BioMarin Pharmaceutical Inc (BMRN) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2010 financial results and results from the Phase I/II trials of GALNS. Sorry. My name is Ann, and I will be your coordinator for today's call. (Operator instructions.)

I would now like to turn the presentation over to Eugenia Shen of Investor Relations. Please proceed.

Thank you. On the call today is JJ Bienaime, BioMarin's Chief Executive Officer; Jeff Cooper, Chief Financial Officer; Hank Fuchs, Chief Medical Officer; Steve Aselage, Chief Business Officer; and also Dr. Chris Hendriksz, the Clinical Lead for Inherited Metabolic Disorders and Director for Lysosomal Storage Disorders at Birmingham Children's Hospital.

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, and thank you for joining us on today's call. So I have a few introductory comments before Jeff reviews the financials for the first quarter of 2010 and Steve provides more details on the commercial activities. Hank will then provide details on the results of the Phase I/II trials for GALNS and have updates on our ongoing R&D programs. Finally, Dr. Hendriksz will share some of his thoughts on the GALNS trial and the overall Morquio program before we open the call for questions.

So, firstly, I'm very pleased to report positive results for the Phase I/II trial for GALNS. Clinically meaningful and in some cases statistically significant improvements were achieved in two different measures of endurance and two independent measures of pulmonary function, indicating an overall improvement on behalf of the patient within the relatively short duration of the trial.

Based on the results of the Phase I/II trial, we feel confident with using an endurance end point as the primary end point in the pivotal Phase III trial. At this point, we are targeting a 24-week trial with six-minute-walk distance as the primary end point. We plan to continue ongoing discussions with the FDA to finalize the Phase III protocol and start with trial in the fourth quarter of this year.

Assuming the GALNS clinical program is successful, we are very optimistic of the commercial potential of the product. There are over 600 MPS IV patients identified to date, which is more than the number of patients on Naglazyme commercial therapy today.

Since there is no neurocognitive component to the disease and no competing treatment, we believe that all patients will be candidates for therapy. We already have a strong worldwide commercial infrastructure in place and relationships with treating physicians who also treat MPS VI and MPS I patients. Since we have laid much of the groundwork with the commercialization of Naglazyme, we expect to achieve significant leverage if and when GALNS reaches the market.

Hank will provide more detail on the Phase I/II trial and the overall program a little later. We remain very excited about this program, and as Dr. Hendriksz will explain, this is a notable milestone for the MPS IV community.

Moving on to the Q1 2010 results, we're off to a good start to the year with an increase in BioMarin net products revenue of 16.9% in the first quarter of this year as compared to the first quarter of 2009. During the quarter, the continued growth of Naglazyme and controlled spending drove profitability.

Naglazyme growth in both new and established markets drove a year-over-year increase in net sales of 23.4% for the first quarter of 2010. We see many attractive opportunities ahead in both new and existing markets for this product and remain confident that Naglazyme represents a (inaudible) market opportunity for BioMarin.

Net third-party sales of Aldurazyme by Genzyme increased almost 8.4% in the first quarter of 2010 as compared to the first quarter of 2009. During the first quarter of 2010, units shipped to third-party customers by Genzyme exceeded BioMarin inventory transfer to Genzyme, which resulted in a decrease in BioMarin net product revenue from the royalty payable to BioMarin by Genzyme of $1.7 million.

Finally, Kuvan generated net revenues of $21.2 million in the first quarter of 2010, compared to $15.5 million in the first quarter of 2009. In the first quarter of this year, the number of commercial tablets dispensed increased 36.9% compared to the first quarter of 2009 and decreased 7.2% compared to the fourth quarter of 2009. In April Kuvan sales and patient referral trends improved, and we continue to expect that 2010 Kuvan revenue will be in the range of $98 million to $108 million. Steve will elaborate on the dynamics of the Kuvan market a little later.

We also recently achieved another milestone with the launch of our fourth commercial product, Firdapse for LEMS in the EU in mid-April. We plan to meet with the FDA in the second quarter to discuss a development strategy for LEMS in the US, and also we plan to explore additional indications in the future.

Moving on to our clinical program, the Phase II study for PEG-PAL is progressing according to plan, and we expect to report results in the third quarter of this year. We also expect to report results from the Phase I study for BMN-195 in the second quarter. Hank will review additional details on the overall R&D programs a little later.

Now I would like to turn this call over to Jeff Cooper, who will review the financial results for the first quarter of this year.

Thanks, JJ

I will start by reviewing product revenues of Naglazyme, Aldurazyme, and Kuvan for the first quarter of 2010. I will then follow with a more in-depth look at our operating expenses and financial results.

Beginning with Naglazyme, net product revenue for the first quarter of 2010 was $48.6 million, an increase of 23.4% over net product revenue of $39.4 million in the first quarter of 2009. 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 net of hedges had an insignificant impact on Naglazyme sales during the first quarter of 2010.

Net sales of Aldurazyme by Genzyme of $39.9 million for the first quarter of 2010 increased 8.4% compared to net sales for the first quarter of 2009. Foreign currency exchange rates caused an increase of Aldurazyme sales by Genzyme of $1.7 million during the first quarter of 2010.

Net product revenue to BioMarin-related Aldurazyme was $14.2 million for the first quarter of 2010, compared to net product revenue to BioMarin of $17 million for the first quarter of 2009. During the quarter -- first quarter of 2010, BioMarin transferred $1.7 million left in inventory to Genzyme compared to units shipped to third-party customers by Genzyme, which resulted in a decrease in BioMarin net product revenue in the royalty payable to BioMarin by Genzyme.

Net product revenue for Kuvan was $21.2 million for the first quarter of 2010 an (inaudible) 36.8% compared to $15.5 million for the first quarter of 2009 due to growth in the number of patients on drugs.

Now I'll review gross margins, operating expenses, and nonoperating items in more detail.

During the first quarter of 2010, gross margins for Naglazyme were 81%.

Aldurazyme gross margins were 67%, which reflects both the royalty and product transfer revenue from Genzyme to BioMarin. Additionally, Aldurazyme gross margins were impacted by a $2.1 million write-down of a registration lot with limited remaining dating related to the qualifications of the new (inaudible) finished vendor which took longer than planned.

Kuvan gross margins during the first quarter were 84%, which reflects an 11% royalty payable on net sales.

Research and development expenses decreased $4.3 million to $30.1 million in the first quarter of 2010 from $34.4 million in the first quarter of 2009. An $8.8 million charge for the [Reidaman] transaction in the first quarter of 2009 was partially offset by higher spending for the Morquio clinical Phase I/II trial, the PEG-PAL Phase II trial, and the Phase I trial for BMN-195.

Of the total R&D spend of $30.1 million in the first quarter of 2010, $3.2 million was for stock-based compensation expense.

Selling, general and administrative expenses increased by $5.4 million to $34 million in the first quarter of 2010 from $28.6 million in the first quarter of 2009. This was largely due to increased spending for Naglazyme and Firdapse, as well as corporate expenditures.

Of the total $34 million in SG&A spend in the first quarter of 2010, $4.3 million was for stock-based compensation expense.

Interest income decreased by $1 million to $1.2 million in the first quarter of 2010 from $2.2 million in the first quarter of 2009, primarily due to the decline in market interest rates and lower average cash balances.

Interest expense was $2.4 million in the first quarter of 2010, compared to $4.1 million in the first quarter of 2009. Interest expense, which now consists primarily of interest on our convertible debt, declined in Q1 2010 due to the reduction of imputed interest expense associated with the final payment on [Medis's] debt.

Now I'll review GAAP and non-GAAP bottom-line results.

Our GAAP net income for the first quarter of 2010 was $1.2 million, or $0.01 per diluted share, compared to a net loss of $13.2 million, or $0.13 per diluted share, for the first quarter of 2009.

Non-GAAP net income for the first quarter of 2010 was $8.8 million, or $0.08 per diluted share, compared to non-GAAP net income of $9.3 million, or $0.09 per diluted share, for the first quarter of 2009.

From a cash perspective, we ended the first quarter of 2010 with $452.4 million of cash and short- and long-term investments. Our cash position decreased from $470.5 million at the end of 2009 to $452.4 million (inaudible) for 2010, primarily result of the $15 million upfront payment for the LEAD transaction.

With regard to 2010 guidance, we are reiterating all previously provided ranges as detailed in the press release issued this afternoon.

And now I'd like to turn the call over to Steve, who will provide an update on commercial activities.

Thanks, Jeff.

Let's start with Naglazyme, which showed significant growth in both new and established markets. Revenues were up 23% over first quarter 2009 and 9.5% over Q4 of last year.

We shipped our first commercial product into Mexico, the culmination of several years of hard work by our Latin America team. We also received our first significant commercial order for Russia, although that shipment did not go out until after the end of the quarter. Besides new business in international markets, we saw significant growth in patients and revenues in both North America and Western Europe.

It is worth noting that we continue to see some disruptions in ordering patterns in Latin America and are aware that therapy was interrupted for a number of patients due to delays in orders or delays in customs clearance in Q1. We've made some progress in addressing these issues, but the situation continues to be won. It can have a substantial impact on quarter-to-quarter revenue growth.

In the US, we are now accruing for greater Medicaid rebate liabilities, which had a relatively minor negative impact on overall Naglazyme sales. We're encouraged by the progress and continue to see significant growth opportunities for Naglazyme over the coming months and years.

Kuvan sales showed a 36.9% growth in tablet demand over the same quarter last year but had a slight decline in demand versus Q4 2009.

Demand was negatively impacted by a number of factors. We saw significant slowdown in patient referrals to BPPS in the holiday period from around Thanksgiving to New Year's last year, and this translated to fewer patients in the system and going on to therapy in the following months. We also saw somewhat higher-than-normal rate of patient discontinuations through this period.

Additionally, roughly 5% of our existing patient base had changes in insurance coverage at the beginning of the year. This resulted in a need for us to provide free Kuvan to help those patients bridge to coverage with their new policies, and this obviously impacted commercial demand negatively.

Actual revenues also showed a slight decline from Q4. Besides the factors impacting tablet demand, revenue was slightly impacted negatively by the higher accrual for Medicaid liability.

We're encouraged that March was a very strong month, but it did not completely compensate for the weak early part of the quarter. We had excellent clinical data presented at medical meetings in March and continue to develop additional educational materials, support mechanisms, and outcomes data to support PKU patients, families, and caregivers.

As JJ mentioned earlier, in April, Kuvan sales and patient-referral trends improved, and we continue to expect 2010 Kuvan revenue will be in the range of $98 million to $108 million.

Our launch of Firdapse in Europe had a slight delay due to a late transfer of the marketing authorization documentation that we needed to launch. There were some minimal ATU sales in the quarter, but the real launch of the product in the UK and Germany took place on April 19th, and the first commercial orders were shipped in the following days.

Although we are only a few weeks into the launch, the early feedback on the product has been positive. Pricing work is ongoing in the other major EU markets, and we plan to have the product available in all major markets before the end of the year. We are actively looking at potential markets outside Europe for Firdapse, as well as additional indications, and will keep you updated as things progress.

In terms of the impact of health-care reform, increase in government rebates had a small impact on total revenue. Medicare exposure is so minimal that the impact is insignificant. As for Medicaid, while over 50% of US Naglazyme revenues are Medicaid, US sales only represent roughly 15% of worldwide revenues, and this percentage is expected to decrease as the international component continues to grow.

The percentage of Kuvan sales impacted by the higher Medicaid rebate level is approximately 25%. So for Q1 of 2010, the incremental Medicaid rebate liability is $448,000, and the total Medicaid liability is approximately $2.3 million.

Also, other notable positive aspects of health-care reform include the elimination of lifetime caps and the extension of that exclusivity to 12 years, both of which we believe will be beneficial to BioMarin's business.

And 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 reported positive results from the Phase I/II trial earlier today. The 36 weeks -- the data are robust and demonstrating clinically meaningful and in some cases statistically relevant improvements in two different domains of endurance and two different domains of respiratory functions.

For six-minute-walk test distance, patients demonstrated a median improvement of 38 meters at 24 weeks, a median improvement of 19 meters at 36 weeks. This compares favorably with improvements of 19 meters and 28 meters' median improvement in Phase II trials of Naglazyme and Aldurazyme respectively.

Although this is an open-label study of GALNS, the placebo effect in six-minute-walk test distances and prior pivotal studies of Naglazyme and Aldurazyme were small or nonexistent. Patients on placebo in the pivotal study of Naglazyme improved by only a median of 6 meters, whereas walk distances in patients on placebo in the Aldurazyme pivotal study decreased by a median of 11 meters.

Finally, excluding the least-impaired patients in the GALNS study, as was done in the pivotal trial of Naglazyme, six-minute-walk test improved by a median of 42 meters (p=0.02), and this improvement continued to trend positively at week 36 with a median improvement of 24 meters (p=0.18).

Patients demonstrated clinically meaningful improvement in three-minute stair-climb with a median of 10.3 stairs per minute improved and a "p" value of 0.06 as compared to pretreatment baseline.

Patients also had a clinically meaningful improvement in pulmonary function. Forced vital capacity had a median improvement of 11% as compared to pretreatment baseline with a value of -- with a "p" value of 0.01, and maximum voluntary ventilation had a median improvement of 10% as compared to a pretreatment baseline and with a "p" value of 0.06.

This improvement in forced vital capacity at 36 weeks on GALNS compares favorably to that observed in the treatment with Naglazyme. In the pivotal trial of Naglazyme, there was no improvement in FVC at 24 weeks, and in the pivotal trial of Aldurazyme, the improvement in FVC was 11% relative to pretreatment baseline levels.

Keratan sulfate levels fell within a few weeks after the start of therapy and decreased even further at higher doses of drug in longer times of observation with a statistically significant median decrease of 47% at 36 weeks with a "p" value of 0.01.

As for safety, the frequency and severity of infusion reactions appear comparable to those observed with Aldurazyme and Naglazyme.

Importantly, the totality of these results indicate an overall improvement in the health of patients in a short period of time. The complete results from the trial will be presented at an upcoming medical meeting, likely the International MPS Society Meeting in Adelaide, Australia, in June.

Based on these results, we feel confident about using endurance as the primary end point in the pivotal Phase III trial, which we expect to initiate in the fourth quarter of 2010. Importantly, the Phase I/II trial will help inform the design of the Phase III trial, including identification of the patient population and proper length of the study.

In the coming Phase III trial of GALNS, we can also incorporate important lessons learned from the Phase III trial of Naglazyme that were not implemented in the Phase I trial of GALNS. Specifically, improvement in walk distance is even more apparent when patients are tested twice at baseline and at each subsequent visit.

Additionally, at this point we are targeting a 24-week trial with a six-minute-walk distance as the primary end point and 2 mg/kg (inaudible).

We're keen to collaborate with health authorities and patient groups to design a robust trial to (inaudible) registration and availability of the product globally and expeditiously. We're also grateful to have already identified a large number of patients with Morquio Syndrome to facilitate the conduct of such a robust trial.

Since we have one shot in the pivotal Phase III trial, we intend to design a risk-minimizing trial that captures the maximum amount of benefits in the shortest period of time. We're also very excited about this program and look forward to updating you further as things progress.

Moving on to the Kuvan outcomes study and Lifecycle development, we expect to initiate a randomized, placebo-controlled, 13-week study in the third quarter of this year. End points include clinically validated measures of neuropsychiatric symptoms and a successful may support a label amendment.

As for the handheld blood Phe monitor, human studies are planned for 2010, and regulatory approval and commercial availability is expected in the first half of 2011.

We also look forward to meeting with the FDA shortly to discuss requirements for registration of Firdapse in the US. We're keen to find an expeditious pathway to enable access in the US to a high-quality pharmaceutical product supported by relevant safety and pharmacology data and with appropriate long-term safety surveillance measures in place.

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

We initiated the Phase I trial of BMN-195 in January and expect to report results in the second quarter of this year. BMN-195 is a small molecule inducer of utrophin, a protein that can potentially substitute for the defective dystrophin protein in patients with Duchenne muscular dystrophy.

In terms of preclinical programs, we expect to file an IND for the PARP inhibitor, BMN-673, by the end of the year and initiate a Phase Ib trial in the first quarter of 2011.

Several undisclosed programs are also advancing preclinically, including two undisclosed biologics which are advancing favorably towards IND-enabling decisions.

We'll also keep you updated on our progress on this program and other programs as they advance and are planning a research and development day on October 19th in New York City, and we hope to see you there.

And now I'd like to turn the call over to Dr. Chris Hendriksz. As we indicated at the beginning of the call, Dr. Hendriksz is the Clinical Lead for Inherited Metabolic Diseases at Birmingham Children's Hospital in the United Kingdom. Chris has also been the principal investigator centrally involved in the design, conduct, and analysis of the Phase I/II clinical trial of GALNS and will be pivotally involved in the reporting of the trial results. We're grateful for Chris's participation in the program, and, Chris, we turn the call over to you.

Thank. Thank.

The positive results from the Phase I/II trial are a major milestone for the MPS IV community, creating much needed hope. Morquio is a systemic disease that affects children in profound ways. Importantly, children are functionally impaired, they can't walk, climb, play with their mates, and are often confined indoors. Due to recurring surgeries, painful joints find this an extensive disability.

I've personally supervised the investigation of the largest number of patients with Morquio Syndrome which have been treated with GALNS. From my experience, the impact of therapy is not only tangible to the patient but also quantifiable in a short period of time. The patients, families, and I have noticed improved endurance, ability to play and climb, more energy, improved appetite and sleeping. It may seem insignificant for us, but the fact that the children report that they can complete a full day at school and then come home to play instead of having a nap first is making a big difference to their quality of life. Also, the magnitude of changes is very similar to what I've observed when using other enzyme-replacement therapies.

The Morquio community is highly involved in this research and treatment. I've personally enrolled my patients very quickly and could have enrolled more except I was keen to have other centers participate. I suspect the Phase III trial will be no different in the speed of enrollment and the eagerness of patients to participate in the study.

The greatest misconception about Morquio is that this is a skeletal dysplasia-only disease and that there is very little gain from therapy. (Inaudible) potential therapies (inaudible). Thankfully, the data is supporting my long-held observation that this disorder is much more than only a bone disease, and I, along with my peers and patients, look forward to the advancement of the program and to the hope of having the first much-needed treatment for this multisystem disorder.

And with that, Operator, I would like to open up the call for questions.

Okay. Thank you. (Operator instructions.)

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

Hi. Good afternoon. Actually, this is Mona on behalf of Cory.

Do you envision at this time enrolling any kind of Morquio patient irrespective of disease severity, or do you envision excluding some patients?

And then also -- I apologize if I missed this, but can you see how large a trial you envision having at this point and how quickly you believe you can enroll patients just given that you've identified so many of them already?

Yes, hi. Thanks for your questions. So we haven't really decided on the eligibility criteria of the trial. I think there's a couple of different ways to go. One way to go would be to enroll all comers in the trial, or we could go in the direction that we did with Naglazyme, which is to have an enrollment cap with the hope that -- with the belief that that might improve our ability to detect a walk-distance improvement. And I think over the next few weeks, as we discuss this program further with experts and regulatory authorities around the world, we'll learn more about the strategy there.

And as far as a larger trial -- and I should say it's a real blessing to have the opportunity to go in both directions there.

As far as potentially a larger trial, we pointed out -- I point out that the pivotal trial of Naglazyme was 37 patients, and this trial reached statistical significance and barely. We have the good fortune of being a more robust company with a worldwide presence now, financial resources to absolutely do the very best by Morquio patients. We haven't arrived at a final sample size, but I think you can expect it to be more robust. We -- as JJ mentioned during his comments, we've already preidentified over 600 patients so we have a very large pool of patients to draw from. As Chris mentioned, the interest of the Morquio community and in enrollment is fairly substantial so we believe we'll be able to move through that enrollment timeframe quite rapidly.

Great. And then just a question for Dr. Hendriksz. I was wondering how long the patients were followed in this trial and whether there was improvements seen beyond the 36 weeks. Just wondering about the kinetics of response here. Thanks.

Chris -- we haven't analyzed the data, but I don't know if, Chris, you want to share any anecdotal observations.

I can probably say that -- as Hank has just said, that we've not analyzed all of the data beyond it, but from observing the children in the clinical trial, the improvement we've seen is definitely continuing beyond the 36-week period.

Okay. Great. I'll hop back in the queue. Thanks very much.

And our next question comes from Joseph Schwartz with Leerink Swann. Please proceed.

Thank you, and congratulations on all the progress.

Is the patient's speed at which they can walk in six minutes, is that -- or distance that they can walk in six minutes -- I guess it's interrelated with the speed -- is that someone capped by the joint laxity that they have? And just talk about your choice of the primary end point a little bit. That would be helpful.

Yes, well, thanks for the question. We're in a great position of luxury of having the choice between so many really good options. I think that the virtue of the six-minute-walk test is that our median improvement in six-minute-walk it -- at 24 and 36 weeks of the trial is between 19 and 38 meters -- two different time points -- I reversed those but -- and that compares quite favorably with the median improvement in walk distance observed in Aldurazyme and Naglazyme.

We -- as I mentioned in my prepared comments, one of the great challenges of walk improvements is statistical variability and test measurement. We can implement in the pivotal trial of GALNS a technique that we implemented in GALNS -- in Naglazyme, which is to make two baseline measures and then two on-treatment measures. When we do that with Naglazyme, we were able to see the treatment benefit even better and reduce some of that statistical variability. So we can apply that to the six-minute-walk test if we choose to do that as the primary end point. The virtue of the six-minute-walk test also, from a regulatory perspective, is that it's really well understood. Therapies, as I mentioned, have been improved on a basis six-minute-walk test. It's an easy road to go down.

But as you also correctly point out, there are other benefits that are captured here in this clinical trial. As Chris mentioned, climbing is clinically relevant to patients, and climbing stairs is viewed by some -- and I might ask Chris, when I'm done, to comment on his view of the clinical relevance of stair climbing -- is highly relevant. It's not served as a regulatory basis for approval of a Phase III trial, but that's an option that we could consider.

And, finally, your points about forced vital capacity are also very important because forced vital capacity has also served as the basis for regulatory approvals. It played an important role in the approval of Aldurazyme and Elaprase in the LFD setting. So we have a panoply of good choices, all of which are, I think, important to Morquio patients because they all capture, in their own way, something slightly different.

And, maybe, Chris, you want to comment on that facet of the benefits that we've observed.

Thank you, Hank.

What I would like to say is just to support what we've seen in the children on the clinical trial is that, firstly, climbing up stairs, for them, is an important daily function, especially in the UK, where we've got double-story houses and things like that. So for many of the children, the ability to climb chairs and actually get more mobility into the house becomes a big improvement in their quality of life. So it's something they can observe on a daily basis.

And I think that's one of the things that we've noticed, that the children seem to be much stronger and easier to climb their stairs. But, yet again, as Hank has said, one of the other things is we are spoiled for choice in some extent here, and it's really finding the best market in the situation. And from a clinical point, I think the greatest benefit for patients themselves would most probably be just climbing stairs, but from the regulatory point, I think there are other considerations as well.

All right. Thank you.

And our next question comes from the line of Salveen Kochnover with Collins Stewart. Please proceed.

Thank you for taking my questions. If you apply the inclusion criteria of six-minute-walk distance less than or equal to 270 meters, which was the criteria for Naglazyme, what would the mean and median baseline change be for GALNS at 24 weeks?

Hi, Salveen. I don't actually have those data off the top of my head. What I can tell you is the 270-meter eligibility criteria that was chosen for Naglazyme represented the cut point of the top-25th percentile of patients observed and the MPS VI survey study. So it's kind -- the [273 25] is not exactly a level playing field numerically but, conceptually, is a level cut point from the point of view of [cortiles].

I think the data are relatively -- you know, a total of 20 patients enrolled in the trial so I don't want to -- I'd be careful about making too much of subgroup analysis here. And, in fact, I -- the thing that I find the most encouraging is that, regardless of the baseline eligibility criteria, we were able to demonstrate clinically meaningful improvements in walk, stair climb, [MVV] and forced vital capacity in the total patient population that in most cases were sustained and it's not increasing and in some cases reach statistical significance. So we're very encouraged about the findings even across the whole patient population.

Okay. And then how important is long-term data looking at improvement in growth velocity for the commercial aspect of the drug, and do you think you would conduct long-term studies here?

Steve, you want answer the commercial question? Steve, are you on the phone?

I'm sorry. I'm off mute now. Tough to answer when you're on mute.

The long-term growth is going to be important, but I don't think it's going to be critical. What we can show, I believe, will be that there's improvement in growth velocity. So if you go back to the growth-hormone trials that were done by Genentech and Lilly, they didn't need to have long-term growth data to show improvement in growth. You can do that in three to six months with changes in growth velocity and movement patients across growth channels on the growth curves.

And, clearly -- JJ here -- we've been able to successfully market Naglazyme for several years -- for about three years -- without having any growth velocity data. The growth velocity data just came out in September of last year, and it was not an issue with Naglazyme so we don't anticipate it being an issue with GALNS. Specifically, considering that, as Hank stated, the pulmonary function improvement for Naglazyme was zero. It was none. And here we have 11% improvement (inaudible).

All right. Thank you very much.

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

Great. Thank you. Wondering if you think you've reached the optimal dose because it looks like there's still a dose response between 1 mg/kg and 2 mg/kg. Why not go up higher in dose?

I -- Lucy, thanks for your question. Some is good, more is better, when does that stop, I don't know. I think in the first instance we have abundant data to support conducting a subsequent randomized trial which we believe will be successful and, when successful, will support registration of the product. I -- you couldn't imagine a situation where you could do even better, and I think we'll have to take that under advisement as time goes by and see what data we can generate in that regard. It's a fair question, it's a good question, and, again, it's a good problem to have, where you think you can get -- you have solid evidence so far and you can think you can even do better.

And then just as a follow up, I guess, to Joe's question earlier, it looks like, if you were to use six-minute-walk distance, then you have to pick people who can do baseline walks. On the other hand, if you choose another end point, such as pulmonary function, I mean, at least [016] patients in the trial or at least 16 out of 18 could do the testing actually so statistical significant. I mean, wonder if that's also an end point that's approvable by FDA as well. There are many drugs approved on those. Just wondering your thinking -- your thought process on sort of, like, zeroing in on six-minute-walk distance.

I think that it's a target, and I think it's -- again, goes back to it's a good problem to have that we have so many good choices. As Chris pointed out, chair climb is so highly relevant to patients, and that's a really key consideration for the FDA. On the other hand, forced vital capacity has served as the basis of approval, and it's an obtainable piece of data, as you point out, and it's both measurable, it's sensitive to the effects of treatment. And then six-minute-walk test has been used as a basis for approval.

So, I mean, I think these are all good choices, and it's still relatively in the early days of the trial. I think, for the reasons that I gave before, we're targeting the six-minute-walk test, it's highly clinically relevant, we think we can win at it, we can reduce -- we can overcome lots of technical problems with the six-minute-walk test and we know how to do that, it would be a relatively easy agreement to reach with the FDA, and we're pretty confident that that's a good approach to take.

Okay. Sorry. Just one more quick follow-up. And then in terms of -- in patients that are younger -- are age range closer to 5 -- more closer to 5 than to 18 -- were there anecdotally any change on the growth curve? Thank you.

Sorry, Lucy. I haven't looked at that data yet. It's still pretty early.

Okay. Thank you.

And our next question comes from the line of Phil Nadeau with Cowen and Company. Please proceed.

Yes, and thanks for taking my question. As this was an uncontrolled trial, one question comes to mind: What would placebo do, and what would be the placebo-adjusted changes? I appreciate there's no placebo specifically in the study, but you do have the week-12 data that were produced by what seems like a subtherapeutic dose. Could you give us some idea of what the magnitude in changes in things like three-minute stair-climb, six-minute-walk distance, and FVC were at week 12?

Yes, I don't actually those figures at my fingertips, but I would just go back and reiterate what our expectation is in regard to placebo effects in clinical trials and these patient populations in general. Just to remind you, the average age of the Morquio patient in the study is about eight, and also about 8% of these patients require wheelchair assistance. At some point they could walk, they could do the six-minute-walk test, but they required assistance. The point of that is this is a fairly rapidly progressive disease.

So our expectation is is that test measures tend to decline and get worse with observation. And that was actually borne out in similar MPS disorders, like MPS I and MPS VI, where walk-distance improvement with Aldurazyme was minus-11 meters in the control arm and plus-4 meters in the control on the Naglazyme clinical trial. So we don't have very much expectation that there's placebo effect for that test or -- results or really any of the other test results.

I did want to also mention that -- you raised the issue of whether the 0.1 mg dose was subtherapeutic. We did observe reductions in urinary [caths]. Not sure I know exactly what to make out of that. We did not observe accompanying improvements in respiratory function -- I'm sorry -- in FVC at that time point -- actually did observe improvements in MVV at that time point, but did not observe consistent improvements in stair-climb and walk at that time point. So I think the net of that is 0.1 might be biologically active but not optimally therapeutically active. Higher doses are (inaudible) quite active, and we don't think the trial is highly likely to be confounded by placebo effects.

Okay. Great. And then my second question is on safety. There wasn't all that much safety data that was put in the press release. Can you give us some idea -- some better idea of the rate of infusion reactions and how many of those were severe.

Yes. Well, in terms of infusion reactions, as Chris mentioned, the -- what he's seen and what we've seen in the trial overall is a severity infrequency pattern that's fairly consistent with what we see for Aldurazyme and Naglazyme overall, and the symptoms of infusion reactions consist of mild fever, shake, chills -- potentially shaking chills, abdominal pain, nausea, vomiting, diarrhea. They are very much infusion-rate related. If you slow the infusion down, you can generally get these under control. Interestingly, we seem to see fewer serious -- I'm sorry -- fewer infusion-related reactions, actually, as the trial went on and dosing increased. We saw only a single patient discontinue due to the infusion-related reaction during the 36 weeks of the study. So, again, overall, data fairly consistent with what has been observed with Aldurazyme and Naglazyme in this setting.

And were there any other side effects that weren't infusion related?

It's a disease that's pretty complicated, and it's not easy to sort all of that out, but I think the general pattern is that we did not see anything that didn't appear -- the treatment -- that we didn't see to be underlying disease related. The treatment-related side effects that emerged in the trial were infusion-reaction related, self-limited, controllable with rate control of the infusion.

Okay. Good. Thanks for taking my questions.

Yes.

And our next question comes from the line of John Sonnier with William Blair. Please proceed.

Hey, thanks for taking the question, and congrats on a lot of good progress over there.

JJ, I'm trying to get a sense of the coordination of the various moving parts in the GALNS program so it's a bit of a higher-altitude question. If you could just talk to us about the timing of the Phase III trial against your manufacturing ramp ability to open name patient and compassionate use protocols, talk a little bit about what you need to do structurally to get the organization ready for the launch. Do you need more reimbursement specialists, QCQA types? Talk to us a little bit about how you see the next six to eight quarters unfolding.

So I'll start and maybe Hank and Steve can elaborate. But I would say the good news is that we've been spending a substantial amount of money in building a second manufacturing facility in the past two years in anticipation of this positive trial so in this respect we are prepared.

So we are actively looking at projecting amount of drug -- clinical drug that's going to be needed to ensure a proper interpretation of the Phase III study, and actually also keeping the current Phase II patients on therapy potentially until the approval, and then hopefully will choose to commercial drugs. We believe at this time that starting the Phase III trial in the fourth quarter of this year would be quite possible even at the 2 mg/kg dose. The good news regarding this product is that the yield on the manufacturing process is at least twice -- or two times or maybe more the yield that we observe with Naglazyme. So even if Naglazyme is only 1 mg/kg, this is 2 mg/kg. That's why the gross margin, we anticipate, would be about the same. So that's pretty good news in this respect.

So the fact that we built that additional facility, we believe that we will be in a position to launch the product commercially and have enough product available, I would say, by early 2013, which is kind of what we anticipate at this time.

Regarding commercial, I'll stop, and I'll let Steve elaborate. Again, we are today calling on all potential prescribers of this product, basically, around the world for Naglazyme. So we don't anticipate a significant increase in sales force beyond what's needed for Naglazyme and the anticipated Naglazyme geographic expansion. So we probably will need a little bit more support, maybe a little bit more reimbursement support -- [MSL], medical affairs -- absolutely -- but maybe Steve can stay a few words about that, and Hank can give his perspective too.

Steve?

Yes, I can't add much to what JJ's already said. The basic platform for what we need is already built. We are going to need probably some additional heads in some select areas, but it's going to be a very minor expansion of head count and cost to take this product to market. I think that's one of the really attractive things from a commercial perspective is how well it fits into our existing activities and our existing structure.

(Inaudible) also I think I forgot to answer one of your questions regarding compassionate use. At this time, we have no plans currently of making this product available for compassionate uses for approval. We actually did not do that for Naglazyme in the US and Aldurazyme, if I'm not mistaken. We are committing to maintaining any patients that are returning to clinical trial also have (inaudible) approval. This we can do. But that's (inaudible) occur (inaudible).

Hank, you want to (inaudible)?

Yes, I think a couple things to tack on Steve's theme and JJ's theme of leverage from a clinical and technical perspective. I mean, we're blessed, again, on several different dimensions here. All of that intellectual investment that Chris talked about in his comments that Morquio patients have made in their research and treatment we're going to try to direct into enrollment velocity in the Phase III clinical trial. We're also blessed to have Steve's team -- global basis to help us get to the right investigators, get the message out there, get their sites up and running and in a quick timeframe, and get their patients on the trial.

And we're also blessed to leverage quite a bit of knowledge internal (inaudible) others. So a lot of technical details in terms of how to get this program right. We're blessed to have the medical team that led the Naglazyme program on our program. Celeste Decker, whose our Medical Director, is doing a great job on the development of Naglazyme, doing a great job in development of GALNS for Morquio Syndrome, and all the little technical pieces that have to go right to get a program going in the right direction in a clinical basis are in place, and we're going to move quickly to doing it the right way.

And also if we -- the other way -- if you go -- if you rewind five years or -- approximately five years when we launched Naglazyme, at that time we had very little money in the bank, we had no presence whatsoever outside of the US, we had (inaudible), and we had half the manufacturing capacity that we have today. So I think -- and also we didn't have the experience that we have today in terms of geographic understanding -- I mean, understanding of the rest of the world. So we are in much, much better position here to prepare the launch of this product. Launch this product that I think Dr. Hendriksz say also the MPS IV patient community is way more involved in their disease -- understanding their disease and potential treatment options than the MPS VI community is. So I think this bodes well -- this bodes very well for the launch of the product.

That's terrific. Thank you.

And our next question comes from the line of Brian Abrahams with Oppenheimer. Please proceed.

Hi. Thanks very much for taking my question.

For Dr. Hendriksz, just wondering what's your thought as to how GALNS is conferring its benefits.

And then for BioMarin, do you have any data, for instance, from any inflammatory biomarkers that might help support (inaudible) mechanism by which you're seeing these rapid functional benefits? Thanks.

Chris, go ahead.

I'll start off with saying that, unfortunately, we've not seen all of the biomarkers, but I do believe that the benefits we are seeing is likely to be associated with the misconception that all of the disease is, of course, purely by skeletal and bone involvement, and actually this disease has got a much bigger component to it in that definitely there is inflammatory component in this disease. And actually for the lung function and things like that, it's one of my beliefs that there's actually an interstitial component to the lung disease as well, which is not scientifically supportive at the moment because we haven't got all the data and things, but looking at the children and the results, I think it's supports that view.

Yes, and I would just add to what Chris said by we collected a lot of inflammatory biomarker data, we haven't analyzed that data yet. But, again, as Chris did, just take a step back, Morquio Syndrome is a systemic disease. The liver, for example, there's quite a bit of increase in keratin storage product in the liver of a Morquio patient. Where that is is probably in (inaudible) cells and macrophages and phagocytic cells, and so it's reasonable to expect that the phagocytic system systemically is activated. As Chris said, there is no direct data about this, but it is curious that in MPS IV, as in MPS VI, one of the first benefits observed with treatment was improvement in maximum involuntary ventilation, suggesting a pulmonary interstitial component that is first to respond, and we look forward to doing more research to understand the benefit. And I think the key consideration at this point is not so much how that benefit arises, but the fact that it does arise quickly in several different domains, all of which are capturable in registration-enabling trials.

Fair enough. Thanks very much.

Yes.

And our next question comes from the line of Eun Yang with Jefferies. Please proceed.

Thanks very much. In the study, at the 24-week time point, patients who were not yet exposed to 2 mg/kg dose, and if I heard you correctly, in your Phase III, you're going to be using 2 mg/kg in the study. So question is: In the Phase III -- planned Phase III, if you use 2 mg/kg and looking at 24-week treatment period, do you think that the magnitude of change or improvement that you are going to see would be actually higher than what you are showing today?

Yes, and that's a great question, and I think you actually do capture a reason to be optimistic, even more so about the results in the Phase III trial. Said differently, patients in this trial were only exposed to 2 mg/kg for 12 weeks. In a going-forward pivotal trial, they might be exposed to that 2 mg/kg more optimally effective dose for double that amount of time. The trial that we did design for Phase I/II was unable to precisely tease out the interacting benefits of dose and time, and so there are reasons to believe that the present trial could be underestimating the treatment benefit.

As I said before, there's another factor, and that is how the tests were done. So there are a couple of different reasons to believe that the Phase III trial could actually capture an even bigger benefit than we've seen so far in Phase I/II. So thanks for that thought.

Thank you. And the second question is on the antibody reaction. What percentage of patients in the study developed the antibody, and was there any neutralizing antibody reaction?

Yes, we haven't reported all that data just yet. Partly still it's in analysis, and I'd, again, encourage folks to go the scientific session in Adelaide, Australia, and if you're unable to make it to Adelaide, Australia, then we'll help you -- provide that data to you in a timely fashion.

The nut of this, though, is that it's our expectation the patients will have antibody responses to (inaudible) enzyme replacement therapy. It's been seen with every other enzyme replacement therapy. It hasn't been problematic therapeutically. We note the continued KS declines through 36 weeks in the trial, suggesting that, as with the other MPS's, we can easily overcome any of that antibody interference.

Thank you.

And our next question comes from the line of Jeff Elliott with UBS Securities. Please proceed.

Thanks. Was there any difference in the infusion reaction rate between the 1 mg and the 2mg per kg dose groups?

Slightly better in favor of 2 than 1.

Okay. And then I'm going to ask something that's not GALNS, if that's all right.

That's allowed. That's allowed.

Oh, I wasn't sure. No one else seemed to be.

For the Kuvan, you talked about that 5% of patients that had a switch in insurance and then sort of dropped off commercial therapy. Would you expect all of those to come back on to commercial therapy in the relatively near term?

All of them -- I would never say all of them are going to come back on, but the majority of them are already back on.

And then in terms -- you said there was a higher rate of patient discontinuation in the quarter than you'd seen previously. Do you have any suspicions as to why that would be?

Well, the discontinuation showed up in January and February, but I think, for the most part, they were patients who stopped taking the drug during the Thanksgiving-Christmas period. And we've got a patient population that is -- can be prone to lack of compliance, and small things in life can throw them off track, and I think, going through the holiday season, we just happened to see more going off than we did through the normal months preceding Q4.

Okay. And then actually I'm going to go back to GALNS because I feel like I left it alone too long. Do you need to see statistical significance, do you think, in the pivotal trials? Because you look at the other ERT's, most of them hit on one but not the other end point. So I know you have reason to be optimistic that you'll see a more robust effect, but does it -- I guess the question is: Does it really matter given the precedent that's been set?

Well, that's really a good question. I mean, the notion of statistical significance derives in a world in which it's easy to overpower studies, and in the rare-disease setting, as you correctly point out, FDA and other health authorities that have been able to apply judicious wisdom to the proper interpretation of tests of significance, and drugs have gotten approved on the basis of their overbiological activity to spectrum, the complete total package data, and got across the finish line where maybe the primary end point isn't always hit, or it's a composite end point, as the case with Elaprase. Having said all that, BioMarin's a pretty robust company, and there's no reason to leave any risk on the table here, and we'll do our very best to enroll a robust trial that takes any statistical (inaudible) chance out of the equation.

Great. Thank you.

And our next question comes from the line of [Ying Wong] with Credit Suisse. Please proceed.

Thank you. This question is for Hank. What is the baseline for the six-minute-walk distance for this patient here?

It was 267 meters.

Two-hundred-sixty-seven. And then my next question is: Are you little bit surprised by the large effect in terms of increase in pulmonary function compared to the improvement in the six-minute walk? If -- I mean, if you think these are relatively healthier patients.

Yes. I like the way you posed that question, only sort of, though. Here's how I'll answer that question: I like the improvement in the six-minute-walk test, as I mentioned, somewhere between 19 and 38 meters at 36 and 24 weeks depending, and (inaudible) placebo arm, and I mentioned before that in -- at least in the Aldurazyme case, placebo declined. So I don't what the placebo adjusted improvement in six-minute walk, but I do know that in the treatment arm in Aldurazyme and Naglazyme, approval was gained with improvements in walk distance of 19 to 28 meters. So our walk-test improvement is clinically relevant by prior standards of regulatory actions.

And I also like our improvement in forced vital capacity. It compares favorably with the relevant improvement in FVC observed in Aldurazyme was 11% relevant improvement. Elaprase relevant improvement in FVC is about 5%. Naglazyme relevant improvement was about zero percent.

Right.

So this is a -- it's hard -- if you guys are going to force me to pick which one I like the best, I'm going to recidivistically say that they're -- that all these data are good and robust.

Okay. My last question has to do -- I joined the call a little late. Maybe you mentioned this already. This is for Steve and JJ maybe. Can you quantify if there's any impact at all from the health-care reform on your revenue?

Yes, I think -- yes, Steve did cover that during the call. You want to go over that again, Steve.

Sure. It was a relatively modest impact on Naglazyme, even though Naglazyme -- over half of our US patients are reimbursed through Medicaid, the US constitutes only about 15% of our global revenues. So the impact on overall Naglazyme revenues was minimal.

Kuvan, we have roughly 25% of our patients are reimbursed in a way that makes them eligible under the new rebate system. We had incremental Kuvan Medicaid liabilities of about $250,000 in Q1.

But, Jeff, I think your projections --

Yes.

-- for the impact --

Yes.

-- of the year were --

Yes. The overall impact of the year for both Kuvan and Naglazyme is about $2.3 million.

Okay. Great. Thank you.

But -- and if I may -- but that's the negative, but there is a positive, we believe, in the health-care reform. One is the fact that all biologics have 12 years of data exclusivity which is retroactive to (inaudible) supply (inaudible). We have 12 years from the approval date, which is a good thing to have. And, secondly, there are more insured patients now -- there will be more insured patients in the US, which should help our marketing in some way.

And then, finally, another thing that hasn't been highlighted as much but -- in the reform is the fact that the lifetime caps on health-care expenditures has been removed, and it has not really been a big issue for us in practice, but it's more of a psychological barrier for starting patients on Kuvan, while some parents don't want to start their kids on Kuvan because they think that, after a few years, they're going hit their lifetime cap and they're going to get a bad habit on their diet. So this is gone now, and I think it's actually should help Kuvan patient (inaudible).

Yes, I think JJ hit it right on the head. It's been surprising, a very small number of patients that have a lifetime cap that would come in to play, but a surprising number that are worried enough about it to make it an issue in their decision-making process.

So all in all, this could actually prove to be slightly positive for you guys then?

Yes.

Over the long haul, we think it will be.

Okay. Thank you.

And our next question comes from the line of Peter Hellman with Robert Baird. Please proceed.

Thanks for taking my question. You might have answered this already, but are you expecting to pursue a SPA agreement with the FDA on the GALNS Phase III program?

We haven't mentioned that. We're going to work real hard to reach agreement, and one means by which to do that is through a special protocol assessment, but it's not the only means by any -- it's not the only pathway by any means. We've got -- again, it goes back to our theme of leverage. We've registered Aldurazyme in the US, and in partnership with Genzyme around the world we registered Naglazyme in the US and around the world, and we registered Kuvan in the US and applying for application in Canada. So we have a really experienced regulatory group, and they know how to talk to the FDA and the other global health authorities, and we -- we're going to do what it takes to get it done rather than spend a lot of time haggling and negotiating.

Okay. Thank you.

And our next question comes from the line of Liana Moussatos with Wedbush Securities. Please proceed.

Thank you. What -- can you go through the geographic breakdown of Naglazyme sales in Q1, and what percent of the 600 patients -- I -- MPS IV patients you identified are moderate to severe?

I'll take the first question regarding the breakdown. The US sales in the first quarter were $7.4 million, EU sales $18.2 million, and international sales -- which is everything else -- of $23 million.

I'm not sure how you define "moderate to severe" here but --

Yes, I think maybe one thing to say qualitatively about that is is that this is a Phase I/II trial population, and there was a little bit of investigator orientation towards the including in the Phase I/II trial slightly healthier population. For example, their median baseline walk was 267 meters, and that compares slightly favorably to what we observed in our MorCAP registry. But I don't think that's going to be a meaningful tilt of the population. I think -- my expectation is the vast majority of identified and to-be-identified Morquio patients will be the kind of patients that could be included in a Phase III clinical trial.

Also, in order to prepare for the launch, something that we are actively looking into is that doing -- is doing additional studies in addition to the pivotal Phase III study, just supportive studies for marketing purposes, and we might actually, if the FDA allows us to do it, start studying patients that are under five years of age and in patients that are nonambulatory. It would not be (inaudible) in studies, but they would be studies --

And speaking of the nonambulatory patients, maybe -- Chris, you have a patient that you were telling us about the other day in terms of bed to wheelchair transfer you might want to share with the group -- the clinical effects of GALNS in that setting, even in a nonambulatory patient.

Yes, I think it's one of those situations which is incredibly hard because how do you capture this, but one of the children, like I say, is wheelchair-bound, has been unable to do anything for himself, and actually needed the care -- female care to take him to the lavatory and things like that. But since he's been on the clinical trial, he's become strong enough, he'll actually transfer himself from his bed into his wheelchair and also in the lavatory. So actually he now has got a much better strength, and he can actually get life -- quality of life for him has made a significant difference. And this is purely what we would most probably think is the -- to increase in power and also levels of energy, something which most of the children on the trial report, that actually they feel so much better since they've been on the clinical trial.

Thanks, Chris. That's a wonderful case to share with us and is, I think, a good sign of the -- we talk about feeling and functioning better with GALNS better, but there's sort of -- dignity of independent living is also an important aspect of the benefit of GALNS.

So, Liana, did it help answer your question?

Yes. Thank you very much.

And our next question comes from the line of Aaron Reames with Wells Fargo. Please proceed.

Thanks for taking my question, and congratulations on the progress. I just had a question about the Phase III design and maybe some of the things that can be done to maybe even mitigate risk further. And I was wondering, as part of that design, if there are plans to, potentially as a tertiary measure, pick up growth velocity measurements so that that data, although it may not be available to -- at a six-month timeframe, might be a little bit more mature and available towards the time when the agency would be going to panel or something like that and so it could be used as a supplement. It seems like it's an endogenous protein so it certainly has benefited just figuring out what to prospectively measure in a controlled fashion so you get the outcomes that you're looking for. So I wanted to know what things you're thinking about doing in terms of a Phase III design to maybe mitigate some of that risk and ensure good outcome from a statistical standpoint.

Yes, so I think that's a very good question in regard to mitigating technical risk and statistical and design considerations. And just to recap what we're going to implement the Phase III trial for sure is the introduction of duplicate testing of key parameters at baseline and on-treatment. To put that in some perspective, by the way, from the GALNS trial, it's very interesting that there were these duplicate measures at each visit -- this -- when I say "duplicate measures," I mean, like, Wednesday-Thursday at week 6 and then at week 12 and then at week 18 and week 24. Interestingly, in the placebo group, if you look at visit one and visit two and are they correlated, there's -- it's actually random. In some cases visit one is better. In some cases, visit two is better. Everybody thought that these kids were so sick they'd get tired and their walks would get worse, but it was actually random. In the Naglazyme treatment group, visit two was always better than visit one, and if you didn't have that visit two visit -- that second test -- you wouldn't capture that, you wouldn't have seen that Naglazyme actually makes people better able to do their second walk test of the week -- of week 6, of week 12, of week 18. So that's one technique that we've learned from Naglazyme that we can apply to pivotal trial of GALNS that we haven't already applied.

The second technique that I should point out is a little bit subtle in the Naglazyme pivotal program is the use of something called "longitudinal statistical analysis." Precise methodology for doing that still needs to be worked out, but it's a statistical task that's -- serves as the basis of approval of Naglazyme and can improve statistical power by reducing variability.

We've learned a lot about how to work with clinical trial sites in the Naglazyme setting in terms of how to best educate them in the walk test, etc., and we'll be collaborating globally with the investigators to make sure they test using all the best techniques and comprehensively.

So that's sort of a panoply of statistical measures and technique measures that we can apply. And you're right, we can measure additional end points. There, I think, we're blessed that -- again, as I said, you see relatively short-term improvement in stair-climb. Chris mentioned how relevant that is to people. We can measure improvement in forced vital capacity. Other questioners asked about that because that served as (inaudible) basis approval. So secondary and tertiary end points here can be quite valuable.

And then, finally, on the concept of growth velocity, as JJ mentioned, we're pretty optimistic that we can -- we don't think we need to -- we had the benefit of the MorCAP registry approaching 200 patients incorporating longitudinal data. We'll be able to use that data, as we did with Naglazyme -- again, knowledge leveraging. We know how to do these now since we know how to plow them pretty quickly. And what we saw in Naglazyme was actually a quadrupling of growth velocity in as quickly as 18 months on Naglazyme compared to untreated patients. So that can also be brought into play.

It's a lot of stuff. The net of that is is that we're pretty confident that we can cover the knock the cover off the ball with a robust clinical trial, six-minute walk as the primary end point, and incorporate a lot of the lessons learned from prior enzyme-replacement therapies that we've run and capture the full benefit of treatment through secondary and tertiary end points.

And so, in other words, some of the -- some of those long-term measures that, I think, some clinicians have talked about wanting to see, that's going to be captured in the Phase III? And kind of what I'm referring to is is there would have been some benefit of having neurocognitive function data supporting Kuvan early on in its launch to help adoption. It seemed like some of those studies were started afterwards so -- and I was wondering if there's -- this is going to be a robust enough design that you'll be able to capture some of those improvements that may be meaningful to clinicians just beyond the endurance measure. So is that something you're planning on doing as a part of the Phase III?

Yes. I think that's a good summary. I think that -- the notion is you capture what you can. First, we were blessed with the Kuvan program that we worked with the FDA. We were able to provide the product fairly quickly to patients on the basis of lowering blood Phe and then over time we're looking into the other measures and that -- those studies have now been financed by ongoing sales of Kuvan. And with GALNS we're blessed again that there are regulatory end points that move pretty quickly and -- but we'll continue to capture data and with long-term treatment and provide that back to the medical and regulatory community and reimburser community as time goes by. Fortunately, we're not going to be held up by waiting for those last bits of data. And, again, it goes back to Chris's comment about this is a disease in which people often look past impairments and functioning and performance that patients have. Fortunately, for us, patients with Morquio Syndrome, the -- GALNS improves feeling, functioning, quality of life, and those things matter quickly to patients (inaudible) really to regulators.

Thanks for taking -- pardon me? I was just going to say thank --

So we have -- so we are going to measure all this growth velocity data but we -- and you made the parallel with Kuvan. I think it's a little different because it's more of a parallel with Naglazyme. As I think I said earlier, we've been able to successfully commercialize Naglazyme without having any growth velocity data, and we don't believe it's actually required commercially to make this product a success. It would be good to have, but it's not a prerequisite.

All right. Thanks for taking my questions. I appreciate it.

Sure.

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

Thank you. Can you just remind me if Naglazyme has been launched in Russia?

Sure. Naglazyme has been approved in Russia, and we shipped our first product out -- got our first orders and shipped our first product. It was not shipped until after the end of the quarter, though, so there are no Russian sales included in the Q1 numbers. There will be in Q2.

Okay. And then just on these Morquio results, have you done any measures to look and -- at any kind of improvement in the bone itself, or is that just too difficult? Would you expect the bone disease to stop getting worse when patients are taking the enzyme-replacement?

Well, I can tell you what our expectation is. Our expectation is -- and this is based on observations that we made with Naglazyme, which is fairly similar disorder -- MPS VI, that is -- and as we were just talking about, you can improve growth velocity, and that can be detectable relatively quickly. We're in the beneficial circumstances, I said earlier, of not having to rely on that either. That benefits us from a corporate perspective. Most importantly, patients are benefited from that in the sense that what they care about every day is not so much how long their bones are and their chondrocytes and all these things. They care about how they feel -- can they climb stairs, can they live independently, can they function independently, and, fortunately, that response happens pretty quickly and to a clinically meaningful degree. So that's the good news of today.

Okay. Thank you.

And our next question comes from the line of Shiv Kapoor with Morgan Joseph. Please proceed.

Thank you so much for taking my question. On this trial, have you done any analysis on any correlation of these results with age? And what kind of population did you have in this trial, and how does it compare to the 600-odd patients that you had identified with MPS IV?

Yes, we're still actually in the early phase of all of the detailed analysis, and, again, I'd steer you to Adelaide as a forum where we can really go through the -- all the various different subgroups. The median -- the eligibility criteria for age were between 5 and 18 in this trial. The median age of the trial was about 8 years, and it's pretty representative of the enrollable Morquio population throughout the world.

Okay. Thanks.

And our next question is from the line of Andrew Vaino with Roth Capital. Please proceed.

Thank you for taking my call. I know you mentioned baseline data for the six-minute-walk test. What was the baseline figure for the three-minute stair-climb?

Do I have that at my fingertips? Probably not. You know what? We can follow up with you and get you that. It was -- I want to say it was in the 40's.

Okay.

Don't remember off the top of my head.

Okay. And, also, I'm noticing that the number of patients in the different measures is somewhat inconsistent. Is there any reason for that?

Yes, what we've done is a completers' analysis here, and not every patient is able to comply with every test, and that's because we didn't have a requirement for a walk -- for being able to do a walk at baseline for -- let me just tell -- I'll just tell it straight in the context of walk. So I mentioned earlier to Phil's question that a patient dropped out due to an infusion-related reaction. So enrolled 20 people, 1 dropped out due to an infusion-related reaction. Actually, that patient's brother was also in the trial -- a boo-boo of ours to have siblings in trial -- but, nonetheless, that patient's sibling withdrew consent and discontinued. Two other --

Although that patient had no --

That patient had no side effects (inaudible).

Two other patients were unable to provide baseline and subsequent walks. One was too impaired. Both had baseline and subsequent visits. One was pretty darn impaired at baseline and was not able to provide a walk test at other visits. So that's why there were 16 patients in the walk evaluated at -- in the completers' analysis. And it goes similarly for all the other measures on there.

The net of this is is that, when looking at the completers' analysis who are all comers in the -- you get essentially the same results across the board. We presented the completers' analysis here because, if we were to do a pivotal trial in a going-forward fashion, our expectation would be that we would enroll patients who can conduct a walk. It wasn't a requirement of this study. It would be a requirement of a future study in which walk was primary end point. So we think that the ability to do a complete walks would be a fair representation of what to expect going forward.

Okay. Thank you.

Yes.

Ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the call back to Mr. JJ Bienaime for closing remarks.

Thank you. So in summary, we are very pleased with our performance to date in 2010, and we look forward to an exciting year ahead. So we recently reached a important milestone with the launching of our fourth commercial product, Firdapse, in the EU, and reporting positive results for this Phase I/II trial for GALNS that was the subject of our questions. We expect additional clinical highlights this year with Phase I results from BMN-195 in Duchenne muscular dystrophy in the second quarter of this year and Phase II PEG-PAL results in the third quarter. We also look forward to initiating a Phase III clinical trial for GALNS this year and filing an IND for BMN-673, our cancer product in the fourth quarter.

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 the -- for BioMarin and our shareholders. So we look forward to keeping you up-to-date on our progress, and thank you for your continued support and for joining us on today's call. Good-bye.

Ladies and gentlemen, we thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a great day.