BioMarin Pharmaceutical Inc (BMRN) 2014 Q4 法說會逐字稿

Good evening, ladies and gentlemen, and welcome to the BioMarin Pharmaceuticals, Inc. conference call to discuss fourth-quarter and full-year 2014 financial results. At this time, all participants are in a listen-only mode. Following the prepared comments, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded.

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

Thank you, operator. Here today from BioMarin's management team are JJ Bienaime, Chief Executive Officer; Dan Spiegelman, Chief Financial Officer; Hank Fuchs, Chief Medical Officer; Jeff Ager, Chief Commercial Officer, and Robert Baffi, Executive Vice President of Technical Operations.

To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceuticals, 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 authority, 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, 10K, and 8-K reports.

Now I would like to turn the call over to BioMarin's CEO, JJ Bienaime.

Thank you, Tracy. Good afternoon, and thank you for joining us on today's call. In 2014, BioMarin delivered $751 million in total revenues, which represents 37% total revenue growth year over year. driven in part by the exceptionally successful launch of our newest commercial product, Vimizim for treatment of NPS(4), or molecule A syndrome.

In addition, we advanced all of our clinical development programs. And as a result of our acquisitions of Prosensa, we added multiple new potential products to our portfolio for the treatment of patients with Duchenne muscular dystrophy.

So 2014 was by far our most productive year to date. And we begin 2015 well positioned to achieve a new set of significant regulatory, clinical and commercial milestones.

Hank will discuss our full slate of regulatory objectives for 2015, but I want to highlight our latest stage product, drisapersen, for the treatment of 13% of the Duchenne muscular dystrophy's patient population, or about 10,000 patients. Drisapersen is currently under rolling submission with the FDA, and we are on track to submit the last module of the new drug application to the FDA by the end of April.

In addition, we expect to submit an application to the European Medicines Agency this summer. And with the near-term approval of drisapersen in either the US or Europe, we believe that we will reach profitability on a non-GAAP basis in 2017 and drive to further substantial profitability in the years after that.

We continue to be optimistic that there is a potential pathway to near-term approval for drisapersen, based on a number of factors. Some of the key factors are the urgent need for an approved treatment for boys with Duchenne muscular dystrophy. The totality of our comprehensive data set of over 300 patients treated with drisapersen around the world and specifically the data that spans more than three years from pre-placebo-controlled trials and two long-term open-label trials.

Importantly, BioMarin has a track record of getting approval of orphan drugs based on a mixed data set and even mixed primary endpoints, as evidenced by our product Aldruazyme. Our experience is consistent with FDA's record, having approved 90 non-cancer orphan drugs without conventional evidence, including many that have missed their primary endpoints. We are encouraged by the interactions we have had with the agency over the past few weeks, and we look forward to a potential advisory committee meeting later on this year.

On the commercial front, Jeff's team did an exceptional job in 2014 launching Vimizim, driving first-year product revenue to over $77 million. Moreover, we generated $751 million in total BioMarin revenue. And looking forward to 2015, we expect Vimizim revenues to continue growing as it penetrates more of the over 650 patients we have already identified.

As Dan will describe more fully, we expect total BioMarin revenues to grow to $840 million to $870 million in 2015, although it is important to note that this guidance is based on current exchange rates and that demand is growing such that we would have been expecting $885 million to $915 million in total revenues for 2015 based on last year's exchange rates.

In conclusion, we enter 2015 with a strong balance sheet, a portfolio of 5 marketed products, and a pipeline of 10 clinical and pre-clinical programs from which we expect a number of milestones and (inaudible) readouts during the coming year. In the very near term, we expect to complete the ruling NDA for approval of drisapersen in the US for treatment of patients with muscular dystrophy; and shortly thereafter, submission of the marketing authorization application for conditional approval of drisapersen with the European Medicines Agency.

We believe near-term approval of drisapersen in either of these regions will drive us to profitability on an non-GAAP basis in 2017.

(inaudible) our accomplishments in 2014 have set the stage for a very productive year, both in terms of commercial success and (inaudible) and regulatory milestones. We look forward to keeping you apprised of these important events throughout the year.

And now Dan will discuss the 2014 quarterly and full-year financial results in more detail as well as provide our financial guidance for 2015. Dan?

Thanks, JJ. Earlier today, we issued a press release summarizing our financial results for the fourth quarter and the full year 2014, and I refer you to that release for full details. Today, I will discuss the results of the quarter and full year, provide guidance for 2015, and also provide some thoughts on a longer-term vision of our next move into operating profitability and accelerating revenue growth.

I am pleased to say that financial results for 2014 met or exceeded our financial goals for the year. In Q4, we saw solid revenue growth in all of our major products. As a result, total BioMarin revenue in Q4 increased 57% year on year to $230.9 million. In the fourth quarter, Vimizim delivered $36.9 million, and KUVAN grew 27% year over year to $57.4 million. [Navizon] revenue Naglazyme revenue increased 29% year over year to $88.5 million, and quarterly revenue driven in part by large orders placed (inaudible) governmental agencies in Latin America.

As a result of each product in the portfolio turning in above expectations Q4 sales, total 2014 BioMarin revenues increased to $751 million, growing 37% compared to 2013 and exceeding the high end of previously provided guidance range by over $40 million.

With Q4 and full-year revenues exceeding plan and total operating expenses coming in line with our expense guidance, we reported a full-year non-GAAP net loss of $25.9 million, compared to our most recent target for the year of $50 million to $65 million loss. We also reported $134 million GAAP net loss for the year.

It is worth noting that our near-breakeven operating result for 2014 is a key reason why cash balances at the end of the year 2014 being essentially unchanged at $1 billion from cash balances at the end of Q4 2013.

I would now like to turn to 2015 financial guidance. As JJ already indicated, we expect 2015 total BioMarin revenue to be in a range of $840 million to $870 million. I note that this 2015 revenue forecast assumes that key currencies remain at the current exchange rate throughout the year. On a constant currency basis, without the impact of recent substantial dollars strengthening, our total BioMarin revenue forecast in 2015 would have been approximately $45 million higher, or between $885 million and $915 million.

Please note that due to our hedging program and natural foreign-currency expense offsets, although roughly 50% of our revenues are transacted in foreign currencies, the bottom-line impact of the substantial currency move we have just experienced is less than $20 million.

In terms of revenue guidance on an individual product basis, we expect strong revenue growth in Vimizim as we penetrate more markets, and a cheap reimbursement in additional markets, and continued steady growth in patients on therapy in our more mature products. For Vimizim, in its first calendar year of sales, revenues for 2015 are expected in a range of $170 million to $200 million based on current exchange rates. On a constant currency basis, our guidance for Vimizim would have been $185 million to $215 million. Naglazyme revenues for 2015 are projected to be between $315 million and $340 million. Though, on a constant currency basis our guidance would have been $335 million to $360 million, reflecting the continued growth in patients even as Naglazyme enters its 10th year on the market.

KUVAN, which had an excellent year in 2014 with over 21% year-over-year revenue growth, is expected to continue expanding into new patients and continue growing, though at a somewhat more modest pace. For 2015, we expect KUVAN revenues of between $210 million and $230 million, or 8% growth over 2014 at the midpoint of this range.

Turning now to operating expenses, 2015 SG&A expenses are expected to be in the range of $360 million to $395 million, with the majority of the increase due to expansion into additional markets for Vimizim, expenses associated with servicing more patients in all of our programs -- Vimizim and Naglazyme and KUVAN -- and, finally, preparation for potential launch of drisapersen and the integration of Prosensa into our operations.

In 2015, R&D expenses are expected to be in the range of $610 million to $640 million, including drisapersen and the Prosensa integration. In total, roughly 75% of total R&D is invested in clinical programs, with the balance invested in supporting our commercial products and, to a lesser extent, pre-clinical and early-stage research.

Looking beyond 2015 with revenues for our programs accelerating, we expect that R&D as a percent of revenues will decrease next year and in the years beyond that.

In terms of projected bottom-line results, in 2015, as we seek approval for drisapersen and progress across our clinical pipeline, we expect that our operating loss, as measured by non-GAAP, will expand to a net loss of between $130 million to $170 million. Non-cash stock compensation expense and interest expense -- as well as other tax, depreciation, and amortization accounting charges of approximately $230 million -- results in GAAP loss guidance of between $360 million to $400 million. Included in the projected 2015 GAAP-only expense is approximately $70 million in contingent consideration expense associated with the continued -- contingent value rights granted to former Prosensa shareholders.

Looking beyond 2015, we believe that the near-term approval of drisapersen in either the US or Europe will take us to non-GAAP profitability in 2017. Moreover, growth in revenues and operating results are expected to accelerate substantially after 2017 if an early approval is achieved and even more so if PEG-PAL and BMN 190 are able to make it to market after completing their current studies in Q1 2016 and Q4 2015, respectively.

In summary, 2014 produced solid financial results with revenues of $751 million and a non-GAAP net loss of $25.9 million. 2015 will be a year of continued revenue growth, particularly for Vimizim. And with the potential drisapersen early approval, a move into operating profitability is expected in 2017, with growing profits after that.

Now I would like to turn the call over to Jeff to provide an update on our commercial products and more on 2015 expectations.

Thank you, Dan. We were extremely pleased with the execution of the Vimizim commercial launch in 2014 and the resulting sales of $77.3 million since approval in the US last February and in the EU last April. Sales were recorded in 19 countries at the end of the fourth quarter, and Vimizim commercialization continues to proceed at the high end of our expectations. A substantial portion of clinical trial and EAP patients have successfully been converted to commercial product. Physician and patient acceptance of the only therapy to treat Morquio A has been strong, and we expect this fact to be an important driver of success going forward.

Finally, we have continued to identify additional Morquio A patients, effectively expanding the available market.

Looking forward to 2015, we expect further progress as the global commercialization of Vimizim proceeds. Specifically, we expect to further build out established markets and continue opening new markets to Vimizim each quarter. We are confident in our ability to maintain Vimizim's current price quarter in both new and existing markets and have important work to conclude negotiating final price in markets such as France, Germany, and Italy. New registrations and the conclusion of price and reimbursement processes in certain countries will allow us to make further progress converting clinical trial patients to commercial. In short, the commercial opportunity for Vimizim this year is high, and we expect continued success in year two of the global launch of Vimizim.

Now turning to our base commercial products, starting with Naglazyme, continued sustainable growth in patient numbers and significant orders from Brazil drove a 23% increase in sales year over year to $334.4 million in 2014. The unpredictability of ordering patterns in this region is expected to result in lumpiness in 2015, a dynamic that has existed since Naglazyme was launched nine years ago. Of all our power products, Naglazyme has the largest exposure to foreign exchange fluctuations, which impacted 2015 full-year guidance previously provided by Dan. However, it is important to remember that patient growth continues. The base of patients on Naglazyme remains impressively compliant and persistent, so the underlying strength of the business is intact.

In May of this year, we will celebrate the 10th anniversary of Naglazyme's first approval in the US. We are delighted with the commercial progress this brand continues to make in a mature part of its lifecycle, and believe Naglazyme serves as an example of the opportunities over time associated with innovative therapies that treat chronic and rare diseases. BioMarin has also conducted important work to characterize the natural history of this devastating disease, which has, in turn, helped reshape the standard of care for MPS 6.

Earlier this month, BioMarin sponsored a symposium at the 11th Annual World Symposium, titled Emerging Issues in MPS Management of Adult Patients, which is representative of this work. Physicians treating MPS are coming to terms with the challenges of treating adult patients that desire a high quality of life, the normal experiences of being an adult, including college, a career, and, in some cases, a family. As we know from the original MPS VI natural history study conducted in 2003, patients with the rapidly progressing form of MPS VI, at that time, were not likely to live into their 20s.

Turning to KUVAN, revenue growth of 21% to $203 million for the full year 2014 was exceptionally strong. Continued sustainable growth in patients, coupled with high rates of compliance and persistence, drove increased demand in 2014. Favorable market conditions for KUVAN in 2014 are expected to apply also this year. These include a revised label, the availability of a powder for oral solution formulation, and professional PKU treatment guidelines favorable to KUVAN. We believe that increased utilization of KUVAN in pediatric patients last year is attributable to the combined effect of the introduction of 100-milligram KUVAN powder, coupled with the revised label, noting that pediatric patients from one month were studied in clinical trials.

Additionally, we believe that increased utilization of KUVAN in adolescents and adults is attributable to the combined effect of ACMG PKU treatment guidelines published January of 2014, coupled with case management services and patient education provided by BioMarin. For KUVAN in 2015, we expect continued steady growth but at a slower pace than last year.

In closing, the commercial team delivered outstanding results in 2014. Fourth-quarter results drove revenue exceeding our full-year expectations by more than $40 million. 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 commercial launch has met the high end of our expectations to date, and we look forward to continuing our commercial efforts in the US, EU, and other international markets. For 2015, the commercial teams will focus on driving market penetration of Vimizim in substantially all marketed regions and continuing to deliver revenue growth across our commercial portfolio.

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

Thank you, Jeff. Our development and regulatory teams are working tirelessly to integrate Prosensa employees and clinical assets into the BioMarin organization. The commitment that our new colleagues have demonstrated preparing the last module of the NDA for submission within a few weeks of its original timeline and at the highest quality has exceeded my expectations.

We have been very encouraged by our recent interactions with the Food and Drug Administration and believe that there is an opportunity for near-term approval of drisapersen for the treatment of Duchenne muscular dystrophy. We believe drisapersen is potentially an effective treatment for boys with DMD because the totality of data suggests that drisapersen has a very clinically meaningful affect on these patients as measured by the primary endpoint six-minute walk test. Drisapersen has the largest set of clinical data of the products in development and we believe we will be the first to be submitted for approval and potentially the first to market in the United States and in Europe. We have data from three placebo-controlled trials and two long-term open-label trials. Over 300 patients have been treated with drisapersen, with less than 1% discontinuation rates in the randomized phase of the studies and less than 3% discontinuation if you look at all of the extensions. Drisapersen is the only Duchenne muscular dystrophy product in development that has been granted breakthrough therapy designation and fast-tracked designations with the Food and Drug Administration.

Most importantly, there is an urgent need for an approved therapy to treat boys with Duchenne muscular dystrophy. As we have stated previously, we believe the equivocal results of the phase 3 study can be understood in context, especially considering the efficacy data from prior trials. We believe we can demonstrate that, while the complete data set is for drisapersen is not perfect, it is sufficient to yield support for a near-term approval.

As JJ mentioned, we are cautiously optimistic that we are on a pathway based on a number of factors, including the urgent need for an approved treatment for boys with Duchenne muscular dystrophy, the totality of the comprehensive data set in over 300 patients treated with drisapersen, and specifically data that spans more than three years from three placebo-controlled trials and two long-term open-label trials.

We are also encouraged by the approval by the European Medicines Agency last year of Translarna, a non-competing drug for Duchenne muscular dystrophy, based on equivocal phase 3 data and subsequent post hoc analyses. We believe this speaks to the motivation by health authorities, the support therapies that demonstrate some level of clinical benefit for patients diagnosed with fatal and rare diseases. We are encouraged by our interactions with the Food and Drug Administration and are on track to submit the last module of the rolling new drug application by the end of April and a marketing authorization application in Europe this summer. We will keep you apprised of material developments related to drisapersen as they become available.

Turning to another potential near-term product opportunity and one that will read out this year, surlifinase alpha, formerly known as BMN-190, for the treatment of CLM 2 disorder, a form of late infantile Battens disease. The preliminary data shared in January from patients in our ongoing phase 1-2 study far exceeded our internal expectations. To remind you, evidence of disease stabilization was observed in all nine patients who have been treated for at least six months with surlifinase alpha. Recall that, based on natural history, patients in our study were expected to lose at least a point on motor and language function scoring within six months. We intend to share this very encouraging data with European regulatory authorities over the coming months while we complete the study, and we plan to share the full data set in the fourth quarter this year.

Briefly on our other clinical programs, we expect to share data from two additional proof-of-concept studies this year, including results from the first three cohorts of patients in a phase 2 study of BMN-111 for the treatment of achondroplasia; we expect to share that data late in the second quarter. And in the fourth quarter, results from the first 20 patients enrolled in the phase 2 study with (inaudible) glucosidase alpha, formerly known as BMN-701, for the treatment of late-onset Pompe disease.

Looking towards our other clinical-stage products, during the fourth quarter we continue to enroll all five of our development programs and they are all moving ahead as planned. This year, we expect to share data from the proof-of-concept study of ravo glucosidase alpha for Pompe. And to remind you, we said at an analyst day last December once we have data in hand from these first 20 patients later in the year, we plan to reopen the study to additional patients and administer ravo glucosidase alpha that has been manufactured using our new and improved purification process.

Also this year, we will share data from the first three cohorts with BMN-111 for achondroplasia and the full data set for BMN-190, or [seralifinase alpha] for CLM-2 disorder. Our pivotal studies with pegvaliase, formerly known as PEG-PAL, for the treatment of phenylketonuria, and (inaudible), our parp inhibitor, for the treatment of metastatic breast cancer in patients with BRAC mutations, will both continue to enroll this year.

Earlier-stage filings include both BMN-270, our factor-A gene therapy product for the treatment of hemophilia A, and BMN-250, our enzyme replacement therapy that fuses [mag glu] with IGF-2, allowing for cell receptor-mediated uptake and delivery to lysosomes in patients with NPS 3B or Sanfilippo B syndrome. We are very excited about these two new potential products as they leverage our in-house expertise in gene therapy and our successful track record delivering enzyme directly into the central nervous system, respectively.

In summary, our regulatory team is focused on putting a robust clinical data module forth for the Food and Drug Administration as part of our rolling new drug application submission in April. We are extremely pleased with the pace in which our colleagues from Leiden have integrated into BioMarin. We are confident that we are preparing the most thorough and accurate representation of that drisapersen data set, and we believe we can demonstrate a clinically meaningful benefit for patients with Duchenne muscular dystrophy.

It is a very exciting time for BioMarin, and we are more confident than ever that we can deliver 3 to 4 new products to treat serious unmet medical needs over the next three to four years. And with that, operator, we would like to now open up the call for questions.

(Operator Instructions) Joseph Schwartz, Leerink Partners.

Congrats on a great quarter. I was curious, you said that you were encouraged by your interactions with the FDA. If you could characterize that a little bit more for us, what kinds of things have they requested that you complete throughout the review here, now that you have been in charge of that process? And also, are you -- how are you doing on the redosing of patients that were previously getting drisapersen in the extension studies?

Yes. So very good interaction with the Food and Drug Administration. At this stage, what the conversations are typically about are about the format of the submission and the content of a submission. And we were pleased that essentially no new content has been requested. And what has been asked for is simply information presented in a way that will facilitate review by the various different review divisions.

So this is fairly normal for this stage of the process.

As far as bringing drisapersen back into the clinic for patients who have previously received drisapersen, we have a so-called extension studies ongoing internationally, and we plan to continue to increase the number of patients who can be -- whose study drug administration can be resumed, and that is an additional priority of the Company to be working on concurrently. We have got a lot of resources here at BioMarin to add to the BioMarin Netherlands team, and we are sowing those groups together in such a way that we can meet these various different needs in a timely fashion.

Okay. Great. Sounds promising. And could I just ask one on an early program, the BMN-250? How are you thinking about endpoints in that disease? And I know you have a natural history ongoing. When can we expect data out of that study?

Well, the first study for BMN-250 is going to really focus a dose escalation, safety, tolerability, method of administration, glycosaminoglycans measured in the cerebral spinal fluid, and exploratory evaluations of some of the clinical outcomes observed in Sanfilippo syndrome.

As to when first data readouts will be available, I think it is really too early to know when data will become available from the natural history study or the treatment study. We're really just getting underway at this point.

Cory Kasimov, JPMorgan.

Thanks for taking the questions. I have two of them for you. First of all, big-picture question. Now that you guys have replenished your balance sheet with the recent capital raise, I am curious how much of an appetite you may have for additional BD on the heels of the Prosensa acquisition.

When we announced the Prosensa deal, we also had preannounced that we would like to replenish our cash balances, and we did with a financing in January. But that doesn't mean that we are very hungry for any potential acquisition at this time. As I have said previously, we are approached on a regular basis by other earlier-stage biotech companies that are developing drugs in the orphan space, since we are a prominent player in the field. So when we are approached, we always evaluate the assets. And if we find the right asset at the right price, we might continue on the business development front. But, at this time, our focus is on early-stage molecules.

Okay. And then the second question is how do you think about the potential evolution of the Battens market opportunity? I mean, obviously, it is a small, prevalent population. But if BMN-190 is successful at keeping these patients alive, is this the type of market that can build upon itself?

Yes. I mean, I think when we -- in January, when we talked about the early results of the ongoing trial, we communicated that the disease, first of all, we believe is under-diagnosed, and that is based on some studies in the UK, whereby we tend to do a survey for early detection of mad cow disease. You end up finding some patients that have Battens disease and were under-diagnosed.

And then the other reason why we believe the prevalence could be more important than the current one is, if our product -- if TPP1 gets approved, and if it is a significant impact with slowing down the evolution of the disease, it could potentially increase the life expectancy of the patient and increase the prevalence.

Phil Nadeau, Cowen.

First, a follow-up on Battens disease for you, Hank. The data that you presented in January was very impressive, but I am curious what you think the FDA and physicians will find to be a meaningful improvement on the Hamburg Cornell scale. Is a one-point difference versus historical control sufficient? Do you have to show stabilization? What is your sense of what will be considered meaningful?

Well, it is a little early to talk about how a health authority anywhere in the world is going to determine what they think to be a clinically meaningful or important improvement. I think what impressed us the most was essentially disease progression was halted. I mean, another way of looking at that is there is 100% stoppage of the progress of the disease. We were impressed by that. I think the investigators were impressed by that. And that is what led them to want to open the study up for the treatment of pre-symptomatic affected siblings, which, of course, is what led us to disclose the data.

But we are going to be talking about these data with health authorities, and certainly the observed magnitude of treatment benefit will be part of the topic of discussion and we look forward to giving you an update once we have had those meetings.

Great. Then my second question is on BMN-111. You have again committed to giving us those -- the data from the first three cohorts at the end of Q2. Where are you in enrolling the studies? Have you moved down three cohorts to a fourth or fifth cohort?

No. We have completed enrollment of the third dose level, and we are gathering data from those patients.

And have you, I guess, formally decided not to go to a fourth dose cohort, or is that decision yet to be made?

We are going to -- we have not formally decided on the beginning of the enrollment of a fourth cohort. And I would say stay tuned for a data update in the second quarter for a more substantial progress report.

Yin Wan, Bank of America.

First of all, I noticed that the timeline for finishing the NDA for drisapersen is slightly pushed from March to April. I suspect it is just formatting any additional requests from FDA that caused the delay. And then, secondly, also on the Vimizim guidance here, can you provide a little bit of color on what is excluded in that guidance? What additional territory launch are you expecting in 2015? And then, just last year on BMN-111, I think you guys talked about potentially expecting maybe 80% to even 100% increase in growth velocity here. Shall we hold that (inaudible) data even if you expect to release in late second quarter? Thank you.

Yes. So I will start, and then it will probably come back to me for the 111 question with Jeff as a sandwich in the middle. So the NDA timeline, you pointed out, was March and, as of this call, it is now April. It is really driven by -- it is a complicated data set. And we want to make sure that the information that is presented is presented in as clear a way as possible and that the information that is made available for reviewers is presented in a way that enables them to do their job in the most efficient way possible.

And we had a similar experience at the tail end of the Vimizim submission where we decided to take just a little longer to facilitate a facile review. I think what we learned out of the Vimizim application process is that a little bit of extra investment to facilitate review goes a long way towards assuring an effective review process and effective decision making. So we are (multiple speakers) --

And I may (inaudible) so for perspective that we have been in control of the database for less than six weeks.

So Jeff, if you want to take the second part of that question and then come back to me.

Sure. This is Jeff. I will answer the question about Vimizim guidance. Previously, have set expectations that we're presently doing business in 50 markets with Naglazyme. And it's our intention to get to all of those 50 markets with Vimizim, but it is going to take several years or a little bit more to do that.

Earlier today, we disclosed that through the end of Q4, we have successfully gotten into 19 markets. That includes many, but not all, of the top major global markets. So in that set of 19 markets, there is what we think plenty of growth potential for getting new patients and continuing to convert clinical trial patients onto commercial Vimizim therapy.

Combined with that, we have got roughly 31 markets to go to get into. And we guided that it is our expectation that we'll be announcing that we have successfully gotten into additional new markets each quarter this year. So all of those new markets are essentially virgin territory for naive-to-treatment patients and conversion of clinical trial patients where they exist. So if you add those two together and in very short terms, we would say building out a penetration in existing markets -- those 19 -- plus new penetration into new markets and penetrating naive patient pools.

And, as to your last question, we have not set a target of efficacy to make a go or no-go decisions for CNP-111 in achondroplasia. We have described the quantitative difference between growth velocity of achondroplastic children and normal children. And we have described quantitatively what would be required to catch up in achondroplasia patients to a normal child in growth if therapy is delayed in its administration in the prevalent population.

The establishment of the target of efficacy for decision-making purposes is many-faceted. It includes consideration of growth velocity, safety, portionality, potentially other efficacy signals. And we have not established what our go criteria because of the complexity of those interacting dynamics, nor have we evaluated the third cohort of data because, as you know, the study is ongoing. So I would say stay tuned again for a readout in the second quarter on the comprehensive data set and more information at that time.

Yaron Werber, Citi.

This is (inaudible) for Yaron. Thank you for taking my questions. So far drisapersen, what do you think will be the focus of the add compound? And also given that drisapersen has breakthrough designation, is it possible for it to be up to the earlier than the end of the year timeline?

Well, thank you for the question on the focus of attention on the advisory committee. I am expecting that this will be a question throughout the course of the year. And I think the answer to that is going to be relatively general during the course of the year. An advisory committee's focus on general considerations of safety, efficacy, data quality, data integrity, interpretability of the data, et cetera. We don't have any more specific information today about what the more specific focus will be as time goes by.

Having not submitted the application, we don't know what review designation -- or, I am sorry -- having not completed the submission of the NDA, we don't know what review designation we will receive, and we don't know, therefore, what PDUFA action date we will receive. It is possible that, as you know, that action can be taken prior to a PDUFA date, but it is way too early to talk about even what the PDUFA date is.

Terence Flynn, Goldman Sachs.

This is Cameron filling in for Terence. Thanks for taking our questions. I had a couple on drisapersen. First of all, if it is not approved, do you think you can still achieve profitability with the current portfolio of approved products? And then, second, if you are approved, do you think there is a possibility that you would have your indication restricted only to ambulatory patients? And if so, can you quantify what percent of the eligible 10,000 patients that would represent? Thank you.

Well, on the second question as to the labeling, it is clearly premature to discuss what the labeling ramifications and negotiation might be. I would say that -- in the case of, for example, aldurazyme, where we had an issue, as JJ mentioned in his prepared remarks, about the primary endpoint in the clinical trial. Whereas we experienced with Naglazyme where there were imbalances of randomization. In neither case did that result in confinement of the label to a specific patient population.

I think it is sort of a general principle in the orphan disease space that labeling tends to be relatively broader than simply the pivotal trial that has been conducted. So although it is -- although there is some background that is worth having about labeling in the orphan space, I would, again, just remind that we are early in the process here and can't really comment on expectations for product labeling at this stage.

And, to collaborate with on Hank said, irrespective of the labeling, and we are going to -- we are looking into implementing some studies -- additional studies to document the potential benefits of drisapersen on non-regulatory patients and on upper-limb mobility, for instance, which is very dramatically impacted by the disease.

Another practical simple way to answer your question is, there will be patients (inaudible) drisapersen approved, untreated. There will be patients that are on drisapersen for a few years that eventually might become non-ambulatory and imagine the difficulty of telling those patients, oh you are in a wheelchair, so sorry, now you cannot get the drug anymore.

This is Dan. With respect to profitability, I mean, our focus right now is on getting drisapersen approved early in one of the territories and growing Vimizim revenues. You postulated what happens if drisapersen doesn't get early approval. We would still be working towards profitability, but the pace and the timeline will be a function of what additional work, if any, we are doing for drisapersen. So the exact details of that would come if we get there, which we are not planning to.

Mark Schoenbaum, Evercore ISI.

This is John filling in for Mark. I just had a couple questions. The first on drisapersen, given that ex-US is the majority of the market, have you guys begun to identify DMD patients worldwide? And would you wait for global regulatory filings after you see something happen in the US or EU? Or is that something you can do in parallel?

And then on Vimizim -- so you have been following Naglazyme patients for 10 years now. And have you quantified how earlier treatment would increase patient weight through adolescence compared to natural history?

And then I guess, lastly, should we expect the trial for Vimizim, the 007 trial in under-fives, to read out this year? And then would you apply for label revision if the data looked good? Thanks.

Lots of questions. Where do you want us to start? The drisapersen, Jeff, maybe you want to answer that question on patient identification?

Yes. So let's start, John, with your question -- ex-US patient identification, we think we know a little bit about DMD based on epidemiology and the specific incidents of exon 51 mutations. And we have guided that we think that's about 10,000 patients.

We also think that -- so we think that the epidemiology is pretty well characterized. We also think that boys with Duchenne muscular dystrophy don't experience the same kind of diagnostic delays that we have seen, for example, with MPS VI 1 and 4A. So that gives us a degree of confidence that these patients are being diagnosed. Perhaps not all with genetic mutation analysis, which will be important.

One of the hallmarks of BioMarin's success has been our ability to go beyond epidemiology and to actually locate the physicians that diagnose and treat these patients and then get a read on how many and where these patients are. And so I would guide that we intend to go out and actively begin that work this year including in international markets. And I would also guide that that is not a trivial effort. So that will take some time and effort.

Maybe I will turn it back over to Hank on --

Regulatory process. So the plan is to file with the European Medicines Agency shortly after the US submission of the new drug application.

As far as rest of the world, certain countries do take their action on the basis of having submitted in the US or having submitted in the European union or based on action taken in either of those territories. We have a -- but beyond the US and the EMEA, we have a complicated map of when to file and sequential rollout. The key really starts with US and EMEA submissions, which will be processed nearly contemporaneously.

And there was a question on the Vimizim under-five data.

Yes. Presently, I don't believe the label is restricted to patients who are under five. And mostly, the information about patients under five spreads by academic (inaudible) patients at scientific meetings. I don't believe that we have committed to a specific timetable for presenting the data. But just as soon as it is sufficiently mature to be discussed in public, I think that we'll begin the communication process. We don't see that as being something that is gated by a health authority action.

And, in fact, in the real world, it is pretty widely accepted that the earlier you start therapy for inborn errors, the better the long-term clinical outcome. So I think Vimizim is probably -- there is the least negative pressure overall in this therapeutic indication because of the history of all that has been established in enzyme replacement therapy. Really good.

So I think there was a question on the early treatment leading to patients' weight increase. Jeff, you have some --

Yes. So just following on the logic that Hank set up, earlier treatment leads to better outcomes in different ways. Healthier patients are frequently larger or gain weight even without getting taller, just by virtue of being healthier. I don't think that we have fully characterized that in a scientific sense, but qualitatively that would be our experience and the conclusion from Naglazyme, certainly.

Andrew Peters, UBS.

Congrats on the progress, and thanks for taking my question. I had one really kind of more of a bigger-picture question on the market opportunity in BME -- DMD. Just wanted to understand now that the Prosensa acquisition has closed, how has outreach to the community been going? And what sort of plans do you have to kind of increase the profile relative to inaudible) a little bit, who has been a little bit more active, at least in the US, on that front. And then, touching on an earlier question on 111, I just wanted to get an update on any goals for a pediatric study and moving into younger patients. Thanks.

Maybe I will get started. I think we have to initiate some efforts to outreach -- for community outreach patient organizations, specifically (inaudible) and (inaudible). As you pointed out, there is definitely a big difference between US and Europe where US rep has a bigger presence in Europe. Not very well recognized as compared to Prosensa, but we are trying to reach out in different parts of the world in this respect.

Maybe, Jeff, you want to add some color to that, or Hank? I mean, Hank on the KOL and Jeff on the patient organizations?

The Prosensa has a great relationship with global KOLs now (inaudible), Netherlands. And couldn't possibly be more pleased by the respect, the mutual respect and support that is out there for the efforts. And on the -- from my exposure in terms of patient advocacy relationships, I want to just say, we are blessed to work in a world where there is such strong patient advocacy at the level of research, development, communication, the scientific process, the regulatory process. There is a pretty high level of comprehension of the process and how to interpret scientific and clinical trial data.

And so that process had begun before we were on the scene and continues. I recently went to a very large patient organization meeting and was just overwhelmed by how committed the advocacy organizations worldwide are to advancing the cause of Duchenne muscular dystrophy. How committed they are to collaboration as a way of being in collaboration with each other, collaboration scientists and medical doctors, collaboration advocates and industry. It really is a great area to work in, and I can see why there is an enormously high level of mutual commitment and trust that exists between patient advocacy organizations and the people around them.

Jeff, do you want to --?

Absolutely nothing further to add.

And there was a question on the BMN-111. I'm sorry. What was the question?

Pediatric plans.

So BMN-111 pediatric plans, maybe, Jeff --

The pediatric plans in a study in young children.

Okay. Thank you, Jeff. So the eligibility criteria for the present study goes down to age 5. We do plan to initiate studies in patients that are under age 5 with more severe forms of the disease. In our time, BioMarin, just to remind people, with Aldurazyme, we didn't begin studies in younger patients until a post-marketing commitment. And in the case of Vimizim, the pediatric studies of patients under 5 are studied as part of the Parry approval plan. And we are starting even earlier studying patients who are under five in achondroplasia, although we haven't committed a specific timeline to starting those studies. Thank you, Jeff, for the assist on the question.

(Operator Instructions) Ian Somaiya, Nomura Asset Management.

It is Matthew on for Ian. Two, following the new rules, if I may. (laughter) First, I wanted to ask on one of the earlier stage pipeline products, BMN-270 for hemophilia. I know the phase 1/2 study is expected to begin in the second half of -- in the first quarter, later this quarter. I just was wondering if you could give us some color on the larger clinical goals for the program. Or really, said another way, how should we be thinking about what will be considered good data coming out of that?

And then on Vimizim, I know you are not providing any updates anymore on the size of the registry, or the number of identified patients. So what I was hoping was you might be able to give some color around maybe the geographic distribution of patients that are currently on drug, and how that maybe compares to what you have previously described as the overall distribution of Morquio patients. Thank you.

I can start with the latter one, which is that the distribution, as we've said, we think ultimately in the 1,650-plus patients that we've identified will be roughly 15% in the United States, 45% in Europe, and so on. At the moment, since the United States launched first, the United States is disproportionate in our current Vimizim patient profile. But we expect it to normalize over the next couple of years.

Yes, in that hemophilia program -- so filing the clinical trials application, or health authority permission for initiation of clinical trials this quarter; and we expect that the actual administration of study medication to begin in the following quarter. The goal of the first study is dose response, safety, and activity of the gene therapy, and producing circulating Factor VIII levels.

We think a good target to aim for is a steady-state Factor VIII level of about 5% or more. The higher you get, the more impact you have on patients presumably in terms of reducing the need for prophylactic factor therapy; the need -- the reduction of breakthrough bleeding, and so on. So that is how we are thinking about the initial part of the program. And then, ultimately, sort of success criteria.

Again, because we haven't even got in the clinic, it's a little early to talk about what would be a win. But that gives you a little bit of a sense of how clinicians think about management of hemophilia with factor replacement therapy.

Salveen Richter, SunTrust.

Just firstly, now that you've integrated Prosensa, and given the FDA interaction, how does it impact clinical development for the three exon skipping programs that are in phase 2?

We are on track with what had been underway. We are continuing the other exons, as had been previously implemented. I think we are at a stage of gathering safety pharmacodynamic activity, PK data -- pharmacodynamic activity, in some cases, PK data. And we are coming to a point where we will have accumulated enough data to make decisions on what the next steps are.

We are working on the NDA for drisapersen around the clock. We are setting up a dedicated team to work on -- we have set up a dedicated team to work on the initiation of the extension studies to resume studying drisapersen in patients who have who have previously received drisapersen.

As JJ mentioned, we are working on defining and implementing ancillary studies, or supportive studies, for drisapersen. And in addition, we are working on implementing studies, further studies for the other exons, including exon 44, et cetera. So there's quite a lot of activity. No significant changes of any kind, as far as the program at this stage.

Chris Raymond, Robert W. Baird.

This is Allison Bratzel on for Chris Raymond. So, first, could you provide any color on Vimizim compliance rates? Have you seen patients coming off therapy, and could you give us a sense maybe of how many, and for what reasons?

And second, back onto BMN-250, with a competitor out there, Synageva, starting their own Sanfilippo B trial, how should we be thinking about patient recruitment? Will it be challenging to sign up patients in the study with two players actively pursuing patients?

This is Jeff. I will take the first part of the question, Allison. In terms of Vimizim compliance rates, great question. Can't give you a quantitative answer, but I will give you a qualitative answer. And that is that we have lost remarkably few patients that have started Vimizim, all the way back to the clinical trials, including the EAP program in the United States, and now with a year of commercial experience under our belt.

So we have previously guided for Naglazyme that a key success factor in maintaining and building that business is a high rate of compliance and persistence with the therapy over the time. We are anticipating that there will be different issues that emerge for Morquio A patients, relative to MPS 6. But so far, the experience has been very positive; and quantitatively would say compliance and persistence, very high.

And I will turn it over to Hank for --.

Yes, so, on BMN-250, the initial natural history and safety studies are reasonably small. And there are certainly, and sadly, an adequate number of patients in the world available for clinical trials. It reminds me of the early days of the development of Vimizim, when there was -- we were launching a natural history study, and somebody else was launching a natural history study. And the question came up, is it really possible for two to coexist? And of course, here we are five years later, having enrolled over 300 patients in that initial study. Several hundred patients in randomized and controlled clinical trials, and launching Vimizim only five years later.

And I kind of feel like BMN-250 is in a similar place. We have a lot of experience with intracerebral ventricular delivery, direct directly to the affected organ. We have a lot of experience measuring glycosaminoglycans in biological fluids, using a proprietary technology that is really available specifically to BioMarin, because we developed it.

So we think there are a lot of reasons to participate in BioMarin clinical trials. We feel like we have a really good relationship with the academic clinicians. And most importantly, there is a huge demand for new therapies for MPS IIIb Sanfilippo syndrome. And that we want to work hard to assess whether BMN-250 is that product that can help patients in a meaningful way.

Based on our experience with TPP1 in LINCL, intracerebral vascular administrations might be, in some respect, a better route of administration than IV, in terms of no to very few infusion-associated reactions.

Robyn Karnauskas, Deutsche Bank.

Just a big-picture question. You have a lot of stuff going, especially listening to the prepared remarks. I think you were talking about earnings positivity in 2017. Can you just help me understand, what are the key moving parts for you that would shift it forward or backward from an earnings perspective? And then on the hemophilia program, where are you at with manufacturing, as far as approval with the FDA and review and support for that product? Thanks.

On the earnings front, the driver is new revenues, and continued growth of our existing products. And that's why we have said that an early approval with drisapersen in either the US or Europe would be the basis on which we believe we could be profitable in 2017. And a comment is that potential for additional revenues from PEG-PAL and 190 would be accelerators to that, going forward.

Topline growth from existing products, potentially early approval of drisapersen, and potential launch of PEG-PAL and/or TPP1.

This is Robert Baffi. Relative your question about our gene therapy manufacturing, we are in the final stages of compiling the regulatory documentation that would support introduction into clinical trials. We are literally in the last stages of that. So we have not had direct feedback yet from regulatory agencies. We would expect that very soon. And we are very confident with the package and the data set that we will be providing.

Shin Kang, Wells Fargo.

This Shin sitting in for Brian. A couple of questions on BMN-111. I was wondering what are some key secondary measures you are looking for in the updating data that might corroborate 111's positive effect on bone growth, and clinical meaningfulness? And on the safety side, if you do see cardiovascular signal, how should we think about the risk-benefit, assuming that you do see a clinically meaningful efficacy?

I just was reminded that I need to introduce myself. This is Hank, and I would be happy to take than question. As regards the secondary outcome measures, I think one of the most interesting and important ones is proportionality. Achondroplasic dwarfism is a skeletal dysplasia which is characterized by disproportional growth of bones. So in addition to increasing total stature as an outcome variable, which is sort of the main efficacy variable -- a related question is, are you restoring proportionality?

And we showed some slides at Analyst Day, comparing for example ratio of the upper body to the lower body. But you could also think about measuring the upper arm to the lower arm, or the upper leg to the lower leg, et cetera. And we think that will be important information to help us understand the extent to which we are reversing the fundamental underlying defect in achondroplasia, which is aberrant signaling under the control of [consistently] FGFR3.

If -- so turning to the second part of your question -- if it turns out that there is a safety signal that is occurring at the same dose that there is an efficacy signal, and there isn't a dose below that which causes an efficacy without a safety signal, then we can think about ways to mitigate that safety signal. Which might include, for example, dosing patients when they are recumbent; dosing patients at night; splitting the dose.

But I think that it's important to recognize that patients with achondroplasia are, and their families, are highly motivated to have medical therapy for achondroplasia. As we've talked about at Analyst Day, the currently available therapy is surgical remediation of disproportionality and its attendant complications. The surgeries are difficult, complicated, and an available medical alternative would be greatly warranted. And so I think that we have a lot of options in the queue for how to maximize the therapeutic benefit and minimize the potential side effects.

Tim Lugo, William Blair.

This [Raj Prasad] in for Tim. Just a quick one again on BMN-111. Regarding the study design, are you seeing a majority of patients from the completed cohorts to date that are enrolling in the open label portion? And regarding the 18-month timeframe, just given the growth hormone studies in short stature that follow patients out for a little longer, like 24 to 36 months, do you think there's a potential for the open label to be extended if you were to use it for regulatory filings? Thanks.

As we were talking about with drisapersen, and was true for Vimizim and all the products before it, we do plan extension studies for -- in the studying of chronic diseases. Obviously with achondroplasia, the consideration really is administration of the experimental agent would be appropriate up until the time the growth plate closes. As to numbers of patients, disposition of numbers of patients in ongoing studies, we won't comment on that. But we do plan extension studies.

And I think there was a second part of your question (multiple speakers). Well, so the growth hormone, I think, is on some level a relevant comparator growth velocity as a primary outcome variable, some considerations of sustained improvements in growth velocity. I do think that these extension studies will play an important role in supporting the interpretation of the data, both in terms of phase 2 data, but also in terms of supporting registration.

It's a little difficult to talk about, at this stage, what is going to -- what the primary endpoint of the registration directed trials is going to be, what the design is going to be, and what length of follow-up is going to be required as far as registration. Because we haven't really passed the proof-of-concept point just yet. So I would say, stay tuned.

Michael Yee, RBC Capital Markets.

This is John on behalf of Mike Yee. Sorry if this was addressed earlier, as I got disconnected in the middle. But in the beginning, you mentioned that the FDA interactions regarding drisapersen has been very encouraging, and that you expect potentially early approval. Yet on an earlier question, you sort of characterized the content of the discussion as with the normal steps for that stage. So can you just provide more color on your reason for encouragement? Perhaps has there been a change in tone? And is your latest expectation to still run to confirmatory post-marketing studies? Thank you.

This is Hank. And I am from BioMarin. I think it is one thing to read about correspondence, and another two actually engage in it directly. So I think the extent to which we are pleased with the progress that is being made with the Food and Drug Administration comes from just being involved in it directly ourselves. And there's clearly a collaborative tone. I've said before about the FDA, in other settings, that they are really excellent, outstanding reviewers of an application. I think we are all benefited by the thoroughness, the comprehensiveness, and the insight that their reviews generated.

And that specifically leads to a comment about the confirmatory studies themselves. There's in some preliminary signaling about what might be required. We continue to believe that we will be able to fulfill any potential requirements for a post-marketing registration, post-marketing commitments, or confirmatory studies. But as we just are about to enter the review process, it would be premature to speculate any further on what the specific content a review is.

The really important principle is that the post-marketing requirements must match issues raised during the review. So stay tuned. Be patient with us. And allow the time for the review to occur. And as we do that, we believe that the outcome of that review will be better for everybody, patients especially.

Thank you. This does conclude the question-and-answer session of today's program.

I would like to hand the program back to management for any further remarks.

Thank you, operator. So, in summary, BioMarin continues, to me, to exceed its financial, commercial, clinical, and regulatory goals. The strong foundation that we put in place in 2014, including the acquisition of Prosensa on a [DMD] franchise with the potential near-term opportunity for approval of drisapersen; continued progress of our robust development pipeline; the strongest new product launch to date at BioMarin of Vimizim worldwide; continued growth of our legacy products, including Naglazyme and KUVAN; and restoring our cash reserves to enable our path to profitability, always position BioMarin for a very busy and fruitful 2015. So we thank you for your continued support and for joining us on today's call. Goodbye.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.