yes. Based on our preclinical data, we do expect to see an increase in growth velocity from the mid-dose cohort as well as the higher-dose cohort level. But again, those are extrapolations that are based on animal studies. How those apply to humans, obviously, is yet to be determined.

And I've tried to be fairly cautious and consistent in reminding people that that's the piece of information that we don't have, how translatable from animals to humans are the dose predictions..

And our next question comes from the line of Tim Lugo of William Blair..

The guidance suggests flat growth sequentially over the quarter or maybe just over $5 million in growth. Can you talk about maybe where we could see some upside from that or what is within that guidance? I know Q4 tends to be lumpy given ordering patterns of certain countries..

Tim, I presume you're talking about VIMIZIM?.

Just VIMIZIM..

Yes.

Jeff, you want to take a crack at that?.

Yes, I'm happy to. So, thanks, Tim. We're really pleased with the third quarter performance of VIMIZIM. And I'll remind you that the VIMIZIM number is superimposition of multiple launch curves. So we know that we're deep in and furthest along with the United States.

The launch curves from Europe, from Middle East and from Latin America are earlier in their trajectory. So our projection at the high end of the revenue guidance for full year revenue would actually translate to 20% quarter-over-quarter growth, which is pretty solid and we think achievable.

And like you, we think it's possible that we could see some upside, but right now, we're guiding to $65 million to $70 million..

All right. And maybe a question for Hank with Factor VIII entering the clinic in early 2015.

Is it safe to say we'll see proof-of-concept data maybe towards the back end of 2015 and maybe you could describe the trial a little bit?.

Well, having not filed the clinical trial application at the IND, it's a little premature to talk about the design of the trial or the expectation for the result. But I think the essence of the question that you're asking is that activity data from the first Phase I trial is a reasonable thing to be thinking about, looking for it.

How long it takes to get that? Of course, it's going to depend on what starting dose we use and at what dose level you need to get to, to get activity. And it's also going to depend on how quickly you can dose escalate. Having not filed the IND, I don't have the answers to all of those questions.

But those are some of the dimensions that will determine how fast we can go from first demand to evidence of activity data. It's reasonable to think that we'll have an efficacy readout on the sooner time frame than conventional medicines just because of the nature of the outcome measure Factor VIII expression in the blood..

And our next question comes from the line of Yaron Werber of Citi..

So I have a financial question then a pipeline question. Just a financial question, when you look at sort of the trajectory right now of Kuvan, and it's had a really nice growth over the last 2 quarters or so. And also, Naglazyme, obviously, had the typical sort of Q3 softness.

I'm trying to get a sense, I mean, it looks to me like both of those can either maintain their trajectory, and Kuvan or Naglazyme can bounce back. And then, being sort of at the upper end of revenues, it's very doable. And with VIMIZIM potentially at the upper end, you might actually even exceed the upper end of the guidance.

Am I kind of thinking about this correctly? And then I have a pipeline question if you don't mind..

Well, I mean, I think you're thinking about it correctly. I mean, that's why we moved our total revenue -- total BioMarin revenue guidance up because all of the products are performing at the upper end of the guidance.

And I'm sure the math is right that if you added up the very upper end of every single one of the numbers, you can get to a bigger number. But the products are performing well and that's why we revised the guidance.

And Jeff, do you have other color?.

Yes, I think you're right. You're both right. We're really happy with the performance of Naglazyme and Kuvan revenue and the growth that we've experienced, and we're optimistic that they will come in near the high end of the guidance..

Okay, great. And then I had a question that I'm going to sort of throw out, and I'm not sure you'll be willing to answer, but I'll try anyway.

For 270 for hemophilia, can you give us a sense -- is it -- are you sort of going to be introducing 2 viruses with sort of a concatemer expression? Or can you put the entire Factor VIII construct to transgene into 1 cassette?.

1 cassette..

And you get the full expression.

It's not a truncated -- other than the typical beta -- B-domain deletion?.

The details of the expression, the anticipated protein expression we haven't revealed yet. Stay tuned..

But just to remind you that the Factor -- recombinant Factor VIII on the market are not the full version of the natural Factor VIII..

Right. There are B-domain deleted, so it sounds like....

They are truncated..

But it sounds like you're putting the whole truncated protein, you're not truncating it further..

No, we haven't said what's the construction of the protein. You're well aware of what sold on to market and we, obviously, are thinking about what protein we want expressed and what the various considerations are. I'd say, stay tuned..

And our next question comes from the line of Andrew Peters of UBS..

Just a question on VIMIZIM.

Just curious if you can characterize the sales this quarter, do they reflect really kind of per patient demand? Or is it -- is some of it driven by kind of more onetime buying large orders, something like that? And then for 111, can you characterize your plans for -- moving into kind of the younger patients, post the data in 2Q? What's the kind of next step there for going into younger patients?.

Let me start, Andrew, with your first question about VIMIZIM. In a steady state or relatively steady state like we've got for Naglazyme and Kuvan, the revenue that we report every quarter really is reflective on a straight line to patient demand.

And for VIMIZIM, as we're going into this kind of rapid patient uptake mode, I would note that some of the countries that have ordered VIMIZIM today, places like Brazil, Colombia, Argentina, Saudi Arabia and others, some of those countries will order for several patients at a time, for a couple of months at a time.

And then it takes several weeks to get that product to the patient, have those patients start therapy. So there could be a little bit of that impacting the revenue versus patient number..

But at the same time, just to remind everybody that we're not -- we don't distribute this product through wholesalers, so there is a possibility of fitting the pipeline, the wholesalers pipeline because we ship direct to specialty pharmacies..

Yes, so on BMN 111, it's a little bit early to get concrete about what the development strategy, what the specifics in the younger patient population are.

But I think just to draw out some of the features, first to say is that as with Naglazyme and VIMIZIM, we recognize the benefit of initiating therapy earlier to make for an even better patient outcome. And as the company has grown and gotten more robust, we've been able to invest in those patients early and earlier in development.

So for example, with Naglazyme, studies in patients who were very young didn't begin until post marketing. With VIMIZIM, we initiated studies in patients under 5 as premarketing, but late in the Phase III -- later in the Phase III program.

And our plan with BMN-111 is to initiate studies in very young patients even earlier in the development course, potentially earlier than the initiation of pivotal or registration-enabling clinical trials. So that's -- point #1 is coming soon to a theater near you. And the rationale is the earlier you treat, the better.

A second point to make is that the special considerations in very young patients include a safety consideration, but also include a potential efficacy consideration. Namely, that the earlier you intervene, potentially, the more you'll be able to improve elements of the disease that go beyond just statural improvements.

And so for example, some patients who are affected with achondroplastic dwarfism and who have profound symptoms earlier in the course of their disease may have sleep apnea or nerve compression syndromes related to the severity of their achondroplastic dwarfism. So that's the second feature of achondroplasia and initiating therapy early.

We're in the process of finalizing our design ideas, and I would say, look for protocol implementation around the corner sometime in early '15..

And our next question comes from the line of Salveen Richter of SunTrust..

Just 2 questions, and I apologize if this has been asked.

But what should we expect at the R&D there? What should we be looking for there? And then, in terms of achondroplasia, what is clinically meaningful here in terms of change in high-growth velocity per kind of the key physician thought leaders out there? And then, are you looking at release of spinal stenosis or kind of more open -- can they -- will doctors be able to know what the data says per MRI data in terms of a more open spinal canal? Those are some of my questions..

Salveen, that's a pretty good, rich list. Analyst Day, I would set the expectation at the Analyst Day.

It's not so much about new data as it is, just giving a very clear picture of what to expect from the important data readout that are happening in '15, and to get everybody on the same common page about design of programs, end points, how to interpret the data when we get the data.

So we're all in it in a good starting place for when the data comes in, in '15. As far as what's the meaningful magnitude of improvement in growth, I've said previously that the study can detect a 50% improvement in growth. But we're really targeting something more like a 100%, 80%, something like that increase in growth velocity.

And the reason that we want to roughly double growth velocity is because we want to enable growth to basically resume on a more normal trajectory. The growth velocity of achondroplastic patients is about half of normal, so doubling it will return to normal.

Now if it's possible to go even beyond doubling it safely that would be even better because then, we can imagine getting to catch-up growth. Meaning, that whatever has been lost before you started treatment with BMN-111, we can make up for that.

And as the third part, how do we -- can we detect improvement in spinal compression? I would say, at the level of the spinal nerve roots, I wouldn't have too much expectation in regard to clinical outcomes in the juvenile population because really significant medical consequences of spinal nerve compression don't really show up in achondroplasia patients until later in life.

And that's the reason that we want to evaluate, more severely affected earlier in the course of their achondroplasia-experience, patients where we might be able to detect clinical improvements. Maybe those are manifest as reduced sleep apnea. Maybe those are manifest as other evidence of reduction of foramen-level compression.

Maybe we can see some anthropometric or bone-shaped types of improvements radiographically in either of those studies.

But I think the way I think about the main study is about stature as an outcome variable and the study in earlier stage patients, earlier patients is about taking up some of the other potential clinical benefits of turning achondroplasia around..

And our next question comes from the line of Cory Kasimov of JPMorgan..

It's actually Matthew Lowe in for Cory today. Just the first question I have is on the achondroplasia program. Are you able to tell us where you are in that study as I know you're enrolling patients in the third cohort yet? If you could just update us on that..

Yes. Well, so we've guided that we intend to complete enrollment in the cohort by the end of the year, we're on track for that. But you can assume that we're in the third cohort. I think we've said that..

I think we've said that..

Yes, we have enrolled patients in the third quarter already. We'll be done a couple of months..

Okay. And then just almost as a follow-up on Kuvan, I think in the past, you've listed a few things that's responsible for the growth in Kuvan understanding clinical practice but other powder formulation, new guidelines, the PKU.

Is any one of those, in particular, really driving the growth? Or is it really a combination of those kind of 3 factors and maybe others also?.

Yes. I think you're right. All 3 of those factors continue to play a positive role on the growth of Kuvan this year. And they've really been in place and hitting that marketplace all these years. So I wouldn't attempt to unbundle or say one is dominant. There are all 3 out there.

They're working in our favor and they -- we expect that to continue to work in our favor..

And I thought I might add a thing, however, I think the -- definitely, the powder formulation has been even better received than we anticipated by the market. And apparently, it's even bringing some patients that we had lost to therapy back on the product. So it's definitely be a very, very useful and successful line extension..

And our next question comes from the line of Joseph Schwartz of Leerink Partners..

I was wondering if, first on BMN-111, you could talk about whether or not you think you'll be able to detect any changes or improvements in the proportionality of bones, the long bones, I guess, in particular.

And whether you can test to ensure that you're not creating scoliosis, like the full knockout genotype?.

Yes. So we will make anthropometric measures and we will look to see if we can reverse the disproportionate growth of the proximal bones relative to the distal bones. And I think that's a reasonable expectation to have.

Obviously, we'll also look at that from a safety side to make sure that we're not making that problem worse, which gets to your scoliosis or exaggerated kyphosis/lordosis, depending on which plane of the spine you're looking at. And again there, it's both an efficacy and a safety readout.

Our expectation is, is that we will reverse the disproportionality and the resultant shape abnormalities of the spine, which in later years turns out to be some of the cause of the mechanical problems that these patients experience later in life.

But your question also prompts me to mention that there are a lot of other medicines in our pipeline aside from BMN-111, so I just wanted to point that out..

Okay, great.

And then, on hemophilia program, can you talk a little bit more about what aspects of the technology make you most optimistic that BMN 270 won't have the same kind of an ephemeral benefit that was undermined by transaminases and otherwise lack of durability for the other hemophilia gene vector products that have been tested already?.

Yes. Well, I mean, I think the -- there's a couple of things there. So first of all, being educated about the experience of others does give us an incremental advantage.

And you'll remember that Nathwani group who published on Factor IX was able to demonstrate more sustained efficacy and control of that transaminase by early recognition and early and prompt intervention to control liver inflammation and sustain Factor IX expression. And so the clinical know-how that's been gained in the field is very important to us.

Another important piece, of course, is the assembly of the gene therapy product itself, with the idea of how to get the best expression possible.

And without going into the particular details of the construction of the medicine itself, what we can say is, is that all of the core elements, alone and individually, have been tested preclinically such that the vector that we've selected for introducing into clinical is what we believe is to be the product that gives us the best chance to demonstrate early efficacy and sustained efficacy.

And then, maybe the third level of this, to just a comment on, is -- and there's also increased experience now without a manufacture and purified the product, which is also incrementally informative about safety and efficacy as well.

So putting all those pieces together, it really is the ability to leverage what's gone before us that we think gives us an incremental advantage for the Factor VIII project. But of course, it's early in development, and there's still a lot of data to be collected..

And our next question comes from the line of Phil Nadeau of Cowen and Company..

One, commercial; then, two, pipeline, if I could. First in the commercial. What countries will be giving reimbursement to VIMIZIM over the next quarter or 2? I guess, it wasn't clear to me from the prepared remarks exactly where you're going to get the reimbursement green lights over the next 3 or 6 months..

Well, I think, we've disclosed, Phil, that we've got sales recorded in 15 markets through the end of the third quarter. And I think we've disclosed what those markets are pretty much.

You know what our priority markets are and we've given you a little bit of color as to what kind of process and timing we're expecting to get into those priority markets.

So anything that's not presently in the list of commercialized is in our sights right now, and we're expecting to be making progress and reporting progress over the coming couple of quarters..

Phil, again, just want to clarify that today, we're already generating sales in many countries on a named-patient basis and significant sales without having an official reimbursement price. And that has been the case with Naglazyme in the past. This will be the case with VIMIZIM.

So of course, we want to eventually long term pursue kind of full official reimbursement. But not -- my point is that the metric of which country are going to get reimbursement next quarter doesn't always give you the right guidance as to the sales you can generate in the next quarter..

Okay.

So if I read between the lines, it sounds like penetrating the market's you're already in is actually probably what's going to be the key driver of growth for the next several quarters?.

Yes..

Okay. And then, 2 development questions. I guess, first on the PARP inhibitor. Hank, in the past, you've said that you're evaluating new indications and combinations for the -- in particular, you're thinking about going into more generalized DNA repair defect type cancers.

Is there any update on those efforts? And can we expect to see any new trials or combinations tested in the future?.

Yes. So a macro level, we have open and clinical trials like some combination studies at UCLA, looking at -- and I think this is important, looking at low-dose combination agent with more protected-dose PARP inhibitor. That's important because, historically, it's been the other way around.

That is to say, low-dose PARP inhibitor and high-dose chemotherapy. And the reason that's important is because in the past, people have tried to sensitize to chemotherapy using low-dose PARP inhibitors. And here, now that we know that PARP inhibitors, we know more about PARP inhibitors, we know that they have a high degree of single agent activity.

The idea is instead to sensitize the PARP inhibitors by using low-dose chemotherapy. And that could lead to a sea change in how we think about combination therapy with PARP inhibitors. We also have talked about plans to look at other indicators of DNA repair defects.

And we're in the midst of getting ready to finalize a protocol that will be our first study outside of BRCA mutation patients, explicitly looking to select patients on the basis of other kinds of DNA repair defects. As we haven't finalized that protocol yet, it's a little early to talk about the specifics of that.

And again, I'd say stay tuned for coming attractions..

Great. And then my last question is on Batten Disease. It seems like that could be a very tricky indication for a number of reasons. The CNS disorder, we as a medical community had limited success in reversing any certain neurodegenerative disease, delivering a drug to the brain, and it's in kids.

But Hank, I'm kind of curious to hear you prioritize what you think the challenges are of developing a drug in Battens? Of those things I listed, which ones do you think you're actually relatively comfortable with and where are the challenges as you see them?.

Well, getting medicine to the brain has been particularly challenging. The approach that we're taking is when that leverages, again, experience in the field of when you need to get a high concentration of drug in the brain go straight to brain delivery.

And we're using a delivery system that's in common use for the delivery of antibiotics or antispasmodics in cerebral palsy. And so I feel reasonably confident that we can get high concentrations of BMN-190 protein into the brain.

And I'm reassured that our preclinical studies show that the phenotype can be -- of the disease can be altered substantially via that route of delivery. I think the second challenge is can we identified patients early enough in the course of their disease that we don't have to rely on reversal of the disease. And I'd say, stay tuned on that.

But I'd say, I think, if I was going to tone in any way there, I'd say we're reasonably optimistic that we can identify Battens patients sufficiently early that if we halt disease progression at that stage, patients have the opportunity to progress slower and potentially preserve function for meaningfully longer period of time.

As to reversing brain disease, that's probably the area where I'm the least cautiously optimistic for the historical reason that you suggested. The only thing I'd say there is that this is -- these are very young children so there may be more reserve function. But I am least cautious -- I am least optimistic about that facet of treatment.

Putting it all together, I think we're pretty optimistic about the chance that this early study could actually provide evidence to support our registration, given the unmet nature of disease and given its severity..

Do you have a sense of how much you need to slow the progression in order to be considered it's a clinically meaningful effect?.

I do. But right now, it's more at the level of talking to clinicians and kind of what their experience is. And the perspective I'd put on that is that, that, basically, given that there is nothing for these kids, and they have such an inexorable decline, that basically anything is going to be clinically relevant.

They, for example, will talk about -- if we take a kid who's not on optimal antiseizure medicines and maybe is a little sleepy as a consequence of that, or the seizures aren't under control very effectively. But just optimizing their seizure medications can be like night and day different.

Now you're not changing the underlying disease 1 iota in doing that. You're not changing the progression rate. But they'll say, families will notice night and day differences from just simply tuning up.

So I think if you add it to supportive care, something that fundamentally did change the rate of progression of the disease, that could be really profound for families..

And our next question comes from the line of Brian Abrahams of Wells Fargo Securities..

On VIMIZIM, I know it's early days, but I'm just curious what you're seeing with respect to patient persistence, maybe relative to your experience with other ERTs.

And then, separately on 111, when we look at growth velocities, should we be thinking about comparing those to each patient's own baseline or to historical H-matched controls?.

Brian, yes, I'm happy to address the question about persistence and we're really happy with the signals that we see. There's a couple of signals that proceed the commercial experience. Although we're getting a couple of quarters into that now. The first is, that the patients were really persistent throughout the clinical trial period.

Some of them had been on therapy for quite a long time. And just to note, it's more of an effort by far to be persistent in a clinical trial protocol than it is to be persistent just in a commercial setting.

The second thing is the degree of conversion that we've experienced so far where we've been able to convert patients to -- from either early access program or clinical trial on the commercial has been very, very positive. I think in our prepared remarks, we said the majority of those patients have transitioned.

So making any kind of a transition threatens persistence. So we're really happy with that. And then, the early commercial experience would be consistent with those 2 observations. So, so far, really good.

I'm sorry, the second question?.

Should we be thinking about comparing growth trajectory versus baseline growth velocity for the prior 6 months or the historical controls?.

Both. So we have fairly well documented in the literature, growth curves for achondroplastic patients. We have our own natural history data that we've recently collected and talked about it last year's R&D day, which corroborated what was published.

But the individual patients who will be treated will also have antecedent growth velocities determined in the natural study before they're included in the BMN-111 study. So we're able to do that comparison in both directions, patient-own control and to the population natural history..

And our next question comes from the line of Michael Yee of RBC Capital Markets..

Following up on achondroplasia question and the Battens question. On achondroplasia, obviously, it's pretty bullish comments about potentially doing a lot better than 50% improvement in growth velocity. This is an open-label study, I just want to confirm that and how long patients have been on the drug in both the first and second cohorts.

And then I wanted to understand whether you can identify any reason for responders, whether high responders or not, whether based on levels of CNP or whatnot. Is there any biology to think whether someone would do better or not on that? And then I had a follow-up on Batten's..

Yes. I think we started enrollment in Q1 of this year. So the longest duration of treated patients have been treated for 9 months roughly. I don't want to make any efficacy comments or -- because I don't want it to be interpreted one way or the other way.

What we said all along is we're going to give you our first efficacy reading data at the Q2 time point, and I want to stick to that. As to whether....

Responders?.

Sorry?.

Yes, thinking about whether you could predict responders or there's biology to think about that based on levels of CNP..

Not that we're aware of. That's the short version. Maybe you could hypothesize a bunch of things but that's, of course, the reason to do the trial.

I think we start with the belief that if we can establish an exposure that doesn't cause cardiovascular side effects, then that gets sufficient CNP to the growth plate that we ought to see a growth response. Now I'm sure there will be heterogeneity in the response because there's heterogeneity in human beings.

But to what extent we can identify the biologic determinants of that heterogeneity, we don't have any prior hypotheses about that..

Okay. And that leads me to my second part, which is the same thing with Batten's is you would expect, I would think, a lot heterogeneity particularly within the level of disease, and it's a small number of N and a very difficult disease.

So again, here, you -- since there's no control, it's open label, and basically you think that any sort of efficacy is clinically meaningful and perhaps the FDA would accept that.

I mean, how do you think about the heterogeneity in the averages here? I mean, essentially, you're saying you're going to file if there's sort of any signs of efficacy since it's such a high unmet need..

So here, again, there's also reasonably well-done published natural history, and age of onset and state of the patient are probably the 2 most important prognostic factors for rate of disease progression. And within those 2 categories, disease progression is actually reasonably homogeneous.

We showed at last year's R&D day, I think, the 90% confidence intervals on the progression rates and they were like tight within 6 months or so. There is one outlying genotype that is a slow-progressing genotype. But that's an exception that proves the rule to a more substantial degree.

And the study is designed to have a year's follow-up in the group of patients that are treated at the full dose. And so we observed that in that natural history progression rate that patients basically lose all their neurological function in a 2-year period.

And so a year is half of that 2-year period, and the study is designed to demonstrate a fairly meaningful alteration in that progression rate over that time period. To talk about that trial as being certainly registration enabling, I think, is a little bit of a stretch for the reasons you said, natural history control, open label.

But on the other side of that, it's a pretty severe disease, and there is natural history data to refer to. So I'd say you stay tuned. Our R&D Day is going to be a good day.

Analyst Day is going to be a good day to hear more details about the design of the program, to talk to one of the leading clinicians in the world who has published tremendously on this particular form of the neurodegenerative pediatric illness. And I think it will set the stage quite well for when the data does mature sufficiently..

And our next question comes from the line of Navdeep Singh of Goldman Sachs..

This is Lisa in for Navdeep. Just one, can you discuss how many patients are currently on Naglazyme and how large do you believe the global prevalence of MPS VI is? I think the global prevalence was initially estimated around 1,000 patients, but that was at the time of Naglazyme launch.

So I'm just trying to get greater color on the market side today..

Okay. We actually don't disclose patients on therapy. So I'm trying to see how we -- let me think how I can help you on that one. In terms of global prevalence, what we estimated at the time of launch was 1,100 patients. And we are approaching that level of number of patients identified, but we have not reached it yet.

So I think 1,100 is still a good number. We're getting closer every quarter. And I think we've also said that we are highly penetrated of known-MPS VI patients on Naglazyme therapy. So maybe you can work back from that 1,100 number and get your estimate of number of patients on therapy..

Can you repeat the last part, I couldn't quite hear you, the highly penetrated?.

Highly penetrated of known-MPS VI patients on Naglazyme therapy..

Got it. And then 2 other follow-ups. Can you just provide some additional color on VIMIZIM launch in the rest of the world, more specifically -- I know you said you've -- of the approximately 1,600 identified patients you said most in the U.S. have transitioned to commercial drug.

But of that 1,600, what percentage can be placed on commercial drug today?.

I think our prepared remarks addressing the United States was that most of the clinical trial and early access program patients in the United States have transitioned on to commercial therapy. And that has been augmented by naive-to-treatment patients that have referred into our case management system, many of whom are now on commercial therapy.

So those remarks are directly related to the U.S. Outside of the United States, it's a mix where in '14 additional markets. In many of those markets we have transitioned clinical trial patients on the commercial therapy. But we also have a healthy mix of naive-to-treatment patients in those markets that have also gone onto commercial therapy..

Can you -- just more specifically, which countries have come online and which major markets have not that you're waiting on?.

Okay. Well, we have disclosed 15. Last quarter we had a list of all the markets. This quarter, we added Brazil as the major additional country to that list. And also, Italy, Czech Republic and Bahrain in third quarter. So you can take our remarks from the second quarter, add those 4, those are the ones that we're in presently..

Okay. And then, lastly, I think last quarter you've provided number of patients on commercial VIMIZIM therapy.

Just any color or any sense on the number of patients at the end of Q3, if possible?.

Yes, this is Dan. I commented on that in our -- in my prepared remarks because we don't give out exact patient numbers on any of our commercial products because the reconciliation issues between the patient numbers and the revenue creates more confusion than it answers.

And VIMIZIM is on track to be -- to meet our revenue guidance and, in fact, the high end of the guidance, which is why we narrowed it that way..

And our next question comes from the line of Stephen Willey of Stifel..

Sorry to bereave the VIMIZIM patient number thing. But I know that you had mentioned previously that your guidance was to have 350 patients on drug by year end.

And just kind of wondering if by the end of the year, that's a data point that you'll be providing us?.

No, I don't believe so, that where we're going to be with revenues, and we're on track for our guidance for the full year and at the higher end of that guidance..

Okay. And then....

And then, we'll give -- and then, of course, we'll give revenue guidance at the end of the year for 2015..

Understood. And then, just with respect to the Kuvan Paragraph IV filing. I'm just wondering if you guys know whether or not if the ANDA that was filed actually, demonstrates bioequivalence against U.S. reference-listed product..

Actually we don't have that information yet. As you know we are preparing in getting into legal action against Dr. Reddy, so we don't want to comment on that..

And our next question comes from the line of Yaron Werber of Citi..

I have a couple of follow-ups. One for achondroplasia, is there an open-label extension in the study? And can patients from the lower doses get sort of randomized to the higher dose, if needed? And then, if you don't mind, I have a follow-up on Naglazyme..

No. I mean, yes, there is an open-label extension and the plan is for patients to stay on their current dose..

And they'll stay on drug until sort of, hopefully, through approval? Is that -- or is it sort of capped by how long they can stay on drug for?.

Well, we haven't mapped out what the plan is for later stages of the open-label extension, but I think there may come a point when if we're not seeing anything in one-dose group but we are seeing something in a higher-dose group, we may alter what dose group patients are on. But it's premature to talk about.

By the way, we did the exact same thing with VIMIZIM. For example, we had an open-label extension at the every-other-week dose until we had established the effectiveness of the weekly dose and the ineffectiveness of the every-other-week dose. At which point, we switched everybody to the weekly dose.

And so you could imagine a similar construction, which is to key patients on the dose that they're originally assigned to and only change that when there's data that drives the decision to change that..

Okay. And I don't know if this is for Dan or for Jeff. When you look at Naglazyme -- so last year, you were sort of running at 63 to 69 or 70 the whole year. Then, there was a big step-up in Q1. So 80, 98. Now you're sort of at 68. I'm trying to figure out, so your guidance sort of implies that the higher end, 74, saw a lot of variability.

I'm trying to figure out sort of what's a good baseline to kind of use as we think about modeling this year and into next year?.

So good observation about the step-up early this year. There's a couple of seasonality things going on in the background. One is that last year and this year in the third quarter, we were missing a Brazil Ministry of Health order. That kind of skews the Q3 number.

And the other pieces in certain markets in our EUMEA region, the ordering is heavier in the earlier year than the latter part of the year due to how they budget their purchases. So that would explain nicely how you go to a step-up in Q1 of -- from Q4 of last year..

Yaron, to help you, I think, because of the lumpiness of the sales as we communicated many times, in addition to some seasonality, I mean, look at the last 12 months, like last 9 months, like last 12 months growth, and that gives you a feel for the growth rate of the product. That's independent from the quarter-to-quarter variability.

In the first 9 months, we grew 21.5% this year versus the first 9 months of '13..

And I'm showing no further questions from the phone lines at this time..

So thank you, operator. So 2014 is setting out to be a very important year for BioMarin. We are investing the resources from 5 commercial products into the development of a rich product pipeline, which is set to possibly deliver 3 to 4 additional marketing products in the next 3 to 4 years.

So total BioMarin revenues delivered strong growth in the quarter, increasing over 29% compared to the third quarter of 2013. And for the full year, we now expect total BioMarin revenues of between $700 million and $710 million.

Between now and the end of the next year, we expect to have pivotal clinical data on 3 programs, PEG PAL for PKUs, 701 for Pompe 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 enrollments in BMN-673 and to file INDs and start clinical work in Sanfilippo B syndrome and our hemophilia A gene therapy programs. So we are extremely pleased with the pace of the U.S.

launch of VIMIZIM, and we expect the EU launch would be just as strong. So we believe that VIMIZIM will contribute to BioMarin, generating more than $1 billion in total revenues over the next 2 to 3 years, driving us to operating profitability and beyond. So thank you for your continued support and for joining us on today's call..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Have a great day, everyone..