BioMarin Pharmaceutical Inc (BMRN) 2018 Q4 法說會逐字稿

Welcome to the BioMarin Fourth Quarter and Full Year 2018 Financial Results Conference Call. Hosting the conference call today from BioMarin is Traci McCarty, Vice President of Investor Relations. Please go ahead, Traci.

Thank you, Vincent. Thank you, everyone, for calling in today. From the management team at BioMarin, on the call is J.J. Bienaimé, Chairman and Chief Executive Officer; Hank Fuchs, President Worldwide Research and Development; Dan Spiegelman, Executive Vice President, Chief Financial Officer, Jeff Ajer, Executive Vice President, Chief Commercial Officer; and Robert Baffi, Executive Vice President, Technical Operations.

To remind you, this nonconfidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authority, availability of capital, future actions in the pharmaceutical market and developments by competitors and those factors detailed in BioMarin's filings with the SEC, such as 10-Q, 10-K and 8-K reports.

Now I'd like to turn the call over to our Chairman, CEO, J.J. Bienaimé.

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

So 2018 was an extremely productive year of execution for BioMarin. During the year, when we advanced our 3 largest products opportunities to-date, we grew the base business 14% to nearly $1.5 billion in revenues, which is our best full year result. And year-over-year, GAAP net loss decreased 34%. And non-GAAP income improved 23%, demonstrating our continued focus on top line growth, expense controls and the improved margins.

We are projecting similar financial progress in 2019 as we work towards approval of both valrox and vosoritide, the achievement of which will be truly transformational for the company.

Turning first to accomplishments in 2018 and '19, outlook for Palynziq for the treatment of phenylketonuria. The U.S. launch began -- begun last July and continued to progress extremely well. The U.S. PKU community has been very enthusiastic about Palynziq, even the dramatic Phenylase demonstrated across our multiyear clinical program.

For Palynziq outside of the U.S., we now expect the CHMP opinion for our marketing authorization applications in this first quarter of 2019. If the opinion is positive, we expect European commission action in the second quarter, followed by the potential launch of Palynziq in Europe in the second half of this year. And in a moment, Jeff will provide more information on European preparation as well as more recent metrics on the U.S. Palynziq launch, which is probably the largest market opportunity to-date.

We reached another significant potential value driver this year. We look forward to a number of important updates in valrox. As announced last month, we have completed enrollment of the cohort of patients in the ongoing Phase III study with the 6e13 dose that are intended to satisfy but still is satisfying requirements, depending on the results observed. We will communicate our decision on whether or not to plan to file an expedited filing in the second half of the year.

And currently, we're on track to complete enrollment of all 130 subjects in the full Phase III study in the third quarter of this year. And finally, we expect to provide a 3-year data update from our ongoing Phase II study with a 6e13 dose and a 2-year update with a 4e13 dose in the middle of this year. And in a moment, Hank will provide some additional details on Phase III enrollment progress as well as our plans for the Phase II data update.

Turning now to vosoritide for children with achondroplasia. We were very encouraged by the 42-month data that we shared at R&D Day last November, demonstrating an average cumulative height gain of 5.7 centimeters, which is a significant outcome for the children in our Phase II study. We hope to prove efficacy in our global Phase III study, which completed enrollment last November and is expected to read out at the end of this year.

Looking beyond these 2 late-stage products, we are leveraging our valrox experience to develop the next wave of gene therapy products, such as BMN 307 for the treatment of phenylketonuria. We share some exciting critical data recently with BMN 307 that demonstrated long-lasting normalization of Phe. We are on track to file an IND in the second half of year with BMN 307, and we believe this is just the beginning of our expansion into a grower gene therapy pipeline.

In conclusion, we are very pleased with our accomplishments in 2018, and we're excited about the prospect for continued growth. In the near term, we continue to target $2 billion in 2020 revenues, which is next year and, beyond that, given the strength of the base business and the potential for the decreased R&D valrox and vosoritide to drive substantial upside and long-term growth. And we expect the next 2 years going to be truly transformational for the company.

I will now turn the call to Jeff, who will provide updates on the current commercial businesses. Jeff?

Thank you, J.J. Starting with the U.S. launch of our seventh commercial drug, Palynziq, we want to provide some additional color on patient and position demand since our last update in January. Both the patient and the physician communities have been tremendously enthusiastic about Palynziq since approval in the U.S. last May, and the numbers speak for themselves.

Starting with commercial reimbursed patients. As of last Friday, February 15, we had a total of 335 patients on reimbursed Palynziq. Of those, 123 transitioned from our clinical studies and 212 are formerly naive to Palynziq. We're very pleased with the opportunity that Palynziq provides to expand our reach into a broader patient population. We are seeing high levels of interest and enthusiasm from adult patients that had formally been on or trialed Kuvan but were not at the time of Palynziq referral as well as patients naive to both Kuvan and Palynziq.

In addition, our strategy to proactively convert adult Kuvan patients, who might benefit from additional Phe lowering from Palynziq, has been quite successful. Only 35% of new Palynziq referrals are current Kuvan patients. Physicians are engaged, and our commercial team is doing a tremendous job leveraging our experience and relationships in the PKU community to promote the availability of Palynziq treatment in the U.S.

Also contributing to robust update is the number of clinics that have at least 1 complete patient enrollment defined as a patient having a complete enrollment form with rare connections, coupled with a complete friends enrollment. We can confirm that there are now 80 unique clinics of the 125 PKU clinics in the U.S. that now have at least one complete patient enrollment. One final leading indicator of patient demand we want to share is the number of patients who are enrolled yet have not received their first commercial dose. As of Friday, February 15, that number was 131. So a robust pipeline of patients awaiting their first treatment with Palynziq.

Turning now to Palynziq revenues. We were pleased with the 2018 full year contribution of just over $12 million. Considering the time required to get patients started on therapy following enrollment, the deliberate titration protocol for new patients that results in partial revenues for patients for at least their first 8 weeks of treatment and the pacing of transitioning clinical patients to commercial Palynziq, sales in 2018 tracked to plan.

Based on the growing number of patients we expect to transition from the induction titration stage to daily dosing, combined with current and expected enrollment rates, our 2019 full year Palynziq revenue guidance is $70 million to $100 million. Should we receive EU approval of Palynziq in 2019, though we don't expect material EU revenues in 2019, we would expect to see a meaningful revenue contribution from that region beginning in 2020.

Now turning to other products in our commercial portfolio, which showed 14% growth and nearly $1.5 billion for the full year 2018. First, I'm proud to announce that this anniversary of the approval of Vimizim, the one and only product approved for the treatment of Morquio A. In 2018, Vimizim revenue grew 17% to $482 million for the full year compared to 2017.

Uneven quarter-to-quarter ordering patterns from the Latin American region were offset by increased revenue from the EUMEA region, resulting in a strong result of a -- for the full year. We expect to see continued steady growth of Vimizim now that pricing reimbursement has been established in the vast majority of our commercial markets, and it is important to focus on annual revenue guidance for Vimizim and all of our global brands. For the full year 2019, we expect Vimizim net product revenues of $530 million to $570 million as we anticipate new patient growth in established market and continued progress gaining access in smaller markets.

Similar market dynamics were in play for Naglazyme. Despite uneven ordering patterns in the fourth quarter, strong results in the first 3 quarters of 2018 contributed to revenue of $346 million or a 4% increase for the full year. Importantly, recall that Naglazyme represents a steady cornerstone of our MPS franchise after 13 years on the market as demonstrated by new patient growth of 6% in 2018. We expect that study trend to continue in 2019, and expect Naglazyme revenue for full year 2019 of $350 million to $380 million.

Moving now to Brineura for the treatment of CLN2, which contributed almost $40 million of revenue in 2018. In the fourth quarter of 2018, we continued to add new commercial patients, resulting in net revenue of just over $12 million. Our teams around the world continue to focus our efforts on education of the early signs and symptoms of CLN2 disease and the importance of early diagnosis. We believe our efforts have increased awareness, and testing of CLN2 will result in the steady diagnosis of children with CLN2. We anticipate Brineura revenue of $55 million to $75 million in 2019.

Finally, moving onto Kuvan, which achieved 6% growth or $434 million of revenue in 2018. As we declare Kuvan market dynamics in the U.S. in 2019, it is important to remember that many adult patients are choosing to start therapy with Palynziq, including patients converting from Kuvan. New Kuvan patients tend to be children and teenagers who consume a relatively smaller total dose compared to adults and thus contribute smaller revenue per patient. For 2019, we anticipate full year Kuvan revenue of $420 million to $460 million, due in part on our plan to focus on converting U.S. Kuvan adults to Palynziq treatment, given its superior efficacy profile.

To summarize, I'm very pleased with the commercial team's performance across the globe in 2018 and believe we are well positioned for continued meaningful growth in 2019. As the commercial team looks toward other key priorities in 2019 and beyond, we are extremely excited by the prospects of launching Palynziq in the EU, launching the first gene therapy product for the treatment of severe hemophilia A as well as the first treatment for children with achondroplasia, and we are preparing for all 3 potential approvals accordingly.

Now I'd like to turn the call over to Dan to provide financial update from the fourth quarter and full year. Dan?

Thank you, Jeff. Please see today's press release summarizing our financial results for the fourth quarter and the full year 2018.

Overall, our excellent 2018 financial results show that we are tracking towards our long-term financial goals, including growing revenues, controlling expenses, expanding margins and, ultimately, delivering GAAP profitability.

Starting with revenues. Full year 2018 top line growth was 14% to just under $1.5 billion. And for full year 2019, consistent with our prior long-term guidance, we anticipate approximately 15% further top line growth to between $1.68 billion and $1.75 billion, based solely on currently approved products. Moreover, as J.J. noted, 2020 total revenue should grow an additional 15% and be approximately $2 billion with the expectation that contributions from vosoritide and valrox take us significantly beyond those levels in the years ahead.

Importantly, expense growth was less than revenue growth, resulting in improved bottom line results and reduced cash usage. Starting with GAAP net loss, in 2018, it decreased 34% to a loss of $77 million for the full year. And for full year 2019, we expect GAAP net loss to decline an additional approximately 16% based on the midpoint loss guidance of $45 million to $85 million.

Moving to non-GAAP income for the second year. In 2018, we had an increase of 23% to $91 million. And for 2019, we expect further non-GAAP income improvement of approximately 65% based on the midpoint of our guidance of $130 million in income to $170 million in income.

Consistent with our financial progress in 2018, excluding repayment of the convertible debt, our net usage of cash and investments was $87 million for the full year. Recall that, last October, we repaid the principal amount for our convertible bonds using $375 million of cash, resulting in cash, cash equivalents and cash investments totaling $1.3 billion as of December 31, 2018, as compared to $1.8 billion on December 31, 2017.

Moving to operating expenses. R&D expenses increased to $696 million for full year 2018 compared to $611 million for the full year 2017. The increase in R&D in 2018 compared to 2017 was primarily due to increased valrox production in support of process qualification activities to satisfy a potential accelerated filing and clinical trial expenses in support of the Phase III program. Vosoritide clinical expenses as we completed enrollment in the Phase III and BMN 250 production expenses.

Looking forward, R&D expenses in 2019 as a percent of revenues will continue to decline and, on an absolute basis, should expand modestly relative to 2018 consistent with the potential accelerated path and the AAV 5 positive study with valrox, the IND filing for BMN 307, as well as other clinical programs, such as the 0- to 5-year-old study with vosoritide. To support the numerous development programs advancing in 2019, full year R&D expenses are expected to be $740 million to $780 million.

SG&A expenses for 2018 expanded marginally compared to 2017 to $604 million compared to $554 million for the full year 2017. The increase was primarily driven by Palynziq and Brineura product launch campaigns and preliminary valrox commercialization effort. SG&A expenses in 2019 will increase to $650 million to $690 million driven primarily by activities associated with the global Palynziq launch and valrox market preparations and general commercial expansion.

And finally, a few comments on taxes. The tax expense benefit line was impacted in both 2018 and 2017 by U.S. tax reform. In 2017, we had an $81 million tax expense primarily due to $83 million of charges associated with the 2017 Tax Reform Act; a $42 million charge directly related to revaluation of our deferred tax assets due to the reduction in the corporate tax rate; and a $41 million evaluation allowance related to California tax credits related to tax planning changes driven by the Tax Reform Act.

By contrast, in 2018, we had a $65 million tax benefit driven by $50 million of orphan drug tax credits recognized in 2018 increased losses in the U.S. Our U.S.-based operating loss for tax purposes increased in 2018 as a result of shifts in our global tax strategy due to tax reform, whereby we recorded higher U.S.-based R&D expense than in prior years.

In summary, our financial results in 2018 set us up for another strong performance in 2019. Top line growth, cost controls, cash use are all being managed with the goal of driving significant long-term shareholder value and profitability as we prepare for potential approvals of valrox and vosoritide.

Now I would like to turn the call over to Hank.

Thanks, Dan. Since the team has already outlined a number of our anticipated catalysts, I'll touch on a few other items before we open the call to questions and answers. First, for Palynziq Europe, the marketing authorization application is under review and tracking to an anticipated CHMP opinion this quarter. We'll keep you posted on developments with the application but suffice it to say, European health authorities are well aware of the dramatic Phe-lowering properties for Palynziq and the importance of lifetime treatment with -- of phenylketonuria. We look forward to sharing news of the CHMP opinion in the near future and to potentially making Palynziq available to European phenylketonuria patients soon.

Moving to vosoritide. There's tremendous enthusiasm from families for the treatment of achondroplasia in patients under 5 years of age, as demonstrated by the high level of interest in our infant and toddler study. As stated to the FDA adviser committee on achondroplasia last spring, there's strong support for starting treatment early in life as it may afford the most dramatic benefit for children with achondroplasia.

We look forward to data from our 0- to 5-year old study to providing important insight into the potential benefits of starting vosoritide treatment early in life. The study is enrolling very well. We have nearly completed enrollment of cohort 1, which includes children from 24 to 60 months of age and having entered the expansion phase; cohort 2, which includes 6 to 24-month-old infants, has been authorized to enroll sentinels. And this will be followed by expansion of the enrollment phase and is on track conclude by the year-end.

To summarize, we're very pleased with the progress of our global vosoritide development program, including the large, contemporary natural history study underway. We believe results from our 4-pronged development program will support improved clinical outcomes for children with achondroplasia. Results from our ongoing Phase II in older children have been encouraging, demonstrating an average additional height gain of 5.7 centimeters in 42 months. Enrollment in the Phase II infant, toddler study is going well, and thus far vosoritide has been generally well tolerated with no symptomatic adverse effects identified. We look forward to the next significant catalyst in the program with top line Phase III data readout by the end of the year.

Briefly on valrox. As we stated in January, we look forward to completing the next steps needed to support a VLA filing through the accelerated approval pathway. We've completed enrollment of the initial cohort for the GENEr8-1 Phase III study intended to support this VLA, and our focus now turns towards completing the manufacturing components of the CMC package. We expect to complete all manufacturing campaigns for a potential accelerated approval filing by the end of this quarter 1Q '19. We're making a progress -- great progress on all aspects of the VLA filing package. And as we have communicated, we'll inform you of our decision of whether or not to pursue an accelerated path for -- forward by the second half of this year.

Turning now to ongoing enrollment in the Phase III GENEr8-1 study, using the 6e13 dose for valrox, also known as the 301 study. We're pleased to share today that we have now enrolled over 100 subjects in the so-called 902 or non-interventional study, whose purpose is to collect baseline leading rate data prospectively prior to treatment with valrox the transgene. Of the subjects who have determined through the 902 study to be eligible for the GENEr8-1 study -- and GENEr8-2 studies, 95% or more are indicating their preference for the 6e13 dose over the 4e13 in the 302 study.

Recall that the full 301 studies are full-approval, 52-week study powered to demonstrate superiority versus standard of care in reducing bleeding. Achieving this important milestone marks another important achievement in our valrox program; much has been accomplished in a very short period of time. Pioneering and development of innovative products to improve health outcomes for patients with rare disease is not new for BioMarin, and we look forward to leveraging this experience as we endeavor to transform the treatment landscape for patients living with severe hemophilia A. The valrox development journey has been fast, it sure has at times, but it is important to remember what has been accomplished, durable bleed control for severe hemophilia A patients was an inconceivable concept only a couple of years ago, and that has exactly been -- it's been what's demonstrated the valrox Phase II to date.

I'm very proud of what's been accomplished thus far, and we look forward to learning more about valrox as we plan -- as we prepare for the upcoming 3-year data update of our Phase II program. As communicated previously, we expect to provide a top line data update in the middle of this year followed by a more detailed data presentation at a medical meeting. I would like to share with you today that we're planning to present a more detailed 3-year Phase II valrox data at the International Society on Thrombosis of -- and Haemostasis, or ISTH, whose abstract deadline for submission of late breakers since June 6.

And finally, to remind you of the other developments expected this year, we are in the middle of preparing for the IND filing for our PKU gene therapy product BMN 307. Recall the preclinical data we shared in January, using the ENU2 mouse model, which we used for Palynziq and which is close within a PKU phenotype. We demonstrated that within 2 weeks, Phe levels would normalize with BMN 307 treatment, continuing out to 80 weeks, well beyond the expected lifespan of the untreated ENU2 mouse. We look forward to putting this product in the clinic and to leveraging our valrox manufacturing experience to initiate clinical studies with commercial scale material.

These are the highlights from the R&D organization. I want to thank you for your continued support and turn the call back to the operator for fielding questions. Thank you.

(Operator Instructions) We have -- your first question comes from the line of Salveen Richter from Goldman Sachs.

Two questions from me. One is, do you have any other hypothesis for the pullback in expression levels that you saw with the hemophilia A program versus the circulating to noncirculating DNA? And then secondly, what is the gating factor here to higher penetration into the MPS VI market. It seems, per our models, that you're roughly a little higher than 50% penetrated at this time point?

Yes, Salveen, I'll turn start and turn it over to Jeff. The other hypothesis to fit the pullback in factor expression levels, have been surfaced to include considerations like endoplasmic reticulum stress. We measure biomarkers of that, both preclinically and clinically, and are unable to document endoplasmic reticulum stress. We consider the possibility that corticosteroids are falsely elevating expression. We don't find evidence of that. We consider it a possibility that there's promoter silencing or [polymerization] of the vector. We don't see evidence of that. And so that we are left with the speculating that the reason for that pullback in Factor VIII expression is a function of analyzing the vector. And of course, in several months, we'll see where year 3 sits in regard not just the Factor VIII, which is interesting but not as dramatically important to patients as long-term clinical outcomes such as sustained reduction in bleeding and improved quality of life. Jeff?

Salveen, this is Jeff. I'd like to address your question about penetration of the MPS VI patient population, at least that was on one of your questions. We are at and have been at a little over 85% penetration of known patients for several years. Just the gating factor on growth of Naglazyme is almost entirely the identification of new patients, the vast majority of which were able to get to treatment in a relatively short period of time. In the event your question was directed towards the Morquio A patient population, we're currently about 65% penetrated of known identified patients there, substantially larger patient populations. We've been at it for less time, and we're still trying to get into some markets that we don't have commercial access to. So probably the gating factor on higher penetration of the Morquio A patient population is getting into the secondary and tertiary commercial markets, and we're making progress on that.

Next question comes from the line of Matthew Harrison from Morgan Stanley.

This is Ishmael on for Matthew. Can you comment on the enrollment progress for the 4e13 dose in the hemophilia gene therapy study? And what impact if any will the data have on an accelerated filing strategy?

Ishmael, 4e we said all along was going to go slower than the 6e. And my comment today was that as we're screening patients for AAV 5 positivity and running them through the baseline prospective bleed rate study, patients are like 95 to 5 holding their hand out for the 6e dose. We're going to continue to enroll in the baseline observational study. Once we conclude fully over enrolling it for the 301 6e dose, we can start talking to patients about whether they're interested in enrolling in the 4e study or waiting for commercial 6e patients. But we always anticipated that the 4e was going to go slower. Patients are very much voting with their feet. They want a higher level of factor expression if they can get it.

So again, this has 0 impact on the timing of our accelerated filing. They don't emphasize with -- Hank just said, we've heard rumors that maybe patients would like to lower levels, and they would prefer that. But we have here on a sample over 100 patients faced with the decision of which 2 therapies they we want to have, it all goes to the higher dose, which could generate higher Factor XI, 95% of it.

Next question comes from the line of Phil Nadeau from Cowen and Company.

Hank, just to start with you on your guidance around the ISTH meeting. Are we to take from your comments that we're likely to see that top line release around the deadline for the late breaker abstract submission. So maybe early June, we get the top line release with the full data at the meeting in July?

Well, Phil, all I said literally was the late breaker deadline was June 6, and I need to let you do the rest of the calculations. But it's not crazy to say if you're interested in valrox, hang around in early June.

Got it. And then second on what you consider top line data versus full data? It sounds like reductions in bleeding will certainly be top line data. What about factor expression levels? Would that be either in the top line or the ISTH presentation?

Well, my view of that is that, that bleeding is what people care about. It's what payers care about quite a lot. It's also what people care about. But I'm also very aware that people are trying to use factor expression levels to try to predict for how long valrox will last for people. So I would imagine that, that will be an element of the top line as well. I think one of the most important things to -- sorry, Phil, to keep in mind about the top line is, again, people need to be remembering one stage in chromogenic substrate assays, and when we provide the data, we'll try to put that in a easy-to-understand format so everybody understands which values we're we talking about.

That's very clear. And then just one commercial question on Palynziq. Are you seeing anything different in the commercial setting about the dose titration that is being used versus what you had thought based on the clinical trials and also the side effect profiles so the immune reactions, are they at all in different frequencies of severity in the commercial setting versus what you've seen in clinical trials?

Well, starting with the dose and titration schedule. It had been some time since we had been dosing new patients in the clinical trial. And if you recall, in the clinical trial setting, one of the things that we adjusted during that program was to a dose and titration schedule along with recommended premeds that would maximize their response and minimize untoward effects. So, so far, no surprises. Most of the clinics that are dosing patients are following the package insert and the dose titration schedule, and we're starting to see some patients that are getting to an efficacy response at 20-milligram patients -- or 20 milligrams per day. I think I recorded 9 at the JPMorgan conference, and that number has gone up in the last 6 weeks. So that's encouraging. What we don't know yet is whether that efficacy response is going to stop at 20 milligrams daily or progress to 40 milligrams daily. And we don't have enough time yet to observe any patients moving up to the 40-milligram dose. And maybe I would ask Hank to comment on what he's seeing in anaphylaxis?

Sure. Jeff's team and my team keep a real close eye on this together. And we see an anaphylaxis rate crudely which is consistent with or maybe even slightly lower than what we've observed in the package insert. Although, as Jeff's just observed, there's not a huge amount of [in] yet since we just launched the drug in July, and it took a little while for some of the naive patients to get commercial authorization. So we're really just coming up on the way where we're going to get into triple-digit numbers of patients who have been on drug for at least 6 months. I think one of the things I am very encouraged about this is we do see anaphylaxis occurring, but the majority of the patients who've had it are successfully rechallenged so that in the commercial setting, which we capitulate that we saw in the clinical setting, in the clinical trial setting, the majority of patients that had an anaphylactic event are able to successfully receive continued Palynziq safely. And the fact that doctors are doing that in a commercial setting as well bodes really well. Because I think that the key thing to keep your eye on is discontinuations due to adverse events. We want to keep that number as low as possible because if we can get you past the first 6 months, the odds are you're going to stay on Palynziq for a very, very long time. So Jeff and I and our teams are keeping a very close eye on this element.

The next question comes from the line of Martin Auster from Credit Suisse.

This is [Mark] on for Marty. I guess my questions relate to the valrox high titer study. Would you be able to provide an update on enrollment of that study and potential timing for data there? And in addition, could you outline what the immunosuppression protocol is for that study?

Yes, okay. So if we're talking about the high titer study, that's study 203 in AAV 5-positive patients, their titers actually are not that high. In the while, people don't really have a lot of titer to AAV 5, certainly nothing remotely like the titer that developed after you've been treated with the AAV capsid. We're starting at relatively even lower titer patients first to see if we can affect gene transfer in those patients. Unfortunately, that study's going a little slowly. Finding AAV 5-positive patients, they're not the majority of patients, as we said before. And so I can't give you any more specific enrollment update. You asked about the immunosuppressive regimens used. And that has the potential to be a very confusing question. And let me take a bit of a step back first. When we talk about immunosuppression, I think, what the field is most significantly thinking about is the prevention of a cytotoxic T response close gene transfer, which can kill the liver and cause the loss of Factor VIII expression. We don't see that phenomenon in AAV 5 capsid. And we've gone into some length in previously explaining what our data are, and at least based on our Phase II study, and we're very grateful to Dr. Mingozzi, whose lab has done all the characterization of cytotoxic T response. You'll recognize that name. He's a key opinion leader in the field. He's also Spark's Chief Scientific Officer. So I think he carries some extra credibility when his lab is not able to document T cell responses to our capsid. So we're not giving corticosteroids to effect an immunosuppression to block the catastrophic loss of Factor VIII expression. And Spark is in the process of testing the hypothesis that their immunosuppression regimen can block catastrophic loss of Factor expression. I'd say stay tuned to that data on the one side, but on the other side, it's not really especially relevant to us. The other thing that people talk about is, if you have a preexisting or you develop a titer AAV 5, can you immunosuppress to enable subsequent treatment. Now as I said, for us, that's a relatively lower bar. Because AAV 5 [sheer prevalence] is relatively low, and the titers are relatively low. So we've got some laboratory concepts of what we want to do from an immunosuppressive point of view. But first, we want to see, if we can affect gene transfer in relatively lower titer patients, who are in this 203 AAV 5 positive study. Now way in the back of people's minds are, what if you got an AAV 5 dose, and 10 years later, 15 years later, you need another dose. You've been drinking a lot. You've taking a lot of acetaminophen, whatever. Your liver is worn out, and you need another dose of valrox. We have it -- because how far that problem is in front of us, we haven't put together a clinical trials concept for how we might achieve immunosuppression in that context yet just because we haven't observed enough loss of expression to make us want to investigate that phenomenon. So big picture: immunosuppression not a big thing for BioMarin relative to other members in the community. Our evidence is both [L-Stot] data as well as don't see catastrophic loss of Factor VIII expression accompanying a T cell cytotoxic response and stay tuned for more data on whether [you can give] immunosuppressed patients who have borderline low titers [indiscernible]. Hopefully, that was a comprehensive answer to a relatively short question.

Next question comes from the line of Joseph Schwartz from SVB Leerink.

I have a question on Palynziq and then valrox. So How is the EMA review of Palynziq been progressing relative to what you experienced in the United States? Are there any notable differences in the issues that are most important to the different agencies?

Joe, I'll just give you a qualitative. It's going better actually than where we were in the U.S. And I think to talk about that concretely, we need to get a little further into the -- we need to get to the tail end of the process where we can put the exclamation and the point on top it. But just to say, I think, it's going better. We've seen, for example, drafts of some of the language that would be relevant, and we're encouraged by that. When we're seeing that we're guiding you to the opinion in March, if you're an aficionado of the CHMP process, you know they meet at regulatory scheduled times. You have to meet certain submission dates. So we're pretty tight in on what we think is going to happen, and when we think it's going to happen.

Mark, the end of the first quarter is not very far from him. Just overreaction.

Absolutely. So then on valrox, given that development has been fast and furious, how are you -- at times, how are you planning to coordinate or perhaps already coordinating with payers in order to support a smooth rollout in the marketplace when the time comes that's consistent with current perspectives of value and health care.

That's great question, Joe. And we see the payer perspective as one of the unique challenges of commercializing valrox. As others have stated often, we're talking about a change in paradigm from chronic treatment to onetime curative therapy and health-care systems not only in the U.S. but in other markets that are not accustomed to dealing with this. On the positive side, I think, that our commercial experience in the United States and around the world puts us in a uniquely good position to deal with that challenge. We've been meeting with payers participating in cross-stakeholder groups addressing this issue for 1.5 years at least. So we've have been pretty active on that front. We meet with payers individually now in the United States. And in Europe, we've been meeting with them, not only in cross-stakeholder groups, but in groups organized solely by BioMarin. Probably the U.S. is going to be the more challenging environment for a couple of reasons: One is the fragmentation of payers and different types of payers. You've got commercial payers, you've got Medicaid payers, you've got Medicare payers. And the second is the -- is kind of the overlay of the government pricing rules and the price reporting rules such that creative things that you want to do with certain payers could read through to really bad discount levels so it would have to be extended to government payers. We're not alone in addressing that. I think there's stakeholders inside of the government, and other payers that are trying to address this. We've got a little time to work this out and solve for it. It's certainly possible in the U.S, if that's was our first approval, that we could be starting on kind of a traditional onetime payment, while models for other types of payments structures were being worked out and facilitated. And finally, we do see some players already taking shape in the United States. So there's LUXTURNA that's on the market. We're watching that. Novartis is going to have an SMA gene therapy on the market in the not-too-distant future and before valrox hits the market, and that would also be instructive to watch the experience there. So in short, we haven't solved for this problem, but we're really active, and we're all over it.

So let me add. I mean, it's lucky that we will -- we might end up with different paying structures in different parts of the world or even in U.S. we can also have different paying structures, depending on the payers. Some might be more interested in paying with the value of the product up front, some over time, some over time based on performance. We are very open to whose needs, and we need to satisfy the different needs on the different segments in the market. But I just want also emphasize that, even if we file for accelerated approval, it is likely by the time we get approval, we will have between 4 and 5 years of data with the Phase II patients, whereby, we will hopefully be able to demonstrate sustained reduction in the antidotes and animation or significantly reduce the need for factoring [injections], which is kind of the basis of the cost effect, and that's the product.

Next question comes from the line of Cory Kasimov from JPMorgan.

Thanks for taking my questions. I also have one on Palynziq and one on valrox. So first, a follow-up on the tolerability profile of Palynziq. Can you talk a little bit about how the dropout rate for the drug, it compares -- or in the real world compares with what you saw in clinical trials? We also heard from a KOL, who said patients are able to continue with the drug post an anaphylaxis event. But are you finding that any of the naive patients drop off if they start to go the administration process? Or are they able to put up with it and learn and -- kind of learn to do and get through it?

Yes, Cory, it's Hank. I'll start and Jeff, I don't know if you want to add some color. But just the tolerability profile that we see to-date, relatively low sample size because of relatively just getting started in July with commercialization. But it's tracking to be at or lower than what we observed in the clinical trials. Rechallenged success occurring in the majority of the patients just as we had observed in the clinical trials. And the overall drop-out rate is relatively low. And in fact, it has more to do with the logistics, and in 1 case, maternal -- family planning considerations in another case. So relatively infrequent dropouts and relatively encouraging news about a relatively low anaphylaxis rate and a -- and positive rechallenged safety. Jeff, did you want to add anything about your current experience?

Well, and going back to Hank's earlier comment about anaphylaxis. An issue here is, our total [end] of patients is growing pretty rapidly but kind of the area of under the curve over time. There's not that much time for many of those patients to draw conclusions. But we did note in the press release how many commercial patients we've got on therapy. In total so far, we've lost -- we've had 7 patients that were naive to treatment discontinue therapy. And kind of for a mix of, I would say, generally, tolerability coupled with lifestyle considerations. We also lost a couple of patients that discontinued for family planning purposes. So the ends are pretty small, but I'm really encouraged that a dropoff of 7 patients at this stage in the game is not overly concerning so far.

Okay, that's very helpful. And then I -- on valrox, I wanted to also ask on the pending 3-year update, and kind of ask you the question the way we're asked about it. And it's, how do you think about the durability of Factor VIII expression levels in so far as is there a rough threshold you hope to be over at the 3-year time point? And how is the FDA communicated to you the relative importance of Factor VIII levels versus bleeding rates?

Boy, so Factor VIII levels versus bleeding rates. Let's start with that part first. That -- basically, what they have communicated to us is that you can apply for accelerated approval. You can -- we'll approve recommendations for Factor VIII levels alone provided that you can business with the assay that you're using as a valid measure of Factor VIII activity and that you can document a substantial proportion of patients who are treated with your gene therapy get into the nonhemophiliac range. And you can document that their bleeding rate that you've observed post gene transfer is reasonably likely to predict clinical outcomes. So that's how to think about where Factor VIII plays a role, doesn't really play much of a role in the [full approval] consideration per se. And so far, it hasn't played any role in durability discussions that we've had. I suppose that confirmation of continued expression, which is what we, BioMarin, expect to be the midyear update will be reassuring to the FDA. And I suppose that if the data are unexpected that we'll have a new conversation based on new expectations, but so far that has not been -- durability of expression beyond 2 or 3 years has not been a key concern of the FDA. And I have to say, when I interact with the medical community, they're working assumption is that if you put the transgene in, it's going to stay in. And so they don't have a lot of questions about durability other than we just want to see the data.

And again, I think you can see we have communicated this but there is a precedence with Factor IX in patients. [indiscernible] presented data at ASH [last] year. Some patients, they were 8 years now after the treatment. Here, they had [2] Factor IX levels in around in the mid-teens. And then after several years, they were below 10%. At 8 years, they were definitely below 10%, and patients still have no significant spontaneous bleeding episodes after 8 years with blood level -- with Factor IX level significantly under 10%. And no need for Factor IX infusions indiscernible company.

They didn't start as high as we are starting. So we're going to be -- our expectations maintained Factor levels much closer to the nonhemophiliac range than what J.J. was citing. We're not saying you ought to expect 5% at [ISP].

No, no.

Your next question comes from the line of Chris Raymond from Piper Jaffray.

I guess, since we're only asking about Palynziq and valrox, I'll follow the pattern, if that's okay. So 2 questions. And I guess on Palynziq, just eyeballing the trends between naive and clinical trial patients, it seems like the naive load -- patient load seems to being accelerating, I guess, faster than the clinical trial participants. And by my count, for example, since the end of the year, you added 72 naive patients but only 11 clinical trial patients. I think I remember you guys talking about at launch that you had a hope to get that full 200 number sort of converted of clinical trial patients. Can you maybe talk about what's going on there with those that have yet to convert, those clinical trial patients?

So good observations, Chris. I think your observations are correct, and we just need to give you kind of the simple answers behind that. So they were approaching 200 patients in the clinical trial program, some of which stayed in an extension study and have continued in that extension study because they have a dose that's higher than the label dose. That -- I think we communicated at the time, there were about 160 patients at the label doses of up to 40 milligrams that we would expect to be transitioning to commercial, and we've been working on that. What we've experienced at that 160, we have some patients that have lacked insurance, and some patients, we've had kind of extended periods of time working for reimbursement approvals. So at the end of January or at JPMorgan, we reported 112 of those patients were on reimbursed therapy. As of 12/31, that's gone up to 123 as of February 15. And we're continuing to make progress against that 160 patient-or-so number from the clinical trial. At the same time, the rate of new patient referral has been going on. It's about 6 weeks on average from a new patient referral coming in to the time that we start those patients, so we've got more momentum going on with new patients. So we'll be working on both of those different cohorts. But the new patients or the previously naive to patients are going to start overwhelming completely the clinical trial population this year.

Great, and maybe, if you'll bear with me on another valrox question on the factor of whole issue around factor levels. We do get a ton of questions from investors on what to expect. And maybe -- I hear what you're saying with respect to FDA cares most about ABR rates, et cetera. But maybe, Jeff...

In the long term, in the long term. Not in the short term.

Right, exactly, yes. And so just assuming that, that holds up, right. And you -- whatever number you present, maybe Jeff, could you talk about what payer discussions you've had with respect to that long-term factor expression level in terms of what they're looking for?

Payers are focused in part on durability. That's a big variable for them. And payers are very pragmatic, practical people. And they say, well, we'll want to see the data when you get there in terms of durability. And recognizing that nobody is going to wait around for 10 years to see what 10-year data looks before patients get treated. This has -- I'm talking about, well, how do we risk mitigate against the variable of durability if we're approving patients for treatment. And what's clear is that, when the payers are thinking about durability, they're thinking about 2 things: first is annual bleed rates or bleed rates; and the second is, [concomitant] utilization or not of factor replacement. Those are the 2 things that they care about.

Next question comes from the line of Ying Huang from Bank of America Merrill Lynch.

It's Aspen on for Ying. So first for valrox, can you remind us the FDA requirements on the accelerated filings, specifically what Factor VIII level we’re looking for with which assay? And then on vosoritide, can you talk at all about how the safety patients are doing beyond the 42 months? Are you still seeing a durable effect on EGV?

So what Factor VIII level, which assay? So chromogenic substrate assay, nonhemophiliac range above 40 IU per deciliter. Well, we haven't specified a statistical test and how many -- what numerator, what denominator? But we've had good, clear discussion with the FDA about that. And as we said at JPMorgan earlier, we have -- we have already enrolled the sufficient denominator, and now we're waiting for the data to mature before talking about what the FDA as to its viability. As far as...

The time frame is (inaudible) 6 to 12 [months].

Measured as early as 22 to 26 weeks and taking no longer than 52 weeks to gather all of the data, that's pertinent to that accelerated approval final package. On the sort of that beyond, we just reported the 42-month data 2 months ago, 3 months ago. So we -- I would say, don't look for another update from us until maybe a year from now, roughly. And the key catalyst that's happening between now and then anyway is the pivotal 301 clinical randomized double-blind clinical trial. I think we've very convincingly established that effect -- that sort of durable. And now we have to finish our pivotal trial in the other 3 prongs of our program.

Next question comes from the line of Robyn Karnauskas from Citi. Next question comes from the line of Tim Lugo from William Blair.

For the Phase II vosoritide infant and young children study, what is the growth you're seeing for that 3-month baseline run in? And how does that compare versus what you noted in the older patients and maybe natural history and what normal healthies look like?

Yes, there is a slide, I think, the agency showed at the AdCom that's from a Julie Hoover-Fong study published in 2008, which looked at AGV and achondroplasia as a function of age. And over the first 2 to 3 to 4 years of life, AGV drops dramatically before stabilizing from about year age 5 to the prepubescent period at about 5 centimeters a year -- so -- or 4 centimeters per year, I should say. So when you ask what's the expected growth rate for the under-5 population, it very much depends on whether you're talking about a 4-year old, a 3-year old or a 2-year old. And the range can be as much as, for example, 8 centimeters off the top of my head. I want to say that the average growth velocity for a 4-year old. But for a 1-year old, the 1-year old might be expected to grow more, off the top of head. I don't what number more. but -- so it's a very steep decline in the AGV untreated natural history population. And that's a big part of why people are so interested in treating patients from an earlier time point. I mean, that's when most of disproportionality sets in, and that's when most of the loss of stature happens.

So as a follow-up, are you just going to match against that natural history kind of on a per-patient basis? Or are looking for some sort of average, like you mentioned for the 4 centimeters versus 6 centimeters of average children at achondroplasia in the past?

Well, both the over 5-year-old study and the under 5-year-old study have been placebo controlled for a year, so there won't be no need for matching the year long. Where matching could be relevant is, what did it all add up to in terms of cumulative height gain compared to an untreated population. That's where our ongoing natural history study will be very important. Where we can match patients by, say, Tanner stage, gender, baseline age, baseline parental height. And where one group is no vosoritide treatment and other group has got, say, 4 or 5 years of vosoritide treatment. That's how we can get to the -- what did it all add up to the portion of the discussion?

And this will only inform safety and the package that eventually submit and not efficacy for this patient population?

Well, it's a little early to talk about what's going to be in the package insert -- you could imagine us supporting both in the sense of -- people really do care -- if I'm putting my child on vosoritide or any growth medication, what can I expect as the ultimate outcome? So I don't want to predict where the agency's going to come out on this. But it's certainly been an important topic of discussion between us and them, and we're doing a fairly robust evaluation of what does it all add up to. So I would be surprised if it doesn't make its way into a package insert, but we got several rivers to cross still.

Next question comes from the line of Akash Tewari from Wolfe Research.

So according to our calculations, it seems that Factor levels are somewhere between 35 and 40 using -- at Year 2 using a chromogenic assay. With that in mind, would the team internally be surprised that, in the 3-year update, Factor levels had drifted below 30? And I guess, more broadly, are you comfortable with this idea of where the Street is, where this midyear valrox update is now becoming kind of a -- it's going to prove whether circularization theory is true or not? Like, how instructive is the 3-year update in terms of that long-term theory? And then on your PKU gene therapy, so it looked like the data we got at the R&D Day was using your mirroring construct. So just to clarify, are you able to show lifetime durability using a [humanized] construct? And what type of translational work are you doing with nonhuman primates in order to get a better understanding on how your -- how 307 will behave in patients?

Want to take a [shot] at BioMarin because that was -- that's a lot stuff that we want to cover. So let me start with just first clarifying that we showed the 2-year data at the World Federation for Hemophilia using a 1-stage assay. At the end of that 2-year time frame, I think the mean, off the top of head, was about 46%. We've also stepped -- in the launch phase. We've also said that chromogenic is about 60% of the value of the 1-stage assay. So you might have been a little high when you were using numbers to the 2-year chromogenic type. I think our number would be -- it's around 26%. And so we would regard stabilization as nought to minus within that 26%. As far as long-term durability, how much will we informed about hypothesis? I'd be willing to bet all my money that no matter what we present at ISTH, there's going to be another hypothesis about why it's going to wear off next week. And so I would just pull back a little bit and just remind that the -- the people have been working on vector design for a long time. And durability of expression is been a huge consideration. And the relationship between durable forms of the vector and vector design has really been investigated quite intensely. And our expectation about durable expression really comes from those experiments as well as experiments that we've done as well as other investigators that have shown that once you get the vector in and regardless of short-term expressions in protein, the vector stays in. That's also assuming, by the way, there's no [any type of hepatitis] as others have observed, not us. So our expectation is, is that there will be long-term durable expression that it will validate that the way we design the vector, recapitulates what's been observed in prior vector design work and that we'll face a well of additional new hypotheses that are generated about year 4 and year 5 and year 6. As far as the construct's use for 307, we showed you both the mirroring construct going out a really long time and shorter duration experiments for the human construct. You can't evaluate durability of expression of the human construct in a mirroring species given the heterologous nature of the protein. So the experiments that we [indiscernible] species. The -- so the experiments that document durable expression were done with mirroring construct. We have no reason to expect that in humans the human construct will behave any differently. And I think your last question was about nonhuman primates, but I think we've covered a lot of ground right here.

(Operator Instructions) Your next question comes from the line of Paul Matteis from Stifel.

This is [Nate] on for Paul. I guess just one on vosoritide. Beyond growth velocity, are there any other key elements to the data, maybe bone ratios or any other medical complications, something like that, that might be important from a regulatory perspective?

Safety. And not because there's a particular safety hypothesis, but just that you're asking about any other. And we're accumulating a very large safety database. We have an ongoing randomized pivotal trial that will be fairly definitive for evaluating safety and getting rid of any concerns about hypertensive episodes. So safety in the younger population will have available for market authorization submission. So in terms of the FDA initial decision benefit risk, benefit is going to be principally driven by consideration of the high-velocity gain risk, safety overall with no particular signal generated so far. Functionality, proportionality, bone health, all academically interesting, all scientifically interesting, not particularly key from a regulatory perspective. All ground pretty well-covered by the advisory committee in May giving advice to the FDA on design of clinical trials in the contemplative patients. And if you go back to that, you'll see, our program pretty closely matches the FDA's advisory committee's recommendations for a development program. So it's mainly, efficacy, EGV, long-term outcomes, height gain and then safety considerations, mainly in the target population but also in very younger patients.

Our next question comes from the line of Ellie Merle from Cantor Fitzgerald.

Just on hemophilia, again, you guys seem very confident in seeing durability after year 3. If you do not see durability to the way that you define it, would this change anything about sort of your future plans or time lines for your other gene therapy programs at all? And I guess, how much of the manufacturing capacity are you holding for hemophilia?

We haven't done a lot of scenario planning around durability post-ICHS simply because the expectations and expressions will be durable. I don't know, J.J., if you want to add anything else.

All -- I mean, base line meeting, we know, and again the animal data, the Factor IX experience. We believe that it's likely that we're going to have a durable people effect here in terms of dramatic reduction in bleeding episodes and Factor VIII replacement units. And so we're not really planning on this scenario. And also, I mean, it will depend if anything happens as to what are the reasons. But I mean right now, we're going full blast on the PKU gene therapy program. Pretty unlikely that that's going to change.

This is Robert Baffi. So what we reported at R&D Day is that we have capacity for 4,000 patients per year at the highest dose. And we are prepared to apply that capacity to ensure that can meet all the commercial demands for valrox when approved.

And [next year] we could move to 5,000 patients with a minimum investment in same facility adding some equipment should we need to have capacity beyond 5,000, by the way, that would be a combination of potentially valrox and some PKU clinical trials and (inaudible) PKU gene therapy. So we already are making plans for a second facility, It's too early to pull the trigger for that one. And I'm looking forward to the day when we have -- we're running out of capacity at 5,000 patients per year at about $2 million or $3 million per patient.

Next question comes from the line of Whitney Ijem from Guggenheim.

Just a quick one on hemophilia again. In terms of the medical community or patient community, I guess, focus on the faster level from a longer-term perspective in the context of the -- some of the micro bleeds and other issues that might occur in the mild range that maybe aren't captured by an ABR?

Yes. I went to a great symposium that was sponsored by Spark on sector level, all that matters are just some of the other considerations matter. And you're absolutely right that there's more to this than just Factor expression. And one of the things that I -- that we're very intrigued by is our quality of life data, which kind of ties to micro bleeds, very difficult to measure clinically, micro bleeds, more straightforward to measure quality of life. We use this instrument called Haemo-QoL-A validated in hemophilia studies. And what was shown in that -- in the use of that instrument is, is that all domains improve from pretreatment baseline. And that improvement continues in year 2 over year 1 even while this whole back is helping like you call it in the factor expression levels was occurring. So we think that there's good, strong evidence for there being more to gene therapies benefit than [assorting] Factor VIII levels or stopping ABRs, stopping Factor VIII is improving quality of life. This by the way is very important to Jeff Ajer sitting to my right because the value proposition for patients is contained in way more than just simply the offset of Factor use. Now having said all of that, you're asking about what the patient's perspective, right? A patient was a panelist on the symposium that I went to. It's really interesting because he spoke about all the other considerations and benefits, but at the end, the chair of the panel asked the patient, "So if you were given a choice between a gene therapy which produces, let's say, a mild degree of correction or a more fulsome degree of protection, which would you rather take?" And the patient said, "Are you kidding me? I want the high-dose stuff." And so I thought that was also pretty profound because it speaks directly to the question you're asking. What do patients prefer? They want the whole package. They want ABR reduction. They want Factor reduction. They want durable expression. They want bleed control persisting through a number of years. They want improved quality of life. They want to live as close to a normal life as they can. They want to increase their activity, which you can't really do when you're mildly hemophiliac. So that they want the values to be as close then to the nonhemophiliac range as they can get.

And that answer from the patients in our competitors' symposium is consistent, again, with the 95% of the patients that are preferring the high dose to the low dose in our own trial.

Next question comes from the line of Edward Nash from SunTrust.

This is Fang-Ke Huang on for Edward. The first question I want to ask is around the MPS IIIB program. Can you guys give us some guidance in terms of your regulatory strategies?

Not much more than we've said previously, which is that the industry has put out a guidance document for slowly progressive diseases. We're studying it very carefully. There's almost certainly an accelerated approval pathway there based on normalization of the substrate which accumulates and is responsible for the disease. But we're still in the collecting the primary data phase. So it's a little early still to be talking about a regulatory strategy. Other than just awareness of the evolving regulatory landscape for transgene replacement therapy.

Next question comes from the line of Kennen MacKay from RBC Capital Markets.

Maybe just a housekeeping question. I was wondering if you could comment sort of globally what the impact of net pricing has been sort of across the portfolio versus prior years and how that's baked into guidance if we're sort of seeing increased headwinds here? And then additionally, on the Palynziq patient switch guidance. Seems like maybe about 50 patients so far have switched from Kuvan, some of these adult patients. Could you maybe help us understand what percent of Kuvan patients are adult versus pediatrics and adolescents and potentially susceptible to this cannibalization. And is that 35% switch trend baked into the Kuvan guidance?

All right. I'll start, and then I'll have Jeff answer your question on the patient switch on Palynziq. For the net pricing, I don't know exactly what you mean, if you mean the issue of gross versus net regarding rebates, which is something that happens a lot in the big pharma industry. At BioMarin, we do not rebate whatsoever, so if this is your question, the impact of this potential regulations or challenging regulations on bottom line is 0. Was that your question, rebates related?

Okay, [so then] maybe a take on the other question about Kuvan to Palynziq switch. So yes, our experience so far is 35% of our naive to treatment patient referrals are coming straight over -- are patients coming straight over from Kuvan. And based on the total number of enrollments we've got that is 344 as of -- well, I'll quote a different number. Just 35%, we're talking about a little over 120 patients that are coming over from Kuvan so far. And in terms of our guidance, it's exactly correct that we've taken that into account when providing the 2019 guidance. So we're expecting that our adult patient population on Kuvan is wanting to reduce modestly and not dramatically. We will continue to see increases in our pediatric population on Kuvan, and the combination of that results in the guidance that we provided.

And how many adults on Kuvan, also another further question.

It's about 40-60 mix adults and pediatrics.

in the U.S.?

In the U.S.

So the 100 is a relatively small fraction of the overall (inaudible) adult population?

Yes, yes. Although again, I think even in the long term, we -- this is good for (inaudible) which you talk about patients to Palynziq. As you know it's anticipated that [sharing] competition will occur in the Q4 of 2020. So that is not something you want to forget. That's something you want to be [fresh].

Next question comes from the line of Liana Moussatos from Wedbush Securities. (Operator Instructions)

So for valrox pricing, did I hear, J and J -- J.J. correctly say $2 million to $3 million per patient in the manufacturing question? And if not, what would be an appropriate range? And would you include redosing?

So what I say is that -- let's assume we can demonstrate 4 to 5 years of -- can you go back in terms of elimination of need for becoming Factor VIII [injections] only treatment of the hemophilia patients. The metric is in the background metric. The metric is the -- if you look at severe hemophilia patients on prophylactic Factor VIII fairly -- 2 to 3 times a week or for patients that -- a few patients that will potentially be taking (inaudible). Surprising which for adult patients between $700,000 and $800,000 a year, so you multiply this by 4 or 5, and that's the background of the kind of economics we're dealing with. We’re not communicating the price, but this is just the metric there.

There are no further questions. I'll turn the call back over to Chairman and CEO J.J. Bienaimé.

Well, thank you, operator, and thank you all for participating on our call today. So 2018 was a normal year for BioMarin. We grew revenues to nearly $1.5 billion, while we advanced the 3 potential blockbuster products, which are our largest market opportunities today. So our financial discipline, our focus on expense controls and margin improvements will continue throughout 2019 and beyond. So I want to thank you. We want to thank you for your continued support, and we look forward to keeping you apprised of our progress throughout the year. Goodbye.

This concludes today's conference call. You may now disconnect.