Traci McCarty - BioMarin Pharmaceutical, Inc. Jean-Jacques Bienaimé - BioMarin Pharmaceutical, Inc. Jeffrey Robert Ajer - BioMarin Pharmaceutical, Inc. Daniel K. Spiegelman - BioMarin Pharmaceutical, Inc. Henry J. Fuchs - BioMarin Pharmaceutical, Inc..

Salveen Richter - Goldman Sachs & Co. Cory W. Kasimov - JPMorgan Securities LLC Matthew K. Harrison - Morgan Stanley & Co. LLC Aspen Mori - Bank of America Merrill Lynch Laura Chico - Raymond James & Associates, Inc.

John Scotti - Evercore ISI Michael Yee - RBC Capital Markets LLC Dae Gon Ha - Leerink Partners LLC Carlos Solorzano - Deutsche Bank Securities, Inc. Phil Nadeau - Cowen & Co. LLC Evan Seigerman - Barclays Capital, Inc. M. Ian Somaiya - BMO Capital Markets (United States) Raju Y. Prasad - William Blair & Co.

LLC Kennen Mackay - Credit Suisse Securities (USA) LLC Prakhar Verma - Stifel, Nicolaus & Co., Inc..

Good afternoon. My name Megan and I'll be your conference operator today. At this time, I'd like welcome everyone to the BioMarin's 4Q and Full-Year 2016 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

And it's my pleasure to introduce your host, Traci McCarty, the Head of Investor Relations at BioMarin..

Thank you, operator and thank you all for joining us today.

With me here from the BioMarin management team are Jean-Jacques Bienaimé, Chairman and Chief Executive Officer; Hank Fuchs, President Worldwide Research and Development; Dan Spiegelman, Chief Financial Officer; Jeff Ajer, Chief Commercial Officer; and Robert Baffi, Head of Technical Operations.

To remind you all, this non-confidential 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'd like to turn the call over to BioMarin's Chairman and Chief Executive Officer, J.J. Bienaimé..

Thank you, Traci. Good afternoon and thank you for joining us today on the call. So 2016 was a momentous year for BioMarin, as full-year revenues topped $1 billion for the first time, coming in at $1.12 billion for the full year, an increase of 26% compared to 2015's full-year revenue.

These results were driven by the approximately 50% year-over-year combined growth of Naglazyme and Kuvan. Jeff and his commercial team have done an impressive job building out our ex-North America Kuvan business and adding patients on therapy for Vimizim.

In addition to commercial progress in 2016, we had a number of important developments and regulatory successes last year. We reported statistically significant results from each of our clinical studies with pegvaliase, Brineura, and vosoritide and proof-of-concept results with BMN 270 gene therapy for Hemophilia A.

In addition, we had our regulatory filings accepted in both the U.S. and EU for Brineura. We reported out exciting preliminary results on our BMN 270 gene therapy program and we began our Phase 3 with vosoritide at the end of last year.

Looking forward to 2017, double-digit growth revenues is expected to continue and total revenue is expected to be between $1.25 billion to $1.3 billion. Also announced today, we anticipate positive non-GAAP results in 2017. In the years to come, we intend to steadily increase bottom line results, while continuing to reinvest in our pipeline.

Dan and Jeff will provide more details on our commercial and financial expectations for the year. On the development and regulatory side, in 2017, we look forward to the potential approval and launch of Brineura in both the U.S.

and Europe, the pegvaliase FDA filing in Q2, the start of the registration enabling Phase 2b study for BMN 270 gene therapy as well as additional data from the Cure Study (03:49) and the announcement of our next IND candidate.

Our new gene therapy manufacturing facility is expected to be completed by mid-year, enabling us to move the BMN 270 program forward, without constraints on materials needed for the Phase 2b registration enabling study in the third quarter. Hank will provide also some more details in a moment.

Before handing over the call to Jeff for more color on our commercial activities, I would like to make a few comments about recent headlines published on our industry and specifically about drug pricing as it relates to orphan drugs. While there have been lots of the headlines in the U.S.

recently regarding increasing scrutiny of drug prices in general and even on some so-called orphan drugs, we believe that the products we have developed and plan on continuing to develop are and will continue to be largely insulated from these issues for several important reasons.

As a first principle at BioMarin, we focus on providing highly innovative medicines in rare and ultra-rare conditions to patients, mostly children, who have either no or unsatisfactory treatment options. This is very different than repurposing and repricing older medications or older generic medications.

Due to the innovation we create, our medications provide significant value to our patients and to the healthcare system. The value of this innovation is recognized globally where cost-conscious single-payer healthcare systems dominate.

As we have noted before, for the products we sell globally, the majority of our revenues ultimately come from outside of the U.S. from single-payer systems and in fact, our U.S. Medicare sales represent less than 3% of our global revenues.

Of critical importance, we price within a fairly narrow range globally, in other words, single-payer healthcare systems from more than 65 countries around the world currently agree to pay essentially the same price for our medications as we currently charge the U.S. government.

Every day we successfully justify the value of our medications all over the world and feel very confident that we can continue to do so in the United States even in the face of increasing price scrutiny.

So despite the uncertainty that many companies are facing related to potential new pricing policy, we feel the highly innovative nature of our products provide a high level of protection to our business. Now, I will turn the call over to Jeff, who will review the commercial business in more detail.

Jeff?.

Thank you, J.J. We delivered strong sales results in 2016 and I am very pleased with total BioMarin revenues for full-year 2016 exceeding the previous year by 26% and breaking the $1 billion mark for the first time.

Starting with Vimizim, patients on commercial therapy grew 40% in 2016 from further penetration in existing markets and new access to eight markets, bringing the total number of active Vimizim markets to 41. 2016 also saw a continued rise in identified patients increasing to over 2,000.

With approximately half of the currently identified patients on therapy and the fact that we continue to identify new patients, there is opportunity for significant continued growth from here. Vimizim net product revenues in the fourth quarter were $94 million or 59% higher than fourth quarter revenues of $59 million in 2015.

For the full year, Vimizim net product revenue increased 55% year-over-year to $354 million and the franchise continues to benefit from robust underlying patient demand. Last quarter, we had communicated risk associated with order patterns in Brazil and Turkey.

I'm glad to report that we are seeing a return to ordering stability in Turkey, but we remain cautious on Brazil and we'll continue to monitor this situation closely. Looking toward full-year 2017 Vimizim guidance, we expect between $400 million and $430 million in full-year revenues.

Moving on to Naglazyme, net product revenues were $75 million in the quarter, a 25% increase year-over-year. For the full year, revenues of $297 million were essentially unchanged from the prior year.

The number of commercial patients increased by 9% in 2016, an indicator of the strong and increasing underlying demand for Naglazyme, which drives our expectations for revenue growth in 2017. Quarterly volatility continued in 2016 with order timing in fourth quarter for Latin America driving strong results compared to the fourth quarter of 2015.

Based on these expectations, our guidance for full-year 2017 Naglazyme net product revenues is between $300 million and $330 million.

Now on to Kuvan, 2016 represented the first full year of global sales of Kuvan by BioMarin since the acquisition of the PKU franchise in the international market from Merck Serono and we are very pleased with the results. Kuvan net product revenue contributed $90 million to the top line in the quarter, an increase of 38% year-over-year.

For the full year, Kuvan net product revenue was $348 million, a 46% increase over 2015.

North American sales were paced by an increase of 15% in commercial patients year-over-year, and in the international markets, we successfully navigated through the transition process and are now receiving orders directly from the majority of top markets worldwide.

The combination of strong results in North America, combined with solid update internationally, gives us confidence in providing full-year 2017 guidance of between $380 million and $410 million, an increase of about 14% over 2016 at the mid-point.

We expect these results in 2017 to be driven by growth opportunities in both North America and the addition of new patients in the international markets. Turning for a moment to market preparations ahead of a potential Brineura launch in the U.S.

and Europe this year, the pre-commercial work is proceeding as planned and we expect to be well prepared upon approvals. As we've said previously, the commercial strategy for Brineura is different than for the launch of Vimizim.

For Vimizim, in advance of launch, we had identified a large number of patients, many of which were able to gain access to Vimizim and which was the key in facilitating rapid updates during launch. The dynamics for CLN2 patients are very different relative to (11:21).

Due to the rapid decline in function of children with CLN2, it is not possible to have a large pool of identified patients that are both waiting for and expected to be still suitable for treatment following launch.

So, rather than existing patient identification, our primary focus is on raising awareness among physicians to facilitate early diagnosis. The goal is to have patients screened and diagnosed early, while they retain good function but (11:55) these will be the best candidates to benefit from the therapy when approved.

We are also working to identify and prepare potential treatment centers. Some key centers have gained valuable treatment experience through participation in clinical trials and expanded access protocols, and we anticipate an official ATU approval in France, resulting in orders from the second quarter.

We plan to leverage this experience in training new treatment sites following launch. Now, I'd like to turn the call over to Dan to provide more detail on fourth quarter and full-year financials.

Dan?.

Thanks, Jeff. Please see today's press release summarizing our financial results for the fourth quarter and the full-year 2016. As Jeff already reviewed top line results, I will briefly cover other key 2016 results and then provide our thoughts for continued growth in 2017 and beyond.

In terms of 2016 operating expenses, across the board, they were in line with our prior guidance. Full-year research and development expenses were $662 million and SG&A expenses were $477 million.

On the bottom line, we reported a full-year $630 million GAAP net loss, which included $599 million of intangible asset impairment charges associated with discontinuing the Kyndrisa and reveglucosidase alfa development programs in the second quarter.

After reflecting the associated reversal of contingent consideration expense and a benefit from income taxes, the net GAAP impact of discontinuing these programs was $381 million. Therefore, full-year GAAP net loss excluding the discontinuation of Kyndrisa and 701 was approximately $250 million. Full year non-GAAP loss was $36 million.

BioMarin defines non-GAAP income and loss as GAAP net income or loss excluding interest, taxes, depreciation and amortization as well as stock-based compensation expense, contingent consideration expense and certain other items such as the intangible asset charge associated with that Kyndrisa and BMN 701 program.

BioMarin regularly uses these non-GAAP results and expectations internally to assess the financial operating performance and evaluate key business decisions, related to our principal business activities. The discovery, development, manufacturing and marketing of innovative biologic therapies.

We ended the year with $1.4 billion in cash, cash equivalents and investments.

In 2016, gross capital expenditures for the year were $168 million, driven by the buildout of the manufacturing facility in Shanbally, to support commercial supply of Vimizim, office facilities in Nevada and San Rafael to support ongoing research and development activities, as well as starting construction of our new gene therapy manufacturing facility in California.

In addition, we added $83 million to inventory to support the continued growth of Vimizim and Kuvan and to prepare for the launch of Brineura. I would now like to turn to financial guidance. As J.J. already indicated, we expect 2017 total BioMarin revenue to be in a range of $1.25 billion to $1.3 billion.

I would note that this 2017 revenue forecast assumes the key currencies to remain at or around the current exchange rates through the year. Our revenue guidance assumes the launch of Brineura in 2017, so we believe we can achieve this guidance, should the launch has been delayed.

Our 2017 revenue growth is just under 15% based on the midpoint of our guidance. Beyond 2017, we anticipate annual revenue growth to continue at approximately 15% throughout the rest of the decade, based on our current products, plus the launches of Brineura and Pegvaliase.

Beyond that timeframe, we expect revenue growth to accelerate further, following the potential launches of products in our pipeline such as BMN 270 and vosoritide. Turning to operating expense guidance, in 2017, R&D expenses are projected to be in the range of $620 million to $650 million.

While this would represent a decrease from 2016 R&D levels, we believe it's sufficient to drive development of our current portfolio and invest in next-generation products. Going beyond 2017, over the next few years, we would generally expect an increase in absolute R&D expenditures, while R&D as a percent of revenues will generally decline.

2017 SG&A expenses are expected to be in the range of $520 million to $550 million. The increase in SG&A expenses in 2017, compared to 2016 is driven by launch and execution of Brineura in the U.S. and Europe, as well as Pegvaliase launch preparation and expansion into additional markets for Vimizim and Kuvan.

Combined R&D and SG&A total operating expenses in 2017 will increase around 4% compared to 2016 levels, a significantly lower rate of growth in the 15% revenue growth rate.

Looking beyond 2017 and for the rest of the decade, we would expect the rate of future operating expense increases to continue to be lower than the revenue growth rate in order to provide increase in profitability.

In terms of capital spending, we expect overall capital investment in 2017 to be similar to 2016 and between $160 million and $190 million primarily in manufacturing and laboratory facilities.

In addition, there will be an approximately $100 million investment in additional inventory to support Brineura launch and continued growth in Vimizim revenues. Our GAAP net loss for 2017 is $140 million to $180 million. In terms of non-GAAP results, we expect that our positive result will be between $30 million and $70 million.

This non-GAAP positive guidance for 2017 is the next step in the multi-year profitability plan that we laid out at the end of 2014. In our Q4 2014 earnings call, shortly after closing the Prosensa purchase and at that time based in part on expectations for drisapersen revenues, we set a goal for the company of non-GAAP profitability in 2017.

The drisapersen was not ultimately approved. We work to keep that 2017 breakeven or better commitment. Based in part on making portfolio decisions such as effectively swapping talazoparib for ex-U.S.

Kuvan and Pegvaliase rights and terminating BMN 701 as well as effectively controlling overall spending, we have consistently improved non-GAAP results in the 2015 through 2017 period.

Looking beyond 2017 through the rest of the decade, we expect these trends of improving non-GAAP results to continue and to have profitability steadily increase, while also continuing to invest in the pipeline. Now, I'd like to turn the call over to Hank, to provide an update on our development programs.

Hank?.

Thank you, Dan. Starting with regulatory and development activities, several programs advanced in 2016 laying the groundwork for our next stage of growth and potential approvals.

In the clinic, we announced in July of 2016 that BMN 270 gene therapy for the treatment of severe hemophilia A had demonstrated proof-of-concept results, leaving us to plan a potential registration enabling Phase 2b study in the third quarter of this year. We are very encouraged by results to-date with BMN 270.

As announced last month in our ongoing study, Factor VIII levels have stabilized, liver function looks fine, and with the exception of one patient who's in the mild range, all patients are at least in the bottom of the normal range in terms of Factor VIII activity levels.

Recall that in order to be enrolled in our studies, all subjects had to have severe hemophilia A with Factor VIII levels of 1% or less prior to treatment.

Briefly, on the additional patients enrolled in the ongoing Phase 1/2 study, remember that we treated three new additional subjects with BMN 270 at 4x1013 vector genomes per kilogram without steroid prophylaxis at the end of 2016 per our amended protocol agreed to by the NHRA in the United Kingdom last October.

Recall that we had the option to dose up to six additional patients, as doses are either 6x1013 or 4x1013 without steroid prophylaxis. Based on our early observations, we're expanding from three patients to six patients treated with 4x1013 and without prophylaxis based on what estimates serve thus far in the first three patients treated with 4x1013.

We are very excited by the possibility of providing a one-and-done treatment option for people with severe Hemophilia A and look forward to sharing our next update on this program before the start of the potentially registration enabling study in the third quarter.

We're also very encouraged and proud to have received PRIME designation from the EU earlier this month for BMN 270.

To remind you, PRIME stands for priority medicines regulatory initiative, and was designated to BMN 270 based on the unmet need in hemophilia A due to breakthrough bleeds in prophylactic treatment settings, leading to sequelae such as – which means the negative after effects of the disease, including hemophilic arthropathy, permanent joint damages as a result of repeated bleeding in joints.

This designation was further justified on the basis of preliminary clinical data in affected patients, supporting that a single intravenous administration results in sustained restoration of Factor VIII activity, reduction of annualized bleeding rates and improved quality of life of treated patients.

BMN 270 gene therapy is the first and only product candidate for hemophilia A to have received this PRIME designation, so we're very pleased to have received this recognition for the program to-date.

Turning to our gene therapy facility, it remains on track for completion in the second half of 2017, with the goal of producing materials to support our potentially registration enabling clinical study and initial commercial demand.

We believe that making the investment now at our own gene therapy facility, we'll ensure that we have ample materials to supply our registration studies and potential commercial launch. The facility design was recently reviewed with U.S. health authorities and the feedback was consistent with our plans for construction and operational control.

The approach laid out was well received and discussed in depth with industry, academic and health authority representatives.

Our extensive experience in facility and process validation for our enzyme replacement products is a distinct advantage and positions us well to apply and adapt our successful strategies for now validation in gene therapy production, consistent with worldwide regulatory requirements.

For example, our Head of Technical Operations, Robert Baffi, recently presented facility and process validation considerations for gene therapy products at the 21st Symposium on the Interface of Regulatory and Analytical Sciences for Biotechnology Health Products. Moving on to vosoritide for children with achondroplasia.

Last year, we shared positive 6-month and 12-month data demonstrating a 50% increase in growth velocity and a dose of 15 micrograms per kilo. Based on these data, last summer, we initiated a global Phase 3 study with vosoritide in children with achondroplasia, the most common form of dwarfism.

As we have said, we expect enrollment to take up to 18 months followed by one year and the like treatment for all patients, which – and this will be followed by an extension study.

Our most recent data readout was from our newest program BMN 250, an enzyme replacement therapy for the treatment of MPS IIIB or Sanfilippo Syndrome, Type B, a rapid and progressive neurodegenerative disease of young children.

In January, we reported that in the dose finding portion of our study, the lowest dose of 30 milligrams per kilo demonstrated a significant reduction of heparan sulfate, a biomarker of brain tissue damage because of non-affected range.

Since that review in January, we've safely dose escalated to the 100 milligram per kilogram dose and then the 300 milligram, our extension phase dose.

In the second part of the study, we hope to demonstrate improvement in neurocognitive function, as measured by the development quotient or DQ scale, which is the number expressing the development of a child, determined by dividing the age of the group into which the test scores place the child by the child's chronological age multiplying by a 100.

Stay tuned for a program update later this year. Turning to regulatory updates, we have a PDUFA date of April 27 for Brineura for the treatment of Batten's disease. And we look forward to potential approvals in both U.S. and EU this year.

With respect to an advisory committee as we have said, we were told as part of the filing acceptance notice from the FDA that we should expect an AdCom and we have been preparing accordingly. Announcements about AdComs are only made by the FDA through notice in the Federal Register and we know that the PDUFA date is drawing near.

However, the FDA does have the ability to take action on the applications with and without an AdCom. So stay tuned and we'll keep you apprised if anything changes.

In the European Union, The Committee for Medicinal Products for Human Use or CHMP meeting is coming up, and we expect a decision and we could expect a decision from the European Commission in the third quarter.

We've been encouraged by our actions with EMA and look forward to the next steps in the process of potential approval of Brineura in the European Union. And finally, based on strong pivotal data with pegvaliase for the treatment of phenylketonuria, our plan is to file a BLA in the second quarter of this year.

This is a large opportunity and our commercial efforts will be supported by the groundwork we've done with Kuvan, our product for less severely affected patients with phenylketonuria. With that, operator, we'd now like to open up the call for questions..

Our first question comes from the line of Salveen Richter..

Thanks for taking my questions. I have three.

In terms of hemophilia A, is there any factor activity level, say, greater than a 125% or so that the FDA is telling you is unacceptable? And then, when we look at how you're dosing the next three patients at 4x1013, how should we think about that as we look to dosing in your potentially pivotal program, and can you just comment on inter-patient variability at this dose? Thanks..

Okay. Thanks, Salveen, for your questions. So let me just say that we're in the midst of our health authority interactions on a global basis. And as you can tell from the PRIME designation, the health authorities have seen a lot of our data. And what I can say about your question about 125% is that that hasn't come up specifically.

An upper limit of acceptable has not been specified to us by health authorities.

And we're in the process of collecting further safety and dose response data and we've showed our strategy for picking a dose to take into the registration enabling trial to health authorities and we continue to be authorized to treat patients, both at the 4013 level and the 6013 level without steroid prophylaxis.

In terms of how we're going to pick the dose for the coming trial, that'll be a combination of safety and efficacy data, and I think as long as we can achieve, I think the guidance – maybe an efficient way of saying is the guiding principle will be to select the lowest dose which produces clinically relevant efficacy.

And while I can't tell you what the results of the ongoing 4013 dose study are, I can tell you that what we've seen has been sufficiently supportive that we want to dose three additional patients at that same 4013 dose level.

And again, I can't tell you exactly about variability, but I will tell you that we are encouraged by what we're seeing, both in terms of activity and variability in activity..

Thanks..

So that's all to say we're very encouraged by where we are and we think that we should be in a great position to start registration enabling trials, as we've said, in the later part of this year..

Great. Thanks, Hank.

And then, just in terms of Brineura for Batten's, how should we interpret the lack of an FDA panel announcement to-date?.

I don't think I can say very much more beyond what I've already said just to recap. When the application was filed by the Food and Drug Administration, they told us to expect an advisory committee which is what they say for all New Drug Applications and Biologics License Applications.

They then go on to say that as to when and whether there will actually be an advisory committee that they ask us to refrain from commenting on that in the public domain until notification of it has occurred in the Federal Register.

Now, what you've also noticed is that there are fewer advisory committees and advisory committees are getting cancelled and actions are being taken in the absence of advisory committees. So the Food and Drug Administration can take an action by the PDUFA date without an advisory committee.

And I've also commented before that although the PDUFA date is a goal, it's also possible for the Food and Drug Administration to take a little longer than the PDUFA date. So that's what we know at this point.

And we continue to work extremely hard to bring Brineura to patients in the United States, and we also work extremely hard to bring Brineura to patients outside the United States..

Helpful. Thank you..

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

Hey, good afternoon, guys. Thanks for taking the questions.

I guess my first one on BMN 250 in light of the recent data at WORLD and as you begin the process of measuring neurocognitive outcomes in MPS IIIB patients, can you describe maybe how complicated or the processes or maybe how inherently variable this can be in this patient population?.

I can a little bit. Let me first start by saying the quantitative terms, the natural history of Sanfilippo Syndrome, Type B is maybe not as well described as the Batten's natural history was at a similar point in development. There just hasn't been as much sample size put into it. And that's one challenge and we're working to augment that data set.

Another challenge is we're using development quotient, which accommodates consideration of the patients' performance abilities in the numerator and their chronological age in the denominator. So the expectation, basically, is that normal will be flat, as you age.

It may not be possible to achieve normal in a patient with an ongoing neurodegenerative disease.

So the evaluation of interest will be to look for attenuation of the change in development quotient, and that difference from Batten's also makes – where the endpoint is not normalized for age, that difference also makes the discernment of effect a little bit more challenging.

But having said all that and pulling back, Sanfilippo Syndrome is a devastating condition. Patients have some significant morbidity well into their teens and have lethality in the 20s and early 30s.

And so, the idea of having enzyme replacement therapy demonstrating a dramatic improvement in outcome is, in this context, we believe, should be discernible, but of course, we've got to collect the data and prove it..

Okay.

And then, a question on gene therapy program, BMN 270, recognizing that you still have to get buy-in from regulators, is there any consensus amongst your KOLs at this point as to what they think an optimal design might be for the Phase 2b trial for that drug?.

Well, more at the level of principles than specific design considerations I mean I say off the top a couple of key things. Not everybody is treated the same way globally, two big buckets of treatment patterns, prophylactic therapy and on-demand therapy.

I think the expectation would be that we'd have quantitative data on outcome in both patients who are treated in an on-demand context as well as in a prophylactic therapy context.

I think that the hemophilia community is very oriented to clinical outcomes, as evidenced by bleed rate frequency, but also very important to them is the rate at which Factor VIII is used. I think the hemophilia community is accustomed to using Factor VIII levels to guide therapy and to interpret outcomes.

So, I think that in a confirmatory trial context, Factor VIII levels could be a key supportive secondary endpoint, also because of their confidence about the predictive validity of a Factor VIII level, they're also very confident that a Factor VIII level above a certain amount would be reasonably likely to predict the clinical benefit, which kind of speaks to another design consideration, which is the opportunity for Factor VIII level based outcomes to initiate the approval process.

So that's something about population, that's something about endpoints. I think it's a little early yet to talk still about sample size and enrollment timeline that sort of thing.

Other than to say that our sense is that there is a huge need for improved care of hemophilia patients where substantial morbidity that is not addressed by current Factor VIII replacement therapy and that was recognized by the EMA in their PRIME designation.

Even the best available therapy doesn't stop bleeding events and patients on replacement therapy live lives that are restricted in their activity because of their predisposition to bleed. And a one-and-done treatment has the potential to restore the patients' clotting levels to physiologic levels, enabling patients to lead more normal lives.

So all that together, I think, again, points us in the direction of being both very encouraged, excited, enthusiastic and feeling that it's a huge demand medically to push BMN 270 forward..

All right. Thanks, Hank. Appreciate it..

Yeah..

And your next question comes from the line of Matthew Harrison with Morgan Stanley..

Great. Good afternoon, everybody. Thanks for taking the question. Two from me, just one on guidance, can you just comment a little bit more specifically, will you be reporting ATU revenues for Brineura or will we see any of that this year? And then, second related to guidance, you commented on Turkey, Brazil and some lumpiness for Naglazyme.

I mean any other impacts we should think about from ex-U.S. lumpiness throughout the year for some of the other products? And then, separately on BMN 270, can you just comment on the communication plan here? You're talking about an update on these six patients sometime maybe around the third quarter.

Should we expect to see that update in addition to the Phase 2, Phase 3 study design or could they come separately? Thanks..

Dan, you want to start with revenue recognition?.

Well, yeah, I mean we would report revenues when they come. The ATU revenue is likely small enough that it probably wouldn't get its own a line on the financial statements, but we'd happy to talk about it when it arrives..

And this is Jeff, Matt. I'll take the question. We address Turkey and Brazil. Previously, we have noted that order choppiness also comes from other markets and in Latin America. So all of Colombia and Chile as well as Brazil, those orders can be coming, large orders that are done relatively infrequently, so that can contribute to choppiness.

Also, I think we've previously noted that certain countries in the Middle East also have similar pattern. So we get large infrequent orders from places like Saudi Arabia and some of the smaller markets in there.

And that's not suggestive that there is anything wrong with the performance of those markets, it's just that the orders come in large chunks and infrequently. And I think that's it....

Hank, the question on the BMN 270 communication plan..

Yes, it's a little early to make an exact color on how that communication is going to unfold. I think we recognized there are two key components, which is what happened with the 4013 dose outcome wise and then, separately, what is the plan for the registration enabling trial.

And part of the reason that's difficult is that we don't know what's going to get accepted at this scientific congresses and when, and because of the huge interest of the scientific community in the program, we do want to make sure that where we can get data presented at times at a meeting set, we afford that opportunity for our scientific investigator colleagues.

But I do think that we should be able to count on hearing both the design of the registration enabling trial and the results of 4013 doses in advance of the initiation of the Phase 3 the registration enabling trial whether they're together or not..

Okay, prefect. Thank you..

And your next question comes from the line of Ying Huang with Bank of America Merrill Lynch..

Hi, guys. This is Aspen on for Ying. Thanks for taking my questions. So just two on BMN 250. First, the data presented at WORLD showed a couple AEs related to the ICV device. And I was wondering if you guys kind of talked about that and if you have any plans to address that.

And then, have you seen any better effects with the 100 milligram dose in terms of HS reductions or any neurocognitive benefit? Thanks..

Okay. Yeah. So we did have a couple of device related AEs in the Sanfilippo program initially. I would put together our results in the Batten's program and the Sanfilippo program and say that overall, we're really pleased by the tolerability, safety and convenience with intracerebroventricular administration of drug.

There's always kinks that you have to work out beginning of studies, to get things humming and we're reasonably confident that we'll be able to do that in the Sanfilippo program, as we did in the Batten program. As regards the biologic activity of the 100 milligram dose, we haven't released those data yet.

Stay tuned, although I will say, it's going to be hard to get a whole lot better than where we were, since we were more or less in the normal range already at the low dose. So set your expectation that we're not going to see like dramatically better by chemical efficacy than normal.

And then, as to the first peeks at clinical activity data, we don't start collecting clinical data until we've gotten into the dose expansion phase – into the cohort expansion phase, so that's after we initiate enrollment of the 300 milligram dose. So it will be a while yet before we have outcome data from the open label trial to talk about..

Okay. Thank you..

And your next question comes from the line of Chris Raymond with Raymond James..

Good afternoon, guys. This is Laura Chico on for Chris. I've got two questions for you. First on Brineura, I just wanted to make sure we're understanding correctly on the AdCom. I think there is some language from FDA that the states they have to provide notice to you by 60 days before the PDUFA date.

I guess, is that an accurate interpretation or are you saying the 60-day guidance isn't necessarily a set in stone? And then, the second question is related to BMN 250. There were some data you showed at WORLD relating to grey matter volume declines. And just curious if there are some reasons why treatment might actually reduce brain volume.

And then, perhaps a bigger picture, what's the most appropriate time range to begin to evaluate changes on an MRI basis?.

Okay. Let me start with the first one, 60 days, is that firm and fast. I didn't in the moment have a synthesis of all the previous AdCom schedulings, but I would be shocked that if the FDA, as a matter of practice, has always noticed 60 days in advance.

Clearly, the FDA has a lot of flexibility and that's why, in my prepared comments, I did acknowledge that it's February 23 and the PDUFA date is April 27. We recognized the same thing. But again, until they notice that there's an AdCom in the Federal Register, we can't comment on whether or when there will be an AdCom.

And as I pointed out, the trend line recently is fewer AdComs and there's no obligation of the FDA to make an AdCom – to have an AdCom before taking an action date. So we're working hard with the FDA in doing everything we can, to enable them to take their action by the end of April. As J.J.

mentioned at JPMorgan, it's a complicated study, it's a natural history control study. You know that the FDA wants to be careful about applying natural history data to pivotal trials, the pivotal decisions, and we're working hard with them to enable them to come to a conclusion.

Your second question, was that about BMN 250 or was it about Brineura? The agreement on Brineura....

Oh, sorry. Yeah, sorry, Brineura. Yeah..

Yeah. Okay..

Yeah..

Okay. So the data we showed was that, so in that end, it's been shown that there is loss of volume of cortex, as the disease progresses and let's interpret that more – let's understand that more colloquially. The brain is melting as a consequence of the disease and brain matter is turning into a – is being liquefied.

The rate at which that happens is slower on Brineura than not treated on Brineura. And the longer you follow patients, the more deceleration of that cortical grey matter loss is. We interpret this is all good and reflective of the treatment, the very large treatment benefit we observed. So our interpretation is all good.

As Dan just handed me, because he is a better research analyst than I am, and pointed out that Kyndrisa AdCom announcement was October 15 and the meeting was November 24. So even in our own – I forget even in our own experience FDA has noticed later than the 60 days period. Thank you, Dan. That's it..

Thanks, guys..

Yeah..

And your next question comes from the line of Mark Schoenebaum with Evercore ISI..

Hey, guys. It's John Scotti in for Mark. I had a couple of questions on that guidance.

So the 15% revenue growth throughout the decade, is that something that you feel you can achieve every year or should we think about that is lumpy? And then, also, on the magnitude of OpEx leverage, you obviously mentioned you're going to have a lot of OpEx leverage, but specifically, I think 2017, the midpoint of OpEx guidance about 3% growth from 2016.

So is that – I mean should we think about that as a fair run rate for OpEx growth on an absolute basis, going forward, relative to the 15% revenue growth or as OpEx growth going to be much higher than that? I'm just trying to get a handle on more quantitatively what we should model for OpEx leverage. Thanks..

Yeah. So we're not in a position to give OpEx guidance more specifically than we have other than to say that it will be – we're committed to having it to be less than revenue growth. I would say that the magnitude of the difference in 2017 is almost by definition as big as it can be.

So I think you should expect it to be less than that on average in the future years. And the revenue growth will have some lumpiness on an annual basis in and around 15% sort of consistently year-over-year is what we're both shooting for and forecast.

Does that answer the question, John?.

Yep, yep. Thanks a lot, Dan..

Great. Sure. You're welcome..

And your next question comes from the line of Mike Yee with RBC Capital Markets..

Hey, thanks for the question. Two topics. First was on gene therapy update, just broadly speaking and talking with FDA and EMEA, I guess, what are the one or two big topics of discussion, and specifically, are you trying to harmonize the two in order to obviously run one study to satisfy both.

And since you got PRIME, is it safe to assume that, obviously, you got the breakthrough. And then my follow-up question is just on Kuvan. Can you just give us an update on the IP timelines given there was a second filer, so just want to clear up that one.

I know you have a first settlement, is it safe to assume you want to settle that second (50:51)? Thanks so much..

Okay. Actually Mike, I'm going to flip your questions a little bit, then I'm going to start with the approval for breakthrough. Can't get breakthrough designation as you can file on IND, we're still in the process of filing the U.S. IND. We did the studies....

Got it..

...outside of the United States initially. So until we repatriate the IND, we can't apply for the breakthrough designation. But on your other question on what are the one, two big topics, I mean we're relatively earlier in the discussion, we're not planning on starting the pivotal trial until the third quarter or so.

This is going to sound a little cheeky, but honestly, this is the real honest answer, the one or two top topics are how can we help you go faster? It fundamentally is what's behind the PRIME designation, and we did a lot of work with EMA in order to get into that slot so that they could have the resources and the structure to be able to help us go faster, without getting into specifics about our conversations with the Food and Drug Administration, suffice it to say that it's not substantively different..

Very helpful. Okay. And then, on....

I am taking regarding the Kuvan..

Okay..

So I saw you have a subsequent question on this before I get to Kuvan..

Yeah, no, I think, I'm good.

So on Kuvan, there was one settlement, there is a second one just to be clear it's all disclosed, are you trying to get that one settled as well, what's the timing of that, are we going to hear about a court start, just remind us about that just we're all squared up on Kuvan?.

Yeah, so we had a settlement with Dr. Reddy's and we have announced. And what happened is after we settled with Dr. Reddy's, the FDA actually switched the priority filing dates between Dr. Reddy's and Merck, which was all surprising, but it's the way it is.

So we actually have been in discussion with Merck for a potential settlement, and then, we could have got to an agreement at the end of last year and we're getting close to a potential trial, so we decided to put it on hold. So there is a trial that is scheduled for sometime this summer and there should be a decision shortly thereafter.

So I think it's pretty unlikely at this time, that we would settle in advance of the trial, not impossible, but I would say, unlikely. So that's kind of where we stand..

Okay. Thank you..

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

Hi, guys. Thanks for taking the question. This is Dae Gon dialing in for Joe. Two quick questions. One on BMN 270 and one on Brineura. So on BMN 270, I know you can't go into specifics of the data from the new 4x1013.

But in terms of your internal expectations, can you comment on the patient variability range that you would be comfortable with going forward? And on Brineura, based on some of your experiences with EAP programs, is there some kind of an analog when we start modeling your launch trajectory? Thanks..

Can I comment on the level of variability that I'd be comfortable with.

I had occasion to look at the variability of our 6013 dose now that we've had a little bit longer duration of follow-up, because one of the considerations really is that when you have patients with different time courses, as they're coming up, things may seem more variable than when you get the steady state.

I've looked at the variability of our expression levels relative to the variability of the most furthest advanced other gene therapy that's been in the clinic. Let me remind you that there is no other Factor VIII gene therapy in the clinic to our knowledge. So the comparison would be to Factor IX gene therapy.

Now, most of the Factor IX gene therapy expressions that have occurred have occurred at relatively low levels. There is one company that's got reasonable activity, because of the use of an artificial procoagulant expression you could say it.

Our variability of 6013 is comparable to the variability that others have noted in expression and it's an acceptable level of variability and now it's really one of the key considerations of choosing hemophilia as one of the first gene therapies that is to say there is not a tightly regulated system in the sense that the normal range of Factor VIII has itself a threefold level of variability.

So we're pretty comfortable with the level of variability we've seen so far. And I'd say unless it's like a lot worse, at a different dose level, it does not pose a kind of a showstopper.

And I would only again reemphasize that a consideration that's on the table is that some patients will end up outside of the normal range, we have one patient who is under the normal limit and one patient who is over the normal limit.

We believe both of those patients are experiencing pretty substantial clinical benefit and we believe that those patients are exposed to have fairly negligible level of risk. And that's not just our belief about that, because clinician investigators are willing to enroll patients at the high dose level and health authorities are willing to allow us.

So there was not just patients in a coming clinical trial, but conceivably in registration enabling trial at that high dose. So all that's why we are saying, we're reasonably comfortable with the level of variability that we're seeing and it was a big factor in choosing Factor VIII gene therapy as our gene therapy target..

Jeff, you want to say something else? (56:56).

What was the question on Brineura?.

Launch strategy (57:00)..

Yeah, I don't know whether Jeff should answer that or Hank should answer that. The Brineura EAP will be a little bit different than the Vimizim EAP in a sense that with Vimizim, we had prescribers who were really quite facile (57:21) at diagnosing and treating somatic forms of mucopolysaccharidosis.

With Brineura, there is two different kinds of complications, first is procedurally it's different. There is the insertion of the indwelling brain device, the training for sterile technique for infusion of brain associated materials.

And second is, the pace of the disease development is such that you really want to try to concentrate on finding patients earlier more than building up a inventory of prevalent patient population.

So we think of the EAP primarily to serve the humanitarian purpose of enabling patients to have access, and secondarily to enable a larger group of physicians to become experienced with the procedure of study and finding patients. Jeff, did I do a reasonable job of....

I think it's all the way... (58:18).

Does that address your concern.

I think what you're trying to do is get a revenue launch trajectory model, have I got that right?.

Yeah, I guess, I was just trying to get a bigger picture, since just some of the things I've heard from patient advocacy was that patients were actually dialing them to find out where they can go to get the drug for their respective children.

So, I was wondering if that would be sort of front-loaded kind of a launch or if it's more of a gradual launch?.

I can share with you how we're thinking about some of the dimensions of launch trajectory modeling.

And kind of building off of Hank's remarks, other than the patients that are in the clinical trials and the relatively small number of patients that are expected to be in early access programs, those patients generally with an expectation that their disease progression has stabilized on therapy, we don't expect where a large number of warehouse patients that will be a big bolus going on to treatment at launch.

However, there are compelling cases of children that are appropriate for treatment and will be appropriate for treatment at the stage of progression that they're in with the diagnosis. So we expect that those patients would be highly interested and motivated in making a compelling case for getting on to therapy, so that will be a boon.

We're going to be very careful about providing adequate assessment of treatment centers and then providing training and in-servicing so that those treatment centers can be successful treating children with this relatively complicated delivery mechanism.

And then in terms of our own modeling, we note that with an incidence rate of one in 200,000, which is not bad compared to some – or not too low compared to some of the other epidemiology that we work with.

The key to building out the base of patients on therapy will be getting them screened, diagnosed, then led to therapy relatively early in their progression of disease, kind of a tricky thing given the rapid progression of the disease.

So that's a critical, critical commercial success factor, with an expectation that those patients stabilize and will be stable over time, and you can see how that patient population will build up materially as we get into launch. That's how we're thinking of it..

Perfect. Thank you so much for that color..

And your next question comes from the line of Andrew Peters with Deustche Bank..

Good afternoon. This is Carlos in for Andrew Peters. Thanks for taking our questions.

First, given that you mentioned that you can hit guidance without Brineura this year, does that range then imply an initial view what the CLN opportunity could be for 2017? And then also, with the announcement the gene therapy facility will be coming online later this year, how do you think about the opportunity to expand your gene therapy expertise into other areas, other diseases? And when you think you might be able to better describe these ambitions or potential programs? Thank you..

So, I think, your first question was whether the fact that our guidance for 2017 incorporates both the potential revenues from Brineura launches or without, that comment on 2017 revenue thoughts for Brineura, and yes, I mean, yes, it does.

I mean, we've indicated, Jeff just went through that we don't think this market is a warehouse of patients bolus market, plus, don't forget, in general, for our products the vast majority of the revenue opportunities are outside of the United States, which take some time, generally speaking, to get reimbursement and to get centers set up.

So, we think a lot of the Brineura opportunity, obviously, for patients, but also as a commercial opportunity in the Naglazyme, Naglazyme plus area, but it's not a rapid first year up-tick..

Maybe I'll address the second part of your question from an R&D strategy point of view and say, yeah, we're really excited about the BMN 270 Hemophilia and we're the furthest along probably the biggest commercial opportunity in any gene therapy program for sure for replacement therapies.

We want to be careful we don't stumble across the finish line there. So we're very focused on making sure that BMN 270 works. As to what else could come in the pipeline, we certainly do consider synergies with existing capabilities.

Our track record is, we started with an incredibly small facility and generated three different protein products out of that relatively small facility.

And Robert's team when they're thinking about the design of the gene therapy facility has given quite a lot of consideration to the potential to use it for other things, but let's not get the cart before the horse, you want to make sure that you get BMN 270 across the finish line.

And our next IND, we have a tip (01:04:32) to what it's going to be, it could be a protein, it could be a small molecule, it could be a gene therapy. I think you just have to stay tuned and hopefully the competition will not figure out what we're going to do next before we announce it..

Fair enough. Thank you..

Your next question comes from the line of Phil Nadeau with Cowen & Company..

Good afternoon. Thanks for taking my questions. Just two, first one on commercial, then one on the pipeline. Commercial, on Vimizim, your guidance for 2017 implies a pretty big deceleration versus 2016.

Is that due simply to annualizing Brazil, so your conservatism over Brazil or are there other dynamics that are going on in the market in 2017?.

Jeff you want to?.

Yeah. Hi, Phil. Jeff here, I'll take that one on. Actually I think the deceleration is maybe more of a percentage of growth deceleration than an absolute deceleration. I think we've noted over the past four quarters that the rate of patient addition which drives our revenue growth is still robust, but has slowed since the early launch quarters.

So we're still expecting robust patient growth at the kind of level that we've been experiencing for last few quarters and that's driving our expectations of revenue growth going forward.

There is some choppiness in order timing that we take into account as it relates to the 2017 year guidance and, of course, we're taking into account some expectations of turbulence in Brazil and a couple of other places..

And....

Okay..

This is J.J., I will just add to that, that we have identified over 2,000 patients we believe there is a chance we, over time, might be able to identify 3,000 patients, but generally when we identify patients, we get a vast majority of them on therapy; it takes a while sometimes, but we generally get them there.

And I think current price for the product, we basically have identified over $700 million of business. So there is still very significant room for growth here. We're just considering the instability in many markets around the world and we just want to be a little careful here..

Got it. Okay..

So you had a second part of your question.

Sorry, you had another question, Phil?.

Yeah, just one for Hank, and it's on the Brineura review. I think, after JPMorgan, a lot of people were commenting on the slide that you guys put up that showed, the concerns that the FDA had or the questions the FDA had about the Brineura review.

Now today, I don't know, maybe I'm reading too much into things, but it seems like you're more encouraged by the interactions that have happened over the last six weeks, included Brineura in your guidance, you didn't come out and say there wasn't going to be panel, but at least that was partially suggested.

So, are we right to interpret that you're maybe feeling better today than you were six weeks ago or am I just way reading into things too much?.

The latter. You're over-reading..

Is there any change in your feel about the application over the last six weeks or eight weeks?.

Every day is a new day, Phil. I don't think we should be measuring like how I feel today or tomorrow or – all I can tell you is, we think we are really good in compelling datas. We know that the Food and Drug Administration is a tough reviewing body. J.J. has identified the elements of the review consideration, those are the elements of the review.

On some level, I think you have to make up your own mind as to whether you think this should be approved or not? We're certainly doing everything we can to get this medication to American patients. At the same time that we're doing everything we can to get this drug to European patients as well..

Got it. Thanks for taking my questions..

Yes..

Next question comes from the line of Geoff Meacham with Barclays..

Hi, guys. This is Evan on for Geoff. Thanks for taking the questions. First one on Pegvaliase. Have there been any updates on your interaction with FDA, anything else that needs to happen for the second quarter submission? And then one on BMN 250.

Do you think we'll be able to follow our regular pivotal trial design plans similar to what saw with Brineura and that this trial that you're conducting quite essentially service the pivotal trial for filing. Thank you..

So, on Pegvaliase, I think we've said we've completed our dialogue with the Food and Drug Administration in terms of what we need. So I wouldn't expect any – well, I don't anticipate that there will be any further updates about the filing timeline as it pertains to the Food and Drug Administration.

We're working really hard and there is a lot in the files, it's a big program, it's a complex program. Our plan is to get it done in the second quarter. But, you know, it's also a case of because it's big and complex, we wanted to make sure that we do it really well.

So, team is working really hard on managing both of those, do it on time and do it well. And as far as the prediction of the design of BMN 250 trial, it's really early. I think it depends on to some extent whether there are reliable activity signals to come out of the Phase 1/2 study and how reliable and how big those are.

If they're gigantic, like they were with Brineura, maybe we can imagine a study that leads to registration that's Brineura like or if they are of a smaller nature than any of the contemporaneous control arm to satisfy health authorities.

What I would say is that the context of a disease being just a little less aggressive than Batten's disease, and little less well-developed natural history inclines to believe that is less likely that it will be a Brineura-like registration program, but it's again also too early to be definitive one way or the other about that..

And one final follow-up on pegvaliase.

Have you gotten any indication or hints that FDA may call for a panel?.

Well, so let's say we're filing in potentially three months and then action dates will be somewhere later. So it's really pretty early to speculate..

And again, we're right on top of the PDUFA date and I can't tell you whether there's going to be a PDUFA come for (01:12:02) Brineura, so..

It is early (01:12:03).

Fair enough. Thanks for taking the questions. Appreciate it..

Your next question comes from the line of Ian Somaiya with BMO Capital..

Thanks for taking my questions. I had two, both on the hemophilia program. So the first is just really on the potential recruitment of the Phase 2b study.

Just what steps are you taking or can you take to help drive the recruitment there? And second, help us understand who is an appropriate patient in a commercial setting for gene therapy, for BMN 270 specifically, and how representative your Phase 2b trial will be in, sort of, in that representing that patient population?.

Hi, Ian. On recruitment, there's not much to say about that yet, other than the benefit here is huge, and it's really attracted a lot of people's attention. There are 50,000 severely affected hemophilia patients in the developed world.

So I think a reasonably – you know, it's kind of ultra-rare, I think it's on an ultra-rare population together with a huge benefit, together with a huge unmet need in terms of recurring, bleeding, I don't know that I would say the recruitment should be viewed as a big challenge in this..

Yeah, I actually (01:13:41) think there was a survey done recently by one of the analysts on the line here, that shows that the majority of hemophilia patients were looking forward to gene therapy and were very interested in actually being treated with gene therapy.

So, assuming the survey is representative of reality, that we shouldn't have any real problems recruiting here..

Just, as I think about that second part of my question, while we introduced price into it, obviously, there is the potential for an opinion from the payers.

And just curious how you're thinking about the magnitude of the treatment benefit you're likely to provide, which is obviously life changing, price, given the benchmarks that have already been said, with the currently available therapies, and how do you access the entirety of the population as opposed to limiting it to the most severe?.

Well, we will start and Jeff can comment, I think right now the first trial and the data we generating is in severe hemophilia patients, which are patients that expect less than 1% of factoring at this time and we understand, and Jeff, correct me if I'm wrong, that it's about half of the hemophilia A population, which would be around 50,000 patients in the world.

That's a pretty significant number. On the pricing issue, actually earlier Hank alluded to the fact that treatment varies in different parts of the world, but definitely in the U.S. and several European countries, the vast majority of severe hemophilia A patients are treated with prophylactic regimen.

In the U.S., the average cost of recombinant Factor VIII injections for prophylactic regimen is north of $250,000 a year.

So this is a very important metric, which – and relatively significant amount of money unless it's an average, that you can guide us in the pricing here, basing in terms of pharmacoeconomic analysis, this is one of the few indications where you have some very clear metrics as to the cost of current therapy and that's just the cost of recombinant Factor VIII injections, that does not include all the cost of the burden of the disease.

As Hank said, when you have joint deterioration, joint destruction, need for joint surgeries, emergency room visits, the cost is very significant on annual basis for these patients..

And for that reason, that's why prophylactic therapy in spite of that expense, as J.J. just mentioned, is the standard of care and the residual morbidity of un-prophylactic patients is quite substantial..

And Jeff, you want to add anything to that?.

No. I think you've done great unless Ian has an even specific (01:16:58)..

No, no that answers my question. Thank you..

Thanks..

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

Thanks for taking the question. This is Raju on for Tim. In your prepared remarks, I believe the mid-point of the Kuvan revenue for 2017 is 14%.

Can you just break that out into North America versus international? I think you said 15% increase in commercial patients year-over-year in 2016?.

So you're asking about the breakout of the Kuvan growth in 2017?.

Yeah.

Based on the 2016 growth in North America as well?.

Yeah, I think I'm just going to have to the point you to the mix between U.S. and North America in 2016 is the best guidance we're in a position to guide to. The growth rates won't be dramatically different in the two regions. So the relative relationship should stay similar..

Okay. Fair enough.

And then with a competitive – on BMN 270, with a competitor launching in a Phase 1/2 trial in the near-term, can you just remind us on the IP and is there a potential for future overlap down the line?.

Overlap of what exactly occurring (01:18:40)?.

I believe he is asking whether there is intellectual property conflicts between some of our products and some of the others being launched..

We don't believe so. There is one patent in the gene therapy field that could potentially be an issue, (01:19:04) but it's expiring I think in around 2020 or so. So it becomes kind of irrelevant, but beside this one, I'm not familiar with anything else that could create a freedom to operate issue here for us..

Okay great.

And then just one last one, J.J., it sounds like gene therapy manufacturing in 2017 and IND coming from in-house, what's the appetite for BD with your balance sheet looking pretty solid right now?.

So, I think it's likely (01:19:38) we will announce another IND candidates this year, might or might not be a gene therapy product, I think might or might not be coming from the outside or it is probably likely to come from the inside research. So we did have a pretty significant pipeline that Hank's and Robert's team are managing.

So we are pretty busy. That being said, we always look at what's available in the outside because we are getting asked to look at some potential assets on a going-forward basis. So, there are some ongoing discussions, but the bar is relatively high.

But if we do find the right assets for us strategically at the right price, there could be some BD in the next few months..

Right. Thank you..

And your next question comes from the line of Kennen MacKay with Credit Suisse..

Hey, thanks for taking my question. Just a quick one on gene therapy.

I was hoping if you could just give us a little bit more color and then help us understand how long those patients had been sort of on-steroids and off-steroids at the last update? And then how that relates to sort of the upcoming data that we'll see without these prophylactic steroids? Thank you..

Yeah, we haven't given kind of the details on the steroid duration and partly that's because we're still settling out and we want to see what happens at 4013, we want to see what the final dose selected is. So, I'd say, stay tuned for more of that metrics on that.

Fundamentally though, the thing I want to remind people about is that we're talking about a very short course of steroids in the grand scheme of things. And for example, at our JPMorgan update as compared to our World Federation of Hemophilia update only six months earlier, all patients have gotten off of steroids.

So, we're not talking about a life of steroid therapy, we're not even talking about a year of steroid therapy, we're talking about weeks or months of steroid therapy. And these kinds of regimens of steroids are pretty well-tolerated..

Okay. Thank you. I appreciate the color..

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

Hi, thanks for taking my question. This is Prakhar Verma on for Steve. A question on Brineura. So do you expect administration to be in a setting similar to what was used in a Phase 3 trial or whether you – or do you expect administration to be allowed in the heart patient setting, and potentially even in a home infusion setting over time? Thank you..

Let me start by saying our clinical experience has been in a more carefully observed setting than home, for example. And I don't know that we're going to be superfast at moving patients from more intensive to less intensive oversight, and so we have a bit more track record and experience of safely managing infusions.

And I guess the other thing to say about that is, none of this is final really until the product is labeled which probably won't happen until the product is approved..

Okay. Thank you..

And your final question comes from the line of Gin Hee with Gabelli (01:23:35)..

Hi, thank you for taking my question.

I've got two longer-term questions, first on BMN 270, I'm wondering further down the road, would you plan to build your commercial infrastructure yourself or you would also consider acquiring from outside? And second on Brineura, if it is approved, I'm just wondering what's your thought on voucher, we've seen that recently the value has come down from last two transactions.

So do you have any plans to sell it or keep it for yourself? Thank you..

So I think the first question was related to commercialization plans for gene therapy?.

Manufacturing, in-sourcing or outsourcing?.

No I think what – (01:24:14).

No I think – Sorry, (01:24:17) your line is a little scrambled here, could you repeat the questions please?.

Right.

So my first question on gene therapy, I'm asking about your commercial plan further down the road, do you plan to build your commercial infrastructure yourself or you would also consider on clearing from outside?.

Yeah. So, Jeff here. We would plan to commercialize our BMN 270 program internally and not to externalize that effort..

And all....

And you have the same question for Brineura?.

Yes, second for Brineura, we've seen that the voucher, if it is approved, I'm just wondering what's your thought on that? We've seen that the voucher, the recent value has come down from last....

Okay.

So, you're talking about the Priority Review Voucher?.

That's correct. So, just wondering....

We would sell this voucher or keep it?.

Right..

I mean, yeah, we haven't decided yet considering that many of the products we are currently developing would – all of them or many of them would qualify for voucher also it's likely we will sell it, (01:25:34) but we haven't decided..

Thank you..

There are no further questions at this time. So I'd like to turn the call over to the Chairman and CEO for your final remarks..

So, thank you operator. So, in summary, 2016 was a momentous year for BioMarin commercially and from a regulatory and development perspective. So we achieved over $1.1 billion in revenues.

We are laying the groundwork for substantial returns going forward, and the top line growth in 2017 is expected to be around 15%, while our expenses will only increase by about 4%.

So, we're in the midst of a transformation from a small one or two product company toward a profitable growth story with multiple late-stage shots on goal, a number of which have blockbuster potential.

So we begin 2017 from a position of strength as our approved products are expected to drive record revenues again, so we await the outcome of our next potential approved products in Brineura.

We intend to file the BLA for our next product Pegvaliase next quarter to be enroll to the global vosoritide study and to move our gene therapy product into registration enabling study or studies.

So on the heels of these products, BMN 250 for Sanfilippo Type B will continue to enroll into expansion phase of the study and we anticipate filing of a new IND molecule to enter the clinic in the second half of this year. So, thank you for your continued support and for joining us today..

And that does conclude today's conference call. You may now disconnect your lines..