BioMarin Pharmaceutical Inc (BMRN) 2007 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2007 BioMarin Pharmaceutical earnings conference call. My name is Jeremy I will be your coordinator for today. (OPERATOR INSTRUCTIONS) We will conduct a question-and-answer session towards the end of the conference. If you require audio assistance please key star 0 and a coordinator will be happy to assist you. This conference is being recorded for replay purposes.

I would now like to turn the call over to your host, Ms. Eugenia Shen.

On the call today is J.J. Bienaime, BioMarin's Chief Executive Officer, Jeff Cooper, Chief Financial Officer, Emil Kakkis, Chief Medical Officer, and Stephen Aselage, Senior Vice President of Commercial Development. I would like to remind everyone that this non confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical including expectations regarding BioMarin's financial performance, commercial products, and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the Securities and Exchange Commission such as 10Q, 10K, and 8K reports. Now I'd like to turn the call over to J.J. BioMarin's CEO.

Thanks, Eugenia, and good morning to everyone. Thank you for joining us on today's call. So I have a few introductory comments before Emil provides an update on our ongoing BH4 [Inaudible] program, and then Jeff will review details of the first quarter 2007 and provide guidance for 2007. And Eugenia will review the list of investors conferences where we will be presenting in the coming month, before we'll ask the operator to poll for questions. So first the launch of Naglazyme in the United States, Europe and certain international markets continue to go vert well. Sales are off to a strong start and we expect ongoing momentum in 2007 to be driven by geographic expansion and the initiation of new patients on commercial therapy. As for Aldurazyme, frankly its fine. Commercialization through [Inaudible] continues to go well. And Jeff will go over the details in a moment. Moving on to the Kuvan program our team is working diligently to complete the NDA which we are on track to file in the current quarter so as you may recall the FDA has granted Kuvan fast track status. We are optimistic that once submitted the application will be granted priority review which would mean six-month review cycle instead of the standard 10 month cycle And assuming this occurs potential approval before the end of the year in the U.S.

I would also like to provide a little information about the expanded access program for Kuvan which was approved by the FDA based on the fact that PKU is a serious condition for which no treatment exists today. The program is expected to start after the NDA filing and will continue until a drug becomes commercially available but will not extend beyond two months after approval. This program will allow physicians to use Kuvan at dose ranging from 5 to 28 milligram per [Inaudible] per day. And while no limitation on the number of participating centers BioMarin can guarantee drugs for only the first 500 patients and will continue to evaluate supply for additional patients. We have received a great deal of interest in the program from physicians and dietitians representing more than 70 centers in the US, which we believe bodes well for the potential launch of Kuvan. We are also making progress on development of Phenylase, a subcutaneously administered therapy for more severe PKU patients who do not adequately respond to Kuvan. Pre [Inaudible] data demonstrates that Phenylase administered subcutaneously once weekly in PKU mice resulted in a sustained decrease in blood c levels to levels within a normal range for a 12-week period. We are still trying to file an IND by the end of 2007 and hope to be in the clinic in early 2008.

As you may recall, Merck Sorono is our corporate partner for both of the PKU programs. Finally I would like to take a moment to further discuss the rationale behind our recent financing. As for the timing we chose to exit this transaction at this time because the terms were unusually favorable. As you all know, the capital markets can become unfavorable for extended periods of time and we would not want to find ourselves in a position of not being able to proceed with a valuable growth opportunity if market conditions that make it more expensive and difficult. But I want to convey to that you we remain very optimistic about the near-term potential for growth at BioMarin. Naglazyme and Aldurazyme are both still generating strong year over year growth with no major competitive threat on the horizon. Looking ahead to the end of the year given the strength of the [Inaudible] and the fact that virtually all PKU patients in the developed world are identified, Kuvan could possibly become our most significant product on the market.

Based on these three products alone we have the potential to generate significant value over the next few years. What this financing does represent is a proactive strategy to maintain growth for the long term and to manage our pipeline not a series of [Inaudible] bets but as portfolio of product opportunities that fit with our product development and commercial competency. There is no immediate transaction of significant size but this financing does provide us with the flexibility to execute a reasonably sized transaction or transactions if we find the right opportunities. And if the right opportunity at the right price does not emerge we will earn significant interest on the cash which in and of itself is likely sufficient to fund several early stage programs. So with that behind us I will turn the call over to Emil who will review our revised [Inaudible] plan for BH4.

Thanks, J.J. . I will first review additional information on the hypertension study results and then update our plans or studying cardiovascular indications of 6R-BH4. In the hypertension study, 116 patients with hypertension on two medications or more were treated with 6R BH4 for eight weeks, and there was no statistically significant effect on any efficacy or safety parameter relative to placebo. Since the release of the top-line data we have conducted extensive analyses of the underlying data and other information to help us understand -- better understand these results. Our post talk subgroup analysis of the phase two trial for uncontrolled hypertension revealed a greater effect of BH4 in patients with higher systolic blood pressure of greater than 150 millimeters of mercury than in patients with systolic blood pressure less than 150 millimeters of mercury, with a within group P value of comparison of 0.004. The placebo group did not show a significant difference when comparing placebo patients with greater or less than 150 millimeters of mercury and blood pressure. When comparing 6R BH4 to placebo in patients with a mean systolic blood pressure of greater than 150 millimeters of mercury the BH4 group had a mean systolic blood pressure reduction of 14.1 millimeters of mercury compared to a mean systolic pressure reduction of 5.9 in the placebo group, a difference of 8.2 that did not reach statistical significance with a P value trend of 0.142

It is common to find greater blood pressure reduction effect for hypertensive drugs in patients with higher blood pressure as post talk analysis suggests may be true for 6R-BH4. But these are post talk analyses, and so they can only help provide insight that will need to be confirmed in prospectively designed studies, and should not be over interpreted. Given these results and other analyses of the supported data on BH4, we plan on conducting two additional small studies in an effort to understand the role of BH4 in treating endothelial dysfunction and the relation of this effect on cardiovascular disease. The first study is a double blind placebo controlled study of the effects of 6R-BH4 on endothelial dysfunction in approximately 40 patients with more severe systolic hypertension defined by systolic blood pressure of greater than 145 millimeters of mercury and with confirmed and significantly impaired endothelial function. The study shall clarify whether BH4 has a clinical meaningful effect in more severe hypertensive subset of patients with endothelial function as suggested by additional analysis of the hypertension study. The second study is a study to assess text of co administration of vitamin C with BH4 on BH4 pharmacokinetics and pharmacodynamics in approximately 40 subjects with more severe hypertension, defined by a systolic blood pressure of greater than 150 millimeters of mercury and with significantly impaired endothelial function. In the prior hypertension study done by Dr [Kyuni] of Emory University, that did show a statistically significant effect of BH4 on lowering blood pressure the BH4 was formulated with a larger amount of vitamin C while our formulation contains a smaller amount of vitamin C.

Vitamin C is known to be an oxidation protectant for BH4 and significant [Inaudible] stress is known to be associate with cardiovascular disease. The quantity of vitamin C could have an impact on activity of BH4 but that is unknown at this time. We designed this study to help clarify whether vitamin C plays a role in enhancing the [Inaudible] of BH4 by protecting it from oxidation Though we had not thought this an important factor in the prior BH4 work there is the possibility that an increased amount of vitamin C mate help BH4 work more effectively in patients with high oxidative stress. Both of the studies that we've just described will start this year. We expect results toward the end of 2007 or early 2008 for the vitamin C plugs BH4 study and by the middle of 2008 for the hypertension study. In some ways these two exploratory studies will help us better understand how BH4 regulates endothelial function and provide us more information on how to guide the development of BH4 in cardiovascular disease. Moving on to the Phase II trial for [Inaudible] disease we have made a few adjustments to the protocol based on our analyses of the hypertension data..

In order to verify the presence of endothelial dysfunction and effective BH4 we will add measures of endothelial dysfunction and [Inaudible] stress to the protocol at some sites. Given the potential that increased vitamin C might protect BH4 from oxidation in patients we will add the co administration of vitamin C with BH4 placebo to half the patients in the study. This design will allow us to determine whether vitamin C has any effect on BH4 efficacy and ensure that if this effect is present that this study will capture it. We will maintain the subject number of 210 patients, the dose at 800 milligrams per day for 6R BH4, and the primary endpoint, the mean change of peak walking time from base line at 24 weeks. Original Phase II hypertension study results were disappointing but the basis BH4's action in endothelial dysfunction is based on many, many studies in animals and humans. The studies we are now conducting help guide our development toward the most effective indications for BH4 and the adequate exploration for important opportunity is very important to complete. We also plan to initiate the Phase II trial in BH4 in sickle cell disease eminently with perhaps the first patient dose this week, and an investigator sponsored study of BH4 in pulmonary arterial hypertension is expected to begin in the second quarter as well. Jeff Cooper now will review the financial results for the first quarter of

Thanks, Emil. I will start by reviewing product revenues of Naglazyme and Aldurazyme for the first quarter ending March 31st 2007, and follow with royalty and license revenue for the same periods. I will then review our net loss for the quarter and follow with a more in-depth look at financial results. Lastly I will provide updated financial guidance relating to projected net product sales and net loss for 2007. Beginning with Naglazyme, net product sales for first quarter 2007, 18.4 million compared to 16.3 million for the fourth quarter of 2006 representing sequential increase of approximately 12.9%. Naglazyme net sales for three months ended March 31st were 7 million. Sales growth to date is attributable to the initiation of new patients on commercial therapy and geographic expansion. Net product sales of Aldurazyme by the BioMarin Genzyme LLC were 26.8 million, for the first quarter ending March 31st, 2007, representing increase of 25.8% over the same period of the previous year. Aldurazyme net sales for the three months ended December 31st, 2006 were 26.5 million. BioMarin's share of the profit of the BioMarin Genzyme LLC as 6.2 million compared to profit of 3.8 million for first quarter 2006.

With regard to royalty and license revenue BioMarin recorded $400,000 in the first quarter ended March 31st 2007 these revenues relate primarily to Orapred licensing and acquisition agreement established with Alliant Pharmaceutical in mid-March 2006 and include royalties on net product sales of the Orapred product line. As for collaborative agreement revenues associated with our partnership with Merck Serono, BioMarin recorded 4.1 million in the first quarter 2007. Our net loss was 9.3 million or $0.10 per share for first quarter 2007 compared to net loss of 9.8 million or $0.13 per share for first quarter 2006. The net loss during first quarter 2007 includes 3.6 million of non cash stock compensation expense compared to 1.7 million of non cash stock compensation expense during the first quarter 2006. The reduced net loss for the first quarter ended March 31st, 2007, was due primarily to an increase in Naglazyme revenue and improved performance of the BioMarin-Genzyme LLC, partially offset by higher spending on preclinical and clinical development programs, [Inaudible] commercial expansion and Kuvan prelaunch commercialization activity. Now I will review the financial results in more detail. Research and development expenses increased 5.9 million to 18.2 million in the first quarter 2007, from 12.3 million in the first quarter 2006.

The increase in R&D spending is attributed primarily to increased development costs for 6 R BH4 for cardiovascular indications, and the [Inaudible] program as well as non cash stock based compensation expense looking ahead we expect to increase R&D spending in 2007 to support the 6R BH4 program for cardiovascular and sickle cell indication, Kuvan regulatory manufacturing activities and Phenylase preclinical work. Selling general and administrative expenses increased by 5.4 million to 16.3 million in first quarter 2007 from 10.9 million in first quarter 2006 this increase was largely due to continued international expansion of Naglazyme increased U.S. commercial activities as well as non cash stock based compensation expense. SG&A spending is expected to increase in 2007 due to the continued commercialization of Naglazyme in Europe, Latin America and other parts of the world as well as prelaunch commercialization activities for Kuvan in th US, including the expanded access program that J.J. noted earlier. From a cash perspective, we ended the quarter with 273.2 million of cash, cash equivelant, and short term investments. Including the proceeds from the public offering a senior subordinated convertible note on a pro forma basis BioMarin had cash, cash equivalents and short-term investments totaling approximately 590 million. And now as J.J. mentioned earlier in the call I will provide an update on 2007 financial guidance. We are slightly improving our guidance for Naglazyme sales and net loss.

With regard to Naglazyme we now expect 2007 net product sales to be in the range of 76 to 82 million from a previous range of 74 to 78 million. As for Aldurazyme BioMarin and Genzyme continue to expect estimated sales for the joint venture for 2007 to be in a range of 115 million to 125 million. And finally we expect our net loss for 2007 to be in the range of 18 million to 23 million from from a previous range of 20 to 25 million. This factors in 16 to 18 million in non cash stock compensation expense. Our 2007 guidance also includes $4 million milestone payment in June for the one-year anniversary of FDA approval for Orapred ODT and 15 million milestone payment from Merck Serono for the acceptance of the MAA filing for Kuvan. The revised net guidance reflects higher interest income and slightly higher Naglazyme sales partially offset by higher spending on preclinical and clinical development program as well as Kuvan launch preparation. That concludes my prepared remarks. I will now turn the call over to Eugenia for comments regarding upcoming events.

Thanks Jeff. Before we open up for questions I would like to note that we will be presenting at a few investor conferences in the coming months. On May 9th we will be presenting at that time Bear Gross Conference in Chicago. On May 14th, Rodman & Renshaw Fourth Annual Global Health Care Conference in Monte Carlo On May 23rd, presenting Citigroup Global Health Care Conference in New York. And finally on June 1st we will be presenting at the Bank of America Healthcare Conference In Las Vegas. You can access these presentations through our website at www.BMRN.com. And with that we would now like to open up the call for questions. Jeremy.

Thank you. (OPERATOR INSTRUCTIONS) We will pause for just a moment as questions compile. First question, the line of Phil Nadeau with Cowen & Company.

Good afternoon. Thanks for taking my questions. I have a few. First, housekeeping question. Jeff, could you break down the non cash comp charge between R&D and SG&A, how much was in each line?

Yes. The non cash comp charge was broken down about 2.1 million was was SG&A and 1.3 million was R&D, couple hundred thousand [Inaudible]

Okay. Second question is on Aldurazyme. This was the second year in a row in which the Q1 sales of Aldurazyme seemed to fall somewhat short of expectations. Do you have any explanation for that? Is there seasonality in Aldurazyme sales? Is it just a lumpy line item, and it happened to be weak in two Q1s in a row? What do you attribute that to?

ya,this is consistent with a pattern we've seen over the last few years, not only last year but the year before that, due to buying patterns in the fourth quarter compared to the first quarter of the following year. So as you noted last year we had sales of about 21.3 million in the first quarter 2006 which was mostly flat versus the prior year's fourth quarter. So this is a pattern that we've seen in the last couple of years and then accelerating sales beyond Q1.

When you say buying patterns is that buying patterns from wholesalers, or is it end user demand buying patterns that are driving this?

Buying patterns from wholesalers and country and governments buying our product.

Okay. Third question, J.J. , is actually for you. Are your explanation of raising the money in the convert was very understandable, but investors have also noticed that you have switched from buying shares to selling them, and I was wondering if you could provide us any detail on your plan how much longer is that going to last what proportion of your holdings do you expect to sell through your

It's a short-term trading plan for cash management reasons, and it should be over by September, and if when it's done it will be less than 4% of all my holdings.

Okay. That's really helpful. And then just last question is on the early access program. Could you give us a little bit more information about how you get approval for this program? Was this something that you approached the FDA? How much data did they have to look at, and is there any characteristic of the patients that could be enrolled in the program, age range or any other levels?

Stephen will answer the question.

this was a program initiated by BioMarin. We approached FDA with request to roll out an early access program, shared the protocol with them, they reviewed the protocol, made a number of very helpful suggestions. We incorporated those suggestions into the protocol, sent it back and got final approval a little over a month ago, about six weeks ago, actually. Subsequently, we've had three different enrollment meetings, we've had over 70 PKU centers in the U.S. attend those meetings and have over 60 that have already filled out the paperwork to enroll patients in the early access program. In terms of patient characteristics, they need to be patients with PKU. Any patient over the age of eight with PKU is eligible to be tested. Patients are tested with a recommended starting dose of 20 milligrams per kilogram. Once tested it is up to the physician to determine what is a clinically meaningful response. The physician can then keep that patient on whatever dose between five and 20 migs per kig for the duration of the program up through the approval of the product. Did that answer your question?

Yeah, that was perfect. Thanks a lot. Congratulations on a solid quarter.

Thank you.

Your next question is from the line of Carol [Werther] with Summer Street Research. You may proceed.

Yes. With your discussions with physicians what do they consider clinically meaningful reduction in blood fee levels?

I think it's variable by center. There's a group of physicians that don't look at it so much as reducing fee as being able to liberalize diet. Their real goal, if the patient is managed on an existing diet, is to be able to move them to a more natural diet, more normal foods, if you will, to improve nutrition and to improve quality of life for the patient. For the percentage of patients, and it is significant that are not well controlled, it really depends on the individual patient, the age of the patient, and the physician's perspective as to what's a clinically meaningful drop in fee. We've made a conscious decision not to try to tell people what's clinically meaningful but to let them manage patients as they should be which is to individual targets for the patients. So far, that's an approach that's been met, I think with a good reception from the PKU community, and the interest in this early access program I think is reflective of that. Emil, would you like to add anything to that?

The only other thing we can say is that we have done analyses that have shown that even 100 micro molar change in blood fee can have a significant impact on IQ over the long haul in patients, and I think most physicians recognize that even modest reductions of levels can be beneficial for patients in the long run.

Okay. Thanks. And J.J. , in the past, I think you've said you've expected to break even or have earnings in 2008. Do the plans for either an acquisition or -- of a product or a company, would that change that

[Inaudible] break even or be slightly profitable, second half 2008, of course it will depend on if and what kind of acquisitions we make. If it's an acquisition [Inaudible] late-stage product again, but if it's an acquisition where the product still requires some development, spending, or regulatory spending before approval that could impact that but at this time it's still our objective to break even in the second half of '08.

Thank you.

Your next question comes from the line of Tom McGahren with Merrill Lynch.

Hi, thanks. Question on expanded access program and one on the BH4 and hypertension. You mentioned that the expanded access program will be available to the first 500 patients. Wonder if you could talk about your manufacturing capabilities for Kuvan currently and plans for the future, and then secondly on the BH4 program, are the patients treatment-naive, those patients with severe hypertension, or will they be on some prior meds like the prior studies?

I'll get started on the program, then Emil, BH4 question. So the 500 limitation is not that much -- is not driven by capacity, our ability to manufacture, you know, Kuvan. It it's more we just want to control the potential impacts of that study on our financials this year because we will be providing new Kuvan free of charge to the patient so we just don't want it to explode to a level that is totally unmanageable and have a very negative impact on our earnings this year- but we are very confident, in our supply chain system for Kuvan. We have several active substance suppliers and we believe we have enough capacity to neat demand in 2008 and beyond. Emil.

On the question of the hypertension studies, the in study of vitamin C plus BH4, the patient will have at least one hypertension medication. That's different from the prior study where there were two or more, one or more, in that study. In the other study, the other study of endothelial dysfunction, in that study the patients will be on a -- expected to be on just one diuretic-type drug. This will allow us to try to eliminate some of the background drugs that occasion effects that can cause variation in the study and allow to us honed in on BH4 and its effect without confounding information from other drugs.

Terrific. Thanks a lot.

And your next question comes from the line of Joseph Schwartz with Leerink Swann. You may proceed.

Hi, thanks for taking the question. I was wondering if you could update us on the status of Naglazyme in some potential newer markets that could begin to contribute, such as Latin America and the Middle East.

Sure. We've actually made substantial progress in Latin America, BioMarin office in Sao Paulo was opened officially in January but we had the opening where we invited in thought leaders from all over Latin America a week ago it was the first real introduction of the Latin-American community to BioMarin, and we're now up to four employees based in Brazil. That's a small start. But we've got a very good reception there.There's a tremendous amount of interest, and we see the Latin-American market in general, in Brazil in particular, as a very significant opportunity for BioMarin, which will get increased attention over the next few years. It is a unusual marketplace in that physicians -- or patients in Brazil do have a right, under their constitution, to healthcare, and have a judicial process whereby the patient can go to court to demand reimbursement for therapy that is already taking place and we have a small number of commercial patients already being treated in Brazil. We would anticipate that will increase substantially over the next few years, particularly when we get the formal approval for the product. Middle East is at a little bit earlier stage. We do have people actively working the gulf states and Turkey right now. We are in process of setting up distribution capabilities our business in the Middle East is minimal at this point, probably will stay minimal through 2007 but should contribute significantly in 2008 and 2009.

And how could the official approval process play out in Brazil, given what you've seen with other enzyme replacement or rare inherited disorder drugs? How soon could we expect that to become approved and, you know, what is the process entail?

Well, the process entails us first establishing ourselves as a company. We're going through what I would consider a fairly significant amount of bureaucracy even getting, you know, the official tax number, the operating authorization from the local and federal authorities. MAA has to be filed after that. So we're probably two years from actual approval in Brazil. The again, interesting and unique thing about the Brazilian market is once you're approved for an enzyme replacement therapy, with one exception, the patient still has to go through the judicial process to get reimbursement from the government for the drug. Aldurazyme, for instance, even though it's approved, is not reimbursed unless the patient goes through the judicial process. The big difference for us in being unapproved and approved is obviously once you're approved, we can be proactive and support a patient organizations, education for the physicians and patients. Right now we obviously can't do any type of promotional activity, and it's really up to the physicians and the patients to drive the marketplace, which they are doing to some extent right now. Approval would give us more of an ability to impact that proactively.

That's very helpful. Thanks very much. If I could just ask a similar question about the pre-commercialization activities for Kuvan in terms of the payers in the United States, how do you see the -- or at what stage are you in terms of conversing with them, and if you could -- perhaps beginning to negotiate how the -- depending on how the approval and the label shake out, the reimbursement could be for people that do and don't see a blood fee decline given that as you were just saying earlier, patients may benefit regardless of a blood fee reduction and may also become candidates for the drug.

We've done a fair amount of payer research is primary market research at this point. We've also had one payer advisory board. We have generally gotten a receptive feedback from the payer system. They see this as, for what it is, which is a very small market, an orphan drug. They have told us that they don't anticipate problems with us being reimbursed for the product. They do anticipate putting it it at a tier 3 formulary level so it will maximize the patient copay. We're not particularly concerned about that. We think there are ways to deal with that. I should maybe clarify one thing. If there's no drop in blood fee or no ability to liberalize the diet then we would not anticipate patients staying on therapy. If it's BH4 responder, we think payment will be very solid almost across the board. If it's a non responder we would expect them not to pay, and they have been pretty clear about that.

Great, thanks very much.

Sure.

(OPERATOR INSTRUCTIONS) Your next question comes from the line of Aaron [Reins] with A.G. Edwards.

Thank you for taking my question. I was wondering if you could just touch upon maybe some of text of compliance in the hypertension study and if you have made any changes to the amount of time that patients will have to have been on a drug in the severe systolic study that's going to be planned.

Yes, we studied, and among the analyses, whether compliance had an effect -- reported compliance had an effect on the outcome, and we did not see any evidence that compliance with the test drug was a factor and whether -- what the result was. In the other studies, we will be monitoring the patients before they begin drugs for a period of time, which is still to be set, but in the other hypertension study, we did it for two weeks, it will be some period of monitoring before we begin the drug treatment period to help assure the patients are stabilized. In addition, we are going to likely have only a single drug diuretic in that study and therefore that will likely change the impact that multiple drugs will have on a patient's control, level of control. We're working in as many angles as we can to assure that the patients are taking drugs and that we are minimizing other variables which could make it difficult to see the treatment effect that we would expect of BH4 on endothelial dysfunction. I will point out that study, the severe systolic study, primary endpoint would be on endothelial dysfunction, not systolic hypertension, and the point is, that it's more of a mechanistic study to make sure that we're seeing BH4 treat endothelial function.

so then all the other effects will be secondary end points then?

Yes.

Are there going to be any changes to the PHA -- PAH rather investigator-led study that's supposed to start this quarter? Will it mimic what the changes that you've implemented in the ongoing study?

The PAH study and the sickle cell study are both open label dose escalating studies.

Right.

So we will be able to see what's going on in the study as it goes. So we're going to monitor in terms of endothelial function in both studies and other measures of physiology of BH4 action, and that will give us some indication whether anything might need to be changed. So as we follow the studies, we could, for example, add other components of the study as necessary to -- explore the effect of the drug. One advantage of doing exploratory dose escalating type study is that we can watch what's going on as we do the study.

Thank you. And then just the last question, if we're thinking about strategic acquisitions, wondering if some context could be provided about what type of partnerships or acquisitions we should think about in terms of size, maybe number of products. I know you mentioned that it could be close to market or on market, but I was wondering if we could get just a little more color on that area.

Yes. I mean, we -- again, we have no imminent acquisitions or no [Inaudible] this time but what we're looking at again is to leverage our overall infrastructure, our ability to get products approved in terms of regulatory abilities in North America and Europe and actually now some other parts of the world. The fact that we have a very successful sales organizations, and marketing organizations, in US, Europe, and emerging Latin America, specifically outside the U.S. our reps are selling, they won't be able to sell Kuvan because of our agreement with Serono, so we're looking at clearly high priced [Inaudible]difficult to reimburse product that we have expertise in. We are somewhat agnostic in terms the [Inaudible] as long as it's of a new product meeting significant unmet medical need in a limited patient population. We are looking at late stage development or, you know, products about to be approved or to be approved in the next couple of years. That's kind of our focus right now. And again, we believe that our track record, both in late-stage development, regulatory approvals, and successful marketing of products in limited patient population position us very well in this respect.

Thank you for the questions. Okay.

And with no further questions, I would like to turn the call back to J.J. for any closing remarks.

Thank you. We are off to a great start in 2007. We had strong first quarter results, including better than expected Naglazyme sales, along with higher interest income. This is driving improved outlook for the year. In looking ahead we anticipate FDA approval for Kuvan by the end of the year and we look forward to making this product commercially available for PKU in the U.S. in late '07. We also remain committed to the BH4 program for cardiovascular indications and we believe that exploratory studies planned for 2007 will help verify BH4 potential role in treating endothelial dysfunction. Additionally with the recently completed convertible [Inaudible] we have the financial flexibility to pursue end licensing or acquisition opportunities to help us maintain a healthy rate of growth well into the future. We look forward to keeping you up to date on our progress and we thank you for your continued support and thank you again for joining us on today's call. Good-bye.