BioMarin Pharmaceutical Inc (BMRN) 2004 Q1 法說會逐字稿

Good afternoon and welcome ladies and gentlemen to the BioMarin first quarter 2004 conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the Company, we will open the conference up for questions and answers after the presentation. I will now turn the conference over to Mr. Joshua Grass, Senior Manager of Investor and Financial Relations. Please go ahead, Mr. Grass.

Thank you. This morning, I have on the call Fred Price, Chairman and CEO of BioMarin; Emil Kakkis, M.D., PhD., Senior Vice President of Business Operations; Louis Drapeau, Chief Financial Officer; Jeff Cooper, Vice President and Controller. This morning, we will be making forward-looking statements about the business aspects of BioMarin Pharmaceutical, including potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress in BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed and BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K and 8-K reports. With that, I'll turn the call over to Fred.

Thanks, Josh, good morning. We're pleased to provide you with an update and a report on the progress we have made over the last few months. My agenda for this call is to first review the progress of our product development programs, including our pending Pediatrics transaction, and highlight some of the upcoming milestones for this year. Then I will go over the financial results for the quarter and for -- also specifically for Aldurazyme as part of our joint venture with Genzyme.

As a reminder, we will provide updated financial guidance for this year during our second-quarter call in three months. Following my brief remarks, I will open up the call up for questions.

First, our Pediatric outline, beginning with the Ascent Pediatrics transaction. On April 20th, we announced that we signed definitive agreements with Medicis (ph) Pharmaceutical Corporation to obtain its profitable Ascent Pediatrics business, which includes Orapred for severe asthma and the 66-person sales organization that markets and sells Orapred to more than 14,000 pediatricians and pediatric specialists in the U.S..

As I commented at the time of the announcement, this deal includes some unique features that make it a very attractive option for BioMarin. First, it brought with it an approved, profitable patent-protected product with multiple opportunities for continued growth. We expect to increase sales through what I call organic growth associated with the rising number of people suffering from asthma and by targeting more pediatricians.

In addition, we intend to introduce new formulations, including a more convenient non-refrigerated version and a quick dissolve tablet that could potentially expand the market to older children. We will file for the non-refrigerated version in the U.S. in the second quarter of this year and expect to file for approval outside of the U.S. in about a year. Assuming the quick dissolve tablet development program continues on track, we anticipate filing in the U.S. and outside of the U.S. in about 18 months.

Second, the deal includes a skilled pediatric sales force. With a commercial added to our business, we're now positioned to capture greater value from products emerging from our pediatric product pipeline. In the near-term, Aryplase for MPS VI and Phenoptin for PKU, pending positive clinical results and regulatory review. As I have said many times before, pre-market identification and physician education activities are critical factors for the successful launches of Orapred products.

Aside from the strategic value, this deal provides us with a product of proven superiority in treating asthma in children. We want to emphasize that within just three years since launch, Orapred has gained more than a 50 percent market share in a crowded market. Orapred's superior patented-protected taste masking technology sets it apart from the rest. The two patents covering the taste masking technology are valid for another 12 years in the U.S. and 13 years in Europe and the rest of the world. Recently filed patent applications related to the non-refrigerated formulation if they are issued will not expire until 2024. Clearly, we are well protected on Orapred and expect continued growth in this business.

From a financial perspective, we expect Orapred to improve the financial performance of the Company. The deal is accretive immediately, excluding onetime deal-related charges. Gross margins are about 85 percent and this transaction will drive us closer to profitability. The transaction is currently being reviewed pursuant to the Hart Scott Rodino Act and pending regulatory approval, we expect the deal to close this quarter. I look forward to providing you with updates on this program as the continues.

Now onto Aldurazyme for MPS 1. On February 15, our joint venture partner Genzyme announced that first quarter sales of Aldurazyme were 7.4 million and they reiterated their guidance for 2004 sales of 40-44 million. We continue to see progress in the regulatory front with Aldurazyme. Since the launch in the U.S. and the EU in the second quarter of last year, Aldurazyme has been approved in Norway, Iceland, Israel and the Czech Republic. Applications for product approval are pending in Canada, New Zealand, Russia and Korea and we expect continued stream of regulatory activity and news throughout the year. I would like to mention that the set application for Australia has just been approved.

Turning to Aryplase, we just completed the Phase III trial of Aryplase for the treatment of MPS VI. We're now in the process of gathering the data from the six clinical sites and plan to announce the results shortly. If the Phase III results are positive, we plan to file for worldwide marketing authorization in the fourth quarter of this year. It is possible that Aryplase could be launched in the fourth quarter of next year.

We're continuing our patient identification and physician education efforts well in advance of this potential launch and we will be using the new 66-person sales force with regard to this effort. The up-front pre-commercialization work we do now will position us for a more successful, less costly product launch.

A few words on our PKU program are in order. In February, we initiated a pilot trial with Phenoptin for the treatment of mild to moderate PKU. People with this form of PKU have some level of enzyme either to break down the phenylalonine found in many protein-containing foods, just not enough of it. Phenoptin is an oral enzyme cofactor that can boost the effectiveness of the enzyme these people do have. There is already a large body of evidence demonstrating the efficacy of Phenoptin and this pilot study is designed to confirm the results and better to find the dosing and screening parameters for future trials. We expect to announce data from this trial in this quarter and if the results are positive, to initiate an additional trial in PKU in the fourth quarter. Again, just as with Aryplase, we plan to use the sales force to do the groundwork well in advance of potential commercialization to get us ready for a robust product launch.

PKU affects far more people than both MPS I and MPS VI, at least 50,000 people in the developed world and we're excited about the potential bringing to market what could be the first approved drug for the treatment of PKU. To address PKU patients who don't respond to Phenoptin, likely those with the more severe form of the disease, we are evaluating Phenylase as an enzyme therapy that could be administered via a subcutaneous injection similar to how insulin for diabetes is administered. Pre-clinical results of Phenylase have been promising, but the studies are not yet completed. We look forward to giving you an update on the program later this year.

A few words about our non-pediatric progress. We've completed the Phase I-B trial of Vibrilase, our topical enzyme therapy under investigation for the debreavement (ph) of serious burns and plan to announce data from this trial in the next few months.

To reiterate what I said on our April 20th call, we do not plan to spend significant resources on any non-pediatric products. We're limiting the downside by only developing non-pediatric products through proof of principle stage, while potentially participating in the upside through partnerships. We expect future partners to take our non-pediatric products through development and then to market them. This includes not only Vibrilase, but also Chondroitinase for spinal cord injury and Extrivase for reprofusion injuries, and our platform technologies as well, such as Neurotrans (ph). We plan to retain significant financial upside through milestones and royalties or profit-sharing arrangements.

A little bit about some more general business regarding conferences in the upcoming months. We will be providing updates at several investor conferences, including the Rodman and Renshaw Global Healthcare Conference May 12th through 14th in London; BioEquity Europe May 17th, 18th in Edinburgh; UBS Global Specialty Pharmaceutical Conference May 24th through 25th in New York; Pacific Growth Equities Life Science Growth Conference June 9 and 10 in San Francisco; Needham & Co. Third Annual Biotech Conference June 16th and 17th in New York.

Turning to the financial results, I will cover them for the first quarter and the three months ending March 31, 2004. The net loss for the first quarter was 19.9 million. This translates to a per-share loss of 31 cents. R&D expenses for the period were 13.9 million, compared to 11 million the same period in 2003. This increase in spending is related primarily to costs associated with clinical development of Aryplase.

From a cash perspective, we ended the first quarter with about 191 million in cash, we burned 15.2 million during this period. Due to the timing of certain costs, the cash burn for the first quarter is a bit less than you might have expected based on our previously issued guidance of a cash burn of between 69 and 73 million for the full year. We will provide updated guidance that reflects the Orapred transaction during the second quarter call.

Now I will cover the results for the joint venture with Aldurazyme, the BioMarin Genzyme LLC. Aldurazyme sales were 7.4 million for the first quarter and sales guidance for the 12 months ending December 31 provided by Genzyme is still 40-44 million. As I previously stated as a result of the Ascent Pediatrics transaction, we will be provided providing revised financial guidance for 2004 on our conference call reporting second quarter results in three months and 2005 guidance later this year. Excluding the non-cash charges associated with the transaction, we expect that our loss for this year will be less than our previous guidance of a loss between 68-70 million. We expect that our loss from next year will be decreased significantly due to increased sales of Orapred and to profits generated by Aldurazyme. We expect the Ascent deal to close this quarter. We will provide updated guidance in three months. Operator, I would now like to open the call up for questions.

(Operator Instructions). Phil Nadeau, SG Cowen.

Good morning. Thank you for taking my question. I was wondering if you could review for us the design of Aryplase's pivotal trial in preparation for the release of results? Thanks.

The Aryplase trial was a double-blind placebo-controlled trial in 38 patients that we conducted at six sites internationally. The primary endpoint for the study is the 12-minute walk test, which is a test that looks at how far a patient can walk during a limited time period. The data from our Phase II study in that showed a very substantial improvement in this 12-minute walk test. And based on those results, we were able to design the Phase III study.

The secondary endpoint is the 3-minute stair climb test; that is, how many stairs a patient can climb in three minutes, from which we also had good data in Phase II. And the other secondary endpoint is the urinary glyco (indiscernible) the carbohydrate that the patients excrete in their urine, which is a biochemical marker of how the enzyme works. We've also had data there (inaudible) Phase III study (indiscernible) we expect to unwind before the end of May.

Great. Thanks. And on Phenoptin, what is the efficacy measure that you're looking at in the pilot efficacy study?

In the Phenoptin study, we're looking at blood level. The phenalalinine blood level has been the standard for the diagnosis and management of PKU for the last 40 years. It's a well described endpoint that shows -- that is, predicts the clinical outcomes in patients, and we believe it is an appropriate way to measure the degree of effect in control on PKU. So it's the phenalalinine blood level.

Great, thank you.

Darren Mac.

Hi, guys. I had a couple of questions. First, can you give us an update on the number of patients on commercial therapy on Aldurazyme for the quarter?

Unfortunately, you have to get that from Genzyme, Darren.

Okay. Then can you tell us specifically which medical meeting the Aryplase Phase III data are going to be released at?

We have the MIKE (ph) meeting in Germany in June, which should be the first presentation. International meeting for MPS diseases.

Okay. And then, is there any -- I'd heard of one doctor in Argentina working on a screening technology for MPS, and (inaudible) lisosomal storage (ph) disorders. Is there any -- do you have any idea of how that is progressing to help with patient identification potentially going towards a newborn screening method?

Right. You're talking about Dr. Chomole (ph) in Argentina is exalting (ph) blood clot-based enzymatic screening technologies. And he has filed patents on those and been developing them. The (indiscernible) currently involved in developing those screenings. I know that other companies may be, and I cannot speak for them, but I believe that newborn screening is something that's in development both by him and by others internationally using a variety of approaches. And with the avids (ph) on these treatments, we expect there to be a reason to begin screening and treating these patients as early as possible.

Alright, thanks.

Buddy Lyons.

The trial for Phenoptin that is going to begin later in the year, assuming that the pilot results are good, is that going to be a Phase II trial?

We would expect it to be a trial that will look at both safety and the efficacy of the drug. We have not decided whether we're calling it Phase II or not. We need to speak with the regulatory authorities to understand fully the staging. However, it is a trial in PKU patients.

And do you know how large that trial will be yet?

We're working on a design, but the initial trial we're talking about is potentially several hundred patient.

Okay. Do you have any -- to switch gears -- any additional scrip data or sales data for Orapred in the first quarter since the April 20 call?

No, we don't. We will be talking about that on the next call.

Okay, thank you.

Ilya Kravets.

Hi. Just clarifying on the upcoming trial, whether it is a Phase II or (indiscernible) do you plan to both begin that registration trial? And the other question is -- if you get Aryplase data by June and it's filed by year end, why do you expect to launch it by year end of '05? Wouldn't you get FDA (ph) approval, given the unmet medical needs?

Let me address that one, that last one first. We are anticipating that we would put a filing together if the data are positive in October this year. It took 10.5 months between the time of the filing of Aldurazyme and the approval in the U.S. And I think we caught a lucky break by having a nonscheduled advisory panel several months earlier than what was anticipated. So it is certainly possible that with expedited review, we could have it in less than a year. But the only data point we have is that almost four quarters. So for planning purposes, until we know something that's different, that is certainly reasonable. But I could not object to somebody who were to project that it could the earlier than that. With regard to Phenoptin, it was very hard to hear the first part of your question. You were coming in faintly. Could you just repeat that again?

Right. I wanted to find out, after this planned clinical study that you will be conducting at the end of the year, the trial following that, will that be a registration problem, or will you need another one?

It's based on two things. One is the result of the trial and two, it's the discussions with the FDA. But having said that, I can tell you that if the results from the next trial, which we don't really want call it anything yet until we sit down with the FDA, but I will put it quotes as the Phase II trial. If those are extraordinarily robust, then we might go into an accelerated mode and the next trial would clearly be a registration trial, the last trial before filing for approval.

Great. Thank you very much.

Tom Brooderman (ph), Canterbury Companies.

Good afternoon, Fred. A few weeks ago, you mentioned the sale of -- or joint venture of some non-core pediatric products, technologies and platforms. Could you comment please on the interest these products might -- that you have received a these products? And do you have some idea of what the total value might be of this entire package? Thanks.

The interest level is legitimately quite high and has surprised us with the -- I don't want to say ferocity -- but sincerity. And it is from quite a number of companies on almost every technology that we have. But I don't want to overplay that because as we all know, a deal is not a deal until it actually closes. But I cannot make therefore a prediction based on some good discussions and also some intense negotiations. But I would expect that one of these deals would get done this year. There could be two or there could be none. But we are working assiduously on this. It's very, very important to us. So it's not a question of not applying the right resources.

In terms of what it could mean, it depends upon the product or the technology itself. For example, the neuro trans technology, which is we're getting proteins across the blood brain barrier; if their results continue to look favorable on that, the potential for a transaction in that area is fairly substantial. On the other hand, other products that have less of a market potential would be smaller. There is no billion-dollar deal here, Tom. But on the other hand, these deals are not trivial either.

Thank you.

Jason Araya, July (ph) Equities.

Good morning. A couple of questions. Number one, the Ascent Orapred acquisition. Obviously it has been in, now this would be a third company's hands, in the past few years. Can you address why BioMarin can do more with it than Ascent originally, or then Medicis after that? And could you also address the rights that are still owed to the original Ascent Pediatrics shareholders? Where does that kick in and do you expect to have to pay that and how much is that liability?

That liability was put in our press release at 15 million. I believe it is 5 million this year and 10 million next year, so that is taken of.

And is that a certainty that will have to be paid, or is that based on hitting certain sales projections?

No, it is certain. The second question is a good one. It relates to -- this is the third organization. There was Ascent, and there was Ascent as a subsidiary of Medicis, and now working with us. First of all, I think Medicis did an outstanding job and the Ascent Pediatrics folks did an extraordinary job in than 2.5 year period. I think what they did is really kind of breathtaking and kudos to them. (indiscernible) us, the capability to take it to the next level has to do with the fact that for BioMarin, pediatrics is what we do. Our entire development engine is oriented towards pediatric products. Our physicians here are board-certified pediatricians. It is the number one thing that we do, as opposed to having pediatrics be a second third thing as it often is in a larger company. You cannot focus on more than one area with all of the gusto that you really would like to do. So this is what we do and everybody here works toward that same comment goal. We know the pediatric community extremely well, our development teams are tied into this area. But we feel that it's an absolute natural take our pediatric products and put them through this system now. We think this is really kind of a marriage made in heaven.

Is the deal done more to acquire the sales force and leverage the sales force with additional products, or is it done more for Orapred and next-generation Orapred in your belief that you can really grow that?

They're both equal. The fact is that we would not have bought the Orapred line if we did not think it had tremendous growth potential. Our goal has been to reach some level of profitability in one of the quarters of 2006 and we believe this has a very real chance of letting us get to that position. Sales force is obviously critical, because -- another way to ask the question is -- would we have bought Orapred without the sales force? And the answer is yes, because we need the profitable product. On the other hand, the gem, the jewel here is having this field force which can take our product years before they're launched and start to identify patients with genetic diseases and do the physician education and the patient education so that there is a terrific launch of the product. So my guess is probably the best way to describe it is it is really 50-50 and it is totally synergistic.

Great. And just a last question. With the stock trading down here at the $6 level, I know in past conferences, you have said that you wouldn't do any financings anywhere near these levels. Would management show a sign of confidence by purchasing stock themselves and showing some insider buys since we cannot use company cash to buy back stock?

I actually have addressed this on a couple of calls before. Investment decisions are an individual person's decision and there is no policy here that requires or even really allows for a discussion of that. It's entirely up to the individual. We don't want to be in a situation where with a wink and a nod, we're suggesting that people should do something and they make an investment and it would be not appropriate to them because they really did not have the cash to do that. So it's really up to each individual person to make up their decision. But I will reiterate what I said on the call a few weeks ago that we don't need to do a financing as a result of this transaction.

Great, thank you very much.

(Operator Instructions). Dave Hoffman (ph), Asbidder (ph).

Hi, gentlemen, thank you for taking the question. I was just curious as it relates to the news of last night regarding the lawsuit filed by Kiel (ph) Laboratories against Medicis regarding Orapred. Was BioMarin aware of the lawsuit at the time of purchase of the product?

Dave, this is Fred. What I'm going to do is I'm going to turn -- I've just been joined by Eric Davis, our inside council, and he will not only address that question, but he will address other issues that relate to this as well.

Okay. We were certainly aware of this lawsuit. We investigated it in the course of our diligence, we interviewed the lawyers, we're fairly (indiscernible) pleadings (ph). We're clearly up to speed on what was going on with this suit. This is a suit against Medicis, it's not against Ascent. Second, this is only a suit for money damages and Medicis has agreed to indemnify us in full for any loss that we may suffer as a result of this suit.

The other point I want to make about this, the news, is that this is a border related motion to dismiss, which is a very difficult motion to have approved. So the fact that it was denied is not a shock to us. We don't think it affects us, we think we are protected by Medicis.

Okay, thank you, that's helpful. I guess as a follow-up, so Kiel is claiming that Medicis maintains a monopoly in prednisolone (ph) and that their acquisition of way Wee (ph) was in violation of Ricoh (ph). So given that BioMarin is going to own those assets, wouldn't one say that from the point of closing -- how would it be that from the point that you closed the transaction forward that if that were shown to be the case, that BioMarin would not have a monopoly in this market?

I think it's clear that we don't have a monopoly in the market. If you just look at the fact there are other competitors that are going oral lipo (indiscernible). Additionally, we don't think that the -- we think that the Ricoh complaint does not have merit and because of those factors that I just mentioned.

So if the court were to find -- this is just a hypothetical -- but at some future point, if the court found that when Medicis bought Wee that Wee plus Ascent equaled a monopoly, then why would it not be the case that BioMarin owning Ascent plus Wee equaled a monopoly as well?

I'm not going to comment on a hypothetical situation involving a lawsuit that we're not even a party to.

Finally, is there any reason that -- I mean, because this came as a surprise to a lot of folks. Was there any reason that this was not disclosed at the time of the product acquisition?

It wasn't material to us. And if you'll look on Medicis' web site, they did not pout out a press release. It wasn't material to them. This has no impact on us, Dave. It is a money damages suit against Medicis. There's no downside for as. This is -- there are many, many liquid oral prednisolones that don't work out there. this would just have been another one of those.

Okay. Understood, and thank you.

(Operator Instructions) Allen Seymour, Columbia Management.

It goes back to this legal issue I guess, which -- are you guys getting a Hart Scoot Rodino review? In other words, if this isn't hit (ph) reviewed by the FTC, would that be a -- would be an acknowledgement in the fact that there's no monopoly here?

We are getting FTC review. The FTC review would not be dispositive (ph). It would not be determined as to whether or not this was a monopoly. It's not the same issue.

Okay, thanks.

Steve Gaye (ph), Access Capital.

Hi. Just kind of following up on a couple of questions. I guess what I'm trying to understand is in your contractual arrangement with Medicis, have they indemnified you against any legal liabilities that might arise from the existing lawsuit against them relating to the assets that you are acquiring? Thanks.

They are contractually obligated to identify us. That's correct.

Great, thank you.

Tom Brooderman, Canterbury Companies.

Just a follow-up, please, Fred, and more a comment. As I look at things, we have approximately $3 a share in cash. We have an approved drug, we have a second drug nearing approval. We have Orapred and we have a platform of three or four drugs and technologies that will be sold. The street is valuing the ongoing business at approximately $3 a share by today's quotes. What are we missing or what is Wall Street missing? Something here isn't in kilter. Can you comment on that, please?

It's hard to make a comment, Tom, because a year ago, when the stock was 13, the market cap was twice and a lot of the assets that we have today were not there. But on the other hand, the market thought a year ago that Aldurazyme was going to be a large product. And I have said before and I think I've said it on the last two calls, in many ways, we seem to be attracting stock for Aldurazyme. If the prospects look good, the stock is up; if the prospect don't look as good, the stock seems to relate to that. I am not a Cassandra, and I don't know if that is true, but that seems to be what is happening. And with the first quarter results of Aldurazyme being modest, I think that there has been some disenchantment or something similar to that, dissatisfaction, and perhaps it is related to that. But on the other hand, I don't suggest that I have the answer to that specifically.

Just a follow-up on your reply, Aldurazyme has had no major problems. A slow start does not reflect on the fact that the drug does not work or the technology does not work.

I think that's a very good point, Tom. The -- Hammick (indiscernible) has said that -- be patient. I think those were his words on one call a couple of calls ago that says Therazymne did not start off like a rocket. There are -- I think there is a very significant upside for this product. It works extremely well. There are more and more patients that I being exposed to it.

There's also two other issues that I would lead to bring up. One has to do with -- there are 65 patients who are currently getting drugs as part of a Phase IV program. Now those patients within a year to 18 months will get off the Phase IV program and they will become paying patients. So you have a double whammy. They are paying now an enormous amount of money to keep them in a Phase IV trial. And that you will see a nice blip as these patients move over to pain patients. You will get a double positive. The absence of the negative cost plus the inclusion of the (indiscernible) drugs margin. That is one thing.

Second is that reimbursement outside of the United States just tends to take longer. So there are patients on drugs who are not getting reimbursement, and not eligible for reimbursement, and this just takes its time to work for the system. In the U.S., generally speaking, reimbursement is much faster. So I think as I mentioned earlier on the call, you see a steady stream of approvals in other countries. That's good news. But then there is another process has to go on in which the product has to go through the reimbursement process.

So I think Henry's (ph) discussion or words are correct. Be a little patient. I think a year from now, you will see a profitable product. He said so and I think it will be growing at a very nicely rate and I think Aldurazyme is a good product, it just got off to a little bit of a slow start.

Thank you.

(Operator Instructions) Gabe Hoffman, Asbitter (ph).

Thank you for taking the follow-up. I was just curious. When the Company conducted a net present value analysis of the acquisition of both Orapred and Ascent, was there some sort of probability weighted analysis conducted that in future years, another well taste masked version of prednisolone might show up on the market?

The answer is yes, Dave. We did that. But we also modeled for the fact that that product would be behind the eight ball within a very short period of time because of the non-refrigerated version, and then beyond that with a flash dose version. Remember, please, that the non-refrigerated version and the flash dose version are also both taste-masked. And it is our belief that it is an intentional cannibalization policy that Medicis put into play, which I think is an excellent strategic plan to in fact essentially eliminate the current non-refrigerated -- excuse me -- the current refrigerated version. So the answer us yes. We modeled on an enormous number of alternatives and variables. And it is our belief with great confidence that with the two new dosage forms, the very strong patent position that somebody coming in with a refrigerated taste-masked product would not be a threat to us. I also would add that the patent, it's our belief, is quite broad and that we cannot make a legal representation that nobody could get around the patent because we have not seen every instance of everybody's technology. But with a broad patent, we think it would be difficult for people to come in and not violate our patent to do effective taste-masking.

Thank you. And just on the indemnity issue, I'm curious as to what -- how long that indemnity extends, and what I mean is this. If hypothetically Kiel were to win against Medicis and Kiel were -- and if it were found that Medicis maintained some sort of illegal monopoly from when they bought Wee in fall 2002, going forward, does that -- is BioMarin indemnified from, let's say, if -- therefore it would still be a monopoly position assuming, any sort of profits that BioMarin might get from the time that BioMarin owns the franchise going forward?

The indemnity extends for 18 months following the closing of a stock purchase, which won't happen for five years and three months. So essentially, it's in the neighborhood seven years and it's closing.

That indemnity is on -- but does that indemnity cover -- what I'm getting at -- is the indemnity cover the time period from Medicis is closing Wee in late '02 to BioMarin, or does that cover BioMarin's ownership of the product from the time of BioMarin's closing to the date you just pointed out?

It covers any damages that BioMarin may suffer as a result of this lawsuit.

Okay, great. Thank you.

There are no further questions. I will now turn the conference back over to Mr. Price.

I would just like to wrap up. We've taken a pretty strong step in making good on our corporate goal of reaching profitability in 2006. We think we have all of the pieces in place for manufacturing, clinical, regulatory expertise in not only U.S.-based commercial capability to capture a much greater value from our own pediatric pipeline to become the premier pediatric focus biotech Company. I look forward to providing you with frequent updates on our progress in the coming months and appreciate your continued support of the work we're doing at BioMarin. Thank you very much.

Ladies and gentlemen, if you wish to access a replay for this call, you may do so by dialing 1-800-428-6051 or 973-709-2089 with an ID number of 346222. This concludes our conference for today.