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

Cory W. Kasimov - JPMorgan Securities LLC Andrew Peters - Deutsche Bank Securities, Inc. Phil Nadeau - Cowen & Co. LLC Salveen Richter - Goldman Sachs & Co. Christopher Raymond - Raymond James & Associates, Inc. Joseph P. Schwartz - Leerink Partners LLC Matthew K. Harrison - Morgan Stanley & Co. LLC M.

Ian Somaiya - BMO Capital Markets (United States) Alethia Young - Credit Suisse Securities (USA) LLC Ying Huang - Bank of America Merrill Lynch Martin Auster - UBS Securities LLC Geoff Meacham - Barclays Capital, Inc. Raju Y. Prasad - William Blair & Co. LLC Jing He - G.research LLC.

Good afternoon. My name is Nicole, and I will be your conference operator today. At this time, I would like to welcome everyone to the BioMarin First Quarter 2017 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. Ms.

Traci McCarty, you may begin your conference..

Thank you, operator. Thank you, everyone, for joining us today.

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 products and programs, actions of regulatory authority, availability of capital, future actions in the pharmaceutical markets 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.

On the call today from the BioMarin management team are J.J. Bienaimé, Chairman and Chief Executive Officer; Hank Fuchs, President of Global R&D; Dan Spiegelman, Executive Vice President, Chief Financial Officer; Jeff Ajer, Executive Vice President and Chief Commercial Officer; and Robert Baffi, Executive Vice President of Technical Operations.

I'd like to now 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. We begin 2017 with a record-breaking quarter and a 28% increase in top line revenues to $304 million driven by the growth of each product in our commercial pipeline. In the quarter, our GAAP net loss was reduced to $16 million and we reported a non-GAAP income of $35 million.

In addition in the quarter, our commercial organization not only focused on growing the base business, but also prepared for the launch of our six approved product, Brineura for the treatment of CLN2 which is a form of Batten disease.

So we are very pleased to have received this approval last week from the FDA and also a positive CHMP opinion from the European health authorities in the prior week.

The collaborative interaction we had with both agencies, who have the review process, illustrates a fairly even therapy that treats rare and ultra rare disorders, not to mention the tremendous unmet medical need for these patients. The flexibility shown by both the U.S.

and EU is an important reminder of the value that targeted therapy can make in molecularly well-defined patient population. Our commercial organization has commenced the commercial launch of Brineura in the U.S.

and we look forward to starting our commercial rollouts in the rest of the world territories following an approval in Europe, which should come at the end of the second quarter. Needless to say, we are very thrilled for families who are in the need of Brineura, and we wanted to thank everyone who helped execute this rapid approval.

For the remainder of 2017, we look forward to advancing all of our development pipeline programs, including BMN 270 gene therapy for hemophilia A.

In July at the International Society of Thrombosis and Hemostasis or ISTH in Berlin, we plan to give you an update on this program including data on the seven 6 x 1013 vg/kg high-dose patients all of whom have been already in therapy for at least a year now.

We will send our details shortly for investor event on July 10, so stay tuned for more information as we get closer to this event. Later this quarter, we'll be on track to file our BLA for pegvaliase which is our next potential approval, and in addition, the vosoritide and BMN 250 programs continue to advance.

In conclusion, we begin 2017 having achieved the goals we anticipated and for the remainder of the year, we look forward to moving all of our patent programs forward, which Hank will review shortly.

With last week's approval of Brineura, we now have six commercial products, making BioMarin the pure-play leader in the field of rare and ultra-rare disorders.

The financial results announced today demonstrate our commitment to moving toward profitability through our ability to grow the top-line and manage expenses, while still continuing to invest in developing innovative new products for rare and ultra-rare disorders.

And now we'll turn the call to Jeff who will review the commercial business in more detail..

Thank you, J.J. In addition to being extremely pleased with the financial results in the first quarter, the commercial organization has begun the U.S. launch of Brineura.

Bearing in mind the nuances of treating the CLN2 patient population as we shared last week, our strategy is focused on building disease awareness and facilitating diagnosis of children early in the course of the disease. Our ultimate goal is to get children diagnosed when they are candidates that maximally benefit from Brineura.

Over time, we anticipate more and earlier diagnosis of CLN2 patients combined with the impact of therapy to lead to a substantial increase in patients for Brineura. Turning briefly to first quarter of 2017 results, we were pleased to announce an increase of 28% year-over-year total BioMarin revenues.

Starting with Vimizim, net product revenues increased to $106 million in the quarter, a 45% year-over-year increase primarily driven by 31% growth in new patients on therapy. Some forward buying positively impacted the quarter for markets in the Middle East and South Korea.

While we received Q1 orders from Brazil for each of Vimizim and Naglazyme, we continue to expect the inconsistent order patterns could persist from Brazil this year. Year-over-year patient numbers increased by 250, and in the quarter, we added one new market for a total of 42 Vimizim markets.

We are extremely pleased with the continued robust commercial uptake of Vimizim and look forward to further penetration in global markets. Turning to Kuvan. Net product revenues increased to $92 million in the quarter, an increase of 19% year-over-year driven by strong commercial patient gains of 8% in the U.S.

Kuvan business in international markets is performing according to expectations where we are identifying and pursuing growth opportunities.

In addition to our EU patent that provides Kuvan exclusivity through 2024 in that important region, we announced on April 13 that we had entered into a settlement agreement with Par Pharmaceutical to resolve patent litigation in the United States providing continued exclusivity to October 2020.

We view our leadership in the PKU market with Kuvan as an important opportunity for BioMarin in advance of potential regulatory developments with pegvaliase. Finally, moving to Naglazyme, net product revenues grew to $81 million, an increase of 25% year-over-year.

Patients on Naglazyme therapy continue to show consistent growth with an increase of 9% year-over-year. Growth in the quarter benefited from forward buying in markets in the Middle East and the effect of a Brazil Q1 order this year compared to the absence of an order in Q1 2016.

In closing, the commercial team delivered strong results in the first quarter of 2016 with net product revenues 28% higher than the same period last year. We remain on track to meet our full year revenue guidance of $1.25 billion to $1.3 billion and reaffirm guidance provided last quarter for individual products.

I'm very pleased with the level of demand we are seeing for Vimizim worldwide. Our presence with Kuvan in global markets will be an important factor as we prepare for potential approval and commercialization of pegvaliase, and in addition, we are underway with U.S.

launch of Brineura and look forward to launching in the EU upon a decision expected later in the second quarter. Now, I'd like to turn the call over to Hank to provide an update on our development programs..

Thank you, Jeff. And it is hard to believe that I will no longer be including Brineura in my commentary now that it's on its way to being a commercialized product.

Needless to say, we're thrilled with the recent FDA approval with a positive CHMP opinion and look forward to helping Jeff seeing brand Brineura to the children who need it as soon as we can. Moving now to development updates for our next potential approved products.

All of our pipeline programs advanced to the quarter laying groundwork for their next stage of growth. Starting with pegvaliase for the treatment of phenylketonuria. At our last update, we communicated that U.S. health authorities were interested in additional immunology data and that we had chosen to update the safety database.

We are now nearly finished conducting the analyses requested by the Food and Drug Administration, and there's essentially no change in the findings of the program we have shared as part of our pivotal study update last year. That is pegvaliase substantially lowers phenylalanine in patients.

As we have said, lowering phenylalanine is primarily dependent on the level of their immune response, which can be safely managed through the induction, titration and maintenance strategies that have been tested in clinical trials.

Importantly, longer-term safety data continue to convey tolerability of pegvaliase and continuation on treatment remains strong. We're making plans to incorporate the patient's voice in the review consistent with the Food and Drug Administration's increasing interest in patient-focused drug development.

We believe this will be an important aspect of the review as current options for patients are quite limited and relatively unpalatable. Finally, the company is progressing on plans to support post approval commitments as may be deemed necessary during review.

All told, we're quite pleased with the progress being made on pegvaliase and look forward to providing further updates as the submissions occur. Turning to vosoritide.

When we last updated on progress, we enrolled the first patient on the randomized study that is an important element in establishing the benefit of vosoritide in promoting increased growth velocity.

We're now finalizing plans to acquire final adult height data from a current population of achondroplasia, children and adults, to facilitate interpretation of longer term growth outcomes, also known as final adult height, and proportionality.

To further our knowledge, we are implementing pilot studies to understand the relationship of height and function, support improvements in patient functionality. We're modifying our infant/toddler program to enable investigation of earlier intervention with vosoritide.

Recall that obtaining information about infants and toddlers has become an increasingly important part of BioMarin's genetic disease development programs, evidenced by conducting a small post-approval study with Naglazyme, a larger study with Vimizim, and a small study with Brineura, and now a study in younger children with vosoritide.

Most importantly, we continue to believe that vosoritide did present an important option for those patients and families who desire to improve growth outcomes and are unsatisfied with available surgical options in the absence of available medical therapy.

And finally, turning to BMS 270 for gene therapy for severe hemophilia A, we have now completed dosing of six patients with a 4 x 1013 vg/kg dose and look forward to having some preliminary efficacy data. The focus of our updated ISTH will be data from patients who had a 6 x 1013 vg/kg dose, many of whom have been on therapy for well over a year.

Recall that based on the 6 x 1013 vg/kg data and work by others, it takes roughly 16 to 24 weeks from dosing for Factor VIII levels to reach steady state. And this will be available in the 4 x 1013 vg/kg patients later this year.

We're also preparing to update on long-term outcomes, quality of life, steroid use and liver function at ISTH either in presentation and/or at an investor event at the upcoming meeting.

On interactions with health authorities, we've completed one round of discussion with the Food and Drug Administration and the European Medicines Agency on the path to registration, working to harmonize feedback, finalize the program studies to support fastest and best path to approval.

On the manufacturing front, we're well past shovels in the ground for our facility and believe material from this facility will be available to be included in the registration enabling study in the spring of 2018. In summary, we are extremely pleased with the productivity coming out of the worldwide development organization.

We have learned so much over the past years on how to best focus our development programs to enable rapid and effective drug development in BioMarin.

Coming off the recent FDA approval of Brineura after three years and eight months in development, my team and I are more inspired than ever to continue our good work for the benefit of patients with rare and ultra rare disorders. Thank you so much for your support.

And I'd like to turn the call over to Dan to review the financial results in more detail..

Thank you, Hank. I refer you to today's press release for a full detail summarizing our financial results for the first quarter of 2017. Starting with top line results, as J.J. and Jeff have already described, total BioMarin revenues for the first quarter of 2017 were $304 million driven by strong growth across the entire commercial portfolio.

In terms of foreign exchange impacts, year-over-year exchange rate movement did not have a material impact on our Q1 results as losses due to the weakening of the euro and the British pound against the dollar were largely offset by improvements in key Latin American currencies and gains on our hedging contracts.

Moreover, we expect that trend to continue for the full-year and do not currently project a significant impact to foreign exchange on full-year revenues in 2017. As Jeff noted, full-year revenue guidance is on-track for $1.25 billion to $1.3 billion, which at the midpoint would reflect the 14% year-over-year revenue increase.

The approval of reserve will provide important support towards our goal of ensuring year-over-year revenue increases throughout the remainder of the decade.

Moving to operating expenses, R&D expenses decreased to $145 million in the first quarter of 2017 compared to $158.8 million in the first quarter of 2016 due to the maturing stage of development of our product development portfolio.

We would expect R&D expenses to ramp up throughout the remainder of the year primarily due to the increasing enrollment in our vosoritide Phase 3 study, which started at the very end of last year and the start in Q3 of our registration-enabling studies with BMN 270.

In addition, there will be increasing R&D investment in BMN 250 studies and in preparations for potentially bringing a new product into the clinic. Expenses in all of these programs should accelerate throughout the year. Furthermore, consistent with our experience after drug approvals, even though Brineura is now approved in the U.S.

and potentially in the EU by the end of the quarter, there will still be R&D spending on this product while we seek regulatory and reimbursement approvals throughout our global territories and transition patient onto commercial therapy.

Similarly, over 200 patients were made in pegvaliase extension studies as we prosecute regulatory approvals in both the U.S. and Europe. SG&A expenses increased to $120 million in the first quarter of 2017 compared to $105.3 million in the first quarter of 2016.

The year-over-year increase primarily reflected the continued expansion of dividend as well as increased expenses related to ROW Kuvan sales to support of our global PKU franchise. With the launch of Brineura and early preparations for potential 2018 pegvaliase launch, we expect SG&A spending to also increase later in the year.

Turning to bottom line results, we reported a $16 million GAAP net loss and $35 million non-GAAP net income in the first quarter of 2017, compared to a GAAP net loss of $83 million and a non-GAAP net loss of $29 million in the first quarter of 2016.

Looking forward, due to the timing of the Brineura launch and the ramp up of our BMN 270 gene therapy and vosoritide programs, we expect an increase in both R&D and sales and marketing spending in the later quarters of the year, which will lead to increased quarterly GAAP losses and a decrease in non-GAAP income in the second consecutive quarters of 2017.

Those spending will increase throughout the year as these development and commercial programs ramp up, we remain on track for full-year GAAP loss of $140 million to $180 million and non-GAAP income of between $30 million and $70 million.

At the end of the quarter, we had cash, cash equivalents and investments totaling $1.2 billion compared to $1.4 billion at December 31, 2016. In closing, BioMarin delivered record results with robust sales from Vimizim, Naglazyme and Kuvan, resulting in reduced GAAP net losses and generating GAAP net income in the quarter.

We expect the ramp up of our (19:27) pipeline products and the launch of Brineura to impact non-GAAP results in the second quarter with our 2017 non-GAAP expectation for the full-year is unchanged.

Looking beyond 2017, we are driving for year-over-year revenue growth through the end of the decade and controlled operating expenses, which increased less than revenue and allows expanding operating margins and increased bottom line results. Now, I would like to open the call for questions and will ask the operator to open the lines..

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

Good afternoon, guys. Thanks for taking the questions. Wanted to ask you about pegvaliase with the pending filing you have there.

First of all, is it the same division of the FDA that just reviewed Brineura that's going to be looking at pegvaliase as well?.

Hi, Cory. Yes, this is Hank. Same division, the Division of Gastrointestinal and Inborn Errors Products..

Okay.

And then, I mean at this stage of the game, I realized you're just kind of coming to focus a lot more in the coming months here, but what are your latest thoughts in terms of where you expect regulatory focus to be for this particular application?.

You're right. It's a little bit early to get into exactly where that's going to be. I think qualitatively, it's going to be in fairly similar places like it always is, safety, efficacy, overall benefit and risk. Now, the safety front has been well described.

We've created a PEGylated enzyme that has a safety profile that's remarkably similar to our recombinant human products. Efficacy, we achieved Phe lowering in a very substantial portion of patients and only we'll be able to see an indirect evidence of a benefit on neurocognition.

And I think the benefit risk concept has to be considered in the light of what's available alternative. And sadly, for so many patients in the PKU arena, there aren't very good alternatives. So medical food is unpalatable and unpleasant, has its own toxicities.

And so, we hope that that will be the framework for evaluation during the review, but stay tuned for more considerations..

Okay. And then last thing, Hank, on this front, when you said you're looking to include, I think you said patient voice into the package..

Yeah..

Can you provide a little more color as to what that means?.

Yeah. So, there are initiatives underway at Food and Drug Administration around patient-centered drug development and bringing patient's voice more in the process. You're familiar with us from the point of view of the open mic session at the Advisory Committees.

You're also aware that the frequency of Advisory Committee is probably diminishing as time goes by and is less and less relevant in the rare and ultra-rare disease space.

And so, we look for ways to, and so does the Agency, for ways to hear from patients in the development and regulatory process that helps make their interpretation of benefit risk most relevant to the patients, and to do that in a way that is more rich than simply the one hour in the Advisory Committee, which is diminishing in frequency.

There are a variety of ways to do that. We have a lot of experience doing it, recently, gained a lot more experience doing that both in the U.S. and the EU with Brineura, and stay tuned for more specifics about that as the time draws closer..

Okay. Thanks, again, for taking the questions..

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

Hi, guys. Thanks for taking my question, and congrats on all the progress.

Question for Hank, on BMN 250, can you just run through the relationship again between heparan sulfate and neurocognition? And how you think about kind of the importance of some of the non-CNS disease burden going forward? And then just looking at the move from the 30 mg per week to the 300 mg dose, given the striking data that you saw at the lowest dose, what do you think the benefit is of moving to kind of a 10 times that high given that you're already seeing reductions in the biomark onto the normal range? Thanks..

Okay. Thanks, Andrew. So, heparan sulfate is one of the species of glycosaminoglycans that is not metabolized – tabolized, I should say, (24:39) correctly in the absence of this enzyme, NAGLU, and accumulates in brain cells.

And its relationship to neurocognition impairments has really been best studied preclinically in the absence of clinical programs to document relationship between reductions in GAGs and improvements in neurocognitive outcomes.

In animal species, what we have shown is that the direct delivery of the enzymes to the brain results in a reduction in measurable levels of heparan sulfate in brain tissues. And it's also accompanied by improvements in physiopathological evidence of neuronal cell health.

And so, we think that the reduction by the delivery of the enzyme that's missing (25:36), the clearance of the storage product out of brain cells and the restoration of neural health will translate into resumption of normal cognitive development in MPS IIIB.

As regards systemic or non-PNS or somatic manifestation of the disease, there is evidence of somatic impairment in MPS IIIB. Presently these morbidities are not as consequential for the patient as the CNS manifestations, and it's really the CNS manifestation that in today's world caused so much more morbidity.

But one could imagine that if we have the same kind of effect on MPS IIIB that we have with that disease that there is the possibility that somatic manifestation for disease could become more pronounced. The modulator of that of course is just how much NAGLU gets into the periphery after an ICV delivery and MPS IIIB.

And it's possible that some of the somatic manifestations may not develop, simply because there is some degree of enzyme delivered to the periphery. Stay tuned. It will take a while to learn more about that, and clearly, we'll learn more about that from the use of Brineura in CLN2 disease.

And then finally, the rationale for going higher in dose on one level is the Phase 1 study to learn the tolerability of higher doses. And what we don't yet have evidence of about is the quantitative nature of the relationship between certain levels of GAG reductions and improvement in clinical outcomes.

We'll be conducting some more preclinical experiments to better understand that. And as to what dose might be taking forward for commercialization, again, it's a little early to speculate about that so stay tuned. Hopefully (27:37)..

All right. Thank you..

Concise coverage (27:40)..

No. No. That's great..

Next?.

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

Good afternoon. Thanks for taking my questions. One commercial, then one pipeline. First, on the commercial, you did mention that there were some pull forward of the ordering patterns in Q1.

Can you give us some sense of how that's likely to play out for the rest of the year? Is it all going to be felt in Q2 or is it more going to be spread over the subsequent quarters of the year? And then second, on pegvaliase, one for you, Hank.

Could you remind us what prompted the FDA to require that the new immunology analysis, was it simply that a lot of time had passed since the trial or was there a more specific question that they informed you about?.

Hi, Phil. Jeff here. I'll cover the first question. Wanted some evidence of forward buying, which is not unusual for these markets in Middle East, some markets in Asia, Latin America.

Usually we don't see the impact of that all at once in the next quarter and we would quantify – as we've estimated that the impact on both Vimizim and Naglazyme to be a combined about $5 million to $10 million in the quarter..

Good. Thanks..

And as to what prompted the Agency's request for additional analysis. It wasn't so much that it was driven by findings and discussions in the time before the BLA submission is driven more by the nature of the substance of the drug product.

So to remind you PEG-PAL is phenylalanine ammonia lyase, which is a protein of non-human origin, which is pegylated to reduce the immunologic sequelae of developing an antibody response. The Agency, and it's earlier question we discussed, this is the same review division that is familiar with our Aldurazyme, our Naglazyme, our Vimizim.

So, they are quite familiar with the immunologic responses to recombinant human products, but they are not quite as familiar with immunology, the response to a heavily pegylated bacterial product.

So, we're talking about something somewhat new and recall also that some of our commentary about working with the DGIEP is that like other review division, they are stretched in for resources. So, knowing that the review time lines are going to be tight, it's really important for them to hit their PDUFA metrics.

They have limited vehicles for extending submission reviews through major amendments. The agency requested that we provide as much of the immunology data upfront to facilitate their timely completion of their review.

So, it was a negotiated agreement with the Agency about how much to give them in advance and how much to expect them to be undertaking as in process review..

Actually – okay. That makes a lot of sense. Thanks again for taking my questions..

Sure..

And our next question comes from Salveen Richter from Goldman Sachs..

Thanks for taking my questions.

Regarding BMN 270, can you comment on steroid tapering or anything new need for steroid use and preliminary thoughts? Have you had any on the pivotal trial design?.

So, steroid, there is not really much of an update to give. I mean we'll cover this in a little bit more detail at ISTH.

Just recall, the last update that we gave, I think the comment was everybody is off steroids, and everybody's liver function except for one patient, is down to normal and the one patient that wasn't already normal was at 45 with an upper limit of 43 or something like that.

And so, there really is nothing new to report, and everybody is perking along and stay-tuned for a real update in the mid-year ISTH meeting. As regards the pivotal trial program, and I think there are sort of two poles of consideration.

Clearly, one is, is that the potential for benefit is quite substantial in regard to reduction in bleeding episodes, reductions in Factor VIII use, improvement in quality of life related to reduced bleeding, reduced recombinant medications, potentially improved quality of life because of a reduction in bleeding frequency that is not treated as a bleed.

For example, visceral bleeds are often not recognized as bleeds. So, there's quite a bit of desire to document that in a pivotal trial to support adoption and reimbursement. And we have every reason to believe given the data that we have obtained so far is that that's what will happen.

At the same time, you've got an end point Factor VIII levels, which has got to be viewed as reasonably likely to predict a clinical outcome. And so that could offer an opportunity for an accelerated approval in the United States or conditional marketing authorization in Europe.

And the virtue of that pathway is that it enables access to treatment faster than might otherwise be available if the product was approved under a standard approval mechanism. That's why they have accelerated conditional marketing authorizations in the U.S. and EU collectively.

So, is it exactly what we settled on for the overall development program? TBD, but I think that's a little bit of color on how we're thinking about the opportunities there..

Great. And, Hank, just a follow-up here in MPS IIIB.

When should we get the next update, and then any updated thoughts on patient epidemiology or the competitive landscape?.

Well, on the competitive landscape front, pretty easy to say that the other folks are I think recognizing what we had recognized, which was direct brain delivery is probably a better idea than other approaches given the existence of a blood brain barrier and the need for relatively dramatic reductions.

We are in the process of completing analysis of the patients in the dose escalation phase. We are busy enrolling more patients in the national history study, and ultimately, they'll flow into the treatment study. As to when the next update will be, I don't think we've penciled that out just yet, so stay tuned..

Thank you..

And our next question comes from Chris Raymond from Raymond James..

Okay. Thanks. Another question on BMN 250, if you don't mind.

So, Hank, I wonder if you could clarify – I know you said it's too early to talk about a final dose, but did you go directly from 30 milligrams to 300 milligrams or were there any interim steps in between? And then can you just clarify, is the expansion phase, they will all – the expansion phase – would that all be at the 300 milligram dose? And then finally on that, what's a reasonable timeframe to expect a neurocog result from that cohort?.

Okay. So let's see, I'm going to do my best to remember the questions. So the patients were escalated from 30 milligram to 100 milligram to 300 milligram. So there was an intervening dose between 30 milligram and 300 milligram.

And all of the patients in the expansion will start at 300 milligram together, the most information we can on the safety of high exposure and also the effects of higher doses on maintenance of GAG lowering. To remind you in the first three patients dosed at 30 milligrams, two out of three had heparan sulfate levels that moved into the normal range.

And a third patient's CSF GAG levels moved into the normal arrangement to hover just above the normal range. So, we'd be very keen to see more data on longer term suppression of CSF GAG levels at the higher doses. Now, a timeframe on which to expect that update to be provided, I think again, is a little premature.

Some of that has to do with the rate of enrollment in the natural history study. Some that has to do with the rate of transfer of patients from natural history into the drug study. So, it's really premature to speculate on when those data are available.

I think also the nature of the question was when can we expect to see neurocog if there is a benefit. And the thing to say about that is that the primary outcome measure here is development. And if we see as good a result as we saw with Brineura, that might happen relatively quickly, but we don't know what magnitude of result we'll observe.

So, that's also another complicating factor sort of estimating when there will be an update of relevance on NAGLU..

So, that was actually my next question is, and maybe one that you're not ready to answer is, are there brackets around the magnitude that you'd need to see, at least in terms of what FDA is looking for or what you think you'd need in terms of neurocog benefit?.

Yes. Well, what I can say is that we think that relatively low order magnitude reductions in CSF GAGs are unlikely to be clinically beneficial. And we based that on animal data that I referenced earlier in which you can't really impact neuronal cell health until you get to substantially more marked degrees of CSF GAG reduction.

And we also partly based that on more intermediate impacts on CSF GAGs in MPS II and MPS IIIA, which were not accompanied by overt clinical benefits in patients treated with enzyme replacement therapy delivered via lumbar intrathecal delivery.

So, we think that you've got to push GAG levels down pretty far if not as far as you possibly can to achieve the dramatic effect that we like to see..

Okay. Thanks..

And our next question comes from Joseph Schwartz from Leerink Partners..

Great. Thanks very much.

I was wondering if you could help us understand when we're likely to get the performance of the patients that are getting BMN 270 at the 4 x 1013 vg/kg dose?.

So, as I said in my prepared comments, based on the observations that me and others have made, it takes about 14 to 26 weeks after gene transfer for liver expression to stabilize. And based on the timing of the doses that were given, we expect the data on 4 x 1013 vg/kg later this year.

Now, I think what people are going to try to resolve to is what expectation to have for the ISTH update if the data are not there, what does it mean? It probably would only mean – and I'm saying this because we haven't arrived at any point of stabilization, because the presentation of data will be informed by whether it's officially mature yet as opposed to whether it's too early to make these data available.

I would say and just remind people that with those patients, first three patients, we wait a little while before deciding whether to dose the next three patients with the same or higher dose. We dosed the next three patients at that same – what we're calling the mid-dose or 4 x 1013 vg/kg.

And you can interpret that was because we're pretty enthusiastic about what we were seeing among the first three patients. As to exact numbers and exactly what's going to get presented and when it's going to get presented, we need to leave a little room for allowing the data to mature, and we're just not there.

I know we're eight weeks ahead of the event, but we're just not at the event yet..

All right. Okay. And then on vosoritide, it sounds like you were modifying the randomized study, if that's right and then adding some ancillary studies.

Can you explain some more about what's going on there?.

Well, it was really more around modified ancillary studies. The trial is in rolling now, one year placebo controlled, randomized clinical trial continuing substantially unmodified as we talked about it in the past. The ancillary studies are a program of studies that we've talked about in the past.

We've talked about the functionality, proportionality, final adult height and safety efficacy in infants and toddlers.

And as has been our tradition in the past, we usually concentrate on getting the randomized study up and running first, and then we turn our attention to the ancillary studies for the simple reason that the randomized trials usually provide about definitive evidence and the ancillary trials if they require it all for registration are supported at best.

And so, the commentary was simply that as regard to final adult heights, we're building more contemporaneous database that relates final adult height in achondroplasia and relates final adult height in achondroplasia to functional outcomes related to proportionality of the functional outcomes.

So just giving a little bit more specifics about the objectives of that portion of the program and then a little bit more specifics around the infant and toddler study by saying that it's very important in providing additional evidence of growth benefit as well as potentially neurological benefit of introducing vosoritide.

And those modifications for that portion of the program were being undertaken. Now that we have so much more safety and efficacy data from doses in older children.

So, again, the big picture is the vosoritide is progressing, randomized control trial underway, ancillary studies in support of decision making by payers by regulators and stay tuned for more updates as those studies get more completely finalized..

And our next question comes from Matthew Harrison from Morgan Stanley..

All right, great. Thanks for taking the question. I have two follow-ups and I think they're more just clarifications. Hank, on vosoritide, can you just talk a little bit about the younger kids studies that you're going to start.

I mean is there any dosing work that you need to do there and sort of what's the age range of patients that you were considering and then – or if you don't need it to dose (43:19) physicians to start something where they're going to look at growth velocity.

And then, if you could just clarify, because you said a couple of things about BMN 270 data at ISTH. We will see data from 4 x 1013 vg/kg (43:33) cohort and it's just unclear about the scope and size of that data or is it possible that we won't see any data from that cohort? Thanks..

Well, we'll take the last part first. It's possible you won't see any data from the cohort. It is also possible that you'll see some data from that cohort and it's just too early even recognizing that it's not that far away from now. Just you want to let the data mature and we don't want to present something potentially misleading as it is maturing.

So stay tuned and then we'll do our very best to get you relevant information just as soon as we have it. And then on BMN 111, I don't know that I can be more concretely definite than just as to your questions, we're excited to say more specific.

We're evaluating the data that we have on exposure and age to determine if its substantially likely that we would need to have different doses in much younger children. And the age range that we would be considering is – in a randomized trial, you're eligible if you're older than five.

But we recognized (44:45) diagnosed, oftentimes either before birth or at birth or shortly after birth, and that families will want to know, is it safe to start vosoritide or when is it safe start vosoritide. Especially given that the earlier you treat a genetic disease, the better your long-term outcome is.

So we're scrubbing our safety exposure response data from our existing population. We're endeavoring to push, in partnership with health authorities and our clinician advisers to progressively younger and younger children to establish safety and potentially efficacy.

And until that trial is up on clinicaltrials.gov, I think it would be too preliminary to speculate on the exact final clinical (45:34) study..

Okay. Perfect. Thanks very much..

Yeah..

And our next question comes from Ian Somaiya from BMO Capital..

Thanks. Just maybe a follow-up or two. On BMN 270, it seems like you and one of your gene therapy competitors might have data in Berlin.

Hank, maybe if you could just share with us your thoughts on as we all try to compare across trials, what we should be looking for?.

The non-cheeky answer to that is going to be – well, it's going to sound cheeky no matter how I deliver it. It's going to be the fact – it's how much experience in time do the various assets have under their belt.

When we first – I think the picture that we have of BMN 270 now at the year-plus mark is substantially different than where it was at say the half-year mark.

I mean just to remind you at R&D Day last year, I think we were presenting that we had gotten an effective gene transfer to some patients, but we're also in the middle of dealing with some liver function test elevations and some regulatory interactions around those liver functions test elevations.

And as you flash forward, you realize that all that had settled out and hardly any of that was relevant. So I think, with us positioned so far out in front of the competition, it's going to be a little hard to get apples-to-apples comparisons to seize the time differences the two programs have.

I think the second thing is to just remind that, yeah, it can be very difficult in the best of circumstances can compare drugs that were not studied in the same study. And so I suspect that the followers will be talking about how great their evidence is that stacked up against our data.

And I would just caution that that's hard to do in even the best of circumstances. Our focus will be on getting our BMN 270 across the finish line and that's what you're going to hear from us..

Okay. And if I may just ask a follow-up question in regard to the potential pivotal design for BMN 270, I know you've mentioned annualized bleeding rates. You mentioned Factor VIII levels.

Is it possible for you to just maybe opine on the size of those studies and potential duration of a follow-up that the FDA might require?.

I can opine on practically anything.

So I think you see the stabilization in Factor VIII levels, 14 to 26 weeks, the question I think the health authorities will ask is, is that long enough to be sure that levels aren't going to go dramatically up after that period or dramatically down after that period, but I think you can get a sense of a dramatic effect on Factor VIII expressions in half a year.

On bleeding, there have been clinical trials that have led to approvals of products with the half a year of data. My suspicion is that in gene therapy on an important clinical outcome like bleeding, health authorities are going to want to see more than half a year of data on bleeding rate.

I think the bigger difference between the two pathways is likely to be sample size. When you can correct the gene expression from less than 1% to in the normal range, it's not going to take a lot of patient sample to document that.

If that's going to take a lot of sample sizes to document an 91% reduction in bleeding frequency either although that number could end up being a little bit bigger than the Factor VIII number simply because of the trial design considerations. So stay tuned..

Okay. And one question for J.J., if I may.

What are the plans for the pediatric review voucher?.

We haven't really decided at this time. A lot of the products we have in development actually would themselves be getting priority review. You don't know this time is pegvaliase will get priority review. So it will be in the equation but that's not the only thing.

So, we might look at divesting this voucher, but again, we haven't made any final decision..

Okay. Thank you..

And our next question comes from Alethia Young from Credit Suisse..

Hey guys. Thanks for taking my questions. Maybe I'll start with the first one back to PEG-PAL and kind of anymore consensus about measuring neurocog or anything maybe on the more quantitative side that you can include in the package? And then I have a couple others..

Hi, Alethia. I think we've came to the pretty comprehensive story already about what we know about neurocognition which to just remind you is that there is pretty heterogeneous phenotype of cognitive impairment in PKU patients. The predominant form of impairment is inattentiveness, but there are also other neurocognitive manifestations.

Some of those include mood disorders like anxiety and depression, but some of those also include dimensions of neurological health like executive function, judgment ability, et cetera. We concentrated on the inattentiveness in the previously conducted pivotal trial for the simple reason that was the most prevalent of the forms.

We documented that the neurocognitive impairment in phenylketonuria in adults is not irreversible, but for reasons we don't completely understand, we were unable to document improvement in neurocognitive outcome in patients randomized to withdraw from pegvaliase compared to patients who were maintained on the pegvaliase after achieving a steady pegvaliase dose.

That may pertain to the tools and that may pertain to the timeframe. So, we also demonstrated some trends in some of the more quantitative aspects of executive function, specifically computer sets, the tests of processing speed, as an example. We referred to that as CANTAB in our previous communication.

And we're working with experts and agency to identify what could be used in a post-approval trial should that be warranted. And I want to remind you from my prepared comments that no definitive path has been determined for the application or for the approval.

We are working in parallel with the agency anticipating and wanting to be ready for whatever post-approval commitments come our way. And so we're examining these issues very carefully and closely right now. We haven't settled on exactly what to do next in regard to measuring neurocog in PKU patients..

Great. And so on the gene therapy manufacturing facility, I know you talked about mid-year as kind of timeline. Is there anything else that kind of needs to be done from a regulatory standpoint? Maybe just kind of walk us through the what's next briefly at a time and last steps.

And then the last question is probably for Jeff, around – can you talk about potential impact of Kuvan, of generics? Do you think it's like kind of a slope, or do you think it's a cliff and why do you think that thing? Thanks..

So let's start with manufacturing. We got Robert Baffi, our Head of Technical Operations here on the line.

So Robert, you want to answer that question on gene therapy manufacturing?.

Yeah. Sure J.J. Thank you. So where we are now with the facility is we've mechanically completed the facilities, that means all the major pieces of equipment have been installed. We go through a commissioning phase which will take approximately two to three months to make sure all equipment is appropriately validated and operational.

And then we'll go into production starting in the late part of the third quarter, and eventually, as we produce and characterize that material, we will have to file that facility as with the Agency and that's the main reasons why the timing for bill of material goes into the second quarter of 2018..

Thank you, Robert.

Now Jeff to answer the question on generics?.

So Alethia, I think you're referring to what would our expectations be in the U.S. market to....

That's right..

... the generic entry. And I think that we know very well how to characterize the generic entry for a traditional retail type of pharmaceutical.

It's less clear what to expect in the case of Kuvan, because of our unique business model, and because there's not really very many, if any, good analogs to follow of specialty products with closed-loop distribution systems facing generic entry.

So anything we have to offer on this one is speculation, but some of the things that we're thinking about are the traditional methods by which generics get rapid penetration and displace the reference brand may not apply here.

We may have some advantages favoring Kuvan, based not only on the distribution model, but our relationship with prescribers and patients. And also, we are not underestimating the ability of a generic competitor to find cracks in the model.

So, can't provide very specific guidance to you other than saying we don't think it's going to be exactly a traditional cliff like with a standard retail pharmaceutical..

Yeah. I also want to add that. I mean, of course, it was going to be depend whether or not pegvaliase (56:27) October 2020 in the U.S. and the extent to which some Kuvan adult patients moved to pegvaliase in the U.S. And also, I just want to remind you that the October 2020 date is only I guess the U.S. market.

And for Europe, we think we have market protection until 2024..

Great. Thanks..

Our next question comes from Ying Huang from BoA Merrill Lynch..

Hi. Good afternoon. Thanks for taking my question. I have one for BMN 270 regulatory path here. Can you clarify whether you have had a meeting or you will schedule a meeting with FDA before you start the potentially pivotal Phase 2b trial? And then under which conditions do you think FDA would deem that trial pivotal? Secondly, maybe for Hank again.

You are now assessing the proportionality in the Phase 3 trial for vosoritide but how important is that end point in the regulatory's eyes when you apply for approval pending the positive Phase 3 trial? Thanks..

How important is I guess....

(57:38) and the risk and the regulatory landscape (57:41)..

Okay. So I mentioned that we've had completed one round of interactions between EMA and the FDA. So hopefully that answers have we met with the FDA.

And as to the path between now and the initiation of the Phase 2b study or the next study, and further FDA interactions, I probably won't give more specific comments about that until we're closer to the initiation of the clinical trial.

Your question about what would be the basis for approval? I think it was, of the next trial that we do and as I laid out, that could be – if that trial is a factoring endpoint, it could lead to an accelerated approval in the U.S., conditional marketing authorization in Europe.

If that end point ends up being bleeding rate, that could lead to a full approval in both territories and exactly what mix and what approach we take, we're still in the process of harmonizing the feedback that we've obtained from the different regions.

So a fairly normal phase or the process of pivoting from proof-of-concept into registration-enabling trials where we want to get the heaven of the best possible data to support adoption and reimbursement and the fastest regulatory action, so we can get started selling the product to patients.

Now, switching the gears and talking about proportionality. The importance of proportionality, I think, is that it's something that defines achondroplasia different than growth hormone deficiency and represents an additional source of morbidity.

It is less clearly understood than growth velocity as an outcome variable in statural disorders than proportionality is, but it could be relevant to substantiate that there is benefit for treatment beyond just growing faster. It could be that improving growth improves proportionality, improving growth and proportionality improves functional outcomes.

And therefore that could be part of the story of how vosoritide gets approved at the end of the day. Now we're still collecting and doing trials and collecting data, so it's premature to speculate on what the outcomes of those trials will be, what significant regulatory review of those trial results is going to be taken for all of that..

Thanks..

And our next question comes from Martin Auster from UBS..

Hey, guys. Thanks for taking my question. I had a follow-up on the BMN 270 manufacturing discussion that was laid out a little bit earlier. You spoke of a roughly nine-month timeframe between product production in Q3 of 2017 until Q2 2018 when the product from the new manufacturing facility could be introduced into the study.

I just wanted to confirm that you intend to use the commercial produced product into the registration study? And also kind of, if you can comment on kind of your confidence level around that roughly nine-month timeframe and any key gating steps in that process? Thanks..

Okay. I'll start and then again, Hank and Robert can provide their perspective. It says on the big picture plan here when we said we anticipate starting the single trial (01:01:59) in Q3 at the time. And of course based on the timelines for the new facility, when we start that trial, we cannot use material from the new facility yet.

So the plan in that case is to use material from a supplier that's used for the same process as the one we intend to use in the new facility but at a different scale, and it would be a larger scale in the new facility.

Now, our intent is that to start sourcing, the product can be used in the field trial in the spring of next year from the new facility, and at the same time, anticipate to show comparability between the material provided from the current supplier and the new facility material.

Should we be unable to show comparability between the two materials, then our current plan would be just to extend the field trials so as to enroll a sufficient number of patients from the new facility to still get approval with just patients treated from the new facility which will be the commercial scale and commercial process.

Let's get out the big picture.

Hank, do you want to add anything to that for Robert?.

Well, so one thing I would add – that's exactly the right description. You can think about what factors would cause an agency to be concerned about scale up and what factors would cause them to be unconcerned.

So the better our comparability data, the less concerned they'll be and more willing they might be to accept the pooling of data from the two different sources.

And then another aspect of consideration will be what's the relative benefit? And I think you can tell from the fact that we've received prime designation from the EMA, that there's a clearly clear recognition that the potential benefit of gene therapy is huge.

So I think our view is, is that that's a reason to believe that we might be able to pool the results from studies of teams of the smaller scale same process with larger scale same process, but as J.J. laid out, stay tuned for how that action turns out..

Okay. Thanks for taking the question, guys..

Our next question comes from Geoff Meacham from Barclays..

Afternoon guys. Thanks for the question. You had another one on BMN 270. So Hank, I know you've had some preliminary regulatory discussions but I was just curious if you had any thoughts on there being any major differences and how the U.S.

versus EU versus Japan, for example, the attitudes on risk benefit for BMN 270 and maybe some of the goal post that they would look for on the safety side, are there subtle differences that you'd expect or can you use the single trial across the globe to support approval?.

Well, I think you just put your finger on the pulse of it. In the rare disease space, I think (1:04:38) has recognized the challenge of having region-specific trials.

And part of the prime process is for them to be able to touch all the different corners of their process as early in the process as possible to facilitate that harmonization between the European Medicines Agency and the Food and Drug Administration. Japan, we don't have as much experience with gene therapy just yet.

So, my comments will be confined with the EMA and the FDA. My expectation is that the differences will be more subtle than they are major, but having this in the details and again you have to stay tuned to see how we're going to harmonize those various details..

Okay. Great. Thanks..

And our next question comes from Raju Prasad from William Blair..

Thanks for taking the question. Hank, we've spoken to the few KOLs that showed a little bit concern on factor levels above 125%.

Is that something that came up in regulatory discussions that you've had?.

I think the important thing to remember is just that we have a trial that allowed us to treat patients with that 5 x 1013 vg/kg dose that produced for one patient who's factor levels were above the upper limit normal. I'm not sure I know where the famous 125% or 120% (01:06:11). I mean that value is in the normal range.

So I'm not sure where that concern emanated from. What we've said is that one out of our seven high-dose patients had stabilized around 250% and the remainder are below that upper limit of normal.

So we've talked about what the ethno-immunologic evidence for how to evaluate the consequence that are and have characterized that as being fairly negligible.

Having said that, we don't expect that every KOL is going to have the same opinion of the data on being number one and that it will take more and sample size longer-term follow-up to accumulate more data that will ultimately bring all prescribers into – or as many as possible into the viewfinder for prescribers as – prescribers of gene therapy.

So we're pretty comfortable with the outcome of program so far from a health authority perspective. Stay tuned for more details about the program..

Great. And then....

And this is in the context, if I may add, of where we stand now is – or the patients that have been treated with a high dose where we indeed had one patient that was above 150% which is upper limit (01:07:42). That's why we real puzzled by this 125% because as Hank said it is still within normal range, so we know where it comes from.

Just in the context of patients that have not had any (01:07:54) or any need for recombinant Factor VIII infusion since July of last year..

Great. And then just a quick one, the manufacturing facility. Can you give some more color on the capacity days we have as far as – will you guys be able to produce other vectors aside from the ones you used for BMN 270? I just asked this because I think J.J. you've mentioned potentially disclosing another gene therapy candidate this year.

Is that still the plan?.

As to next IND candidates, we tend not to talk about them until we talk about them and we haven't talk about them. We said, we recognized, we have a leadership position in gene therapy that might predispose us. And at the same time, there are other potentially very large orphans that could be of interest to BioMarin..

Yeah. So, we – seen another way, our gene therapies would probably be an important component of our future. At this time we don't really have any intention to turn into a pure gene therapy company.

And we have internal research efforts and also business development efforts that also could potentially and likely will identify non-generic gene therapy solution to some rare and ultra-rare disorders that have no available therapy today..

Great. Thanks for the question..

And our next question comes from Jing He from Gabelli..

Thanks of taking the question. So on BMN 270, would you expect to have enough data from 4 x 1013 before starting Phase 2b. Should we expect an update on Q3? And also on Brineura, it's early days but just wondering if you've got any feedback from payers, especially on pricing. Thanks..

I'm just wondering, are we going to have some data I think that's what I heard on the 4 x 1013 addition before making a decision on the final design of the pivotal trial?.

Of course..

Yes, we will and we have an ongoing study of 4 x 1013. We have dosed 70 patients at 6 x 1013. As to whether that's sufficient or we need more dose finding, TBD..

And on your second question, the launch of Brineura just got under way, essentially this week. We've announced the price. We have some patients that are commercially in motion. We don't have any response yet from payers..

Great. Thanks..

And ladies and gentlemen, we have reached our allotted time for question. I will now turn the call back over to CEO and Chairman, J.J. Bienaimé for closing remarks..

Thank you, operator. So in summary, we start 2017 from a position of strength. We've been delivering a record quarter of $304 million in total BioMarin revenues. We've seen a 28% growth year-over-year. We got out sixth product approved, Brineura by the U.S. FDA.

And it's in the process of being introduced probably at the beginning of June and potentially soon thereafter in Europe. Of course, upon a anticipated positive opinion there in June. Regarding our gene therapy program, it's moving forward and towards a registration-enabling study. Our pegvaliase is on the horizon and on track for a late Q2 filing.

And continuing enrollments of our vosoritide and BMN 250 programs is (01:11:49). And so we look forward to continued success out of our worldwide development organizations. And we thank you for your continuous support and for joining us on today's call..

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