BioMarin Pharmaceutical Inc (BMRN) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the fourth quarter 2009 BioMarin Pharmaceutical Incorporated earnings conference call. I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to your host for today, Ms. Eugenia Shen of Investor Relations.

Thank you. On the call today is JJ Bienaime, BioMarin's Chief Executive Officer; Jeff Cooper, Chief Financial Officer; Hank Fuchs, Chief Medical Officer; and Steve Aselage, Chief Business Officer. I would like to remind everyone that this nonconfidential 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 of the Pharmaceutical market, and developments by competitors, and those factors detailed in BioMarin's filings with the Securities and Exchange Commission such as 10-Q, 10-K, and 8-K reports. And now I'd like to turn the call over to JJ, BioMarin's CEO.

Thank you, Eugenia. Good afternoon to all and thank you for joining us on today's call. I have unusually few introductory comments before Jeff reviews the financials for the fourth quarter and the full year 2009. Steve will then provide more details on commercial activities and Hank will provide an update on our ongoing R&D efforts before we open the call for questions.

So we're very pleased to report the fourth quarter and the full year 2009 results with an increase in BioMarin net product revenue of 25% in full year 2009 compared to full year 2008. And during the quarter, the continued growth of Naglazyme and Kuvan drove profitability for the quarter. So importantly, during the fourth quarter of 2009, we generated close to $20 million of cash from operations, compared to $4 million in the fourth quarter of 2008. Naglazyme growth in both new and established markets drove an increase in net sales of 27% for the full year 2009 over the full year 2008, and we see many attractive opportunities ahead for this product and remain confident that Naglazyme represents a $300 million plus market opportunity for BioMarin.

Net third party sales of Aldurazyme by Genzyme increased almost 3% in the fourth quarter of 2009, as compared to the fourth quarter of 2008, although negatively impacted by around $6.3 million by foreign currency in 2009. The number of patients on therapy continues to increase. Finally, Kuvan generated net revenue of $76.8 million in full year 2009 compared to $46.7 million in 2008, and $22.7 million the fourth quarter of 2009 compared to $15.1 million in the fourth quarter of 2008. In the fourth quarter of 2009, the number of commercial tablets dispensed increased 17.8% over the third quarter of 2009. We're also gearing up to launch our fourth commercial product, Firdapse, for LEMS in EU in late March. We plan to meet with the FDA in the second quarter to discuss the development strategy for the US and also we plan to explore additional indications in the future.

Moving on to our clinical programs, as announced a few weeks ago, very encouraging data is emerging from the GALNS trial after the first 24 weeks. We expect to report complete Phase I/II results in the second quarter of the year and to initiate the pivotal Phase III trial in the fourth quarter of 2010 or first quarter of 2011. Assuming a successful six month in life study using endurance as the primary end point, we could file in the second half of 2012 and receive marketing approval in the first half of 2013. As for PEG-PAL, the Phase II study is progressing according to plan and we expect to report results in the third quarter of 2010. We remain excited about both of those programs and Hank will review additional details on our [over line accrued revenues] later.

It's also worth noting that we completed the construction of our new manufacturing facility in the fourth quarter of last year. This will meet the projected commercial needs for Naglazyme, Aldurazyme, GALNS, and PEG-PAL through at least 2016. Validation of the facility will be completed this year with a [significant] approval by the FDA in 2011. Now I would like to turn the call over to Jeff Cooper, who will review the financial results for the fourth quarter and the full year 2009.

Thanks, JJ. I will start by reviewing product revenues of Naglazyme, Aldurazyme, and Kuvan for the fourth quarter and full year 2009. I will then follow with a more in depth look at our operating expenses and financial results before reviewing our expectations for 2010.

Beginning with Naglazyme, net product revenue for the fourth quarter of 2009 was $44.4 million, an increase of 21.6% over net product revenue of $36.5 million in the fourth quarter of 2008. Net product revenue for the year ended December 31st, 2009 was $168.7 million compared to $132.7 million for the year ended December 31st, 2008. Naglazyme net product revenue growth is attributable to geographic expansion internationally, the initiation of therapy by previously identified or newly diagnosed patients, and weight gain as patients grow. Foreign currency exchange rates caused an increase of Naglazyme sales of $600,000 in the fourth quarter 2009 and a decrease of $4.4 million for the year ended December 31st, 2009.

Net sales of Aldurazyme by Genzyme was $38.7 million for the fourth quarter of 2009, increased 2.9% compared to net sales for the fourth quarter of 2008. Net sales of Aldurazyme by Genzyme for the year ended December 31st, 2009 were $155.1 million compared to $151.3 million for the year ended December 31st, 2008. Foreign currency exchange rates caused an increase to Aldurazyme sales by Genzyme of $2.4 million during the fourth quarter of 2009 and a decrease of $6.3 million for the year ended December 31st, 2009. Net product revenue BioMarin related to Aldurazyme was $16.8 million for the fourth quarter of 2009, compared to net product revenue to BioMarin of $14.4 million for the fourth quarter of 2008. Increase in net product revenue to BioMarin in the fourth quarter of 2009 was due to the timing of inventory transfer to Genzyme resulting in net $1 million of incremental inventory transfer revenue.

Net product revenue for Kuvan was $22.7 million for the fourth quarter of 2009, compared to $21.7 million for the third quarter of 2009 and $15.1 million for the fourth quarter of 2008. Product revenue for Kuvan for the year ended December 31st, 2009 was $76.8 million compared to $46.7 million for the year ended December 31st, 2008. Net product growth is primarily due to patients initiating therapeutic Kuvan.

Now I'll review gross margins, operating expenses, and nonoperating items in more detail. Gross margins for Naglazyme were 80% during the fourth quarter of both 2009 and 2008. In the fourth quarter of 2009, Aldurazyme gross margins were 76%, which reflects both the royalty and product transfer revenue from Genzyme to BioMarin. Kuvan gross margins during the fourth quarter were 84%, which reflects an 11% royalty payable on net sales.

Research and development expenses increased $1.7 million to $27.4 million in the fourth quarter of 2009 from $25.7 million in the fourth quarter of 2008. The R&D expense during the quarter increased primarily due to increased development spending for GALNS, PEG-PAL, and Duchenne Muscular Dystrophy programs. Of the total R&D spend of $27.4 million in the fourth quarter of 2009, $3.4 million was for stock-based compensation expense.

Selling, general and administrative expenses increased by $7.8 million to $36.5 million in the fourth quarter of 2009 from $28.7 million in the fourth quarter of 2008. This was largely due to increased spending for Naglazyme, Kuvan, and Firdapse, as well as corporate expenditures. Of the total $36.5 million of SG&A spent in the fourth quarter of 2009, $4.6 million was for stock-based compensation expense.

Interest income decreased by $2.2 million to $1 million in the fourth quarter of 2009 from $3.2 million in the fourth quarter of 2008, primarily due to the decline in market interest rate. Current yields invested funds were less than 1%, which are driving down interest income on our investment portfolio. Interest expense of $2.7 million in the fourth quarter of 2009 compared to $4.1 million in the fourth quarter of 2008. Interest expense, which now consists primarily of our interest on our convertible debt declined in Q4 2009 due to the reduction of [imputed] interest expense associated with the final payment on the debt.

Now I'll review the GAAP and non-GAAP bottom line results. Our GAAP net income for the fourth quarter of 2009 was $4.7 million or $0.05 per diluted share, compared to net income of $24.5 million or $0.21 per diluted share for the fourth quarter of 2008. GAAP net loss for the year ended December 31st, 2009 was $500,000 or zero per diluted share compared to GAAP net income of $30.8 million or $0.29 per diluted share for the year ending December 31, 2008. Non-GAAP net income in the fourth quarter of 2009 was $13.5 million or $0.13 per diluted share, compared to non-GAAP net income of $8 million or $0.08 per diluted share for the fourth quarter 2008. Non-GAAP net income for the year ended December 31st, 2009 was $47.1 million or $0.46 per diluted share, compared to non-GAAP net income of $30 million or $0.29 per diluted share for the year ended December 31st, 2008.

From a cash perspective, we ended the fourth quarter of 2009 with $470.5 million of cash and short and long-term investments. During the fourth quarter of 2009, we generated $19.9 million of cash from operations, compared to $4 million in the fourth quarter of 2008.

With regard to 2010 guidance, we are reiterating the ranges that we previously provided on February 4th. Naglazyme net product revenue is expected to be in the range of $190 million to $200 million. Kuvan net product revenue is expected to be in the range of $98 million to $108 million. This includes up to $4 million in net product revenue related to Kuvan royalties on European sales and product transfer revenue to our partner Merck Serono. For Aldurazyme, we expect net product revenue to Biomarin to be in the range of $70 million to $75 million, which includes both royalty and inventory transfer revenue. We expect that Aldurazyme inventory transfer revenue during 2010 will be significantly lower than 2009.

Turning to expenses, we expect cost of sales in the range of 19% to 21% as a percent of sales, R&D in the range of $140 million to $145 million, and SG&A in the range of $145 million to $150 million. For the 2010 bottom line, we expect our GAAP net income to be in the range of $2 million to $12 million. This includes the net impact of the loss between $10 million to $14 million for the Huxley transaction, which reflects US development cost of $4 million to $5 million in amortization and other costs related to the acquisition. The GAAP net income guidance also takes into consideration $11 million to $13 million in net operating expenses associated with the lead transaction, including between $3 million to $4 million acquisition related charges. Non-GAAP net income for 2010 is estimated to be in the range of $39 million to $49 million.

Regarding cash flows for 2010, we plan to spend approximately $40 million in capital expenditures, which is less than half of 2009 capital spend. Importantly, even after considering the upfront and milestone payments related to the Huxley and LEAD transactions, we expect to be slightly cash flow positive in 2010. Now I'd like to turn the call over to Steve, who will provide an update on commercial activity.

Thanks, Jeff. 2009 marked a successful year of continued growth in our three commercial products. We look forward to the expanding upon that with the launch of our fourth product, Firdapse. We are on track to launch in the EU on a country by country basis, with the first countries in late March. Pricing has been filed in Germany at EUR23 per tablet. The annual cost of therapy can vary widely from patient to patient. Dosages can range from 50 milligrams to 60 milligrams a day, with the annual cost of therapy varying widely from patient to patient. We estimate the annual cost will range between EUR10,000, and EUR50,000 per year. We plan to meet with the FDA regarding the development strategy in the US in the first half of the year and also plan to explore additional possible indications.

Turning to Naglazyme, we continue to make tremendous progress in both new and existing markets. Particularly, we believe there remains significant potential in international regions, which is the largest contributor to Naglazyme growth. We're working to secure reimbursement in Russia and Mexico and hope to have patients on therapy in the first half of the year in those countries. In more established territories, we're still uncovering new patients and are also improving on our patient finding capabilities. We remain confident with our current peak sales estimate for Naglazyme of $300 million plus, which is double our expectation at the time of launch. It is worth reminding you that we are seeing and expect to continue to see some choppiness in ordering patterns due to government entities purchasing less frequently, but in larger quantities. This can obviously influence quarter to quarter comparisons. This is particularly true in Brazil, where federal purchasers altered procedures to purchase less often and on behalf of large blocks of patients, resulting in a much smaller number of orders, but much higher quantity orders, however.

Moving on to Kuvan, steady growth continued through the fourth quarter of 2009 with a solid 17.8% increase in the quantity of commercial tablets dispensed to patients as compared to the third quarter of 2009. We are pleased to see data emerging from investigator sponsored trials to help build the value proposition for Kuvan. At the upcoming American College of Medical Genetics meeting in March, data will be available from several small investigator sponsored trials, including one looking at blood Phe variability and another on institutionalized patients. As you know, institutionalized patients are currently not factored into our PKU market estimates and could potentially offer upside. We remain hopeful about the long-term potential of the market and our ability to successfully execute this program. We look forward to keeping you updated on the progress of Kuvan and Naglazyme.

Now I'd like to turn the call over to Hank, who will provide an update on our R&D pipeline.

Thanks, Steve. Starting with the GALNS program for MPS IVA or Morquio syndrome, we were very encouraged by the preliminary results reported in early February. Keratan sulfate levels fell within a few weeks after the start of therapy, and after 24 weeks there were improvements in the six minute walk distance, three minute stair climb, and pulmonary function consistent with those observed in clinical studies of drugs for MPS I, II, and VI. Also importantly, the frequency and severity of infusion reactions appear comparable to those observed with Aldurazyme and Naglazyme. Based on these results, we feel more confident about using endurance as a primary end point in the pivotal Phase III trial, which we expect to initiate by the fourth quarter of 2010 or first quarter of 2011.

Moving on to the Kuvan outcome study in life cycle development, we expect to initiate a randomized placebo controlled 13 week study of Kuvan in June of this year. End points include the clinically validated measures of neuropsychiatric symptoms, and if successful will support a late [limit]. We look forward to meeting with the FDA to get their input on the final study design in support of our objectives. As for the handheld blood Phe monitor, we have successfully completed early proof concept laboratory studies and are proceeding with prototype development. Near term plans include user studies as well as engineering scale up and finalization of the commercial product design with expected availability in early 2011.

We also look forward to meeting with the FDA shortly to discuss requirements for registration of Firdapse in the US. Just a reminder, Lambert Eaton Myasthenic Syndrome or LEMS is a disease for which no therapy is approved in the United States, and amifampridine has been shown to improve important measures of strength in published controlled clinical trials. We're keen to define an expeditious path to enable access to a high quality pharmaceutical, supported by relevant safety and pharmacology data and with appropriate long-term safety surveillance measures in place.

Moving on to the PEG-PAL program, Phase II studies are ongoing and we expect to report results in the third quarter of 2010. The study will evaluate the safety and efficacy of weekly injections for eight weeks followed by dose and regimen optimization in the extension period. Flexible Phase II protocol provides multiple opportunities to arrive at a tolerable safe dosing frequency, and we continue to believe that if approved, PEG-PAL may offer significant benefit for PKU patients.

We initiated the Phase I trial for BMN-195 in January and expect to report results in the third quarter of this year. Just to remind you, BMN-195 is the small molecule inducer of utrophin, a protein that can potentially substitute for the effect of dystrophin protein in patients with Duchenne Muscular Dystrophy. Assuming successful Phase I trial, we expect to initiate a Phase II trial in the fourth quarter of 2011.

We're also working on several exciting preclinical programs, including the PARP inhibitor, BMN-673, which we recently acquired from LEAD Therapeutics. We expect to file an IND for this by the end of 2010. We will keep you updated on our progress on this and other programs as they advance. We're also planning an R&D day in late Q3 or early Q4 of this year to discuss our programs in more detail. And with that, operator, we would like now to open the call for questions.

Certainly. (Operator Instructions). Your first question comes from the line of Cory Kasimov with JPMorgan. Please proceed.

Hi, good afternoon. Actually, this is Mona for Cory. I had two questions, both for Hank. The first is, I was wondering on the PEG-PAL program, if Hank you could comment on the frequency of the updates that you get and whether -- have there been any changes to the protocol at all?

In terms of frequency of updates, we're monitoring the trial. It's ongoing. We really strongly believe that it's important to get all the data from the clinical trial before coming to any conclusions. And as I said in my prepared comments, we expect that to occur in Q3 of 2010, and we have not reported that there have been any material changes in the protocol since we started it.

Okay. Great, and then the second question is actually on the BMN-195 program. If you could just give us a little more detail on the Phase II that you're planning in later this year? And I guess also what's the associated cost of the clinical trials for this program?

So the Phase II trial, as I said in my prepared comments, is scheduled to start at the beginning of 2011, and we've not really arrived at a design. I think one of the core concepts is to test the safety, tolerability, PK, and exposure in a healthy volunteer study and then determine from that study what range of doses to explore in a Phase II study in DMD patients, with the idea of establishing proof of principle probably through the biological activity of upregulating utrophin, and in a study whose design would enable a Phase III trial to begin shortly thereafter, if successful. As far as cost of that clinical trial, I think it's too early to talk about the cost of that. We have no idea of what the sample size is going to be, the number of doses or duration. I think it's pretty early. It's exciting, but it's still early for discussion of Phase II.

Just on the Phase II, so over what period of time do you think you would be able to see the upregulation of utrophin in the Phase II?

In biological experiments, you can see it occur very quickly. In humans, we have no idea how quickly it occurs, and also of course there may be some accumulation of biological effect with chronic dosing. So these are all great questions and I look forward to having more detailed conversation when we've had an opportunity to design that program.

Great. Thanks very much.

Your next question comes from the line of Lucy Lu with Citi. Please proceed.

Hi. Thank you. Two questions, also for Hank. The first is in the GALNS study, are you seeing any kind of dependent therapeutic [impact] of the drug? And the the second question is since you classified PEG-PAL in the mid-stage development category, does that imply more Phase II study, based on what you know today?

We just reported preliminary encouraging data -- just to remind you, in the GALNS program, patients were included if they were between five and 18 years of age. We haven't reported whether there are some groups in that study and any trends in that regard, and I'd say stay tuned for the 36 week update, which we expect as I previously described to occur in about May. And as far as describing PEG-PAL in terms as a mid-stage program, I think we're on course to do what we said we're going to do, which was going to investigate alternative dosing schedules in a Phase II clinical trial to determine if we can identify a safe and effective dose and [pour] it into a Phase III program. And the description of it is mid-stage is really just to demarcate it from the more advanced programs, which include Firdapse, Kuvan, and GALNS, in which we expect to enter label enabling trials in the near term.

Thank you.

Your next question comes from the line of Joseph Schwartz with Leerink. Please go ahead.

Thanks for taking my question. I was wondering if you could give us a sense of where your Pompe enzyme replacement therapy candidate stacks up relative to the two non-disclosed biologics in early development?

That does not include the Pompe, as we communicated a couple weeks ago. That program is on hold at this time.

Okay. And when might we begin to see data from the two investigator sponsored studies in autism for Kuvan? Can you give us an update on how those trials are going?

That's only one trial, single center trial in California. That's not a -- it's a investigator sponsored trial, so we provide funds, limited funds, and free drugs to the investigators. We don't manage the drug ourselves. Based on our interaction with the investigator, it appears we should have some data around Q3 of this year.

Okay. And then lastly on the DMD program or the MD program, can you give us a sense of how much utrophin is expressed in these patients' muscles relative to dystrophin and how that might influence the ability to effect a change in that disease?

That's a great question and very briefly, I think what's known about that is the more utrophin you have, the less severely affected you are. And it appears that if you can get a patient to have 25% of the protein in the form of utrophin as compared to the expected level of protein in dystrophin that you can have a pretty profound effect on overall survival and functional outcomes. So if you pressed me and said what's the target you would want to aim for, based on what we know about the natural history, I think we're shooting for about 25%. It's again a little bit early to be concrete about this, because I think we have a little bit more work still to do, both clinically and preclinically.

Okay. Great. We look forward to the data. Thank you.

Your next question comes from the line of Salveen Kochnover. Please proceed.

Just following up on Lucy's question, could you give us some -- just some insight into the severity of patients enrolled into the GALNS program?

Sure. Hi, Salveen. I think it's fair to say that because this was a first in human study that the GALNS population was selected to be a little bit more healthy and robust in terms of their ability to tolerate new medicines. But beyond the qualitative descriptions, I want to leave it towards the presentation of the final data to get a good, detailed understanding of the accrued patient population and the outcomes.

I guess just for Steve, in terms of Kuvan with these mew patient additions, what is really driving uptake here? Is it physician or patient comfort on long-term safety, marketing efforts on your part, maybe if you could give us some color on that?

Salveen, I think it's probably a little bit of all of the above. I think as physicians have gotten more experienced with the product, they've gotten more comfortable with it and they're certainly using it on some additional patients. Some of the marketing efforts I think have been effective. And I think there's been at least a trickle of data coming out of some of the meetings starting really last fall with more coming in March of this year that are starting to shed some light on some of the benefits of Kuvan beyond just changes in diet. So a combination of a lot of little things are adding up to some progress.

And could you just maybe detail for us the countries that you're targeting and the associated timelines with Naglazyme expansion in 2010?

Sure. I think the two largest opportunities for us that would represent new geographies are Russia and Mexico. We have received marketing approval in both of those countries. That happened last year. But as in a number of countries, the marketing authorization doesn't necessarily come with reimbursement approval. So we're working through reimbursement issues in both Mexico and in Russia. We certainly hope to have commercial patients on therapy in the fairly near term, certainly in the first half of this year in those two areas.

Thank you.

Your next question comes from the line of Craig Gordon with Cowen and Company. Please proceed.

Hi. Thank you for taking my questions. In the past you've given us some color behind Kuvan in terms of compliance, patients who dropped off, bringing them back onto drug and trying to attract new patients into the clinic. I was just hoping you could maybe provide more color this quarter as well. Thank you.

Sure. Qualitatively, I can tell you that it is a challenge, particularly in the first 90 days or so after patients go onto Kuvan to keep them on Kuvan. It's a time when physicians are adjusting dose, often adjusting diet, parents are adjusting lifestyles. It's a little bit of an unsteady time in the patient's lives and they're more prone to go off. Sometimes go off, come back on, go off, back on. It's just an unstable period. Once patients get out beyond that first 90 day period, they tend to be a good bit more stable. We do see some dropoff even after the the first 90 days, but if we can get them through the first 90 days, they tend to be pretty stable. Compliance has been actually very good with these patients once they're on them and they're stable. We're seeing compliance rates in the high 80% range, which is really a good bit better than we anticipated with the launch of the product. We take that as pretty good news. Once they're on, they're doing well, they want to take their medicine and they continue to take their medicine. Not sure if that gave you enough color, but hopefully gives you some insight.

It does, and if I could just follow up -- in the past, you guys have been trying some pilot programs about bringing patients who have been out of the PK community back in. Any update on those programs as well?

Yes. There's really kind of two different things we're working on. I mentioned a number of the patients that have dropped off in the past. We've done market research on those patients and found out that many of them dropped out for reasons unrelated to the therapy itself. They were happy on the therapy, doing well on the therapy. Some type of change in life, change in job, change in house, change in living conditions caused them to go off. And we're actively reaching out to get ex Kuvan patients back to being Kuvan patients. We're having some success with that already. As far as patients who are out of the system, we know that many patients -- when they turn 18 they leave home, and they end up not able to get a job that provides them with health insurance, and they just fall out of the the healthcare system entirely. We've run a number of pilot programs. At this point, we have been able to reach out, pull some patients back into the system. It is challenging, because a significant number of those patients really don't have any healthcare, not only not to be able to pay for their Kuvan, but even to pay for a doctor's appointment. So we're working to try to find some alternative coverages for those patients. We do think there's an opportunity there, but it's a challenging opportunity to work through.

Great. Thank you very much.

Your next question comes from the line of Chris Raymond with Robert W. Baird. Please go ahead.

Thanks. Just wanted to probe a little bit more on the Pompe program. What -- JJ, I know you said it's on hold. But maybe if you could explain a bit, what catalysts would change that status? Is it clinical or business related?

It's mainly business related to looking at other opportunities we have in terms of product portfolio, investment needed to move to the next decision point and our ability to manufacture proteins at this time. I've got to tell you that despite the fact that we built a new manufacturing facility, we don't have excess capacity right now to take on a [673] in development. That's one of the issues. And I'm glad actually we made that investment. Sometimes analysts say we are spending too much money, G&A, and capital expenses. But despite that, even if we wanted to move the full product forward today, we couldn't do it. We just don't have the capacity to do it.

Certainly you weren't talking about me on that one.

No, we're not talking about you.

One last question. With respect to the undisclosed biologics, can we expect to hear some news or disclosure on these this year or should we just wait?

My memory isn't so long. Yes. I would hope at the R&D day we can get pretty concrete about what's going on in the early portfolio. We do need to make a little bit more progress on some of them. Progress is being made and we're pretty excited about the progress. I think the R&D day is going to be a pretty busy and full update, considering that we have three programs going into Phase III, label seeking trials in the next few months, and two products progressing through their proof of concepts in a short order and at least one new IND candidate. And that's quite a chunky portfolio. So I hope we can set aside some time for the earlier stage programs as well.

Great. Thank you.

Your next question comes from the line of Brian Abrahams with Oppenheimer and Company. Please proceed.

Hi. Thanks very much for taking my questions. The first question on Firdapse, just wondering if based on your discussions with some of these European countries if we should expect similar pricing in other areas as you have secured in Germany? Just wondering -- you gave us a wide range of what the dosing is. Can you give us a better sense of what the average dose that's used in patients for -- at least currently for the compounded version? And then I have a follow-up for GALNS. Thanks.

It's a little bit complicated. Germany and the UK will be our first launch countries. Those are free price countries. We don't have to negotiate price. We can set it where we want it. We set it at EUR23 per tablet in Germany and equivalent pricing in the UK in pounds Sterling. We are working with -- France is probably the first country where pricing negotiations will take place. We'll go into the transparency commission this week. We've had several preliminary discussions with them already, and we'll work with the TC over the next several months, pricing in France sometime around mid year. The rest of Europe will generally follow as France is used as a benchmark. We hope to have consistent pricing across Europe, but until we get through those negotiations and get agreement with pricing authorities in those countries, we can't say for sure.

As far as dosing of the compounded product, the compounded product that we've seen is used not only in LEMS, but there's some use in MS, some use in general myasthenic syndrome, use in [Morquio] syndromes. We get a variety of dosing with some of the non-LEMS patients as low as 15 mgs per day. LEMS tends to be used at a somewhat higher dose. We've also seen in the compound of the drug doses of 80 and 100 milligrams a day used fairly routinely. The label that we got for Firdapse uses 60 milligrams as a maximum daily dose and it is unclear at this point what that's going to do to the average daily dosing. If we just look at LEMS patients in France, where the ATU is available, looks like the average dose there is between 40 and 50 milligrams per day. We've been very hesitant to tell you what we think the average is going to be because there's conflicting pressures on dosing, both upward and downward pressures. We're really going to have to get out on the market and see some use before we can tell you for sure how it's going to play out.

On GALNS, I know it's only been a couple weeks since you reported the initial data, but just wondering if you had any better sense as to the mechanism of why you saw such rapid functional benefits, wondering if you examined any [inflammatory] markers in the study?

Hi. No, we have not had a chance to look at the complete profile of biological markers and hopefully we'll have enough of that processed in time for the May, June updates that we can go through that in some detail.

Okay. Thanks very much for the added information.

Your next question comes from the line of [Liliana Asaros] with Wedbush Securities.

How many MPS VI patients are in Russia and Mexico?

We've never given specific patient numbers either in countries or even in total, but we know of patient numbers in both those countries that we feel make them significant opportunities for us.

Can you like ballpark it or anything? Give us anything? Compared to another country?

Major markets in Western Europe.

Say that again.

Some of the major countries in Western Europe, we would see these opportunities as substantially equivalent.

Okay. Thank you.

Your next question comes from the line of Andrew Vaino with Roth Capital Partners. Please proceed.

Thanks for taking my question. Just quickly, what percentage of your Naglazyme revenue is in Brazil?

Have we broken that out?

We haven't broken out to that extent. I could give you the breakout between US, Europe, and the rest of the world, but we haven't quite broken it out to that extent.

Okay.

What we have said is that Brazil is the single largest country in terms of patient numbers for us, so it's a very significant one.

We can give you the breakdown between US.

So for the fourth quarter, US sales of Naglazyme were $6.2 million; EU sales were $19.5 million; and international sales, which would include Latin America, Middle East, everything else including Brazil, $18.7 million.

Okay. That's very helpful. Thank you. Secondly, just on the PEG-PAL, can you just remind me, what's the average number of PEG strands per unit enzyme?

Large.

Number of what?

PEGs per molecule. I don't think we've reported the particular molecular molar ratio of PEG to PAL. As you know, one of the concepts is to PEGylate as highly as possible to reduce immunogenicity, and we've certainly taken that seriously.

Okay. Thank you.

Your next question comes from the line of Carol Werther with Summer Street. Please proceed.

Thanks for taking my question. I was wondering if you could describe the validated measures of neuropsychiatric symptoms that you will be using for the randomized placebo controlled trial for Kuvan, and whether or not we'll see those measures at the meeting next month?

Hi, Carol. Great question. I think the three domains in which we will probe will be inattentiveness, depression, and anxiety. And I don't believe they're going to be preliminary data reported at the ACMG, but at subsequent meetings. And I think one of the things to enhance awareness about is that in the psychometric world, there are terms like executive function, and attention is one of the key components of executive function. In the psychiatric world, attention has been the primary end point of product approvals and has let clinicians see as one of the most robust benefit of markers of Kuvan. When you see data rolling out you may see slightly different terms, and the point of emphasis around clinically validated scores is to just denote that we intend to work with the FDA to try to amend our label so that we can talk more broadly to patients and providers and potentially psychiatrists about the benefits of Kuvan.

So is there a specific test I should be looking at?

There's a lot of drugs approved for Attention Deficit Disorder, both in children and adults, and as well for anxiety and depression. Just call up any number of the drugs, you'd come up with the usual suspect of scores and scales.

Okay. Thanks. And then I got on late. Did you give any update about where you are with the trial in institutionalized patients with Kuvan?

There will be data presented at the ACMG, SIMD meeting in Albuquerque at the end of March.

Thanks very much.

(Operator Instructions). It will be just a moment. We are still seeing if we have any questions. All right. Your next question comes from the line of [Laurie Wehr]. She's a private investor.

Hi. I wanted to ask a question about the Duchenne product, BMN-195. I know it's a little bit premature and your protocols aren't written for Phase II, but do you anticipate the Phase II trials being in the US or overseas? And if so, or either way, have you thought about any participant guidelines?

Like you said, it's a little early to be talking about that. I think one of the things that I'm most present with about DMD, Duchenne Muscular Dystrophy, is it's really a global problem. There are considerations for doing this in a lot of different places, and we would love to be able to engage investigators as broadly as possible. But at this point, it's not possible to get specific about where the trials will be conducted.

Okay. And is your upregulator, it's orally ingested?

Yes.

Okay. Thank you.

Your next question comes from the line of Craig Gordon with Cowen and Company. Please proceed.

Thank you for taking my follow-up. Just two brief questions. Kuvan was mentioned, its growth 17.8% quarter-over-quarter. Can you tell us about inventories? Were they still within the midpoint of historical range?

They were. We didn't see significant aberrations in specialty pharmacy inventories at the end of Q4 at all.

Great. Thank you very much.

If there are no additional questions, I would like to turn it back to Mr. Bienaime for closing remarks.

Thank you. In summary, we are pleased with our 2009 performance and we are confident in our ability to meet our stated financial objective for this year and we look forward to an exciting year ahead. So we have now three growing commercial products on the market, and we are getting ready to launch our fourth product Firdapse, in the EU in the next few weeks. So this year will also be quite significant clinically with our advancing pipeline of products, and we expect to report Phase II results for GALNS in the second quarter, Phase II PEG-PAL results in Q3, Phase I results for BMN-195 in Duchenne Muscular Dystrophy, and I'm happy to see that there is mounting interest for the product in the third quarter of this year, and then for BMN-673, the product we acquired from LEAD Therapeutics by the end of this year. So in terms of future growth, we are focused on carefully managing our pipeline portfolio to ensure continued double-digit revenue growth in the coming years and maximize long-term value for BioMarin and our shareholders. So we look forward to keeping you up-to-date on our progress. Thank you for your continued support and for joining us on today's call. Good-bye.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.