BioMarin Pharmaceutical Inc (BMRN) 2014 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the BioMarin Pharmaceutical Inc conference call to discuss the first-quarter 2014 financial results and Vimizim launch progress.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Traci McCarty, Director of Investor Relations at BioMarin. Please go ahead, Traci.

Thank you, operator.

With me today from BioMarin are Jean-Jacques Bienaime, CEO; Dan Spiegelman, CFO; Hank Fuchs, CMO; Jeff Ajer, Chief Commercial Officer; Robert Baffi, Executive Vice President of Technical Operations.

Before we get started, let me remind you this is a non-confidential presentation containing forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc, including expectations regarding BioMarin's financial performance, commercial products, and potential future products in different areas of therapeutic research and development.

Results may differ materially, depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market, and development 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.

Now, I'd like to turn the call over to JJ Bienaime, our CEO.

Thank you, Traci, and good afternoon, and thank you for joining us on today's call.

We had a very productive first quarter, led by the US approval and launch of Vimizim, and very strong royalty revenues of our other commercial products.

We are also very pleased to have received the EU approval of Vimizim on Monday, allowing our commercial team to get started on another successful launch, in a region that is home to approximately half of the MPS IVA patients. In a moment, Jeff will review the sequence of events that will roll out as part of the EU launch.

In the US, our commercial team hit the ground running upon receiving FDA approval of Vimizim on February 14, as evidenced by the broad and accelerating demand we're seeing. At the end of Q1, we had 17 patients on therapy, and as of the most recent information from yesterday, we now have 50 patients receiving commercial Vimizim and over 120 more patients in the BioMarin patients and physician services, or BPPS channel, and who are either on commercial therapy or awaiting commercial Vimizim in the US.

That means that eight weeks after launch, we already have more patients seeking to obtain Vimizim in the US than we currently have on commercial Naglazyme in the US, after nine years on the market. The commercial team is doing a fantastic job, and we expect both the US and now the EU launch to roll out, and reach our sales targets as planned.

I would also like to acknowledge the work performed by our technical operations group in coordinating the production, release, and distribution of Vimizim to enable the rapid launch in the US. Similar efforts are in place to expedite the launch in the EU, and the rest of the world. Manufacturing is one of our core competencies, and our combined US and Irish manufacturing facilities are now capable of supporting nearly $2 billion of enzyme product revenues.

While we are in the early days of the launch of Vimizim in the US, we are extremely pleased with the momentum we're seeing. Early indicators of patient demand give us confidence we can achieve our previously-stated revenue guidance of between $60 million and $70 million for the year.

Even more importantly, we believe that the long-term potential of this product is very exciting, and we have increased confidence that Vimizim will allow us to grow BioMarin revenues to over $1 billion over the next several years, especially considering that we have already identified approximately $600 million of potential Vimizim business around the world.

In addition to the launch of Vimizim in the US, solid operational progress drove strong financial results. We achieved total revenue growth of nearly 20%, including over 20% year-over-year growth of Kuvan.

Naglazyme revenues continue to grow double digits, more than eight years after approval. This is a testament to the long life of enzyme replacement therapy products, and the continued strength of the ultra-orphan pricing model.

Turning to development activities, we are announcing the decision to modify the entry criteria for the randomized discontinuation portion of the PEG-PAL Phase III program, the BMN 302 study. This decision is based on data from the Phase II study, and emerging data from BMN 165-301 feeder study. The findings suggest that immunologic reaction to PEG-PAL plays a strong role in determining speed of titration, dose required to lower blood Phe concentrations, and safety.

In the new entry criteria for BMN 165-302, we intend to leverage those patients who have relatively weaker immune response to PEG-PAL, who therefore achieve Phe reductions faster, at relatively lower doses, and with relatively fewer side effects. We expect that by using this criteria, approximately two-thirds of patients will meet the eligibility criteria for the randomized trial, and we believe that optimizing the entry criteria for BMS 302 will increase the probability of success, and of achieving both Phe lowering and neurocognitive functions as endpoints, to support full regulatory approval. Hank will discuss full ramifications in more detail shortly.

Based on the changed protocol, the associated review of proposed protocol to the regulatory agencies and preliminary BMN 165-301 with the FDA, and requirement for additional patients, the Company now expects for the enriched BMN 302 study to be available in Q4 2015. While this is a delay from our prior expectations, we are still confident in the commercial opportunity for PEG-PAL, and more importantly the viability of this therapy for adult PKU patients. We're still planning on addressing the entire adult PKU market with PEG-PAL.

Hank will provide more details on PEG-PAL in a moment. Additionally, Kuvan's continued double-digit growth mitigates part of this delay. The remainder of our development pipeline continues to make good progress and the guidance we have previously provided regarding regulatory progress, planned enrollment, completion, and data release for all of our other programs remain unchanged.

Between now and the end of next year, we expect to have potentially pivotal clinical data on three programs, PEG-PAL for PKU, BMN 701 for Pompe Disease, and BMN 190 for Batten disease. In addition, and also by the end of next year, we expect to have proof of concept data in patients for BMN 111 for achondroplasia. We expect to complete enrollment in BMN 673 and to file INDs and start clinical work in Sanfilippo Syndrome and in our hemophilia A gene therapy programs.

We made great progress in the first quarter of 2014, we're very pleased with the pace of the US launch of Vimizim, and look forward to the EU roll-out over the coming weeks and months. We expect sales of Vimizim to help BioMarin reach over $1 billion in total revenue over the next few years, and as we stated before, we believe that successful commercialization of Vimizim can be the basis for BioMarin achieving operating profitability thereafter, as Vimizim and our other core products continue to grow, and as new products from our robust pipeline are introduced, we expect substantial revenue growth and increasing profitability.

Next, Dan Spiegelman will review the financials for the first quarter, Jeff Ajer will then provide more detail on the Vimizim launch and our commercial products, and Hank Fuchs will provide an update on our R&D programs before we open the call for questions.

Now, I would like to turn the call over to Dan.

Thanks, JJ.

Earlier today, we issued a press release summarizing our financial results for the first quarter of 2014, and I refer you to that release for full details. Following are some key highlights.

Total BioMarin revenues delivered strong growth in the quarter, increasing 18.5% compared to the first quarter of 2013. This result was driven by double-digit growth in sales of all three of our major products, a 15.4% increase in Naglazyme, a 20.2% increase in Kuvan, and a 13.5% increase in the royalties we receive on Aldurazyme.

Based on these growth rates, we expect to be up on the high end of our full-year revenue guidance of between $650 million and $680 million. Turning to bottom line operating results, we reported a non-GAAP net loss of $1.7 million for the first quarter, compared to a non-GAAP net loss of $8 million in the first quarter of 2013. We believe non-GAAP net loss is the best measure of our operating results, because it excludes non-cash accounting expenses such as stock-based compensation, contingent consideration, and interest expense.

We also reported a GAAP net loss for the first quarter of $38.1 million, versus a loss of $39.8 million in the first quarter of 2013. Importantly, we ended the first quarter with cash, cash equivalents, and investments of over $1.1 billion.

Turning to operating expenses, R&D expenses of $86.2 million in the first quarter were relatively flat, compared to $83.7 million in the first quarter of 2013, and were $11.1 million less than R&D expenses in the fourth quarter of 2013. This was primarily due to the timing of study starts, and we anticipate R&D expenses will rise over the coming quarters as enrollment in BMN 701, 673, 190, 111, all our various studies accelerate.

SG&A expenses increased to $60.1 million in the first quarter, compared to $51.1 million in the first quarter last year. The increase was driven primarily by increased Vimizim sales and marketing activities, and increased stock-based compensation expenses.

In addition, please note that operating expenses in the first quarter included an $8.8 million gain -- in other words a reduction in expenses, on the termination of our corporate headquarters lease, due to our purchase in Q1 of the San Rafael Corporate Center. Without this gain, R&D expenses would have been $92.3 million, and SG&A would have been $62.8 million.

As noted, we expect R&D expenses to accelerate materially during the year, as BMN 701 begins, and our other clinical studies mature. It is typical for clinical program enrollment and expenses to increase as the study progresses, and we expect that for our various programs. SG&A is also expected to increase modestly as we launch Vimizim in Europe and other parts of the world, following approval.

In terms of 2014 financial guidance, it remains unchanged from the guidance we provided at the beginning of the year. However, based on Q1 revenues and actual Q1 spending, we believe that we are likely to be at the high end of the range in terms of revenue guidance, and the low end of the range for R&D spend, and for GAAP and non-GAAP net loss. Though we're not changing guidance at this time, we will reevaluate at the end of Q2.

Now, I would like to turn the call over to Jeff, who will provide an update on our commercial program.

Thanks, Dan.

We were very pleased with the news early Monday that the EC had approved Vimizim, and our commercial team is moving forward to roll out a strong launch in that region. Before I touch on some of those details, I would like to review some specifics related to the US launch.

As JJ said, we are thrilled with the pace of the program. The commercial team has executed its plan, resulting in $900,000 of commercial sales in the first six weeks of launch. For perspective, this is more than twice Naglazyme sales in the first six weeks of its launch.

Keep in mind there is no retail or wholesale trade stocking of Vimizim. Revenue numbers reflect actual patient infusion requirements. During these early days of the launch, we believe the most meaningful metric is patient starts.

Recall that our priority following US approval was to switch EAP and clinical trial patients to commercial drug. We now have the majority of both patient groups progressing through key stages in the BioMarin patient and physician services, or BPPS, channel, and can expect them to be reflected in patients on therapy later this year. At the end of the first quarter, there were 17 patients on commercial therapy, and as of April 30, there were 50 patients on commercial Vimizim in the US, France, and Argentina.

But potentially more important, there are over 120 patients that have signed into the BPPS channel in the United States. Patients who signed up for BPPS are interested in obtaining the drug, and our conversion rate of patients who sign up for BPPS is extremely high. Interest in and acceptance of Vimizim by physicians and patients has been strong. The reimbursement landscape in the US has so far presented no material surprises.

Turning back to EU preparations, the commercial team has begun taking the initial steps for launch in that region. The team is staffed up, trained, and has been awaiting approval and are ready to launch.

One of the gating factors for launch of Vimizim in the EU is the availability of labeled product for different markets. Commercial product with the UK label is in our warehouse, released, and available to ship now, and will be followed shortly by German labeled and then other labeled products.

Market access and reimbursement plans are in place for each individual market, and will be executed against as quickly as possible, following approval. Our target pricing for EU is consistent with that previously disclosed for the US. We expect discounts, variable by market, and impact of reference pricing systems relative to published prices, as we proceed and a resulting price corridor.

Some highlights regarding expectations for major markets include availability in France under the approved ATU early access program. This allows commercial Vimizim to be used for naive to treatment patients, while we work through reimbursement process. Already, a number of commercial patients are on treatment in France through the ATU program.

In Germany, we will sell at list price and expect patients to be able to be treated at that price while we work through the reimbursement process there. We expect both patients transitioning from clinical trials and naive to treatment patients to be approved for reimbursement in Q2.

In the UK, National Health Service has invited NICE to evaluate Vimizim through the highly specialized technologies process, and we are in process of facilitating that evaluation. In parallel, we intend to apply to NHS for interim funding to be commissioned for Vimizim reimbursement.

In Spain, hospitals are expected to approve funding for patients on a named patient basis while we apply for formal reimbursement, and work through that process. In addition, we are aware of patients in certain markets for which access to commercial Vimizim is being requested on a named patient basis. This includes Turkey, Middle East, Brazil, and Colombia.

In Latin America, we are encouraged by the number of patients seeking therapy. At the end of the quarter, there were over 70 patients with prescriptions seeking named patient access in the region. The timing for patients to be approved under these named patient programs is variable, but the first patients could begin to be treated by the end of the second quarter.

In addition to approvals in the US and the EU, we have a number of international registration filings in process. Vimizim has been filed, and is under review, in Brazil, Canada, Australia, Mexico, and most recently, Japan.

In short, the commercial team is fully prepared and ready to execute a strong global launch of Vimizim. We continue to believe we are on track for our full-year target of $60 million to $70 million in Vimizim revenue, and 350 or more Vimizim patients on therapy.

Now, turning to our base commercial products. Our press release and the comments from JJ and Dan have already described the excellent results last quarter, so please turn to the release for detailed results.

In the commercial portfolio, the one item I would like to highlight is Kuvan, where sales of $45.2 million in the first quarter of 2014 increased by 20.2%, compared to the prior-year quarter. This reflects a continuing increase in underlying demand, as measured by patients on therapy. New Kuvan business continues to benefit from steady levels of new patients being referred for a response trial, and the positive impact of the field-based clinical coordinators that support patients for effective trials.

Kuvan powder for oral solution was also launched during the quarter. This new formulation of Kuvan may be helpful for very young patients, and older patients who are intolerant of, or have difficulty being compliant with the tablet formulation.

The availability of Kuvan powder in Q1 2014 contributed to sales growth, and will be a growth driver going forward. We remain bullish on Kuvan growth prospects quarter to quarter throughout 2014.

In closing, I am very pleased with the level of demand we are seeing for Vimizim, both in the US as well as in other regions. The results we're seeing from the US launch are testament to our experience and foundation of bringing ultra-orphan drugs to patients expeditiously. Our established brands continue to deliver strong revenue growth, which we anticipate will continue through 2014.

Now, I will turn the call over to Hank Fuchs, who will review the pipeline.

Thanks, Jeff.

Overall, our clinical and research programs are progressing extremely well, and we are on track to meet our expected timelines in four of our five clinical programs, and our two IND programs. The one program timeline that is changing is PEG-PAL, and, as JJ described, we believe that by enriching the entry criteria for the Phase III study BMN 165-302, we increase the likelihood of the program's success, and ultimately it -- and finally the utility of PEG-PAL for adult PKU patients.

As always, our ultimate goal is to bring the most robust label forward, so the most patients who can benefit from PEG-PAL, no matter the time it takes to achieve maximal therapeutic benefit. We have achieved the original enrollment target in the feeder study of BMN 165-301 with PEG-PAL. However, prior to substantial gearing up enrollment in the pivotal randomized Phase III trial, called BMN 165-302, we evaluated our Phase II data and the emerging data from the 301 feeder study with PEG-PAL.

As has been previously established, immunogenicity to PEG-PAL, which is a bacterially-derived protein, is responsible for transient and self-limited side effects. In addition, immunogenicity to PEG-PAL leads to the need in some patients for higher doses, administered more frequently. With the additional data from BMN 165-301, the feeder study, in hand, analyses confirm that the immunologic reaction to PEG-PAL plays an important role in determining the speed of titration, the dose required to lower blood phenylalanine concentrations, and safety.

Given this new information, we intend to modify the entry criteria for BMN 165-302, the randomized discontinuation design trial. We hope to leverage those patients who have relatively weaker immune reactions to PEG-PAL, who therefore achieve Phe reductions faster at relatively lower doses, and with relatively fewer side effects. Under the revised entry criteria, patients will need to demonstrate a pre-specified reduction in blood Phe from PEG-PAL during the 301 feeder study, prior to entering into the randomized discontinuation trial.

By using these criteria, it's expected that approximately two-thirds of patients will meet eligibility for the randomized trial. Therefore, the Company will increase enrollment in the feeder study in order to enroll the targeted 120 patients in the 302 randomized trial. Patients who do not demonstrate a reduction in blood Phe after 24 weeks in the 301 feeder study will enter a parallel study to accommodate the longer timeframe necessary for safely reaching maximal benefit.

To summarize, we feel that enriching the entry criteria for the randomized trial is the right thing to do. We believe that PEG-PAL can be an effective therapy for a large percentage of adult PKU patients, no matter the time it takes to titrate the dose, and we look forward to continuing to advance this program with the goal of demonstrating robust Phe lowering and neurocognitive benefits for all patients studied. As JJ mentioned, based on the change protocol, associated review of proposed protocol in preliminary 301 data with the FDA, and the requirement for additional patients, we now expect the data from the enriched 302 study to be available in the fourth quarter of 2015.

We recently completed a meta-analysis of outcomes in those with PKU. This study is important, because it focuses on adults, the initial target population for the treatment with PEG-PAL. The study also captures relevant and new information published since the time of Kuvan's original approval.

Medically-significant inattentiveness is the most predominant psychiatric problem in PKU patients, but anxiety and depression were found to affect 22% and 17% of patients respectively, as well. Seizures occur in 10% of PKU adults, and tremors occur in 29% of PKU adults. Symptoms were worse among the more poorly controlled patients.

For example, seizures occur in 21% of patients who are characterized as suboptimally treated, compared to 3% of patients who are more optimally treated. Interventional studies demonstrate substantial improvement in anxiety, depression, and mood disorder. But of course, long-term compliance with medical food per prescription is very poor.

In summary, this meta-analysis describes the substantial burden of phenylketonuria, the relationship of blood phenylalanine levels to poor outcomes, and the benefit of modifying blood phenylalanine concentrations. It is for this reason that PKU clinicians and patients are so eager to collaborate with us to develop PEG-PAL.

Turning now to the remainder of our clinical pipeline, we're happy to report that all of the programs are moving forward as expected, and we anticipate numerous development milestones over the coming 18 months, including data read-outs for BMN 111 in achondroplastic dwarfism, BMN 190 in Batten disease, and enrollment and completion of BMN 673, the molecularly targeted PARP inhibitor, BMN 701 for late-onset Pompe disease, and the filing of two IND candidates, BMN 270 and BMN 250.

I did want to highlight BMN 701 for the treatment of late onset Pompe disease because progress is encouraging. We're happy to report that we are screening our first patient in the Phase II/III switching trial, and expect to begin enrollment any day. As a reminder, patients in the study have been previously treated with a glucosidase alpha.

The primary endpoint is maximal inspiratory pressure, as we believe this is a direct measure of respiratory muscle function, and is likely an important indicator of 701's effectiveness in this setting. The study will be conducted using our new higher-producing cell line. We expect this study to complete enrollment in the first half of next year.

In closing, our pipeline is unparalleled in the orphan drug industry. I believe our track record of developing and commercializing therapies to treat serious medical conditions is also unmatched. We're energized by the prospect of moving all of our development compounds forward, and look forward to keeping you apprised of our progress over the coming months.

With that, operator, we would now like to open the call for questions.

(Operator Instructions)

Phil Nadeau, Cowen.

Hank, I want to explore the change in a PEG-PAL trial a little bit further. First, would you be willing to discuss what the pre-specified hurdle for inclusion in the randomized discontinuation portion of the trial is?

Hi Phil. For the question.

I left it a little bit vague because we haven't been through the FDA, but our expectation is the cut point that we will use will be such that roughly two-thirds of patients will be eligible. And one-third of patients will go into the parallel study, which explores potentially higher doses, given over a slightly longer period of titration.

Okay. And second on the rationale for the change, I guess it's a little unclear to me, exactly -- It does seem like if you're seeing decent efficacy in two-thirds, you probably hit a statistically significant result on the primary endpoint. Is it that you want to see a higher magnitude of Phe reduction on the label, or is there something with safety, where including those one-third patients in the randomized discontinuation trial there were maybe some sort of side effects anaphylactic reactions, whatever, that you want to avoid?

I think you got it exactly, Phil. The randomized trial is our first shot at achieving neurocognitive outcome. Therefore, we want to make it our best shot. And so the idea of including those patients who had better Phe reductions drives better likelihood of hitting the neurocognitive endpoint.

Okay. And then last question for me.

Given that you are reaching a trial, for patients that are known to respond to the drug, do you think that is in any way going to change the FDA's criteria for what they want to see in order to license the product? So it does seem like you're stacking the deck in your favor. Would the FDA now more emphasize the neurocognitive endpoints or outcomes, or do you think Phe reduction could still be sufficient for initial approval?

A couple of comments. First of all, the FDA discussions are not yet held, and I mentioned that we need to be talking to them about the program. I think the idea of enrichment is an idea -- that the FDA likes the idea of focusing drugs in patient populations.

I don't think that it's going to cause them to raise the bar. In fact, part of the reason I mentioned this recently completed meta-analysis is because I think that is an important element of, let's call it the water landing, in case we don't actually hit neurocognitive in the first randomized trial. It increases my confidence that should we hit Phe alone, that the endpoint -- that the drug will be registrable.

In summary the idea of an enrichment is to optimize the chance for hitting not just Phe, but for hitting neurocognitive. We still need to talk to the FDA, but we think this increases the overall likelihood, and therefore value of the product for patients.

Great. Thanks for taking my questions.

Cory Kasimov, JPMorgan

It's actually Matt Lowe in for Cory today. Wondering if you could help us better understand the rate limiting steps, when you're transitioning the patients -- the Vimizim patients, to commercial patients. Just the steps that you need to go through there?

That would be great. Thank you.

There are a couple. The first is for naive patients, and these things happen in parallel, but we need to arrange for naive patients to be having assessments done, and then starting what will become hopefully weekly infusions for life. There is a little bit of time and scheduling involved with those patients and the clinics that are going to treat them.

In parallel, we need to work through reimbursement, and those reimbursement systems look different, depending on where in the world that patient resides. In addition, we have early access patients in the US and clinical trial patients all over that are transitioning to commercial therapy. Those patients -- we have the advantage time-wise of skipping the step that I just described, of getting them on the schedule for assessments and onto treatment.

The EAP patients in the US, and no surprise, are the fastest of the different groups to commercial therapy. The clinical trial patients, you might think, would also be very rapid to commercial therapy. They have the additional step involved of scheduling, and then complaining an end of study visit.

That is not a huge step, but it is an additional step in the process, takes a little time. We're working through that for essentially all of the clinical trial patients, in markets where we can transition them.

Okay. That's helpful. Thank you.

And then, I think you touched on it quickly in your prepared remarks. Any additional detail you can give us on the early feedback from payers with the launch of Vimizim?

So the best early feedback from payers right now is in the United States, where we have had a couple of months on the market. So far, there are no surprises relative to our expectations in the United States. The United States generally being what we think is a favorable, and a relatively fast market to get reimbursement.

We have taken the steps that we intend to do of providing payer education, meeting live to present both Morquio A and Vimizim to the big commercial and government payers. The payers that have published coverage criteria so far have done so according to our label, no surprise. Most patients require a prior authorization, no surprise.

Patients that we have submitted for reimbursement where there hasn't been a coverage determination issued, we have the ability to work those patients through on an individual basis, and we're doing that. In the EU, our team is -- with a new approval in hand, our team is busy scheduling meetings with payers, and doing the things that we need to do to get those reimbursements system processes going. We've actually been busy over the preceding months preparing those processes.

That's helpful. Thank you.

Chris Raymond, Robert Baird.

I want to make sure I understood your answer to Phil's question, Hank. So can you just clarify? Did the 301 study hit in its primary endpoint?

The 301 study primarily was a safety study, to characterize the safety of dose escalation. I think what you are maybe getting at is why the change?

I guess the question is, did it show us that sig Phe reduction?

I'm not going to comment on the magnitude of the Phe reduction observed in 301. What I will affirm, that Phil commented on, that I did affirm and will repeat is that we are reasonably confident we're going to hit a significant reduction in blood Phe. What we are aiming to do here is to increase the likelihood of hitting neurocog, by increasing the magnitude of Phe reduction even further.

Okay. And, just by my math, and just looking at the upsizing of the enrollment, it sounds like it is roughly 40 more patients, if I have got that right. Can you talk -- is that the largest component of the delay, of the one-year delay, or is there some other driver there that we should be thinking about?

Far be it from me to correct your math, but I think it is a few more patients than that. But that is only one of the components of the delay. Because the study, the feeder study had already met its eligibility criteria, it's enrollment criteria, we have to reactivate it at sites.

Because this represents a change that is important to the design of the pivotal trial, we want to make sure that we give the FDA a chance to see and react to it. We're talking to you all relatively early in the cycle, because once we reach the decision to change the design of the trial and incur a timeline delay, we felt that was important for you all to know that. There is still a little bit of work to do, to figure out exactly when things are going to happen. Our best estimate, as we sit here today is that will have data 4Q 2015.

Okay, and if I can sneak one Vimizim question in. I think I've heard you say in the past that Brazil and Turkey will allow traditionally named patient sales after US approval. But I think I heard you say that 50 paying patients are from US, Argentina, and France. Can you maybe give some color on what is happening in Brazil and Turkey?

Happy to, and you got that right. The 50 patients are from the US, France, and Argentina, presently. It is possible to get named patient sales going in Turkey, Brazil, also Colombia and Middle Eastern countries.

With a US approval, we have been busy getting that process started. That process takes a little time to work through.

So patients -- initial patients need to get through -- get into the system, as that system exists in each of those countries. And then it takes a little while -- I am very confident that by the end of Q2, we will be reporting sales from a number of those named patient sales markets. They just had not hit yet by the date that we were reporting commercial patients yesterday.

Thank you.

Navdeep Singh, Goldman Sachs

Just a few questions on PEG-PAL, and one on Vimizim. Making sure that the FDA didn't require this amendment to the PEG-PAL study? Is there any safety issues, red ink?

I'm sorry, Navdeep, you cut out in the middle of the question. Could you get me that again?

I was making sure that the FDA didn't required this amendment to the PEG-PAL study?

No, we are initiating it.

And can you discuss how strong the immune reactions were in the one third of patients?

Well, the way I would characterize the overall immunogenicity of PEG-PAL, and the clinical sequelae of it, is to say that like with our recombinant human-derived products, you can detect antibody in everybody. And like with our recombinant derived human products, PEG-PAL elicits hypersensitivity-type reactions in under 10% of patients, using the most modern criteria that are applied nowadays.

A pretty sensitive criteria for the occurrence of hypersensitivity reactions. We went through that carefully at the Vimizim Ad Com.

The fact that the hypersensitivity rate is comparable for the PEG-PAL, as it is for recombinant human GALNS, Vimizim is actually an amazing accomplishment, because we essentially turned a bacterial protein into having the tolerability profile of a human protein. The majority of these events are, like with the recombinant human proteins, enzyme replacement therapy. They are self-limited, generally mild to moderate in severity, the majority -- the very large majority of patients can resume therapy.

A few patients have one or two or three recurrences of their hypersensitivity symptoms, but the majority of patients can resume therapy. Only very few patients are interrupting therapy substantially, as a consequence of these hypersensitivity reactions. And so overall, that is a picture that is pretty darned impressive in terms of having turned what is fundamentally a bacterial or foreign protein given chronically, into something that looks like our chronic enzyme replacement therapy.

That is super helpful. On path to FDA approval of PEG-PAL, has that changed? I was previously under the notion that you could get accelerated approval for PEG-PAL on Phe reduction, and now that doesn't seem to be on the table. Is FDA not requiring you to have to show neurocognitive benefit for FDA approval?

No, I apologize if I confused that. No. Let me state it very clearly. Everything that we know says that accelerated approval is still a very viable option for PEG-PAL. The new meta-analysis results that I'm reporting to you are substantiating the underlying belief that we have, and that the FDA would have to have.

That is to say that blood Phe is a reliable marker of poor outcome in patients. So no we're not changing -- there is no news today about a change in the FDA's stance, as it pertains to approvability of the drug on the basis of Phe alone. And our belief that we actually have fortified our case for accelerated approval it comes to that.

The reason to push harder to enrich the study, to take a year's delay, to increase the likelihood of hitting neurocog, is because it's just better to have it in the product's label from the get-go, if we can achieve that in the product's label from the get-go. You can tell, doctors from an academic perspective, they get it. They understand that this relationship between blood Phe and poor outcome, it's primarily so that when doctors and patients are applying to their payers, the evidence is powerful. We are trying eliminate any and all assistance for the adoption and utilization of PEG-PAL for the appropriate patient.

Thanks, Hank. And then just a quick one on Vimizim. Jeff, how long is it taking to convert a patient from a clinical trial onto commercial Vimizim? Thanks.

Variable. Our experience so far is in the United States. As I mentioned previously, one of the gating factors is scheduling and then conducting an end-of-study visit, which includes a pretty robust set of assessments. Those assessments are going to be very important when we get around to analyzing longer-term outcomes from this study.

So, that is the biggest gating factor. We have got a lot of patients from the clinical trials in the United States that have already been through that assessment, and a number of them have already progressed to commercial therapy. I'm better than pleased with the progress that we're making, we're working through all of these patients one at a time, which was exactly our expectation.

Okay. Thanks Jeff.

Yaron Werber, Citi.

This is Chris in for Yaron. Can you speak a little bit more about the gating elements are for reimbursement in Europe?

And then on the PEG-PAL studies, can you just confirm that there were no changes to the endpoints in the Phase III study due to what you are changing today? And also for the parallel study, is that endpoint going to be the same as well? Thank you.

This is Jeff. I will field the gating factors for reimbursement in Europe question first. As we have discussed on a number of occasions, the reimbursement environment in Europe is heterogeneous.

There is essentially a different system in each of the EU markets. They are all different, they all have different timing, they all have different points of emphasis. In each of those countries, we have to go through a parallel process of working through that market's reimbursement system.

I tried to give a couple of highlights in the discussion today about how things work. I mentioned that in France we have got essentially the fast start being approved through the ATU system, which allows us to start naive to treatment. But not clinical trial transition patients, while we work through the formal reimbursement system.

In Germany, as I mentioned previously, Vimizim is expected to have sales of less than EUR50 million per year in Germany. That allows us to establish a list price and essentially begin treating naive patients, and clinical trial transition patients fairly immediately after we do that. In parallel then, we will have to go through the formal price and reimbursement negotiations with GBA, and that will last somewhere between nine months and a year.

In the UK we're going to have to go through a NICE appraisal, and for these types of products, there is now not very much evidence of how that works, what the criteria are that NICE uses, and how long this takes. But there is a path. So we will go down that NICE pathway with Vimizim.

In parallel, there is the possibility, not the guarantee, but the possibility of getting a temporary funding commissioned by the National Health Service or NHS, and we are in process now of pursuing that. It is not easy to tell how much time that's going to take, so those are just some examples from the few biggest markets in the EU.

And then as far as the changes to the PEG-PAL program, none of the things that we're making necessitate changes in the endpoint of either study. The outcome measures for both studies will remain the same

Thank you.

Ying Huang, Barclays

It's actually Catherine for Ying today. A couple of questions, one on Vimizim. I think you mentioned over 70 patients are seeking therapy in Latin America.

And then the first patient should start, starting in 2Q. I think we talked before that the full-year guidance doesn't actually include any meaningful revenues in these regions. Can you walk us through how we should think about the add to the guidance for the full year?

And then also, when do you expect to get approval in some of these other countries that we've submitted for like Brazil, Mexico, Canada, Japan?

And also, one on PARP inhibitors, actually. Some of the other developers are using combinations. Do you have any plans to combine BMN 673 with another agent?

And also anything about any other indications? Thank you.

So we will take those in pieces. This is Dan, on the guidance. To be honest, I am not sure where your confusion or where the misunderstanding came from.

The $60 million to $70 million and the 350 patients has always been guided to as a worldwide revenue and patients number. While the United States is the first country being launched and is an important part of it, and likely disproportionate in 2014 than full over time. These revenue numbers assume material patients on therapy in the United States, Europe, and in our various other markets. No change to guidance.

Part two of the question was approval timing, and so we have been reporting that we've got registrations filed in a number of international markets. And we will be disclosing over time when we get those registrations, and that allows us to go commercial in those countries. A reminder that we're talking about Canada, Australia, Mexico, Brazil, and Japan.

What I would say is that minor impact from those markets for revenue in 2014, except for Brazil, where we think we will be able to get started early with named patient sales. And we will keep you apprised of registrations, as we receive them.

As far as the PARP inhibitor, we do have some plans to enter Phase I combination studies. Those will be principally conducted by academic colleagues. We do note that other companies are undertaking studies in combinations.

Combinations with PARP inhibitors are difficult, and so we have prioritized instead focusing on monotherapy indications. Which is not to say that we're not interested in combinations, it's to say that we are prioritizing our monotherapy indications. Specifically, we have a Phase III program in metastatic germline BRCA-immune breast cancer that we're actively enrolling. And we were the first company to initiate a randomized Phase III trial of a PARP inhibitor as monotherapy in breast cancer.

Other indications that we are exploring, as you know, we talked about having response activity in small cell lung cancer. Look for an update on progress against that target in the ASCO time frame. We also have indicated that we want to evaluate the possibility of treating patients with germline BRCA-immune breast cancer earlier than when the disease is metastatic. So look for study starts to occur in the neoadjuvant setting.

And finally, we have identified the possibility of finding patients with other DNA repair deficiencies states as potential patients that are amenable to 673 therapy. So look forward to a start of a monotherapy study in patients with DNA repair deficiencies. Those would be the additional activities that will unfold over the next weeks to months in the 673 space.

Great. Thank you.

Lee Kalowski, Credit Suisse.

So maybe just first a quick question on Vimizim, as we think about the US uptake. Just as far as the BPPS that you said in the press release, I'm wondering about how we should be thinking about those 120 patients. Would they not be relatively rapidly going on to therapy? And is there any reason why, given the lack of alternatives, the BPPS patient might abandon and not go on therapy?

And then just a quick question on the base business, as far as Naglazyme is concerned, it looked like a pretty strong quarter. How should we be thinking about that through the remainder of the year? I think you previously guided for $290 million to $310 million. Is that still how we should be thinking about it?

Yes so I will field the Naglazyme question first. As Dan stated, no change to the guidance on revenue.

I would state that Naglazyme increasing sales are consistent with the kind of year-to-year patient growth we have been experiencing, which is encouraging steady patient growth. And we had strong order patterns across the board from different markets in the United States, I'm sorry, in international markets. Other than that, nothing remarkable about Naglazyme, just another good strong quarter for Naglazyme.

With respect to the United States, you asked about the timing and conversion rates of patients enrolled in the BPPS. We announced that we have got in excess of 120 patients in that channel, some of which have already progressed to commercial therapy, and are represented in that total number of 50 on commercial therapy.

There is variable timing in the United States, because essentially every different patient has a different payer, and we have to deal with each payer separately. As I've guided before, some of these payers issue and approval and timing of days to a couple of weeks. Other payers will take months to get through their hurdles, and questions, and issues. Although in the United States, we're pretty confident that we will get through those hurdles and issues with just about every patient.

In terms of conversion rate, I would qualitatively call it very high. Once we get patients in the BPPS system, our conversion rate is extremely high. We don't tend to lose them.

Okay. Thank you.

Joseph Schwartz, Leerink Partners.

A lot of my questions have been asked, but I was curious if you could tell us how the 302 study for PEG-PAL is powered on a neurocognitive benefit? Does that change at all with the proposed changes? Thanks.

There is no change in the endpoint or the analysis strategy. What I will say here is not we have designed the analysis to be hierarchical, meaning that we analyze Phe first, because that is the endpoint that's going to support accelerated approval. If that is successful, then we analyze for neurocognition. As I said before, we think it is highly likely that we're going to hit the blood phenylalanine endpoint in the randomized trial.

As far as what we're looking for, I don't have the exact specific details. But what we have observed previously is that in patients with medically-significant inattentiveness treated with Kuvan, we observe about the same effect as that observed, that's caused by drugs used to treat inattentiveness in patients without PKU, in other words, in patients with ADHD syndrome.

That is the basis of the powering, essentially. I don't have the exact specific numbers with me.

Okay. And then can you give us any color on the types of patients that are signing up on BPPS? Are these patients noteworthy in terms of any characteristics such as age, or weight, or anything like that?

Sure. A lot of these patients are coming straight out of the clinical studies and the early access programs. They are characteristic of the adults and pediatric patients in those programs, respectively. Otherwise, I think we've set expectations previously that we expect the early patient referrals to be tilted towards pediatric patients, and so far, we think we're seeing that.

Okay. Thank you.

Brian Abrahams, Wells Fargo

This is Shin calling in for Brian. I have a couple of questions on BMN 673 related to the previous question. You have a collaboration with Myriad to develop the next generation companion diagnostics beyond BRCA.

I was wondering if you could give us an update on the timeline for such diagnostics entering the clinic, and how you plan to incorporate that into your currently ongoing or planned clinical trials. And what the regulatory path might look like, as a follow-on to BRCA studies.

Generally I don't think we have given the specific date for the anticipated start, of the clinical trial. As far as the regulatory path, our working belief is that it would end up being a companion diagnostic in the US, like other companion diagnostics. That is to say, it has to come out of a PMA certified lab.

As you know, Myriad has now initiated that process to become a codiagnostic for BRCA testing. In the DNA repair deficiency diagnostic setting, we're working with a company, who are gathering the experience on how to get a companion diagnostic approved, in the context of a drug. So we're leveraging that experience in the HRD space.

We don't plan to incorporate the test into the ongoing trials, because the ongoing trials pertain to patients with no mutations and DNA repair BRCA mutation. We would apply it to the future trials, and again as I said, we haven't pinned down a specific start date for that. Although it is our next -- one of our next priority studies to begin.

Okay. Another follow-up question related to the previous question, is the competition therapy with 673 you have mentioned the combo therapy with chemo agents like taxane and carboplatin. I was wondering if there was a good scientific basis for combining 673 with targeted therapies like TI3 kinase inhibitors.

Sure. There is a lot of rationale and there have been both pre-clinical studies, and there's an ongoing clinical study of the combination of a PARP inhibitor and a TI3 kinase inhibitor ongoing, and we evaluate that. And keep an eye on that.

As I said before, our focus is more on the registration enabling pathways, because those are going to be ones that drive initial market adoption and utilization. But the rest of the program does have other elements including combinations, combinations with chemotherapy as well as combination with novel targeted agents, as well.

Thank you very much.

Stephen Willey, Stifel.

A quick question on Battens, actually. I'm wondering I know that you treat patients with the top dose, and I think you have alluded to the rapidity of response in the animal models. Wondering if you are seeing anything at this point that would maybe inform you as to whether or not you believe this may have some kind of registrational capacity?

As you know, the trial is an open label trial, and yes, we have indicated that we are dosing it at top dose levels now. You know that it is a rapidly-progressive disease.

We have commented that our interactions with health authorities have given us reason to believe that should the results warrant, that this single trial could serve the purpose of Phase I, Phase II, and Phase III all at once. We haven't given any specificity around what we would have to show to achieve that outcome, but at least, it is plausible in the first instance to talk about this trial as supporting registration.

As to be part of your question that pertained to what are we seeing so far, what I want to say about that is this trial is an ongoing trial, and I would be very reluctant to talk about preliminary data. Just to remind you, these are very sick children, and their families are dealing with a lot. The last thing they need to be dealing with is a bunch of rumor and preliminary interim unpolished results. So we're going to be very careful about keeping the data confidential, until it is ready to be talked about in a more formal way.

Okay, thanks.

Matt Roden, UBS.

This is actually Andrew Peters in for Matt. Just a first one on Vimizim. Of the 70 patients that are seeking treatment in Latin America, do you have a break out of a country by country basis, and is there any difference in the reimbursement process in any of those countries?

And then just one for Hank on 673. Has the enrollment been consistent with your expectations? Has it been faster or slower, given the relative infrequency of the mutation? Thanks.

Okay, so first on Latin America and the demand for Vimizim through named patient channels, as indicated by numbers of prescriptions written. No, we don't break out country by country, but we'll note that all of the countries that we were expecting to be represented, that means Brazil, Colombia, and Argentina -- actually are. Each of those countries has a different system that needs to be worked through by those patients and their physicians and patient advocates, for them to get access to Vimizim.

As I mentioned earlier, in a broader sense, it takes a while for those patients to first get into that system and then make it out the other end with a payer that is willing to come to BioMarin and purchase Vimizim. I will note that we reported that of the 50 patients on therapy, Argentina is represented in that group. So that is an indication that the first of their named patients have made it through the end of that process, as of the end of April. I also mentioned that I'm pretty confident that we will be naming other countries when we get back together again, next quarter.

It's JJ. I would just add that we have great experience with Naglazyme in those countries, which is going to be very helpful in dealing with patients on reimbursed therapy. We don't anticipate that there will be any significant differences here between Vimizim and Naglazyme in those countries.

On the enrollment issue, on the enrollment question what I want to say is things are about as expected. Trials always finish faster than they start, and we're in no different situation.

One of the things I did want to comment about though, because you asked about the rarity of the tumor. I think it's kind of a sweet spot question for BioMarin, because we're quite accustomed to working in the rare disease setting and providing all the support that is needed.

One of the particular challenges with this tumor -- with this indication in this tumor is that although there are guidelines for BRCA testing around the world, there is not general adoption utilization reimbursement for BRCA testing. We certainly bring a willingness to bring that to the equation. One of the questions that has gotten raised is how do we deal with, when we identify a potentially eligible trial patient, with the fact that we're also making a diagnosis, not for the patient but for the family.

And so one of the things that has occurred to me is that we as a company are actually quite uniquely well-suited to be the partner of preference for these kinds of patients, because we are in the business of genetic diseases. And I think that is something that when we work with our clinical investigators, they appreciate about working with us very much. We bring a lot of knowledge about finding rare diseases and dealing with families who have gotten a potentially bad diagnosis in their germline DNA.

To recap, starting as we expected, which is slower than it will finish. We're overcoming some of the challenges of the rare disease setting, and the fact that we are BioMarin gives us a competitive advantage in that regard.

Great. That is very helpful. I appreciate it.

Josh Schimmer, Piper Jaffray.

Hank, is there any chance that we'll get any interim data from the 111 study before the second quarter of next year?

Yes. There is any chance.

As you know, we've said, we plan to -- I was practicing my one-word answer. We said we would enroll during the year, we said to about a six-month endpoint. So we're guiding to the middle of next year.

If you go faster if we see efficacy faster or lower dose cohorts. But it could also go slower, if the predictions from animals are off. And so we're still on track thinking that we will finish enrollment by the end of the year and guide to data in the middle of next year.

It is one of our most exciting programs. Achondroplastic dwarfism is not just a problem of stature, it's also fairly medically significant complications. And so, as with our other programs, we are really keen to make a difference in this condition, as well.

Great. Thanks very much.

Ian Somaiya, Nomura.

I wanted to start off with a congratulations. Great start to the new year.

On PEG-PAL, I was hoping to get the impact -- commercial impact of the changes to the enrollment criteria in the 302 study. Are we to now expect that a third of patient population will be no longer eligible for the drug? I just want to make sure that is not the case.

I want to remind you that in the rare orphan disease space, it's not generally the practice to literally label a product according to the eligibility of the one pivotal clinical trial. So for example, the Morquio trial that we just got registration for Vimizim on the basis of worldwide, excluded patients who couldn't walk 50 meters, excluded patients who could walk further than 325 meters. And there is no place between the US and Europe where the product label specifically excludes the use of product there.

The way we handle that typically is by the conduct of ancillary clinical trials, to support the widest possible labeling and the broadest possible adoption. I mentioned that the patients who don't fit neatly into the randomized bucket, we'll continue to gather safety and efficacy data in those patients, in studies conducted in parallel.

Obviously, we haven't had the discussion with the FDA yet about the design change. And of course, this is subject to final decision making at the time of labeling. I think it is a reasonable expectation to have that we will figure out a way to make the product available to all patients with phenylketonuria

I guess in your opinion there is no downside to making these changes except for the one year lost in terms of development times?

That is essentially the trade-off. Take a year longer, but increase the odds of getting the neurocognitive outcomes. Again, not so much for initial registration, as much as definitive registration, ultimately adoption.

Okay, and can we talk about that a little bit. What the impact of the neurocognitive benefit would be on adoption, and potentially even on a pricing standpoint?

Maybe I will start, and if Jeff or JJ want to make a comment, but as I said, most clinicians already get the connection. It's not as if they require substantial amount of proof.

Most patients experience the benefit, but the thing that today's patients are most focused on is not having to be told that they need to be taking medical food. Their principal, the patient's principal benefit will be perceived in being allowed to use PEG-PAL and not having to be reminded about the need for medical food intake.

I think that is a compelling value proposition right there. I don't know if Jeff or JJ want to add about the next levels of utility of neurocognitive data.

The neurocognitive data, as Hank mentioned before, will be really important in working through payers for reimbursement. We have already demonstrated with Kuvan that we can get reimbursement for PKU without having that demonstrated neurocognitive benefit on the label. But having the prospect of having that on the label would really make it faster and easier with payers.

The other thing that I'm extremely interested in, with respect to PEG-PAL, is the roughly 50% of PKU patients that aren't being treated in a clinic today. And those are almost entirely adult patients that aren't in a PKU clinic, because they don't see any value in going to a PKU clinic and actively treating their PKU. If we could -- if we had the tool available to reach out to those patients and say, we not only have a Phe lowering therapy, but that the Phe lowering therapy will give you a neurocognitive benefit. I believe we have the powerful draw to start recovering some of that heretofore lost opportunity in the United States.

This is JJ. On the other question on pricing, obviously it's premature to talk about pricing here. But should we demonstrate the neurocognitive benefit in addition to the Phe lowering benefit, that can only be good for pricing

If I could just ask one last question on Vimizim. Related to the BPPS, what portion of patients fail to get into it, and what are the typical reasons why the patient would not make it into the BPPS?

Patients need to make, and the clinics that treat them need to make an affirmative decision to be treated with, in this case Vimizim, but it could also be Naglazyme or Kuvan in the United States. And with a prescription for one of our drugs, that prescription gets sent into BPPS, and that starts the enrollment process.

Essentially, patients need to make an affirmative decision that they want to be treated, their clinics need to agree with that, write a prescription and send it in. With respect to Naglazyme, we are highly, highly penetrated of the known patient population in the United States. I would expect that we will be so with Vimizim, also.

Okay. Thank you very much.

Thank you, and at this time, I would like to turn the call over to Mr. Bienaime for closing remarks.

Thank you. Let me summarize that we're managing BioMarin for the long term.

Our fundamentals today are as true as they have ever been for the Company. We are extremely pleased with the pace of the US launch of Vimizim, and we do expect the EU launch to be just as strong.

Total BioMarin revenues delivered strong growth in the quarter, increasing nearly 20% compared with the first quarter of last year. We expect to be at the high-end of our revenue guidance for the full-year, so we believe that newly enriched PEG-PAL Phase III program will provide the results needed to pursue full approval with both a significant reduction in blood Phe levels, and an associated neurocognitive benefit.

Between now and the end of the year, we expect to have pivotal clinical data on three programs -- the end of next year, sorry. PEG-PAL for PKU, BMN 701 for Pompe, and BMN 190 for Batten disease. In addition, we expect to have proof of concept also by the end of next year in patients for BMN 111 for achondroplasia, to complete enrollment in the BMN 673 in BRCA-immune breast cancer, and to file IND technical work in Sanfilippo syndrome and hemophilia A gene therapy programs.

We expect our approved products to achieve over $1 billion in revenues over the next few years, driving us to profitability and beyond. Thank you for your continued support and for joining us on today's call. Goodbye.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.