Good day, ladies and gentlemen, and welcome to the BioMarin Pharmaceutical's First Quarter 2016 Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Ms. Traci McCarty. Please go ahead.

Thank you, operator. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical, including expectations regarding BioMarin's financial performance, commercial products and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market and developments by competitors, and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K, and 8-K reports. On the call today from BioMarin management are: JJ Bienaimé, Chairman and Chief Executive Officer; Dan Spiegelman, CFO; Hank Fuchs, CMO; Jeff Ajer, Head of Commercial; Robert Baffi, Executive Vice President of Technical Operations. Now, I'd like to turn the call over to BioMarin's Chairman and Chief Executive Officer, JJ Bienaimé. Jean-Jacques Bienaimé: Thank you, Traci. Good afternoon and thank you for joining us on today's call. Given our recent extensive pipeline update, Hank will not be making any prepared remarks today, but he will be available during the Q&A portion of the call. Starting with our commercial results, we begin 2016 with strong revenue growth, reaching $236.7 million in revenues this past quarter, an increase of 16.7% compared to the same period in 2015. This result was driven by the continued robust commercial uptake of VIMIZIM, which contributed $72.6 million in the first quarter, an increase of 43.5% year-over-year. Importantly, KUVAN revenue in the first quarter was $76.9 million and included a $16.9 million from new international markets that we acquired last quarter from Merck, as well as $60 million from North American territories, roughly 20% increase in those territories from last year. For those of you that were not able to attend or listen into our Annual R&D Day, I…

Thank you, JJ. We are extremely pleased with the continued growth, robust commercial uptake of VIMIZIM and are happy to report our highest quarterly results to-date. We begin 2016 with first quarter VIMIZIM revenue of $72.6 million, an increase of 43.5% over the same period last year. Revenue growth for VIMIZIM is paced by growth of commercial patients, which has doubled in the past year. Sales performance was particularly strong in the EMEA region, as clinical trial patients in the UK converted to commercial and we experienced further penetration in a number of markets. Relative to the timing of large orders impacting quarterly revenue, we have seen some examples of that with VIMIZIM since a large order in Q3 2015 from Latin America, and we'd guide to expect some choppiness in the future. We continue to see a steady rise in identified patients, increasing to over 1,900 in the quarter. We gained access to three new markets for the first quarter for a total of 36. As a result of the strong demand we are seeing for VIMIZIM, we are increasing full year guidance to between $315 million and $340 million, driven by increased patient penetration, as well as contributions from new smaller markets. And now turning to other commercial products. NAGLAZYME revenues in the quarter were $65.4 million, lower than Q1 2015 revenues of $78.2 million, but an increase over the prior quarter $59.7 million. As previously discussed, quarterly revenue volatility is primarily due to inconsistent Brazil central government order patterns. The year-over-year revenue volatility is primarily due to a large Brazil order in the prior-year period, which did not repeat in Q1 of this year. Recall that in 2015, the timing of large orders from Brazil, particularly in Q1 and Q2 of 2015 had the impact of creating…

Thank you, Jeff. Earlier today, we issued a press release summarizing our financial results for the first quarter, and I refer you to that release for full details. JJ and Jeff have already described top line results, so I'll move directly to operating expenses and bottom line results. With the exception of today's increase in full year VIMIZIM guidance and updated GAAP net loss guidance that I will describe momentarily, we reiterate all elements of our full year revenue guidance, including the expectation for full year total revenues to come in between $1.05 billion and $1.1 billion. As a side note, exchange rates have largely stabilized compared to last year's volatility. And net of our hedging, we did not see any material impact of year-over-year FX rate changes on Q1 revenues. Moreover, thanks to the recent strengthening of the euro versus the dollar, and since approximately 50% of our revenues are in dollars with a little over 30% in euro, even with continued weakness in Latin American and other emerging market currencies based on exchange rates in April, we do not project a significant impact of foreign exchange on full year constant currency revenues in 2016. Moving to operating expenses, the two largest items of note in our Q1 income statement relate to the accounting for the reacquisition of the ex-North American rights to KUVAN and pegvaliase, which closed at the beginning of the first quarter. The first accounting impact of this transaction is reflected in cost of sales. As part of the acquisition of the Merck Serono PKU business, we acquired some inventory, which per the purchase accounting rules is placed on the balance sheet at fair value, or nearly 90% of the expected selling price. We sold half of this inventory in the first quarter, resulting in an…

Thank you. And our first question comes from Michael Yee with RBC Capital Markets. Your line is open.

Hi. This is Andrew Ty (20:49) on for Michael Yee. Thanks for taking my question. I just wanted to talk on achondroplasia. Great data at the analyst event. In second half 2016, will you disclose the 30-microgram data at a major conference? And I guess a second question to that is, how good do you think efficacy needs to be and can you talk a little bit about your expectations for its side effects? And maybe a third question would be, at what point would you seriously consider the 60-microgram dose? I think that you have a Phase 3 protocol allowing for that. Thanks.

Okay. So, I don't know that we've distilled our concrete plans or providing an update on the 30-microgram dose cohort. As far as – I think your second question was kind of what's the efficacy target, what's the safety consideration? The efficacy target is normalization of growth velocity, and we believe that growth velocity can serve as the primary endpoint. The on-target effects of the peptide are potentially cardiovascular-related, although we haven't seen that to a clinically significant degree. And your third question is related to the 60-microgram dose, and we haven't made a decision on when or whether to start a 60-microgram cohort. We believe, in summary, that the 15-microgram dose, which supports achievement of normalization of growth velocity is by itself sufficient to warrant a registration enabling trial.

Great. Thank you.

Thank you. Our next question goes to Joseph Schwartz with Leerink Partners. Your line is open.

Great. Thanks very much. Maybe I could just follow along with a vosoritide question first, for you, Hank. And can you give us some insight into when the FDA meeting will occur, how you'll communicate the results of that? And then I know that you're gearing up for the primary end point being growth velocity improvement and that's been fine for the growth hormones in short stature, but achondroplastic patients have a lot of other health complications. And as we've seen recently certain endpoints aren't really always convincing the FDA that they'll translate into health improvements. So can you give us some additional, some more of your thinking in terms of whether the FDA might want to at least see a trend there? Or why are you confident that just growth velocity improvement will suffice?

Hi, Joe. So as far as the specific nature of the ongoing regulatory dialogue, kind of who said what and when, that's stuff that we don't usually get into. There's a lot of back and forth and there's a lot of aligning with the health authorities internationally. Where we – when you will know what we've arrived at in terms of agreement on the registration pathway is when we start enrolling the Phase 3 trial to support registration. And we'll provide any relevant color about the study design and its acceptability, too, from a health authority perspective at that time. As far as what else to show, the statement that you made was that growth velocity might be acceptable in a growth hormone context; is it going to be sufficiently acceptable in an achondroplasia context? I think the growth hormone experience is somewhat relevant and somewhat informative in that it establishes that growth velocity can be used as a registration endpoint and is a framework that we think is relevant to thinking about achondroplasia. But you're right, there are other medical complications of achondroplasia, as was featured in our last two speakers. Two R&D Days ago, we talked about orthopedic and skeletal complications, and at the last one, Dr. Ravi (24:14) talked about some of the medical complications. Whether the medical complications can be fully captured – the other medical complications outside the statute of limitations can be fully captured as a primary endpoint in the clinical trial, I would be somewhat cautious about. And whether we can obtain secondary endpoint data – as forward option (25:38) or payers reimbursement, and that sort of thing, I'd say let's hold on, and let us do a little bit more work on study design, and discussions with health authorities, and we can come back to you and talk about what we decided was primary, what we decided was secondary and why.

Okay...

I'll also go back to, the fundamental belief here, though, is that this achondroplasia starts in the growth plate which is overtly defective. We've shown that we can correct the defect and normalize growth velocity. It taught us, therefore, that a lot of the subsequent sequelae will be benefited. It's just a question of how long you have to treat and follow patients to demonstrate the correction of the skeletal deformity, and so just stay tuned.

Thank you. Our next question comes from Salveen Richter with Goldman Sachs. Your line is open.

Thanks for taking my questions. So with regard to Latin America, just curious; other companies have been discussing how the political instability is affecting order volumes from Brazil, I mean, as well as Venezuela. So do you expect that this will play out for both NAGLAZYME and VIMIZIM just given your guidance here is intact? And then secondly, when we look at these products, NAGLAZYME in particular, we've seen uneven buying patterns in the past, but it's been relatively Q2-heavy last year. Should we assume you're really in a kind of a – maybe it's not as uneven and you're kind of going to be more Q2-focused? And then how should we think about VIMIZIM in this regard, too?

Thanks, Salveen. Great questions. Starting with Latin America political instability, BioMarin doesn't have exposure to Venezuela, so the political and economic instability in the region really applies to Brazil, and there is some additional economic instability in other important markets, such as Colombia and Argentina and even Mexico. So we are watching those markets carefully. We are trying to manage our business and our exposure to that instability carefully. So far, the major impact to us was, has been foreign exchange and order patterns. And as noted, we had big orders for NAGLAZYME in Q1 and Q2 of last year, big orders for VIMIZIM in Q3. We haven't seen the NAGLAZYME quarter repeat yet, but the buying process has started for NAGLAZYME, and it's probably worth noting that the buying process for VIMIZIM in Q2 is already essentially completed. So we have seen material orders for VIMIZIM there. In terms of uneven buying patterns going forward, I don't think my expectation is that the business will always be Q2-heavy. What I would say is that we have experienced some large, and then some very large orders that obviate the need to buy in one, two or even three subsequent quarters on occasion, and that's the kind of pattern that I would expect to see going forward. And finally, just a little editorializing; the big orders' impact are hard to model and impact a little bit the interpretation of subsequent quarter sales. But from our perspective, in a volatile market, getting those big orders is great because it secures product supply for one to several quarters for patients in market. Thank you.

Thank you. Our next question comes from Ying Huang with Bank of America Merrill Lynch. Your line is open.

Hey, guys. This is Anton (29:51) on for Ying. Thanks for taking my questions. So first, with the other exons for KYNDRISA do you guys have any plans to move forward with those, or are you waiting for EU decision? And then which steroid are you guys using for the hemophilia trials? And then do you guys have any sort of rationale behind the observation week and then the expression level that we're seeing? Thanks.

We're waiting for EU, KYNDRISA before making final decisions on the development strategy for the other exons. I believe the steroid that we use in the hemophilia program is prednisone, but for the most part the steroids are more similar than different from each other, at least within the group of corticoid steroids. And your third question was... Jean-Jacques Bienaimé: The relation between expression levels and time from treatment.

Well, all we can say based on the hemophilia A program and we're the only ones in the clinic and the furthest along is that it seems to be rising with time. That's different than the pattern that has been seen with hemophilia B, where there is more of an early liver response, a suppression of the Factor IX expression, and then with steroid therapy a stabilization at much more lower levels. We don't – I don't know that I can explain at a molecular level yet the differences in the pattern. That it's – we're in a world where we're just describing what we're seeing in real-time. But it's pretty consistent among the patients as JJ mentioned that in his prepared comments that with more time Factor levels rise before plateauing at a much higher level, that has been observed from the hemophilia B trials. Jean-Jacques Bienaimé: Which is good news.

It being the objective to get closer to normal levels of Factor VIII. Jean-Jacques Bienaimé: The point being again is that the results we presented last week in New York, we said we were – preliminary interims, obviously we don't know the final results, and the results when we have the full 16 weeks of all patients will be, should be somewhat different, hopefully better.

Thank you. Our next question comes from Chris Raymond with Raymond James. Your line is open.

Great. Thanks. I wanted to maybe go back to Latin America real quick for a second. So I heard that your answer to the last question, but could you just maybe confirm, are you seeing any sort of artifact where decision makers are actually delaying new patient starts or skipping doses? Is that happening? Or is this just basically a, as you described, intra-quarter chop?

Hi Chris. This is Jeff. Yes, we have seen and it's normal in that region for patients to have delayed starts. I would say that's not unusual but usual. It's our job to get those patients through the delays associated with patient starts. And with respect to skipped doses I think the effect that you're referring to is what we would call discontinuity of supply, meaning supply runs out for certain patients in market for a period of time. And I would say that's also been an effect that we have seen over time in Latin America for different patients and different markets. So again that's something that is really our job to manage through to maintain high levels of compliance and adherence.

And maybe just a follow-up. You mentioned other countries, Argentina for example. But just can you clarify, and I'm not asking for a specific country by country break down, but is Brazil pretty much the lion's share of revenue base there? Or is it perhaps spread out among other countries in that region?

For BioMarin's business, Brazil has historically been the largest market for NAGLAZYME annually in Latin America. And Brazil and Colombia are shaping up to be the biggest markets for VIMIZIM in Latin America. Jean-Jacques Bienaimé: But to answer your question another way, based on what we're observing today in these countries, we are raising VIMIZIM guidance and we're not changing NAGLAZYME guidance.

Thank you. Our next question comes from Tim Lugo with William Blair. Your line is open.

Thanks for the question. So historically, you've been investing in R&D in your large pipeline, however, SG&A looks a little light this quarter and it looks like it's been trending well actually over the past two quarters. Maybe, JJ, can you talk to, is there a cultural change going on within BioMarin, one more focused on profitability? And maybe the guidance you've given to 2017? Jean-Jacques Bienaimé: Great. Thanks for the question, Tim. I mean, we – I don't think we were in the past not focused on eventually getting to profitability. I think in the past few years we've been building our commercial organization to launch sequentially several products around the world. And definitely we have two global products, NAGLAZYME and VIMIZIM where we had to increase our SG&A spend to deal significant commercial medical affairs, financial operations around the world. So that's why we had to keep increasing our SG&A. I'm not saying we're plateauing but we're reaching a level where there is less of a build-up, and indeed, we have communicated very clearly in the past year or so that we are – our goal is to be breakeven to slightly positive on a non-GAAP basis in 2017. So we're moving towards that goal, but at the same time, we're helped by the fact that our rapid growth is all behind us. And we're going to keep growing, but the rapid, rapid growth that we experienced in the past three years or four years is somewhat behind us in the short term.

Understood. And Dan, maybe can you speak to any sort of swings that you expect for expenses that maybe a swing factor is coming up in Q2? Is it mostly KYNDRISA? Is it vosoritide Phase 3? Because it looks like the trends are very positive.

Quarterly – we don't expect big variability in quarterly expenses relative to our guidance throughout the year.

Thank you. Our next question... Jean-Jacques Bienaimé: And – but there are lots of variables at play, and obviously, what happens with KYNDRISA Europe will have some impact on our SG&A and R&D spend, but based on all our scenario planning, we still believe and reiterate that whatever happens with KYNDRISA Europe, we still believe we can breakeven to slightly positive in 2017 on a non-GAAP basis. But if we get approval in Europe, it will challenge obviously our spend in some quarters as compared to lower growth.

Thank you. Our next question comes from Geoff Meacham with Barclays. Your line is open.

Hey, guys. This is Evan on for Geoff. Just a few questions on hemophilia. JJ, you had mentioned something about a discussion with the European health authorities. I didn't quite catch what you said. Is that some sort of a gating event that you need to get through? Can you just repeat what you said? Jean-Jacques Bienaimé: Yeah. Maybe Hank will be more articulate than I was.

Perfect.

Well, what JJ said was, as we previously noted, due to an increase in liver enzymes in two patients who did not receive prophylactic steroids, we will not enroll the final three patients until we discuss our findings and agree on next steps with European health authorities. We continue to accumulate data with the first nine patients, including seven patients treated at the high dose, and still expect to provide 16-week data on all patients before year-end.

And do you – I mean, do you see this as a big risk to the program at this point? Or is it just kind of an early safety precaution to make sure that you're checking the box?

Early safety precaution to make sure we're checking the box. We went over it in a little bit of detail at the R&D Day, patient number one, when the event occurred, a very different pattern from patient number three, a very mild elevation of liver enzymes, and so, and this is out of abundance of caution, first in man, a novel gene being delivered for the first time. Jean-Jacques Bienaimé: And also somewhat reassuring is the fact that, it's still early, but with all the patients at the highest dose for which we have given prophylactic steroids, we haven't seen any significant liver enzyme elevation in these patients so far.

And also remember we're talking about not Factor expression of 5% and we're barely hanging in there. We're talking about four of our patients have double-digit Factor expressions even as early as 8%, and two of our patients out later are in the above 50% in the range of Factor VIII expression. So more out of abundance of caution.

And just one other thing. When patients get to that 50%, is there any risk for an immune response or developing of inhibitors? Is that a concern at all?

Well, inhibitors are generically a concern. The type of patient population that we're treating are heavily pre-treated and the rate of inhibitor development in heavily-treated patients is relatively low. So and we're presenting a product, if you will, or we're instructing the liver to manufacture a product that looks just like Refactor (40:29), a product that they would ordinarily be receiving. So we don't have an expectation that inhibitor development would occur at a higher rate in gene therapy treated patients than in patients who are treated with, in the normal prophylactic course of Factor replacement therapy.

Great. Thanks for taking the questions. Appreciate it.

Yes.

Thank you. Our next question comes from Ian Somaiya from BMO. Your line is open.

Hi. Thank you. It's Matthew (41:04) on for Ian. I wanted to actually follow up on hemophilia as well specifically the patient, I think it was patient three, that went back on steroids. I just was looking to get a little bit more color on sort of the where they are in terms of maybe the long-term dosing outlook for steroids. Is it going to be tapered over time? If you're willing to share what the actual dosing protocol is, that would be great. And then on VIMIZIM you highlighted the EMEA as being particularly strong and I was just wondering if you could provide any additional color on what drove, or why the region was particularly strong and if these are setting the stage for continued strength there or if these are a reflection of perhaps one-time gains just in this one quarter? Thank you.

So on the steroids regimen, patient number 3 was in a treatment mode, that is to say we waited until we observed the nerve function tests to increase. We have now subsequently implemented prophylaxis. As JJ indicated there are no patients that started on the prophylactic regimen that are experiencing abnormal liver function tests. So I don't know what conclusions, if any, to draw from the one patient who was treated in response to an increase in liver functions versus what will happen to patients who are prophylaxed. The belief is that if we prophylaxed, we'll need less steroid for a shorter period of time, although it's still early and it remains to be shown in a larger number of patients that that can be reliably achieved. I don't think we're going to get into the details of the specific steroid regimen of a specific patient on this call. Now I'll turn it over to Jeff for the second half of your question.

And Matthew (43:04), thanks for your question. The VIMIZIM performance in EMEA was particularly gratifying for Q1, and we think that's durable, meaning not an impact of large order timing or something like that. The two factors going on there, at the end of 2015 or so, we announced that we had come to an agreement with NHS in the UK. And so one of the effects in the first quarter was transitioning a large number of our clinical trial patients and some other patients on the commercial VIMIZIM in the UK. And the other effect was just general, further penetration in some pre-existing markets in the region and several new markets that began buying. So again, it's probably a durable effect for future quarters.

Thank you. Our next question comes from Phil Nadeau with Cowen & Company. Your line is open.

Hi, this is Jeff on for Phil. Thanks for taking my question. Just a question on gene therapy in general, I mean with the promising early data that you're seeing with the BMN 270. I think you mentioned during the R&D day that gene therapy is an interest for BioMarin. So have you – are you satisfied with where your manufacturing capacity and platform is right now, or do you envision sort of broadening that out to a bigger spend or adding to that platform?

Yeah. This is Robert Baffi. Thanks for the question. As we've shown with our other programs we get to leverage the technology we've developed for our commercial products, many of the manufacturing techniques that are used for production of VIMIZIM, ALDURAZYME, NAGLAZYME are directly applicable to the gene therapy production and as we, over time we clearly intend to build capacity to meet clinical and commercial needs as they arise. We feel very confident in our science and our abilities to meet those needs as they develop.

Thank you. Our next question comes from Mark Schoenebaum with Evercore. Your line is open.

Hey guys. This is John in for Mark. Just a few questions. The first one, I guess on VIMIZIM. I was wondering if you could give us the quarter-over-quarter sequential patient growth number and if you expect this kind of whatever growth it is to continue throughout the year. And then a couple on hemophilia, I guess first for the patients that you – for which you're currently tapering down the dose of prophylactic steroids, I know and I think that JJ hinted at this but can you give a little bit more color on how those ALT levels have changed? So I guess my question is as you've tapered down prophy steroids, are ALT levels still unchanged from the patient baseline or are they just not quite moved up past the limit, upper limit of normal? And then finally, on your $1 billion peak hemophilia gene therapy guidance I was wondering what your assumption are for pricing. Are you assuming a pay-for-performance model or price per injection? And any color you could provide on that would be great. Thank you. Jean-Jacques Bienaimé: Shall we start with you?

Yeah. So, I don't think we've been disclosing quarter-to-quarter patient numbers. We did say in the prepared remarks that by the end of Q1 of this year patients had doubled since Q1 of 2014. So that's some intelligence there. Jean-Jacques Bienaimé: In 2015.

2015, sorry. And I'll turn it back over to Hank for the question about steroids.

Yeah we, for the patients who are on prophylaxis, we have not given the details of where they are in their steroid course and tapering it, but the liver enzyme response has been as there have been the dose changes to the prophylactic regimen. What we have said is that patients don't have abnormally high levels of ALT while on prophylactic therapy. That's different than the low-dose patient and it's also different than the first patient at the highest dose who was treated. For the prophylactic patients, our characterization is simply then they have not gone above the normal range. Jean-Jacques Bienaimé: And then your other question I think is on pricing of gene therapy? I mean, this is still early here. We have some time to figure out what to do there. We have already done some preliminary pricing research in the U.S. and Europe. And actually the field is kind of evolving there. And in Europe now in a few year payers might be or they are open to a pay-as-you-go or pay-per-performance. So this is all the stuff we're exploring, and we'll keep you up-to-date as we make some progress and get closer to launch (48:40)

No, I think that's perfect. Thanks, JJ.

And this is Dan. I'd say that the different models, the different payment models we've modeled out don't change the peak revenue. But it does change the timing – the time course of the revenue. Jean-Jacques Bienaimé: And also, because we see it early in the offer of this product – we see our pricing decisions would also driven by the efficacy we see with BMN 270. I mean, very encouraging right now. I mean that definitely will drive the final pricing decision. If we're at 5%, on average, versus 25%, 30%, 50%, that does make an impact on our pricing decision. And if we raised it up (49:31).

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to JJ Bienaimé for any closing remarks. Jean-Jacques Bienaimé: Thank you, operator. So as discussed earlier, we started the year from a position of strength. We delivered an excellent quarter of nearly 17% growth in total bottom line revenue year-over-year, and a multitude of (50:17) there with our cross-development portfolio. BioMarin is poised to achieve the next stage of development, supported by our robust commercial business and broad mixed-stage pipeline of products, all of which we believe have a high likelihood of approval and commercialization. Taken together, we expect this strong foundation will drive us towards non-GAAP breakeven or better profitability next year. We thank you for your continued support and for joining us on today's call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day. [u1]