BioMarin Pharmaceutical (BMRN) Earnings Report: Q4 2015 … · 2016. 2. 26. · Welcome to the BioMarin Pharmaceutical Inc. conference call to discuss fourth-quarter and full-year

CompanyName:BiomarinPharmaceuticalIncCompanyTicker:BMRNSector:HealthCareIndustry:Drugs

EventDescription:Q42015EarningsCallMarketCapasofEventDate:12.31BPriceasofEventDate:76.41

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BioMarinPharmaceutical(BMRN)EarningsReport:Q42015ConferenceCallTranscriptThefollowingBioMarinPharmaceuticalconferencecalltookplaceonFebruary25,2016,04:30PMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

TraciMcCarty;BioMarinPharmaceuticalInc;IRJ.J.Bienaime;BioMarinPharmaceuticalInc;Chairman,CEODanSpiegelman;BioMarinPharmaceuticalInc;EVP,CFOJeffAjer;BioMarinPharmaceuticalInc;EVP,ChiefCommercialOfficerHankFuchs;BioMarinPharmaceuticalInc;EVP,ChiefMedicalOfficerRobertBaffi;BioMarinPharmaceuticalInc;EVP,TechnicalOperations

OtherPart icipants

AndrewPeters;UBS;AnalystJudyLu;RBCCapitalMarkets;AnalystYingHuang;BofAMerrillLynch;AnalystChrisRaymond;RaymondJames&Associates,Inc;AnalystMarkSchoenebaum;EvercoreISI;AnalystCoryKasimov;JPMorgan;AnalystGeoffMeacham;Barclays;AnalystPhilNadeau;CowenandCompany;AnalystSalveenRichter;GoldmanSachs;AnalystStephenWilley;StifelNicolaus;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometotheBioMarinPharmaceuticalInc.conferencecalltodiscussfourth-quarterandfull-year2015financialresults.

(OperatorInstructions)

Asareminder,thisconferencecallisbeingrecorded.

Iwouldnowliketointroduceyourhostfortoday'sconference,TraciMcCarty,SeniorDirectorofInvestorRelationsatBioMarin.Pleasegoahead,Traci.

T raciMcCarty(IR):

Thankyou,Kaylee.Thankyou,Operator.

Today,toremindyou,isanon-confidentialpresentation.Itcontainsforward-lookingstatementsaboutthebusinessprospectsofBioMarinPharmaceutical,includingexpectationsregardingBioMarin'sfinancialperformance,commercialproducts,andpotentialfutureproductsindifferentareasoftherapeuticresearchanddevelopment.




ResultsmaydiffermateriallydependingontheprogressofBioMarin'sproductprograms,actionsofregulatoryauthorities,availabilityofcapital,futureactionsinthepharmaceuticalmarketanddevelopmentsbycompetitors,andthosefactorsdetailedinBioMarin'sfilingswiththeSecuritiesandExchangeCommission,suchas10-Q,10-K,and8-Kreports.

Ontoday'scallfromBioMarinmanagementareJ.J.Bienaime,ChairmanandChiefExecutiveOfficer;DanSpiegelman,ChiefFinancialOfficer;HankFuchs,ChiefMedicalOfficer;JeffAjer,ChiefCommercialOfficer;andRobertBaffi,HeadofTechnicalOperations.

NowIwouldliketoturnthecallovertoBioMarin'sChairmanandChiefExecutiveOfficer,J.J.Bienaime.

J.J.Bienaime (Chairman,CEO):

Thankyou,Traci.Goodafternoonandthankyouforjoiningustoday.

SoBioMarinisentering2016fromapositionofstrength,basedonfourpillarsofgrowth.First,weexpectthatourcurrentlyapprovedproductsmaygenerateover$1billioninrevenuethisyearandwebelievecanreach$1.5billionby2020.

Second,wehavetwoglobalproducts,cerliponasealfaandpegvaliase,withpotentiallypivotalresultslaterthisyearandpotentiallaunchesnextyearthat,combinedwithourexistingproducts,maydriverevenuestowellover$2billionby2020.

Third,ourbest-in-classdevelopmentportfoliohastwoadditionalproducts,vosoritideforachondroplasiaandBMN270,ourgenetherapyproductforhemophiliaA.Thatrepresents,eachofthem,$1billionplusmarketopportunity.

Fourth,weexpecttoturnthecornertowardsprofitability,achievingnon-GAAPbreakevenorbetterin2017andbottom-linegrowthintheyearstofollow,andthisirrespectiveofwhathappenswithKyndrisainEurope.

In2015,wemadeprogressonanumberoffinancial,strategic,andtherapeuticfrontsthatsetsupforasuccessin2016.Wesawstrongdemandandrevenuegrowthacrossourcommercializedproducts,delivering18.8%ofgrowthyearoveryearintotalBioMarinrevenues.

Onthestrategicfront,wecompletedtwotransactionsthattogetherreducedourfutureR&Dexpenses,increasedournear-termrevenues,andprovideduswithworldwiderightstothePKUfranchise.Thatcouldgeneratewellover$1billionofrevenuesinthelongterm.

ThefirstwasthesaleofourPARPinhibitorandthesecondoneistheacquisitionfromMerckSeronoofallrightsoutsidetheUSforKuvanandpegvaliase,withtheexceptionofKuvaninJapan.

Onthecommercialfront,Jeff'steamdidanotherexceptionaljobin2015withthecontinuedstronglaunch--globallaunchofVimizimdrivingtotalBioMarinrevenuesto$889.9million,andwe'relookingforwardto2016totalrevenuethatisexpectedtobebetween$1.05billionto$1.1billion,andDanandJeffwillprovidesomemoredetailonthe2016guidanceinamoment.

Onthedevelopmentfront,in2015weachievedanumberofimportantmilestonesthatwilldrivesignificantvaluein2016andbeyond.Severalclinicaltrialsadvanced,includingtheclinicalproofofconceptforreveglucosidasealfaforlate-onsetPompedisease.

WealsocompletedenrollmentofourPhaseIIIpivotaltrialforpegvaliaseforPKUandareexpectingPhaseIIIpivotaldatanextmonth.WithcerliponasealfainCLN2disease,wecompletedenrollmentinourPhaseI/IIstudywhichcouldpotentiallybeourregistrationstudy.Resultsfromthatstudywillbesharednext




weekasalatebreakerattheWORLDLysosomalStorageDiseasemeetinginSanDiego.

Asbackground,basedonrecentmarketresearchwenowbelievetheprevalenceofCLN2intheworldisbetween1,200and1,600children,withanincidencerateof100,000to200,000,whichisbetweenourVimizimandNaglazymemarketnumbersforMPSIVandMPSVI,respectively,representingabouta$500millionglobalopportunity.

Withvosoritideforachondroplasia,lastJunewesharedpositivesix-monthPhaseIIdatashowinga50%increaseingrossvelocityatadoseof15microgramsperkilogram,andpatientsinthatstudyarenowintheextensionarmandweintendtoprovideaone-yeardataupdateatR&DdayinApriltoseewhetherthegrossvelocityincreaseismaintainedforafullyear.

Alsoin2015,wedosedourfirstpatientswithBMN270forthetreatmentofhemophiliaAandwewillalsoprovideaprogramupdateonthisatR&Dday.

AdevelopmentthatdidnotgoaswehadhopedwasKyndrisaintheUSforthepotentialtreatmentofboyswithexon51skipamenableDuchennemusculardystrophy.WeweresurprisedanddisappointedbyboththeadvisorycommitteemeetingandthecompleteresponseletterfromtheFDAthatwereceivedinJanuary,butweremainhopefulthatthereisanear-termfast-forwardforapprovalintheEUandbeyond,wheremorethan80%ofglobalpatientsreside.

WelookforwardtostayingontrackwiththeEuropeanregulatorysubmissionoftheMarketingAuthorizationApplicationforKyndrisa.Underthecurrenttimeline,weanticipateaCHMPopinioninlateQ2,whichcouldleadtoapotentialapprovalinQ3.However,werecognizetheregulatoryhurdleforapprovalandaremanagingthebusinesstobepreparedforanyoutcome,andHankwillprovideanupdateontheKyndrisaprogramalsoinafewminutes.

WehadpreviouslyindicatedthatwiththeUSapprovalofKyndrisawecouldbenon-GAAPprofitablein2017.Basedonthecontinuedgrowthofourcorebusiness,thestrategictransactionsthatweimplementedin2015divestingtalazoparibandacquiringex-USrightstoKuvan,andalsothankstocontinuedfinancialdiscipline,weintendtomanagethebusinessinordertobenon-GAAPbreakevenorbetterin2017,evenwithoutaUSapprovalofKyndrisaandregardlessoftheultimateregulatoryoutcomeinEUforKyndrisa.

Andnow,Danwilldiscussthe2015quarterlyandfull-yearfinancialresultsinmoredetail,aswellasprovideourfinancialguidancefor2016.So,Dan.

DanSpiegelman (EVP,CFO):

Thanks,J.J.

Earliertoday,weissuedapressreleasesummarizingourfinancialresultsforthefourth-quarterandfull-year2015andIreferyoutothatreleaseforfulldetails.

Iampleasedtoreportthatonaconstant-currencybasistotalBioMarinrevenueforthefull-year2015increasedby23.6%comparedto2014toalevelof$926.5million.Duetothestrengtheningofthedollarduring2015,wedidexperiencea$36.6millionreductioninreportedrevenues,netofhedging.EvenagainsttheseFXheadwinds,reportedtotalBioMarinrevenuefortheyearincreased18.8%to$889.9million.

In2015,Vimizimcontinuedisexcellentlaunchtrajectory,generating$228.1millioninnetrevenuesfor2015,thefirstfullyearonthemarket.Inaddition,revenuesgrew58.5%inQ4comparedtothesamequarterin2014,providingagoodbasefor2016.




Kuvan,initseighthyearsincelaunchintheUS,generated$239.3millioninnetrevenues,anincreaseof17.9%overtheprioryear.Growthinthefourthquarterwasalsostrong,witha12.9%increaseoverthesamequarterlastyear.

Naglazymecontinuedtoaddpatientsontherapyandgeneratedover$303millioninnetrevenuesin2015.However,unevenorderingfromLatinAmericaandforeign-exchangeheadwindscontributedtoa9.4%decreaseinnetrevenuescomparedtotheprioryear.Nevertheless,wecontinuetoprojectstableorincreasingrevenueswithNaglazymein2016andbeyond.

Operatingexpenseswereinlinewithourexpenseguidance.Full-yearR&Dexpenseswere$634.8millionandSG&Aexpenseswere$402.3million.Grosscapitalexpendituresfortheyearwere$223.9million,drivenbythebuildoutofthemanufacturingfacilityinShanballytosupportcommercialsupplyofVimizimandourSanRafaellaboratoryandofficefacilitiestosupportongoingresearchanddevelopmentprojects.

Non-GAAPnetlossof$142.7millionwasslightlyabovethehigherendofourguidanceduetoalicensingfeeincurredattheendof2015associatedwithsecuringfreedomtooperateforvosoritideintheUnitedStates.

Wereported$171.8millionGAAPnetloss,whichincludedseverallargechargesandcredits.First,GAAPnetincomeincludeda$369.5milliongainonthesaleofintangibleassetsduetothesaleoftalazoparibtoMedivation.

Inaddition,theFDAcompleteresponseletterforKyndrisawastheprimarycausefora$47.9millioncredittocontingentconsiderationexpenseinthefourthquarter,duetothereversaloftheliabilityforthepotential$80millionCVRforUSFDAapproval.

Inaddition,basedontheCRL,inthefourthquarterwetooka$198.7millionintangibleassetimpairmentchargetoreflectthedeclineinvalueoftheUSKyndrisaintangibleasset.

Iwouldnowliketoturnto2016financialguidance.AsJ.J.alreadyindicated,weexpect2016totalBioMarinrevenuetobeinarangeof$1.05billionto$1.10billion.Iwouldnotethatthis2016revenueforecastassumesthatkeycurrenciesremainattheircurrentexchangeratesthroughtheyear.

Inaddition,theEUdecisionregardingKyndrisadoesnotmateriallyimpactthisrange,duetothefactthatevenwithanEUapprovalinthesecondhalfoftheyear,wewouldanticipateonlynominalrevenuesfromKyndrisain2016.

Jeffwillprovidemoredetailsonourproductbyproductrevenueguidanceinthissection.

Turningnowtooperatingexpenses,2016SG&Aexpensesareexpectedtobeintherangeof$470millionto$490million.RoughlyhalfoftheincreaseinSG&Aexpensesin2016comparedto2015isdrivenbyexpansionintoadditionalmarketsforVimizimandKuvanandisdirectlyrelatedtotheprojected$160millionto$210millionofadditionalrevenuesfromtheseproducts.

TheotherhalfoftheincreaseisassociatedwithpreparationforpotentiallaunchofKyndrisain2016andcerliponasealfaandpegvaliasein2017.Wewouldexpecttobeatthelowerendofthe2016SG&AspendingrangeifKyndrisadoesnotreceiveapositiveCHMPopinionandEuropeanapprovallaterthisyear.

In2016,R&Dexpensesareprojectedtobeintherangeof$680millionto$720million.Intotal,roughlytwo-thirdsoftotalR&Disinvestedinclinicalprograms,withthebalanceinvestedinsupportingourcommercialproductsand,toalesserextent,preclinicalandearly-stageresearch.




Lookingbeyond2016,withrevenuesfromourprogramsacceleratingandwithseveralofourlater-stageclinicalprogramsnearingcompletion,weexpectthatR&Dinabsolutedollartermswillbefairlystableandasapercentofrevenueswilldecreasenextyearandinthecoupleofsubsequentyearsbeyondthat.

Capitalexpendituresin2016areexpectedtobebetween$150millionto$175millionaswecompletevalidationandapprovalofourIrishmanufacturingplantandaddtoourlaboratory,office,andothermanufacturingfacilitiesatourheadquartersinCalifornia.

Intermsofnon-GAAPnetlossguidancefor2016,weexpectthatouroperatinglosswillbebetween$75millionto$100million,aroughly30%to50%improvementover2015.IntheeventKyndrisaisapprovedandlaunchedintheUS,ourexpectationisthatwewouldbeatthehigherendoftheSG&Aexpenses,whichwouldresultinbeingatthehigherendofthenon-GAAPnetlossfor2016.Conversely,wewouldexpecttobeatthebetterendofthenon-GAAPlossrangeifKyndrisaisnotapprovedinEurope.

Whileanarrownon-GAAPlossguidancerangeaccommodatesbothscenariosregardinganEUapprovalofKyndrisa,duetotheverydifferentGAAPchargesandcreditsinthetwoEUapprovalscenarios,GAAPresultswillbemateriallydifferentdependingonwhetherKyndrisareceivesEUapprovalornot.

TheGAAPlossguidanceof$400millionto$430millionprovidedintoday'spressreleaseisbasedontheassumptionofanEUapprovalandlaunchthisyear.IfKyndrisadoesnotreceiveapprovalinEuropethisyear,wewouldexpectcreditsforthereversaloftheCVRliabilitiesandpossiblesignificantintangibleassetimpairmentchargesthatcouldmateriallychangetheGAAPresultsfromtoday'sguidance.

Lookingbeyond2016,webelievethatunderawiderangeofregulatoryoutcomesforKyndrisa,cerliponasealfa,andpegvaliase,wewillbeabletomanageourbusinessinordertoachievebreakevenorbetternon-GAAPincomein2017.Moreover,growthinrevenuesandoperatingresultsareexpectedtoaccelerateafter2017,withnear-termapprovalsofpegvaliaseandcerliponasealfa,respectively.AndapprovalofKyndrisainEuropewouldaddparticularearningspowerin2018andbeyond.

Insummary,2015producedsolidfinancialresultswithrevenuesof$889.9million.2016willbeayearofcontinuedrevenuegrowth,particularlyforVimizimandKuvan,importantdataresultswithpegvaliaseandcerliponasealfaandpotentialfilingsforboth,whilemovingtowardsnon-GAAPbreakevenorbetterin2017,withgrowingnon-GAAPprofitsafterthat.

NowIwouldliketoturnthecallovertoJefftoprovideanupdateonourcommercialproductsandexpectationsfor2016.Jeff?

Jef f Ajer (EVP,ChiefCommercialOfficer):

Thankyou,Dan.

WeareextremelypleasedwiththecontinuedglobalcommerciallaunchofVimizimandtheresultingcumulativesalesof$305.4millionsinceapprovalin2014.

2015sawasteadyriseinidentifiedpatients,increasingtonowover1,900,comparedtoapproximately1,650atyear-end2014.ThenumberofpatientsbeingtreatedwithVimizimincreased10%quartertoquarterinthefourthquartercomparedtoQ32015.

Wegainedaccessto13newmarketsin2015toatotalof33,includingSpain,Japan,Turkey,and,atyear-end,theUK.Patientsoncommercialtherapymorethandoubledin2015duetoacombinationofaccesstonewmarketsandfurtherpenetrationinmarketsaccessedin2014.




Despitetheimpactofforeignexchange,full-yearVimizimresultswerestrong,delivering58.5%growthinQ42015comparedtoQ42014and195.1%growthin2015comparedtofull-year2014,whenwelaunchedintheUSinFebruaryandtheEUinApril,respectively.

Vimizimwasimpactedlessdramaticallybyforeignexchangein2015comparedtoNaglazyme,duetoalowerbaseofsalesin2014andamuchhighervolumegrowth.Recall,alargeorderfromLatinAmericainthethirdquarterof2015impactedQ42015results,butthequarter-to-quartercomparisonwasfavorableoutsideofthatdynamic.

For2016,weexpectfurtherprogressastheglobalcommercializationofVimizimproceeds.Specifically,weexpectincreasedpenetrationinestablishedmarketsandtocontinueopeningnewmarketseachquarter,althoughnotatthepaceseenduringtheinitiallaunch.

Insummary,thecommercialopportunityforVimizimthisyearishigh.WeexpectcontinuedsuccessinyearthreeofthegloballaunchofVimizim,assupportedbyfull-year2016guidanceofbetween$300millionand$330million,whichisa38%increaseatthemidpointover2015full-yearrevenuesof$228.1million.

TurningtoKuvan,inNorthAmericain2015,salescontinuedtobenefitfromgrowthinnewpatientsandcontinuedhighlevelsofadherence.Full-year2015salesof$239.3millionreflecteda17.9%growthinKuvan'seighthyearonthemarket.

Importantly,atyear-end2015,commercialpatientsonKuvanincreased15.8%yearoveryear.Additionally,webelievethatincreasedutilizationofKuvaninadolescentsandadultsisattributabletothecombinedeffectofACMGPKUtreatmentguidelinespublishedJanuary2014,coupledwithcasemanagementservicesandpatienteducationprovidedbyBioMarin.

LookingtowardournewKuvanterritoriesin2016asaresultofouracquisitionofworldwiderights,withtheexceptionofJapan,theorganization'sfocushasbeentotransfermarketingauthorizationsandlicensesineachcountryaswetransitiontotakingoverordertocashactivities.FurtherbolsteringourglobalstrengthintheKuvanmarketistherecentallowanceofanEUpatentthatprovidesusexclusivitythrough2024.

WeareveryenthusiasticaboutourfutureprospectswithKuvan,bothintheUSandabroad.ThelongerexpectedcommercialtimehorizonintheEUwillenableustomaximizeoureffortstogrowthemarketsaccordingly.

ForKuvanin2016,weexpectcontinuedsteadygrowthintheUSandtheadditionofrevenuefromoutsidetheUS,resultinginfull-yearguidanceofbetween$320millionand$350million.

MovingontoNaglazyme,in2015continuedgrowthinpatientsdroveincreaseddemand.Patientsoncommercialtherapyincreasedby8.7%overtheyearandidentifiedpatientscontinuedtorise.Astrongdollarandlargeunevenorderpatternsdrovebigswingsinquarterlysalesandalsoimpactedrevenuesforfull-year2015comparedto2014.Asaresult,salesof$303.1millionforthefull-year2015were9.4%belowprior-yearreportedrevenues.

AsweobservedsinceNaglazymewaslaunched10yearsago,unevenorderpatternsfromtheLatinAmericanregioncontinuedin2015.Inaddition,ofallourproducts,Naglazymehasthelargestexposuretoforeign-exchangefluctuations,whichimpacted2015full-yearresults.However,itisimportanttorememberthatpatientgrowthcontinues.ThebaseofpatientsonNaglazymeremainsimpressivelyadherent,sotheunderlyingstrengthofthebusinessisintact.

Andfinally,afewwordsonKyndrisaasitrelatestothecommercialorganization.Wearepreparingfora




potentiallaunchintheEUandinternationalmarkets.

Aswehavesaidpreviously,uponanapprovalwewillleverageourexistingglobalinfrastructure,whilemakingmodestandfocusedinvestmentstoprepareforlaunch.UponapositiveCHMPopinioninthesecondquarterofthisyear,wecouldpotentiallyreceiveapprovalofKyndrisaintheEUinthesecondhalfoftheyearwherebywewouldbeginthelaunchprocessonacountry-by-countrybasisinthatregion.

Inclosing,thecommercialteamdeliveredstrongresultsin2015,growingtotalBioMarinrevenues18.8%yearoveryeartoatotalof$889.9million.I'mverypleasedwiththelevelofdemandweareseeingforVimizimintheUSandothermarketssincethecommerciallaunchin2014.For2016,thecommercialteamswillfocusondrivingmarketpenetrationofVimiziminsubstantiallyallmarketedregions,aswellasrampingupoursaleseffortswithKuvaninournowglobalterritories.

Now,IwillturnthecallovertoHank,whowillreviewthepipeline.Hank?

HankFuchs (EVP,ChiefMedicalOfficer):

Thankyou,Jeff.

AsJ.J.describedinhisintroductorycomments,onthedevelopmentfrontwehaveanumberofimportantmilestonesthatcoulddrivesignificantvaluein2016andbeyond.

FirstupisdatafromourstudywithcerliponasealfaforthetreatmentofchildrenwithCLN2,aformofBattendisease.ThesedatawillbesharedasalatebreakerattheWORLDmeetingonMarch2andifsupportivewillbethebasisofregulatoryfilingsintheUSandEUmidyear.

BioMarinwillhaveaverylargepresenceatWORLDthisyear.Wehavesubmitted19abstracts,sixofwhichhavebeenacceptedasplatformpresentationstosponsoredsymposiaandanumberofotherprogram-specificeventsandmeetings.

Beyondcerliponasealfaresults,anothersubjectofinterestatWORLDwillbepreclinicaldatawithBMN250,ourNAGLUIGF2fusionproteinforthetreatmentofMPSIIIB,comparingintravenoustointracerebralventriculardelivery.

Inaddition,wewillhavetwoplatformpresentationswithVimiziminpatientswithMorquioSyndrome,oneontheimpactinpatientswhohavelimitedambulationandtheotherontheimpactoflong-termVimizimtreatmentonpulmonaryfunctioninpatients.

Turningtoanothersignificantcatalystexpectedlaterthisquarter,weanticipatesharingthepivotalresultsofthepegvaliasestudyforthetreatmentofPKU.PegvaliasehasthepotentialtohaveanenormousimpactonpatientswithPKUwhoareeithernotamenabletotreatmentwithKuvanorwhowantamorepotenttherapeutic.

RecallthattheprimaryendpointinthisstudyisPheloweringandthesecondaryendpointisneurocognition.Toremindyou,wehaveseensignificantreductionsinbloodPheinthePhaseIIandinthe301feederstudies,sowehaveahighdegreeofconfidencethatwecanmeettheprimaryendpointofthestudyanddemonstratetheappropriatebloodPhelowering.Webelievethestudyisalsopoweredsufficientlytodetectatrendinneurocogimprovement,whichcouldsupportregistrationbasedonconversationsheldtodatewiththeFoodandDrugAdministration.

WelookforwardtosharingtheseresultswithyoulaterinthequarterandtopotentiallysubmittingtheBLAlaterthisyear.

InApril,weplantohaveourR&DdayinNewYork.Atthatmeeting,weplantoprovideupdatesonall




ofourprograms,andspecificallyaone-yeardataupdatewithvosoritideforachondroplasia,andplansforourpivotalstudy,whichwehopetobeginattheendofthisyear.

WealsoplantoprovideanupdateonourprogramwithourgenetherapyproductBMN270forthetreatmentofhemophiliaA.RecallthatwedosedthefirstpatientinlateSeptemberoflastyear,andIamhappytoreportthatpatientshavenowbeentreatedatthethirddoselevel,whichisapproximately10timesthestartingdose.WeweresufficientlyencouragedbywhatwehaveseentoexpandthenumberofpatientstreatedatthisdoselevelandwewillbeprovidingmoredetailsatourR&Dday.

Wealsoplantohaveexternalspeakerswhowillpresenttheirperspectivesonourproducts,allofwhomarecurrentlystudyinvestigators.Itshouldbeanextremelyinformativeeventandwehopeyoucanattend.

FollowingR&Dday,weanticipatemanyotherimportantcatalyststhisyear.Inthesecondquarter,weexpecttoreceiveaCHMPopiniononKyndrisaforEUapproval.Werecentlyrespondedtoourday120questionsandsoremainonouroriginaltimelinerelatedtotheMarketingAuthorizationApplicationprocessforaEuropeanUnionapproval.Basedonthisandassumingtheopinionispositive,wewouldexpecttohearaboutapotentialapprovalintheEuropeanUnioninthesecondhalfoftheyear.

WecontinuetobelievethatKyndrisaisavaluableandimportanttherapeuticoptionforpatientswithDuchennemusculardystrophy.However,asJ.J.said,werecognizetheregulatoryhurdleforapprovalandarepreparedforanyoutcome.

Turningtoothereventsexpectedinthesecondhalfoftheyear,assumingthedataaresupportive,weintendtosubmittheBLAandMAAfilingsforcerliponasealfaforthetreatmentofCLN2.

Giventheseverityofthisdisease,wehopetomovetheapplicationsforwardasexpeditiouslyaspossible.Andinordertoaddressthesignificantpatientdemandweareexperiencing,weintendtoalsostarttheprocessofmakingcerliponasealfaavailablepriortopotentiallyregulatoryapprovalsandcommerciallaunch.

BasedonourexperiencewithVimizimestablishingasimilarprogramforexpandinguse,weexpecttheprocesstotakeseveralmonthsfromthetimewesubmitapprovalapplications.

Andsowiththat,Operator,wewouldliketonowopenthecallupforquestions.

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)

AndrewPeterswithUBS.

AndrewPeters (Analyst-UBS):

SoIguessafirstoneontheguidancethisyear.Didn'thearalotonthecalltodayaroundtheotherexcellentstickingprograms.IknowinthepastyouhavedescribedyourcommitmenttoinvestintheraasdependentonKyndrisa.So,howdoestheR&Dguidancefactorinanysortofprogressorinvestmentontheotherexonskippers,andisthatgoingtobedependentontheEUoutcomeforexon51?


ThisisDan.Iwilltakethatand,Hank,youcanjumponin.We'reinthreeotherexonsatthemomentwithPhaseIIsanditisanticipatedthatthosewouldcertainlybecontinuingthisyear.Wewouldn'tanticipate




asignificantchangeintheinvestmentlevelin2016.Andgoingforward,itwillbeafunction,aswehavesaidbefore,ontheKyndrisaresult.


Andjusttoadd,thestudiesthatareunderwayarerelativelyearly-stage,relativelysmallstudies.


Okay,thankyou.Andthenjustasitrelatestoguidance,Imayhavemissedthisbefore,butcanyoujustframeperhapstheimpactofFXonconstant-currencybasisforrevenuenextyear?Iknowyouhaveputitthatwayinthepast.WhatwouldVimizimandtotalrevenueguidancebeona--ifFXhadn'tbeen--youdidn'texpectittocontinuetoweighonresults?


SoIthink--sowegavetheimpactin2015actualresults.Ifratesstaywheretheyaretodayorwheretheywereacoupleofdaysagowhenwewrotethis,fortheremainderof2016theFXimpactisinthe$20millionto$30million,$40millionrangebecausetheeurotodayisactuallyprettyclosetowhattheaveragerate,maybeevenalittlehigherthantheaverageratein2015.Soyouactuallygetalittleeuropickup.Andtheoffsetisthereductionduetoweakeningof,ifyouwill,third-worldcurrencies.


Okay,great.Thankyou.

Operator :

MichaelYeewithRBCCapitalMarkets.

JudyLu (Analyst-RBCCapitalMarkets):

Goodafternoon.Thanksfortakingthequestion.Thisis[JudyLu]onforMikeYeeatRBC.Congratsonthequarterandtwoquestions,ifImay.Thegenetherapyprogram,Iknowwewillgetsomemoredatalaterthisyear,butcouldyoujusthelpussetupthisscenario.Whatkindofscenariosareyouenvisioningforyourgenetherapydata?

Andthen,similarquestiononyourPEG-PALprogram,thescenariosthereyouwouldenvision,andmorespecifically,ifIrecallcorrectly,youjustsaidonthecallthatthesecondaryendpointisneurocognition,soitissecondary,notco-primary.Sothismeansyoudon'tneedtohitonthat.Isthatcorrect?Thanks.


Hankisgoingtoansweryourquestions(MultipleSpeakers)


So270scenarios,thisisafirst-in-manstudy,sokeyoutcomevariableisthesafety,anditisalsoadose-rangingstudy,andsowewouldliketoobtaindataontherelationshipbetweentheadministereddoseandtheamountofFactorVIIIthatgetsproducedasaconsequenceofdeliveringthetransgene.

So,thescenariosrangefromnotsafeandnoevidenceofadvocacyovertherangedosestotheotherendofthespectrum,safeandwecandemonstrateadoseresponse.AndIthinkoneofthekeyconsiderationsthatwesaidintheprogramallalongiswhatistheshapeofthatdoseresponsecurveandcanweachieveameaningfuldegreeoftrans--ofgeneexpressionatdosesthataretolerated?




Turningto165--Iamsorry,toPEG-PAL,topegvaliase,theconstructionoftheanalysisistheprimaryendpointisbloodPhelowering.WearemassivelywellpoweredtodetectareductioninbloodPhe.Thefirstsecondaryendpointisimprovementinneurocognitionasmeasuredbytheattentiondeficitratingscale.

Thewaytheanalysisplanisstructuredisthroughwhat'scalledahierarchicalanalysiswhereinifyouhitthep-valueintheprimaryendpointofPhe,thenyoucantestthefirstsecondaryendpointinthehierarchy,neurocognition,withouthavingtotakeap-valuecorrectionforthefactthatyounowhavemultipleendpoints.

Andthishierarchicalstep-downprocedureisafairlystandardprocedureinstatisticaltesting,andforthereasonthatIsaidbefore,thatwearehighlypoweredtodemonstrateabenefitonbloodPhe,weexpecttobetestingneurocogwiththeappropriatestatisticalinterpretationaroundit.

Soalthoughneurocogisnotformallylabeledaco-primaryendpoint,thestructure,theanalysisallowsustobetalkingtotheFDAaboutaclaimtobemadeifwehitneurocogorachieveatrendinneurocog.


Andalso,wedesignedthetrialbasedonsomeexperiencewehadwithasimilarneurocogscalewithKuvan,wherewe--Idon'tknowifyouremember.WedidastudywherewewereabletoshowsomeimprovementsinabouteightweeksorsooftreatmentwithKuvan,whichisamuchlesspowerfulagentintermsofPhereductionandPEGvariance.

Operator :

YingHuangwithBankofAmericaMerrillLynch.

YingHuang (Analyst-BofAMerrillLynch):

Firstofall,maybe,Hank,canyouelaboratealittlebitonthepoweringofdetectionofaneurocognitivefunctionbenefitinthePEG-PALtrialforPhaseIII?

Andthensecondly,maybeforDan,youareassumingyoucouldachievenon-GAAPbreakevenorbetterin2017.Doesthatimplyyouroperatingexpensescouldprobably--intermsofslowingdownthegrowthofthatOpExin2017?

Lastly,canyouguysprovideanupdateonhowmanyMorquiopatientsyouhaveidentifiedsofar?Thanks.


Iwillstartwiththelastquestion.Actually,wedid--JeffAjerinthepreparedremarkssaidthatwehavealreadyidentifiednowover1,900patientsworldwide.


Allright,thanks,J.J.


Andthen,poweringforthepegvaliasestudyonneurocog,wehaven'tgiventheexplicitdetails,butwhatIwouldsayisthatwehavebeenindialoguewiththeFoodandDrugAdministrationaboutwhattheywouldconsidertobeasuccessfuloutcome,andtheyunderstandthatbecauseoftherarityoftheconditionandthenatureofthetoolsusedtotestforimprovementincognitionthatthestudyispowered




todetectatrendtowardimprovement,whichtheyhaveindicatedtousinourinteractionsthatthatwouldbeadequate.

Andso,onewaytothinkaboutthisisthatifPEG-PALhasroughlythesameeffectonattentiondeficitasdrugsusedtotreatattentiondeficitdisorders,wewillachievetherequisitetrendofimprovementinattention--ininattentivenessinPKUpatients.

Andwe'reoptimisticaboutachievingthattrendfortwodifferentreasons.OneisthatunlikeanattentiondeficitdisordersyndromethatisnotcausedbyPKU,inthecaseofphenylketonuria,attention--inattentivenessisreallydrivenprettysingularlybythegeneticabnormalityofinheritanceofthedefectivegenefrommetabolizingphenylalanine.Saidanotherway,weareaddressingtherootcauseofthedisease.

Andsecondly,weareconfidentabout--wehavesomeconfidenceabouthittingthisendpointbecause,asJ.J.mentioned,wehaddoneapreviousstudywithKuvaninwhichwehaddemonstratedanimprovementinneurocognition,andnowwithPEG-PAL,we'reusingamuchmorepotentdrugtoimproveneurocognition.

So,giventheFDAinterestintheendpoint,willingnesstoacceptatrendtoapproval,andbasedonwhatsimilaroutcomeshavebeenobservedinattentiondeficit,aswellasourownobservationswithKuvanandPKU,thathasgivenustheconfidenceabouthittingneurocog.Andobviously,itwon'tbeuntilweunblindthatweknowforsurewhetherwedidorwedidn't.Staytuned.


Yes,andthisisDan.Iwilltrytoansweryourguidancequestion.The2017guidancereflectsthepossibilityofaprettywiderangeofpotentialrevenuesin2017,both--notaverywiderangeoffourcoreexistingapprovedproducts,butthepotentialforKyndrisa,pegvaliase,Battendisease,andwehavedevelopedoperatingscenariosunderprettymuchallthevariousdifferentcombinationsofthem,andintheoneswhererevenuedoesn'tgrowverymuch,wecanmanagetheoperatingexpensestothatappropriateleveltogettonon-GAAPbreakeven.


Great,thankyou.

Operator :

ChrisRaymondwithRaymondJames&Associates,Inc.

ChrisRaymond (Analyst-RaymondJames&Associates,Inc):

Justacouplequestions,andfirstwantedtomaybeexpandalittlebitonPEG-PAL.So,Iamdetectingabitofinvestorconfusioncommerciallywhenthinkingaboutthelaunch.Giventhatpatientshavethislong--relativelylonginductionandtitrationperiod,justfromyourexperienceinthetrialcanyoumaybetalktoyourexpectationsforkeepingfolksengagedthroughthattitrationphaseandspecificallywhatkindofdropoutrate,forexample,wemightexpect?

Andthen,howyouthinktheymightdooncethey'veemergedfromthatandareontheappropriatemaintenancedose.Obviously,nothinginthetrial,butjusthowyoufeelcommerciallythatdynamicmightplayout.

Andthen,thesecondquestionisonpricing.So,justnoticingyourdrugpricinghistory,itseemslikeupuntillastyearyouguyshadapatternofsmallbutregularincreasesfortheBioMarincontrolled




commercialdrugs.AndVimizim,Idon'tthinkyouhavehadanincreasesinceithasbeenonthemarket.Sojustcurious,thisseemstobe--seemstocontrastwithalmosteverybodyelse,soisthisachangeinstrategyonyourpartoramIreadingtoomuchintothetimingelementhere?Thanks.


So,hi,Chris,thisisHankandIamgoingtostart.First,thefirstthingiswhydon'tIkickoutalittlebitthepremiseofthestatementoftherelativelylonginductiontitration.

EvenstartingpatientsonKuvan,theyhavetogothroughaninitialphaseofresponsetesting,andthenastheirlifeadaptstoinitiationtoKuvantherapy,somefurtheradjustmentsofdoseneedtobeundertaken.

AndwithPEG-PAL,itisfairlysimilar,andIthinkJeff'steamhasdoneamarvelousjobofcommercializingKuvanandworkingthroughthoseissues.InthecaseofPEG-PALmorespecifically,thereisonedifferencebetweenPEG-PALandKuvan,andthatisthatbecauseitisaninjectionofanon-humanprotein,therecanbeatransientinitialimmuneresponsetotheproduct,whichcangetmanifestasa--thinkofitasaflulikesyndrome,potentiallyfever,rash,orjointaches.

Butthat'srelativelymanageablebythecliniciansandthepatients,andyoujustpausealittlebitontherateatwhichyouescalatethedose.Andwefindthatabout80%ofpatientsoruptoabout80%ofpatientscanachievePheloweringwithadoseofupto40milligrams.So,thepatientsaregettingthroughthatinductiontitrationandgettingaverylarge,about70%reduction,inbloodphenylalaninelevels.

Andso,theirmotivation,togetherwiththemagnitudeofthebenefit,haveledtofairlygoodretention.Wearereasonablypleasedabouttheretention.Andinfact,wehavealsolearnedalittlebitaboutmanagingsomeofthesideeffectsduringinductiontitrationandcanreally--wehavereallygottenprettygoodatlow-frequencysideeffectandlowdropoutrateduringinductiontitration.

SoIthinkwehavelearnedalotandtheevidenceisgoingtoberevealedwhenweunblindthestudy,butwearepleasedwiththe--withwhatwehaveaccomplished.


Andwehavepatientsthathavenowbeenonthedrugforoverfiveyears.


Great.


Andthen,justturningtothecommercialimplications,IguessIwouldstart,Chris,bysayingthatallofBioMarin'sdrugsrequireahighdegreeofpatientandclinicengagementandsupporttofacilitatesuccessfulcontinueduseofthedrugsandthekindofcommercialsuccessthatwe'veexperienced.

Sowelookatpegvaliaseanddon'tseethisasathreateningsituation,justanewflavorofwhatwehavedonesuccessfullywithourothercommercializedproducts.

Infact,thePhaseIIIclinicaltrialexperienceatalargenumberofPKUclinicsintheUnitedStateshasgivenusthisamazingbenefitofclinicsthathavelearnedalotthroughthePhaseIIIperiodabouthowtomanagepatientsthroughinductionandtitrationphase.

Weanticipategettingalotofleveragefromthatexperiencewhenpegvaliase--assumingpegvaliaseis




approvedandturnscommercial.WeexpectthatourPKUteam,includingfield-basedclinicalcoordinators,willprovideahighlevelofsupportinthefieldwithpatientsandtotheclinicstosupportthatinductionandtitrationprocess.

TheonecommercialaspectaboutthisthatIthinkisworthnotingisbecauseitisahigh-touchprocess,theuptakeonpegvaliasewillbelimitedtoasmallnumberofpatientsineachclinicatatime.So,notalladultpatientswillgoontopegvaliasetherapyuponapproval.Theywillgainaccesstotherapyovertime.

Andso,maybeIwouldaskJ.J.ifyouwantedtofieldthepricingquestion.


Yes,IamnotsureIunderstandexactlythepricingissue,butIwouldsayingeneralandphilosophicallywefeelthatwepriceourproductswhenweintroducethematarelativelyhighlevelbecausewebelievetheydeliveralotofvalueandinnovation.

Butourbusinessmodelhasnotbeeninthepastandwillnotbeinthefuturebasedonaggressivepriceincreases.Thatisnotwhatweintendtodo.WehaveinthepastincreasedthepriceintheUSonly,bytheway,becausepriceincreasesaremainlypossibleintheUSforKuvanandNaglazymeabovetheinflationrate,andthatisourintenttocontinuedoingthatway.

AndIwillpassitovertoJeffregardingtheVimizimpriceincreasehistoryorlackthereofortheplansthere.


Yes,thanks,J.J.Imean,J.J.'sguidancehasbeenclear.PriceadjustmentsdonotexceedinflationevenintheUnitedStates.Annualpriceincreasesarenotourmodel.Ithinkwewouldguidetocontinuetoexpectverymodestandonlyperiodicincreasesinpricesgoingforward.


Okay.Thankyou,guys.

Operator :

MarkSchoenebaumwithEvercoreISI.

MarkSchoenebaum(Analyst-EvercoreISI):

Iwantedtoaddresstheprofitabilityin2017.Iknowyouhavetouchedonsomeofthis.Iapologizeifyouenduprepeatingyourself.Butthisisachange,atleastfrommyunderstandingbefore,anditisareallypositivechangethatIthinkalotofpeoplearegoingtopayalotofattentionto.

SoIamjustwondering,DanorJ.J.,Iamnotsurewhowantstoaddressthis,whatchangedbetweenDecember,January,andnow?Whatprogramshaveyoudecidedtode-prioritizeordidsomethingonthecostsideordidsomethingchangeinyourinternalrevenueprojections--orwhathaschangedbefore?

BecauseIrememberaskingyouthisbefore,andyousaid,yes,ifKyndrisaisnotapprovedanywhere,wewouldprobablypushthatout.SoIwouldbecurioustoknowifyoucouldbeatallmorespecificaboutthat.

Andthenmysecondquestion,ifImay,wasthereisa--inyourhemophiliagenetherapytrial,thereisapatientbloggingabouthisexperiencesonFacebook.Iwaswonderingifyouguysareawareofthat,thoseposts,andifyouhadanycommentaryontheirauthenticity.

Andthenfinally,forHank,canyouhelpdefinewhatatrendisinneurocog?HastheFDAsaidthep-value




hasgottobeunder0.1orjust--andwejustdon'twanttogetinasituationwhereyouguysthinkthereisatrend,buttheFDAdoesn't.


MaybeIwillstart--orDan,youwanttoaddress(MultipleSpeakers)


Yes,sure,ifyouwanttodoit,theprofit.

Mark,Idon'tthinkit'ssomuchachangeasitisaclarificationandfurtheranalysis.Throughmostoflastyear,theplanthatwearemostfocusedonwasaKyndrisaapprovalandlaunchintheUnitedStates.AtJPMorganandatthebackhalfoftheyear,thebackendoftheyear,whenwewereaskedwhatournewguidancewaswesaidweweren'tinthepositiontogiveit.

Whathaschangedis--andweneversaidthatweweregoingtopushitout.Wejustsaidweweren'tinapositiontoprovidenewguidance.Andwehavetaken--wehaveutilizedthetimeto,frankly,developtwotothefourth,fifthdifferentsetofscenariosandnowhavetheconfidencethatwehavetheabilitytoturnenoughdialsandmanagebusinesstobothkeeptheportfoliogrowing,keeptheproductsappropriatelyinvested,andmeetthatgoal.

AndIwouldsaywedidratchetthetargetdownalittlebecausebeforewetalkedaboutbeingnon-GAAPprofitablein2017andourguidanceisnotaccidentallywordedtosaybreakevenorbetter.Someofthecases,iftheproductapprovalsaren'tthere,willbemoreatthebreakevenendthanattheprofitableend.


Andalso,youknow,sincewereceivedthecompleteresponseletter,wesharpenedourpencilsandwerealizedthattherewereinvestmentswewereplanningtomakethatmight--Imean,mightnotbenecessaryrightawayanditcouldbedelayedalittlebit.AndwhenwedidallthosescenariosanalysisthatDanmentioned,werealizedthatagainwhateverhappenstodifferentscenarioswebelievewecanmanageexpensessothatwecanbreakevenorbetter.Thatwasyourfirstquestion.


Yes.


Secondonewas--


Theblogger.


Sorry?


Theblogger.





Theblogger,so(MultipleSpeakers)


Iwilltakethesecond(MultipleSpeakers)


Isityou,J.J.?Isthebloggeractuallyyou?


Yesandthathasbeenuncovered.


Andforthatreason,we'regoingtoprotecttheidentityofthepatientswhoareinourclinicaltrialsandnotcommentonwhatamountstorumorsandspeculationsthatareoutthereintheuniverse.

Sufficetosay,asIsaidinmypreparedremarks,thatwehavetreatedpatientsatathird-doselevel.Wearesufficientlyencouragedbywhatwehaveseenthatweareexpandingthenumberofpatientsthataretreatedatthatthird-doselevel.Andwe'lllookforwardtoprovidingyouamoreconcreteupdateaboutthestatusoftheprogramatourR&Ddateinacoupleofmonths.


(inaudible)Hanksaidthatweencouragedwithwhatweareseeingtoexpandthenumberofpatientsisthekeycommenthere,wecansay.


Andthen,asregardstotrend,therehasn'tbeenaconcreteagreementastonumericallywhatthetrend--whatthevalueofthe--whatthep-valueneedstobe.

Justtostepbackalittlebitandputthisbackintocontext,theagencyhasgonebackandforthalittlebitonthis.Whenwefirstmetwiththem,theysaidbloodPhealonewouldbesufficienttosupportafullapproval.Thenwemetwiththemagainaboutsomeotherfacetsoftheprogram,andtheysaid,well,bloodPhereallyshouldbeseenasasurrogatebecausewehave--whattheysaidtousatthetimewasweapprovedKuvanonthebasisofbloodPhe,butthatwasreallyinchildren,andwepointedoutthatactuallyKuvanisapprovedindependentofadultversuschildren.

Andthen,webroughtbacktotheminasubsequentmeetingsomefurtherevidenceabouttheclinicalrelevanceofabloodPheabnormalityinadults,andthatisthepointatwhichtheysaidtous,youknow,wewouldreallyliketofullyapprove,notconditionallyapprove,thisifwecouldandweunderstandyourstudymaybeunderpoweredfordemonstratingtypicalstatisticalsignificanceofimprovementinbloodPhe.Andso,atrendcouldbe--couldgetusthere.

Now,obviously,thatissubjecttoafullreviewanditisalsosubjecttosafetyconsiderations,sothathasbeenthedialoguewehavehad.WehavebeenledtounderstandbytheFDAthatatrendwouldsatisfyapproval.

IshouldalsocommentthisistheDivisionof[gastrointestinal]InbornErrorProducts.ThisisadivisionthatwehaveworkedwithfairlycloselyoverthepastdecadeforAldurazyme,Naglazyme,Kuvan,Vimizim,andwe'vehadalotofdialoguewiththem.

So,wearebeingrelativelyfulsomeinoursharingofthedialoguewithyouovertheyearsandbelieve




thatastrongimprovementinbloodPhe,togetherwithatrendinneurocog,wouldsupportafullapproval,andthatastrongimprovementinbloodPhealonemightleadtoanactionbasedonPheasasurrogateendpoint.


Thankssomuch,guys.

Operator :

CoryKasimovwithJPMorgan.

CoryKasimov(Analyst-JPMorgan):

So,IhadacoupleforyouontheCLN2programaheadofyourdatanextweekatWORLD.Iguess,firstofall,canyoujusttrytoputintocontextwhattypeofresultherewouldbeclinicallymeaningful?Obviously,we'regoingtobelookingatasingle-armstudy.Soisthereanysortofefficacythresholdthatyouorcliniciansorregulatorsarelookingforintermsofdiseasestabilizationover12months?

Andthenonthatsametopic--onasimilartopic,totheextentoftheFDAfeedbackyouhaveonthisregulatorystrategytofilelaterthisyear,canyoutalkaboutthelevelofinteractionyouhavehadwiththemonthisprogram,onceagaingiventhatthisisonesingle-armstudy,soyourconfidenceinfilingiftheseresultsareindeedpromising?Thanks.


Yes,sowehavenotcommunicatedthenumericalbenchmarkforefficacysuccess.WehavedevelopedthatinternallyonthebasisofourinteractionswithboththeFDAandwiththeScientificAdviceWorkingPartyoftheEuropeanMedicinesAgency.Andthenatureoftheevidencepertainstohowpatientsprogressoncerliponasecomparedtotheirexpectednaturalhistory.

Andso,whatwewillbeprincipallytalkingaboutistherateofdeclineintreatedpatientsversustheuntreatedpatients.Butyoucanalsoimaginethattherewillbeadditionalanalyseslookingat,forexample,theproportionofpatientswhodeclineasiftheywereuntreatedortheproportionofpatientswhohaveadeclinethatislowerthanwhatwouldhavebeenexpectedortheproportionofpatientseven--youcanimaginethatsomepatientsmaynotevendecline.

Thatwouldbeaprettydramaticoutcomeifwecanhalttheprogressionofthedisease.Thisisadiseasethattakeschildrenataveryyoungage.So,completelyarrestingtheirprogressionmightbeaprettydramaticfinding.

Youwillalsobewantingtoseeothersecondaryendpoints,andonethatImighthighlightforyoutopayattentiontowouldberadiographicevidenceofprogressivedisease.AndtherehasbeensomenicenaturalhistorydataontherateofprogressionofBattendiseaseinuntreatedchildren.Wehavelongitudinalx-raydata--MRIdatafromthetrialthatwillhelpyouinterprettheoverallmagnitudeofthetreatmentbenefit.


(MultipleSpeakers)onaverage,thereislotsofgraymatter.Thebalancekeeps(MultipleSpeakers)


Yes,soanormalchild--soyoucantakeasagittalsectionofabrainusinganMRIimageandyoucandelineatewhitematterfromgraymatter,graymatterbeingthesubstanceofthebrainandthewhite




matterbeingthesynapsesandtheconnections.Andnormally,childrenloseabout1%oftheircorticalgraymattervolumeperyear.Thisisanormalphysiologicprocesscalledpruning.

ABatten'schildlosesabout12%oftheircorticalgraymatterperannum,andsoifminus1%isnormalandminus12%isdisease,whenyoulookattheresultswhenwepresentthemnextweek,youcangaugeforyourselfwhereinthespectrumofminus1%versusminus12%weare.

Nowthesecondpartofyourquestionspertaintohowmuchinteraction,howmuchconfidence.Andthere,Iwouldsaywehavehadjustalotofinteractionandalotofdialogueaboutrequirementsforregistration.AndIthinkboththeEuropeanMedicinesAgency,somekeymemberstates,aswellastheUSFoodandDrugAdministration,andwehavehadvery,very,veryfulsomedialoguesaboutrequirementstosupportregistration.

We'vebeensayingthatweareencouragedthatthistrialcouldformthebasisofanapplicationandpotentiallyanapproval.Iwillsayitisonlyaweekfromnoworthereabouts,andhopefullyyouwillbethereandwecantalkaboutthedataandyoucanmakeupyourownmindastowhetheritwillsupportaregistration.

CoryKasimov(Analyst-JPMorgan):

Okay,that'sreallyhelpful.Thanks,Hank.

Operator :

GeoffMeachamwithBarclays.

Unidentif iedPart icipant :

Thisis[Evan]onforGeoff.ItisgoodtobebackonaBioMarinearningscall.Thanksfortakingourquestions.WearelookingatBMN701.Whataresomeoftheoptionsthatyou'reconsidering?Inthepressrelease,youhaddiscussedyouaregoingtorelookatsomenextsteps.Whatcouldthosebe?

Andalso,inadifferentprogram,whatgivesyouyourconfidenceintheEUforKyndrisa?WehavehadaprettyclearFDAdecision.WhatisdrivingyourthoughtsintheEUrightnow?Thanksalot.


So701,letmejuststartsayingwe'rereasonablyencouragedbythedatathatwehaveseenfromnowtwostudies,oneinagroupofcompletelynaivepatientsandoneinpatientswhohavebeenonMyozymeforsomelengthoftime.AndthemostrecentdatawasthatinpatientswhohavebeentreatedwithMyozyme,701improvesthemaximuminspiratorypressure,maximumexpiratorypressure,andsix-minutewalkdistancefromtheir--on-Myozymebaseline.

Anditisimportanttorememberthatthesepatientswerecharacterizedbytheirphysiciansasmajoritydeclining,soimprovementinabackgroundinwhichpatientsaredeclining,wehavetakenthisasarelativelystrongsignal.

Ihavesaidallalongthatoneofthekeyconsiderationsfromaregistrationpathwaypointofviewisthathealthauthoritieshavebeenconcernedabouttheinterpretationofsingle-armclinicaltrials.Now,theflipsideofthatisthatsomemedicationsinthesetypesoffields,intheenzymereplacementtherapyrarediseaseworld,haveactuallyaccomplishedregistrationusingsingle-armso-calledswitchtrialdesigns.

WehavehadsomedialoguepriortoobtainingthesedatathatIhavereflectedastheyhaveexpressedsomeconcernsin[lenerman]astowhetherasingle-armstudycouldsupportafullregistration.Whatwehaven'thadachancetodoyetistocirclebackwiththemandsaynow,giventhesedata,doyouhave--




doesthisalleviateyourconcerns?Doyouhavemoreconcerns?Doyouhavelessconcerns?

AndIwouldsaystaytunedforfurtherupdatesonhowthoseconversationsprogress.

Probablythemostimportantthoughttoleaveyouwith,though,isthatopinionleadersareveryencouragedandveryengagedbythesedata.Andso,weareworkingverycloselywiththemtodiscussrestartingaswitchstudybecausetheyarekeentohavesomethingthatisbetterthancurrentlyavailabletherapy.Theyperceivecurrentlyavailabletherapyasbeingsubstantiallylimited.

SwitchingtoKyndrisaintheEuropeanUnion,againherewehavehadquitealotofdialogueandwecertainlywouldsaythattheUSFDAactionisonourminds,anyway,asitpertainstotheglobaloutlookforapproval.AsJ.J.saidinhisprimarycomments,weweresurprisedanddisappointedbytheapproachtheagencytookinitsinteractionswiththeadvisorycommitteeandtheresultsintheCR--thecompleteresponseletter.

TheEuropeanhealthauthoritieshavetoldusthattheyreviewindependentlyfromtheUnitedStates.Theyhavetheirownindependentreviewmechanismandwehaveinteractedwiththemquitesubstantiallyaroundthedata,andthroughtheprocess,theyaskquestions.Werefertothoseastheday120questions.Weinteractwiththem,explaintheapproachthatwe'regoingtotaketoaddresstheirquestions,andwehavegottensomefeedbackfromthem.

Anditisreallythatbasisofthatdialoguethatwereflectthatwehavesomedegreeofcautiousmeasuredoptimismaboutthechanceforapproval.ButwearestillintheprocessandIwouldsaystaytunedforfurtherdevelopments.

Theactiondatethatwearetalkingaboutisinthefirsthalfoftheyear.Itisnotveryfarfromnow,andwewillknowatthatpointarealopinion,asopposedtothingsthatwecanspeculateon.


Andwhenyougetthat--


(MultipleSpeakers)maybeadd,soweareactuallyprosecutingthisfiling.Like(inaudible)wesayinthepreparedremarks,wedorecognizetheregulatoryhurdlefollowingwhathappenedintheUS.Soweprepareforanyoutcome.

Atthesametime,thereareprecedentswheretheEMAhasapproveddrugsspecificallyinthisfieldthathavenotbeenapprovedbytheFDA.FDAjustissuedasecondrefuse-to-filelettertoPTCforatalurenandPTCandatalurenhasconditionalapprovalinEurope.Ithasbeenonthemarketforalmosttwoyearsnow.Sothat'swherewestand.


Okay,thankyousomuchfortakingthequestions.

Operator :

PhilNadeauwithCowenandCompany.

PhilNadeau (Analyst-CowenandCompany):

First,onequestionon(MultipleSpeakers).Jeff,inyourpreparedremarks,yousaidthatoutsideoftheimpactofBrazil,therewereothervariablesignsonquarter-over-quartergrowth?Couldyouelaborateon




that?WhatweretheencouragingsignsthatyousawforVimizim?


Whichproduct?Oh,Vimizim.


Yes,happytodothat.So,underlyingsomeofthequestionsinthequarterlyresultsareverylargeordersthattakeplaceinBrazil.Thoseordersaregreatwhenwegetthemandwelikethemalsobecausethereisacertaintythatpatientsstayontherapyandhavesupply,butitintroduceschoppinessinthequarter-to-quarterresultsthatare--maybedifficultforyoutointerpret.

Weviewtheunderlyingbusinessonthebasisofstartingwithnumbersofpatientsontherapy,marketsthatwearegettinginto,reimbursementapprovalsthatwearegetting,andtheadherenceofpatientsontherapy.Thoughwehavehadreallyimpressive,inmyview,quarter-to-quarterincreasesofpatientsontherapysincewelaunchedVimiziminthefourthquarter,Ithinkwehavesaidinthepressreleasewewereup10%inthefourthquarteroverthethirdquarter.

Ifyoulookatthequarterlysalestrend,Q3oflastyearbrokethetrendbecauseofthatBrazilorder,andifyoueventhoseout,IthinkQ3andQ4arerightinlinewithcontinuinggreatquarter-to-quartergrowth.


Okay,that'shelpful.


Andwe--andasJeffstatedinhispreparedremarks,wehavenowidentifiedover1,900patientsworldwide,whichistheprimarywaytogrowthebusinessinthefuture,whichisworthalreadyover$700millionofbusinessifwegetthosepatientsontherapy.


Iguessitisworthpointingouttherehasbeena30%increaseinthenumberofidentifiedpatientswithMorquioAinournetworkssincewelaunchedVimizimjusttwoyearsago.


That'shelpful.Then,Hank,twoforyou.First,afollow-uponyour701comments.Itsoundslikeyouaresayingbasicallyyou'rejusthopingtogetsomeclarityfromtheregulatoryauthoritieswhatisgoingtosupportafilingfor.Itisthattrue?Andthensecondon(multiplespeakers)


Whichproductareyoutalkingabout?


701.


Okay.





Andthen,second,ontheADHDendpointinthePEG-PALPhaseIII,Ibelievethatthereisanabstractouttherethatsayspatientsatbaselinehaveascoreof9,whichseemslikearelativelymildscore.Ithinkthescalegoesupto27.Sodothesepatientshavesufficientinattentionatbaselinetoshowabenefit?


Right,sowith701,Ithinkthefirststepistogothroughthedatathatwehaveobtainedandthengothrough--re-remindourselvesinquiteabitofdetailaboutallthefeedbackthatwehavereceivedsofar,andthenhaveinourmind'seyearangeofpossibleapproachestoaddressthehealthauthorityconcerns,andtheninthecontextofthedatathatwehaveobtainedtothendevelopastrategytogobacktothemandsayhereishowwewouldproposetoaddressyourconcerns.

Wejustgotthedatarelativelyrecently,soweareintheearlystageofthatprocess,andfortheseglobalprograms,ittakesawhileto--andtheEuropeanprocessinparticularisnotafastprocess.So,Iwouldsaywe'rejustatthebeginningofthejourneyoffiguringouthowwe'regoingtogoatthehealthauthorityprocess.

Intheinattentiveness,Ishouldpointoutthatinattentivenessisthemostcommoncognitivemanifestationofphenylketonuria,andatanygivenpointintime,abouthalfofthepatientshavemedicallysignificantinattentivenessandabouthalfdonot.Thehalfthatdonot,bytheway,maydevelopmedicallysignificantinattentivenessaweeklater,amonthlater,ayearlater,andtheyalsohaveotherproblems--mooddisorders,etcetera.

TheprimaryanalysisstrategythatwereachedagreementwiththeFDAaboutactuallylooksattheinattentive--theimprovementininattentivenessinsubstantiallyinattentivepatients.It'salittlebitofanuanceddetailabouttheanalyticstrategy.

Butthen,giventheproportionthatIdescribedandwhatyoureportedasthebaselinelevelofinattentiveness,youcanthenbackintowhatthebaselinelevelofinattentivenessisgoingtobeintheinattentivegroupofpatients.


That'sveryhelpful.Thanksfortakingmyquestions.

Operator :

SalveenRichterwithGoldmanSachs.


ThisisTomonforSalveen.Thanksfortakingourquestion.IjusthadaquickoneaboutBMN270inhemophiliaA.Soyoumentionedyouareatthethirddoseandyouarecomfortablewithwhatyouareseeing,somuchthatyouhavetreatedseveralpatientsatthisdosenow.

Justwonderingifyouareconsideringmovingtoafourthdose,ormaybetoaskthequestioninadifferentway,underwhatscenariowouldyouwanttomovetoafourthdose?


Yes,sotheprotocolwaswrittentohavethreedoselevels,andwehavethebenefitofcollaboratingwithDr.NathwanifromUniversityCollege,London,whowastheprincipalinvestigatorwhorantheFactorIXhemophiliatrials.AndDr.NathwaniandtheUKhealthauthorityhadcometoanunderstandingthatyoudon'tneedtotreatalargenumberofpatientsatalowdose,atamediumdose,andahighdose,thatthat'saveryinefficientuseofpatientresources.




Andso,patientnumberonewastreatedatthestartingdoselevel.Thenwewereabletoelevatethedosetopatientnumbertwo.Thenwecouldelevatethedoseevenfurtherforpatientnumberthree.

Weagreedwiththehealthauthoritythatgiventhatweweregoingthatfastindoseescalationthatwewould--ifwewantedtogotoafourthdoselevelthatwewouldcomeandtalktothem.Wewouldassemblethesafetydataandsubmitanamendmenttotheprotocol.

So,wehaven'ttriggeredthatprocessbecauseweareencouragedbywhatwe'veseen.Now,wemightstilltriggerthatprocess,andIthinkthatisgoingtobedrivenbyacombinationofwhatmagnitudeofincreaseinFactorVIIIexpressioncanwesustain,howsafeisittosustainit,andaproportionofpatientshave--canachievethatleveloffactorexpression.

So,whenIsaidthatweareencouragedbywhatwehaveseenandwehavedecidedtoincreasethenumberofpatientsatthatdose,thatwillhelpusdiscernthemagnitudeofimprovementinFactorVIIIexpressionwecanachieveandtheproportionofpatientswhoachievedthatmagnitude.Staytuned.FurtherupdatescomingatR&DdayinApril.


Justafollow-up,ifIcan,sowe'regoingtohavedataonthethreepatientsatR&Ddayormaybethefive?Butonewayoranother,arewegoingtogetagoodreadondurabilityfromthisfirstdataset?IknowthefirstpatientwastreatedinSeptember,soclearlythatonehasbeenontherapyforquitesometime,butwhatisyoursenseondurabilitythere?


Peoplearetalkingaboutthisbeingoneanddoneforalifetime,andsoeventhatSeptemberpatientinAprilyouwillhavesixmonthsof,sosomepeoplemightsaythat'snotverylongintheschemeofalife.Ontheotherhand,fromDr.Nathwanistateddemonstratingstableexpressionforatleastfiveyearsandpreclinicalexperimentsdemonstratinglifetimecorrectioninsomeanimalmodels,wethinkthree,four--theprincipaleffect--thethingthataffectsdurabilityreallyistheliverresponsetothetransgene.Andthathappensearly.

Andonceexpressionhasstabilizedaftertheliver--ifthereisaliverresponse,oncethepatienthasstabilizedafterthatliverresponse,itseemstobepredictiveoflong-termoutcome.

So,exactlyhowmuchofthatyouwillseeatR&Ddaywilldependonwhatdosesareactiveandtheamountoffollow-upthatwewillhaveprior--atR&Dday.Itwillbe,tobeclear,thebeginningofthejourney.Veryinformative,butstillthebeginningofthejourney.


Butitwouldbemorethanthreepatients.


Okay,great.Thanksagainfortakingthequestion.

Operator :

StephenWilleywithStifelNicolaus.

StephenWilley(Analyst-StifelNicolaus):

Justaquickoneonmanufacturing,actually.YoutalkaboutfinishingvalidationoftheIrelandplantlater




thisyear,andjustwonderinghowmuchcapacitywillbeimmediatelyavailablein2017,thepaceoftheproducttransferthatisgoingtooccurtothatfacility,andthen,Iguess,anycolorthatyoumightbeabletoprovidearoundthelonger-termtaxbenefitandiftherewouldbeanyimprovementingrossmargins.Thanks.


IsRobertonthephone?

Unidentif iedCompanyRepresentative :

Yes.


Robert,areyouonthephone?

RobertBaf f i(EVP,TechnicalOperations):

Yes,Iam.


Youwanttotakethisone?

RobertBaf f i(EVP,TechnicalOperations):

Yes,sowecan--intheShanballyfacilityinIreland,wearegoingthroughtheprocessqualificationmanufacturingcampaignnowthatstartedinthebeginningofJanuaryanditisproceedingverywell.

ThecampaignwillendintheJunetimeframe.Wewillthenhavetowriteupthedocumentationandsubmitit.Wewillprobablyhaveinspectionsinthefirstquarterof2017andareanticipatingapprovalinthemajorregions,USandEurope,bymid-2017andthensubsequentfilingsforaroundtheworld.

Thisissimilartowhatwehavedoneaswe'veexpandedourproductioninCalifornia.SothecapacityintheCaliforniafacilityismorethanadequatetobridgeustothatapproval,andthenwewillbeabletoproduceproductattwodifferentsitesofVimizimandweareanticipatingmeetingallthecommercialdemandsasrequired.


Andthen,Dan(MultipleSpeakers)


Sorry,Stephen,whatisyourquestion?


Yes,sojustcuriousifthereisanyexpectationaroundalonger-termtaxbenefitandifyouarewillingtoprovideanycoloraroundwhatthatmightbe.


Yes,Danwilladdressthat.Yes.





Yes,sothemanufacturinginIrelandisanimportantpartofthelong-termtaxstrategy.WebelievethatforVimizim,byutilizingthis,wecangetdeferralsuchasthetaxratefortheprofitsonVimizim,andotherproductsthatovertimewecantakeoffshoreshouldbeinthelowteensandwewouldexpecttohaveablendedlong-termtaxrateinandaroundthe20%level.


Okay,that'shelpful,thankyou.

Operator :

ThankyouandIamshowingnofurtherquestionsatthistime.IwouldliketoturnthecallbacktoMr.Bienaimeforclosingremarks.


Thankyou,Operator.Soinsummary,weareentering2016,webelieve,fromapositionofstrength,basedonthefourpillarsofgrowththatIoutlinedatthebeginningofthecall.Andweanticipateourapprovedproductswillgeneratesolidlyover$1billioninrevenuethisyearandwebelievewecanreach$1.5billionby2020withthoseproducts.

Wehavetwoglobalproducts,cerliponasealfaandpegvaliase,which,withpivotalresultslaterthisquarterandpotentiallaunchesnextyear,thatiscombinedwithourexistingproducts,maydriverevenuewellover$2billionby2020.

Andthird,ourbest-in-classdevelopmentportfoliohastwoadditionalproducts,vosoritideforachondroplasiaandBMN270forgenetherapyinhemophiliaApatients,thateachaddress$1billionplusmarketopportunities.Andaswesayalsoatthebeginningofthecall,weexpecttoturnthecornertowardsprofitabilitybyachievingnon-GAAPbreakevenorbetterin2017andbottom-linegrowthintheyearstofollow.

WelookforwardtoseeingyouatWORLDnextweek,theWORLDmeetingnextweekinSanDiego,andR&DdayinNewYorkinApril.Thankyouforyourcontinuedsupportandforjoiningusontoday'scall.Bye.

Operator :

Ladiesandgentlemen,thankyouforparticipatingintoday'sconference.

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BioMarin Pharmaceutical (BMRN) Earnings Report: Q4 2015 … · 2016. 2. 26. · Welcome to the BioMarin Pharmaceutical Inc. conference call to discuss fourth-quarter and full-year