BioMarin Pharmaceutical Inc., Q1 2009 Earnings Call Transcript

May. 1.09 | About: BioMarin Pharmaceutical (BMRN)

BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)

Q1 2009 Earnings Call

April 30, 2009 5:00 pm ET

Executives

Eugenia Shen - Senior Manager of IR

J.J. Bienaime - CEO

Jeff Cooper - CFO

Han Fuchs - CMO

Steve Aselage - SVP of Global Commercial Development

Analysts

Salveen Kochnover - Collins Stewart

Brian Abrahams - Oppenheimer

Chris Raymond - Robert Baird

Phil Nadeau - Cowen & Company

Lucy Lu - Citigroup

Joseph Schwartz - Leerink Swann

Liana Moussatos - Pacific Growth Equities

Jose Chamber - FBN

Shiv Kapoor - Morgan Josef

Andrew Vaino - Roth Capital

Stephen Willey - Thomas Weisel Partner

Joseph Schwartz - Leerink Swann

Carol Werther - Summer Street

Liana Moussatos - Wedbush Morgan Securities Inc.

Operator

Good day ladies and gentlemen. And welcome to the First Quarter 2009 BioMarin Pharmaceutical Incorporated Earnings Conference Call. My name is Shamita and I'll be your coordinator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions)

I would now like to turn the call over to Ms. Eugenia Shen, Senior Manager of Investor Relations. Please proceed.

Eugenia Shen

Thank you. On the call today is J.J. Bienaime, BioMarin’s Chief Executive Officer; Jeff Cooper, Chief Financial Officer; Han Fuchs, Chief Medical Officer and Steve Aselage, Senior Vice President of Global Commercial Development.

I would like to remind everyone that 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.

And now I would like to turn the call over to J.J., BioMarin's CEO.

J.J. Bienaimé

Thank you, Eugenia and good afternoon to all and thank you for joining us on the call. So, I have a few introductory comments before Jeff reviews the financials of the first quarter of 2009. Steve will then provide more details on the commercial activities, and Hank will provide an update on our ongoing R&D programs before we open the call for questions.

So, first looking at the big picture, we're proud of the business we've build and we believe that in this tough economic environment we're well positioned for continuous long-term growth. We have three commercial products from the market, each one independently profitable and two of them are basically annuities with significant revenue contributions. We are transitioning from a business based on both products and collaborative revenue to mainly a product revenue driven business.

We have developed into a fully integrated Company with considerable manufacturing and R&D capabilities and a promising product pipeline. We're operationally cash flow positive and with $556 million in cash and investments, we believe we have a sustainable business that will continue growing for years to come. After our Q4 call we received a lot of feedback from analysts and investors on our financial results.

And this feedback was constructive and reflected the difficulty investors faced in understanding and tracking investment of our core business. In order to make the results of our core business more transparent and to provide a better basis of comparison over time period, we have adjusted our non-GAAP metrics to exclude certain non-recurring material items and effective tax of these adjustments in addition to non-cash stock compensation expense.

We have compared our methodology with our peers in the Biotech industry and we believe that our methodology is somewhat conservative. The non-GAAP metrics does not include items such as upfront license fees, milestone payments and impairments on investments, they are recorded to the P&L but this doesn't work far as excluding ongoing amortizations of deferred revenue or amortization of acquired intangible assets.

Although our GAAP to net loss in the first quarter of 2009 with $13.2 million compared to net income of $1.7 million in the first quarter of 2008 when comparing to year-over-year results of non-GAAP net income on apples-to-apples basis, with the increasing leveraging our core business as non-GAAP net income more than doubled.

The detail reconfiguration of GAAP and non-GAAP net income is provided in the press release issued this afternoon. And Jeff will review this in more detail a little later.

Naglazyme continues to perform well, with an increase in sales of 42% as compared to the fiscal 2008 despite currency headwinds and a slowdown in the world economy. We continue to make tremendous progress in international market and we remain confident that Naglazyme represents a $300 million best market opportunity.

Next, net third party sales of Aldurazyme by Genzyme were flat in the fiscal of 2009 as compared to fiscal of 2008. Although revenues were negatively impacted for around $3.6 million because of foreign currency weaknesses. The number of patients on therapy continues to increase. Either to Naglazyme and other Aldurazyme patient therapies, Aldurazyme benefits from, we have growth drivers such as dosing by weight and theoretically extension of life expectancy and consequences such as (Inaudible).

In terms of the challenging healthcare environment, we proposed a [discretion] and reimbursement for students. We believe Naglazyme and Aldurazyme will unlikely be significantly effected at least in the near-term.

Both products treat very small also offer indications in to these populations with limited impact on payers budget and minimal risk of optimal use.

Additionally, we are very expensive and compacted manufacturer. And we will continue to carefully monitor for potential competitive and reimbursement to that, but in this uncertain environment these two products are relatively well incubators.

Certainly Kuvan generated net earnings of $50.5 million in the first quarter compared $15.1 million in fourth quarter of 2008 and $5.8 million in the first quarter of 2008. We are encouraged to see quality feedback emerging from the PKU committee and we believe that this along with results from the numerous to this years profit growth, the recent two program and the long-term you will probably see study turned off for additional support for the use of Kuvan. During the first quarter we received notice of allowance for the US patent office with the one (inaudible) for Kuvan.

We expect that patent will be officially issued later this year and if issued we expire in 2024. we believe this is a significant asset in protecting the IT position of Kuvan. Potential competitors would need to conduct clinical trials to demonstrate the efficacy of their useful product using a twice daily dosing regiment.

Moving on to people programs they completed the fifth cohort in the PEG-PAL Phase I trial and we believe we are up taking and if you get their response at this point so we are transitioning to recession study and working to finalize the protocol.

Also we announced the indication of the Phase I -II trials at GALNS or MPS4a last week, this product has a senior development timeline of PEG-PAL assuming success in this Phase I - II study we expect to initiate a pivotal Phase III study in the second half of 2010.

This indications lies in our core area of expertise and we plan to leverage our strength in manufacturing, clinical, regulatory and commercial to quickly develop a therapy and for the many untreated MPS4 patients who are very eager to quite treat it.

We remain excited about both these programs and Hank will review additional details on our overall R&D programs little later.

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

Jeff Cooper

Thanks, J. J. I'll start by reviewing product revenues of Naglazyme, Aldurazyme and Kuvan for the first quarter ended March 31, 2009. I will then follow with a more in depth look into our operating expenses and financial results before reviewing our expectations for 2009.

Beginning with Naglazyme, net product revenue for the first quarter of 2009 was $39.4 million, an increase of 42.2% over net product revenue of $27.7 million in the first quarter of 2008. Naglazyme net product revenue growth is attributable to geographic expansion internationally, the initiation of therapy by previously identified or newly diagnosed patients and weight gain as patients grow.

Naglazyme, sales in the first quarter of 2009 were negatively impacted by foreign exchange rates of about $2 million as compared to the first quarter of 2008 which is net of our impact of our revenue hedging program. However, after factoring in the offsetting national hedge of expenses denominated in foreign currencies and net negative impact of foreign exchange on our P&L was about $1.2 million.

Net sales of Aldurazyme by Genzyme were $36.8 million for the first quarter of 2009, were flat compared to net sales for the first quarter of 2008. First quarter of each year has been historically weak and foreign currency exchange rate had a $3.6 million negative impact on Aldurazyme sales by Genzyme in the first quarter of 2009. However, in the first quarter of 2009 the Aldurazyme unit volume increased 9% compared to the first quarter of 2008 as the number of patients on therapy worldwide continues to grow.

Net product revenue to BioMarin related to Aldurazyme $17 million for the first quarter of 2009. This includes $2.5 million of incremental net product transfer revenue as transfers of product to Genzyme exceeded the amount of products shipped to third party customers by Genzyme during the first quarter of 2009.

Net product revenue to BioMarin was $24.1 million for the first quarter of 2008 and included incremental net product transfer revenues of $9.5 million compared to $2.5 million in the first quarter of 2009.

Net product revenue for Kuvan was $15.5 million for the first quarter of 2009 compared to $15.1 million for the fourth quarter of 2008 and $5.8 million for the first quarter of 2008. Net product growth is primarily due to patients initiating therapy with Kuvan. Now, I’ll review gross margins, operating expenses and non-operating items in more detail.

Gross margins for Naglazyme were 88% during both the first quarter of 2009 compared to 80% for the first quarter of 2008. Aldurazyme gross margins will continue to fluctuate from quarter-to-quarter depending upon the timing of product transfers to Genzyme, which is the basis for cost of goods sold recognized by BioMarin. In the first quarter of 2009, Aldurazyme gross margins were 77% which reflects both the royalty and product transfer revenue from Genzyme to BioMarin.

Kuvan gross margins during the first quarter were 84% that primarily reflects an 11% growth in payable on net sales. Once the inventory that was previously expensed as R&D is mostly used up in the first half of 2009, we expect US Kuvan margins, including the 11% royalty payable to be in lower 80% range.

R&D expenses increased $16.7 million to $34.4 million in the first quarter of 2009 from $17.6 million in the first quarter of 2008. This includes $8.8 million related to the upfront cash payments and premium on the equity investment related to the Riquent deal. The increase in R&D expenses also attributed to increased costs for clinical and early stage development programs and non-cash stock-based compensation expense. Off the total R&D spend of $34.4 million in Q1 2009, $2.5 million which is stock-based compensation expense. Excluding the $8.8 million related to the Riquent deal R&D was $25.6 million in the first quarter of 2009 compared to $25.7 million in the fourth quarter of 2008.

Selling, general and administrative expenses increased by $4.9 million to $28.6 million in the first quarter of 2009, from $23.7 million in the first quarter of 2008. This was largely due to continued international expansion of Naglazyme, commercial cost of Kuvan and growth in corporate expenses, including non-cash stock-based compensation expense.

Of the total $28.6 million of SG&A expense in Q1 2009, $4.8 million was for stock-based compensation expense. SG&A expense in the first quarter of 2009 was just slightly lower compared to the fourth quarter of 2008.

Overall, we will continue to manage our spending closely. But we do expect operating spend to increase from current levels as the year progresses due to advancement of our development programs and extension of our commercialization activities.

Non-operating interest income decreased by $3.4 million to $2.2 million in the first quarter of 2009 from $5.6 million in the first quarter of 2008, due to decline in market interest rates. Current yields (inaudible) funds are now in the 1% range compared to 5% just 18 months ago.

Non-Operating interest expense was $4.1 million in the first quarter of 2009 especially flat as compared to same quarter of 2008. Interest expense consists primarily of interest on convertible debt and a incurred interest on the medicine tests.

In the first quarter of 2009, BioMarin also recorded impairment losses of $4.5 million related to our equity investments and the La Jolla Pharmaceutical and $1.4 million related to our equity investment in Summit plc for a total impairment loss of $5.9 million. The remaining investments of $1.8 million La Jolla and $200,000 in Summit are reflected on our balance sheet as of March 31, 2009 based upon their trading price and public exchanges on that date.

Because both of these companies have announced that they do not have sufficient resources to fund operations for the next 12 months, the 2009 guidance reflects an assumption that remaining investments in both companies will be written down as zero by the end of the year.

Also on March 2009 we entered into an asset purchase agreement with Summit in which we purchased certain Summit's assets which included all of Summits rights to pre-clinical drug candidate know us BMN-195 for the same as register fee and that made the original 2008 license agreement. The purchase consideration was principally differed milestone payment, matching the term of the original license.

Now I will review the GAAP and non-GAAP bottom-line results. Our GAAP net loss for the first quarter of 2009 was $13.2 million or $0.13 for fully diluted share compared to net income of $1.7 million or $0.2 for diluted share for the first quarter of 2008.

Moving on to non-GAAP net income as J.J. mentioned earlier, beginning of the first quarter of 2009 our non-GAAP net income for 2009 guidance and historical financial results exclude material non recurring items and the tax effect of the adjustment as well as non-cash stock-compensation expense.

We believe this provides more clarity and a better basis for comparison of our ongoing business. We define material non recurring items as transactions that required to the P&L in the current period but are not incurred on a routine or ongoing basis examples of material non-recurring items that are relevant to our 2008 and 2009 P&L are the upfront license fees for Summit plc and the Riquent deal and the subsequent impairment charges on our investments in Summit plc and La Jolla Pharmaceutical Company.

Additionally, the one time P&L benefit that we received during the first quarter of 2008 from the initial transfer of Aldurazyme inventory concurrent with the restructuring of our joint venture with Genzyme is also considered of a non-recurring item.

Other examples of material non-recurring items include milestone revenue and upfront payment to the extent they are recorded directly to P&L and their entirety in the current period.

However, license fees paid and milestones received and paid that are amortized over a period of time in accordance with GAAP rather than being recognized in the current period and their entity are considered referring due to their ongoing nature.

As result such items with an ongoing P&L impact are not excluded from our non-GAAP income. For example the ongoing amortization expense associated with the Orapred transaction and the ongoing amortization of the upfront payment received from Merck Serono in 2005 which is recorded as the collaborative revenue for several years are considered recurring items.

The reason that we have modified our non-GAAP reporting is provide transparency to the financial performance of our commercial products, our R&D stage programs and supporting function. Previously we excluded only stock-based compensation expense due to its non-cash and non-operating nature.

However, during 2008, 2009 we have recognized material non-recurring revenues and expenses by making analysis of our core ongoing business more complex for the investment community. A detailed reconciliation of the GAAP and non-GAAP bottom line that includes description for each of the non-GAAP adjustments is provided in the press release issued this afternoon.

Non-GAAP net income for the first quarter of 2009 was $9.3 million or $0.9 per fully diluted share compared to non-GAAP net income of $4.1 million or $0.04 for fully diluted share for the first quarter of 2008.

Also please note that in the first quarter of 2009, 2008 both GAAP and non-GAAP net income were not high enough to reflect the impact of convertible debt as they are included with the anti dilutive. The inclusion of convertible debt shares and calculation of dilutive earnings per share is driven by the accounting requirements in accordance with the Generally Accepted Accounting Principles.

From a cash perspective we ended the first quarter of 2009 with $555.9 million of cash and short and long-term investments. I should also note that we have an additional $7.7 million of restricted cash classify as a part of other current assets on the balance sheet that will be used as a part of the final payment for the Medicis debt obligations which is due later this year.

With regards to 2009 guidance, we're essentially maintaining our previously provided guidance in mid-February. The only exceptions are R&D expense, where we now include $8.8 million of expenses associated with the Riquent transactions and the write-up of our investments in Summit La Jolla.

Additional we're adjusting our non-GAAP net income guidance to reflect the previously described methodology. Naglazyme net product revenue is expected to be in the range of $160 million to $175 million. Kuvan net product revenue is expected to be in the range of $70 million to $80 million. This includes up to $1.5 million net product revenue related to Kuvan royalties on European sales and product transfer revenue to our partner Merck Serono.

For Aldurazyme, we expect net product revenue to BioMarin to be in a range of $69 million to $74 million. Our estimate for 2009 reflects net incremental inventory transfer revenues between $3 million and $7 million compared to $4.4 million in net incremental inventory transfer revenue in 2008.

Turning to expenses, we continue to expect cost of sales in the range of 19% to 21% as a percent of sales, R&D in the range of $118 million to $128 million including upfront research and development expenses of $8.8 million associated with the Riquent transaction and SG&A in the range of $120 million to $130 million.

For the 2009, bottom-line we expect our GAAP net results to be in the range loss of $15 million breakeven.

As noted in the press release issued this afternoon to provide more clarity on our ongoing core business, non-GAAP net income excludes non-cash stock compensation expense, non-recurring material items, and the tax effect of the adjustment.

Non-GAAP net income for 2009 is estimated to be in the range of $33.7 million to $51.7 million. Regarding cash flows, we plan to spend over $80 million in capital expenditures to complete expansion of our NOVATO manufacturing facility, corporate campus and warehouse facilities. We also expect to pay up to $72.1 million for the remainder of the net debt due in 2009.

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

Steve Aselage

Thank you, Jeff. First as JJ touched upon earlier, we are closely monitoring the impact of the worldwide economic slowdown and weakened healthcare sector on our business. In aggregate, we see no material impact on over our Naglazyme and Kuvan sales. Volume of patient is system request, patient compliance or dosing regimen.

Turning to Naglazyme, we continue to make progress in international markets, particularly in regions such as Latin America and the Middle East. While fluctuations in foreign currency have massive true growth of Naglazyme. We are encouraged by progress made in new geographic regions and the number of newly identified patients initiated on therapy.

It is probably worth noting the Latin American transactions including Brazil which is currently our largest market, are done in US dollars. So, currency fluctuations do not impact revenues from that region.

Please also keep in mind that as international becomes a larger portion of our overall revenue, a greater percentage of orders come from government entities that tend to buy larger quantities less frequently. This situation is likely to cause some quarterly fluctuation going forward as we experienced in 2008.

From our assessment of the market, we believe the remain significant untapped potential, particularly in the international region, which is the largest contributor to Naglazyme growth.

In addition to Brazil and Turkey some areas where we see significant near term growth opportunities include Colombia, Saudi Arabia early stage markets such as Poland, Russia, Belarus, Mexico and the Baltic states. Markets where we have identified MPO six patients but unsure about our ability to secure reimbursement include Iran, Venezuela and China. We remain confident with our current peak sales estimates for Naglazyme of around 300 million which is double our expectations at the time of watch.

Moving on the Kuvan, we continue to make progress in this very complex market. We have continued to see fluctuations in specialty pharmacy inventories. So we will provide end-user demand information as well as revenues. The quantity of commercial tablets, dispense to patients is the best metric to track true patient demand, in the first quarter of 2009 that increase 9.5% as compared to the fourth quarter of 2008. In order to continue building a clinical data set with Kuvan, we are supporting a number of investigator initiated trials that will assess range of majors including improvement in behavioral symptoms, depression, anxiety, short term memory processing speed, executive function and changes in bone density and nutrition.

The trials will evaluate various patient populations, including some that were not included in our Phase II and Phase III trials. We continue to work to provide education and information to the PKU community, this is a patient population that has not had access to the types of support and information that are normally seen in Orphan disease populations and we are committed to making sure that patients get the information they need to make and form decisions. We feel that we are making progress in this regard and are encouraged to see increasing support from the PKU community. The American College of Medical Genetics Annual Meeting in March, Dr. Antshel from SUNY Upstate Medical University highlighted the children of the PKU on [diet alone] our risk for significantly lower IQ than unaffected peers and siblings.

I will also point it out that increases in Phobias, depress moods and anxiety and decreases in positive emotions autonomy and social confidence are associated with PKU. We believe that it is important to quantify the impact of PKU such as describe by Dr. Antshel and the various treatment options through the investigators sponsor trials and our registry program and seven year post marketing study.

We also expect that these trials will provide important data about the affects of Kuvan, beyond lowering fee levels in some patients. Such as the affects on their function, it is worth mentioning that we have also reorganized our commercial team creating three geographic franchises.

In North America sales marketing patient services and operations will all now report to one person and our Kuvan sales representatives and managers will be responsible only for Kuvan. A small group of representatives will support only Naglazyme in the US; we feel these changes going to improve both focus and a coordination of our Kuvan selling efforts.

While we expect additional challenges and fluctuations in the coming year, we remain confident about our long term potential over the market and our ability to successfully execute this program.

Now I would like to turn the call over to Hank, who will provide an update on our R&D pipeline.

Hank Fuchs

Thanks Steve, starting with the GALNS or program or MPS4A the Phase I-II trial with initiated last week. In terms of timing this program is on power with PEG-PAL program, as both we yield Phase I, II results by early next year. GALNS has been shown in lights to reach important tissues including cartilage and different zones of the bone including bone marrow, calcified bone and importantly, the growth plate. We have also shown that GALNS is taken up into human Morquio chondrocytes in vitro and reaches the lysosome to clear keratan sulfate.

This indication is well with our core development regulatory and commercial competencies, and we hope to leverage our strengths to provide the first treatment options for this unmet medical needs.

Moving onto PEG-PAL as JJ mentioned earlier, we completed the fifth carbohydrate at the Phase I study and we believe that we have in our state in efficacy data to move on to the Phase II study. You are transitioning to the Phase II study and working to finalize the find of the protocol and working besides to get them activated in the rolling patients. This Phase II study will evaluate the safety and efficacy weekly injections for eight weeks followed by dose optimization in an extension period, this will be the two proof concept study for the drug since it is, it is the efficacy of repeat dosing in the presence of any immune response that is the key question to answer.

To put this in perspective minor immune reactions with enzyme therapies are not unusual. The question is whether we are able to thus around this to pretreatment of possibly identification of patients you may react the therapy. We would like to reiterate that during our serious adverse in the Phase I trial and while we have always been concerned about the potential safety issues with PEG-PAL, we are no more concern now and we were at the beginning of the trial.

As for the BH4 cardiovascular program, the investment get sponsor Phase IB, multi-center open label dose escalation study in preliminary arterial hypertension show that the drug was well tolerated and improve the six minute walk distance and patients compared to their pretreatment based on levels, completed results for this study represented the American Trust Society meeting in May in San Diego.

As for the single-center, investigator-sponsored trial of chronic kidney disease, BH4 was safe and well-tolerated in patients but there were no improvements in the primary endpoint of albuminuria or secondary endpoints of the enzyme creating ratio, EGFR and blood pressure. We are now reviewing the data from the completed BH4 cardiovascular studies and make a decision on the future BH4 cardiovascular program.

Turning to our product BMN-103 for Pompe disease, we believe our highly phosphorylated enzyme could result in more efficient uptick in cells and potentially lead to improved glycogen reduction in key affected muscle groups not addressed with current therapy. We continue to evaluate several partnering options for this program, although we have not excluded the possibility of developing this product ourselves.

In terms of other pre-clinical programs the BMN-195 is a small molecule to a user of Utrophin a protein that can potentially replace the defective dystrophin protein in patients with Duchenne Muscular Dystrophy.

After completing reformulation work in toxicology studies we into enter to this program into the clinic by early next year. Regarding the development in handheld blood Phe monitor, we have successfully completed early Kuvan contact studies in our proceeding with proto type development. Near-term plans include user studies as well as engineering scale up in finalization commercial product design. As expected availability in late 2010.

We are also working on two undisclosed pre-clinical programs for which we expect to make IND enabling decisions during the course of the year. We'll keep you updated on our progress on this in our other exciting programs as they advance.

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

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) You have a question from the line of Salveen Kochnover of Collins Stewart. Please proceed.

Salveen Kochnover - Collins Stewart

Good afternoon, thanks for taking my question. Could you provide us with some color on the first quarter Kuvan new patient additions into the free drug program and just comments from physicians and patients and how the [extra launch] is progressing?

Steve Aselage

Sure, we have said publicly that referrals into BPPS were somewhat down from Q4 we’re continuing to add net new patients into the program now as reflected by the end-user demand. As far as xUS, Merck Serono has approval in [NAEU]. They have launched now in three countries but those launches took place I believe it was April 21 or 22. So it is really too soon to saying much about uptick of Kuvan in the European marketplace.

Salveen Kochnover - Collins Stewart

And can you maybe just give us a little bit more clarity as to why you think referrals are down versus the fourth quarter?

Steve Aselage

When we saw significant bullish referrals in the fourth quarter. Most of the PKU clinics worked on the assumption that the started our equivalent program would end on December 31, and it really worked very hard and pull some extra patients in to take advantage of that program. We had a number of centers that actually pull the patients in got them into BPPS but then at BPPS put the patients on hold until they can get them back into clinic and start them up again. I think we ended up in a situation where there was some backlog with patients from Q4 that rolled over in to Q1 to actually come in and go through the logistics of getting started and I believe that had some negative impact on Q1 referrals in.

Salveen Kochnover - Collins Stewart

Great. And then is there any chance for an interim look at the phase II PEG-PAL data on posted we repeat dosing?

Hank Fuchs

We’re really just finalizing design to that program and getting it started. So I think it will as we get clear on the program that we’re going to implement, I think we’ll give you an update then.

Salveen Kochnover - Collins Stewart

And then just one last question, whether the determining factors that you intend to take into consideration on deciding whether to continue with BH4 cardiovascular program going forward?

Jeff Cooper

I think the core considerations are the strength of the clinical evidence, the degree to which an important medical need might be provided by the drug, physician and investigator interest, potential regulatory pathway considerations and obviously we are running a business here and we are going to pay very close attention to business considerations and making decision.

Salveen Kochnover - Collins Stewart

Thank you.

Operator

Your next question comes from the line of Brian Abrahams of Oppenheimer. Please proceed.

Brian Abrahams - Oppenheimer

Hi, thank you very much for taking my question. Question on the freehand held device, I was wondering if you could outline in a little bit more detail some of the steps that are going to be necessary in order to make that available? And what's your sense based on your market research as the potential this might have in increasing Kuvan uptick?

Steve Aselage

Do you want me start with the regulatory or would you like me to start with the commercial?

J.J. Bienaime

Why don't you tell the commercial.

Steve Aselage

We think that home free monitor would be a significant benefit to Kuvan and also an essential part of the PEG-PAL launch in the future. One of the barriers for patients getting started and staying compliant is the logistics involved and getting a patient to the hospital, getting a blood drawn in any institutions require three to four weeks of stable blood levels prior to starting a patient on Kuvan.

If the patient can use dried blood spot, mailing it in is awkward. But if that the center that requires patient actually show up at the hospital, get a blood drawn, family was a 100, 150 million away. It's huge logistic of very good patient being able to put a simple standard, easy to use, way to measure blood fee all results back into center we think we will make it much easier for patients to be get started once patients are on therapy being able to routinely check their blood I think we could give them a significant motivation to stay more compliant both with their diet and with their Kuvan therapy but we see it as win-win both in getting patients started and keeping patients on therapy.

J.J. Bienaime

I mean regarding as was explained by Hank we are the working prototype already we are basically talking about making some modifications to blood glucose monitor devices to adapt them to measuring T levels and we do not. Now we need to give a lot of several (inaudible) to be able to do an end-user study and to look at how patients interact with the device and how lucky might the device before we do those, to scale up and prepare for launch. Earlier, we think commercial availability but it’s actually we are not going to sell, it's unlikely we are going to sell this device before even providing free to the patients to actually potentially improve Kuvan and down the road potentially and PEG-PAL sales.

Brian Abrahams - Oppenheimer

Great and then just a quick follow-up, can you describe in a little bit more detail the reactions that were seen with PEG-PAL’s, the higher doses independent of the Depo-Provera? And based on your dialogue with the FDA how high is your level of confidence that the agency will enable you to proceed into phase II?

Steve Aselage

I think one of the most important prospects to have on this is that we have not observed serious adverse reactions in patients who have been treated with PEG-PAL. The events that we have seen are the event that we would be expected to be seen with a product of protein nature, we have not reported any alarming or severe serious adverse reactions to the FDA. And as far as ongoing dialogue with the FDA product to (inaudible) we really at the stage of implementing that (inaudible) characterize all of the Aldurazyme we received from investigators, IRVs, regulatory authorities, etcetera, in terms of how we capture that into the final design of the phase II program.

Han Fuchs

We are confident that we are going to be able start the study soon.

Brian Abrahams - Oppenheimer

Great. Thanks for the initial clarity.

Operator

Your next question comes from the line of Chris Raymond of Robert Baird. Please proceed.

Chris Raymond - Robert Baird

Thanks. I just want to make sure I understand some of the dynamics here with Kuvan numbers, Steve, you mentioned, I think I heard you say that unit sales for Kuvan were up, am I correct 9% over Q4 '08, is that correct?

Steve Aselage

9.5%, that is the measurement of tablets dispensed from specialty pharmacies to the patients.

Chris Raymond - Robert Baird

Okay.

Steve Aselage

For tablets dispensed.

Chris Raymond - Robert Baird

And so, I understand Q1 or Q4 had an inventory impact, but is it an accurate statement to say that, obviously your sales, your revenue run rate was not up 9.5%. So, can we just from our perspective for thinking purposes, assume that $1 million inventory issued that we heard about in Q4, has been sort of worked out or we had a sort of steady state inventory level among the distributors?

Steve Aselage

We will find out. But I think we are close to a steady state at this point. Chris, what has surprised us really a little bit for product with this smaller volume, is the ups and down on a month-to-month basis of the inventories the SPs are keeping. The ordering patterns haven't been particularly predictable. So, it is the reason why we went to the end user demand metric. We found trying to count patients and communicate patients has not been particularly helpful and sometimes misleading. And the one thing that is unarguable is how many patients should go or how many tablets are going to the patient. We get good accurate information on that, we can track it relatively real time basis, so we felt like going forward that might be something that would help everybody with their models which would be, I think pretty clear inside into the true demand.

Chris Raymond - Robert Baird

So remain, what was that tablet unit growth sequentially in Q4 versus Q3?

Steve Aselage

9.5%.

Han Fuchs

That's Q1 versus Q4.

Chris Raymond - Robert Baird

Yes Q4 versus Q3?

Steve Aselage

It was smaller, it was I am doing some math in my head here it was more or like 2%.

Chris Raymond - Robert Baird

Okay, so it essentially looks like they just worked off the inventory from Q4.

Han Fuchs

Clearly I mean since the dollar sales grew up to 9.5%, it was some destocking that took place at the pharmacy level I mean specialty paharma unit.

Chris Raymond - Robert Baird

Okay, thanks.

Operator

We have a question from the line of Phil Nadeau of Cowen & Company. Please proceed.

Phil Nadeau - Cowen & Company

Good afternoon, thanks for taking my question. J.J. the first one for you, after the long-term guidance you gave last quarter there was a pretty balanced reaction in the stock, wondering if that has caused you and the management team to change your long-term plans as far as expenses and if there is anyway that you could actually decrease the expenses that you had projected, you are going to have?

J.J. Bienaime

Yes we decided not to give no long-term guidance we have to update this and we make no reasons to provide for the long-term guidance and its time that we are making expenses very carefully where we have gone through a review with (inaudible) and the senior management team of all additional expenses that part being incurred within the company as a different programs, we believe we are fairly fiscally responsible specifically compared to all the companies that are about our size with significant revenues and for the sake we do some better life freelancing there. SG&A huge $160 million significantly higher than ours when they are only selling one product around the world and we are selling two products and supporting three. So, but we are matching the expenses and hopefully we will continue to grow in the GAAP and the non-GAAP income it's what we have been reaching.

Phil Nadeau - Cowen & Company

Okay. And just a follow-up to that, understanding that there are priorities within every company and its hard to make any definitive statements but if you did decide to cut cost where there are certain areas to do that or do you find that your expense structure is kind of as stream lined as it possibly could be given the projects, do you think should be cut down?

J.J. Bienaime

Given the projects that we are ongoing right now, I think it will difficult to significantly cut the expense the percent. Although the R&D expense is obviously one item little fluctuate in the future depending on how many projects survive and how many new projects we bring in. I know from (inaudible) and that’s somewhat difficult to putting us while we give a range, but maybe just an elaborate but clearly recent projects we opted in and we provided a pretty long list I think in the press release. It's we believe we have the right infrastructure and it would be difficult to significantly reduce the expense where we are not.

Steve Aselage

I said pretty here what Jeff says I think really the ultimate spending will be dependent upon the projects that may get through the pipeline and of course, these projects move further along in the pipeline into later stages development to become more expensive. So, to the extent that we are spending a little bit more money on certain programs in one sense it's positive because it might mean that we are actually getting success with those programs obviously to the extent with some programs don’t make, will be spending money on those programs. Clearly as we look at our portfolio of all of our programs we look at that carefully at least the couple of times a year in terms of all our programs and then prioritize in terms of where we want to go and also back me in the overall spending impact. So and we look at that pretty closely.

Phil Nadeau - Cowen & Company

Okay, that’s very helpful. Hank one for you it seems like (inaudible) for mid 2010 data for phase II clinical trail maybe somewhat later than we have thought, maybe a quarter or maybe two quarter later than we thought. Is there any change in the design that you are thinking about versus what have suggested in the past or I guess what lie is that in mid 2010 rather than like Q1 or earlier?

Han Fuchs

Not to my knowledge there hasn’t been any major change in the design of the program. I think we are probably been conservative about all the things that we have to do to get the programs through, approve the patients, go through the stages of the protocol, collect the data and report it.

Phil Nadeau - Cowen & Company

Okay.

J.J. Bienaime

But hopefully it could happen earlier but it's kind of are talking there right now.

Phil Nadeau - Cowen & Company

Okay. And one last question just housekeeping question for Jeff. Do you have the quarterly non-GAAP EPS numbers for 2008 using the new method of computing non-GAAP EPS?

J.J. Bienaime

Sure, for the first quarter of 2008 it's $0.04 a share and for the full-year 2008 that’s basic and diluted to the full-year 2008 basic about $0.30 and diluted about a penny less $0.29.

Phil Nadeau - Cowen & Company

Okay. Do you have contributing quarters.

J.J. Bienaime

I don’t have it handy but we can get those to you.

Phil Nadeau - Cowen & Company

Okay, great. Thank you.

Operator

You have a question from the line of Lucy Lu of Citi. Please proceed.

Lucy Lu - Citigroup

Great. Thank you. I have a question on the Pompe Disease program, what's those into your calculation and consideration in term of finding a partner versus doing this program yourself? And also I want to know if you have decided to do yourself, hosting candidates program angio clinical testing and do you need to change R&D expense guidance for this year? I think it probably take a lot of resources to do this. Thanks.

J.J. Bienaime

So I will answer the earlier question I mean (inaudible) already dealt in our 2009 guidance, although this year [vitamins programs] we know there has been clinic this year we are just doing some clinical work. So, what answers into the decision there are too a lot of variables, risk assessment of the program and potential de-rsiking of the partner for different reasons.

I will be very keen to break the often drug status on Europe and the US and basically NTV analysis of what we believe or adjusted NTV analysis probably just NTV analysis as to what we can do. All along versus going with partner some we are in consideration of course. We just talked about expenses and obviously we do this program on our own. We talked in our P&L would be much higher than if you partner it for obvious reasons. So obviously just taking into account we have say that we are in active discussion with a potential partner right now. And we feel pretty confident that either we will finalize the deal with the partner or as major decision is going alone by the end of the summer I would say?

Lucy Lu - Citigroup

J.J. it sounds like you are a little more open than before in terms of really wanting to take on this program on your own, am I reading that correctly?

J.J. Bienaime

No you are not reading that correctly. You just said what (inaudible) a year-ago we saw well I know we partner which is shielded and here it is either we partner it or we do it alone, that’s the difference. But we have not made a decision I would say the higher probability that we were into partnering or not.

Lucy Lu - Citigroup

Okay. And then last question on the BH4 program, if you want to discontinue that program, how much money can you save from R&D’s budget?

J.J. Bienaime

This year I mean Jeff do you want to answer that?

Jeff Cooper

I think as you look at our BH4 spending for this year clearly as you look at the BH4 in total we will spend less that last year. We had a full range development during 2008 and we are wrapping up the numbers studies, we have completed the number of studies so the spending will collapse however we are also looking at prodrug development and assuming that we continue to move forward on that program that spending will ramp so there will be somewhat of an offset. So overall our spending will be a bit less than last year if you look at BH4 and prodrug but not too much.

J.J. Bienaime

But to summarize as to where we stand based on what being committed on BH4, there are only two indications that could potentially move forward, one is (inaudible) and one is PH that’s about it. And then we are going to make a decision if we move with one unlikely we would with two or we don’t do anything anymore we just shell off the program and we will make that decision in summer.

Lucy Lu - Citigroup

Okay, thank you

Operator

Your next question comes from the line of Joseph Schwartz of Leerink Swann. Please proceed.

Joseph Schwartz - Leerink Swann

Hi, thanks for taking the question. I think I heard you say that BPPS referrals were down versus the fourth quarter, but there is a back log of patients. And I am wondering now that we are looking towards the summer. Do you expect more weakness this year in summer months and are all of the patients that were in the investigators sponsored studies that can get commercial therapy already on Kuvan? Thanks.

Steve Aselage

With regard to projecting future, referrals in the BPPS, we think we can increase referrals over the next few months. I think if there is one thing we wanted in the last year and half is it is dangerous to predict what referral levels are going to look like downstream. So, we feel confident and we are putting in place some programs that are going to help referrals. But I honestly can't tell you, it's going to increase by x% or certainly that it is going to increase at all. We feel good about what's happening. We feel like we are making progress. And we feel like we are going to come in within the revenue guidance that J.J. has provided which is going to require some increasing referrals.

So, I am generally positive about it with regard to the bolus of patients. Maybe it's worth saying that one of the reasons while we have that 9.5% increase in tablets dispensed in Q1, because we had some success in taking the starter patients that came in at Q4 moving them through reasonably, rapidly on the commercial product in Q1. You had a third question in there and if you could repeat that for me, I would appreciate it.

Joseph Schwartz - Leerink Swann

I think there were a couple of fairly large investigator sponsored studies that you were waiting just to begin until those protocols were all figured out and yet they were going to be using commercial drug. So I am wondering have those already begun what stage away there?

JJ Bienaimé

We have at least eight different investigators response to trials in PKU of those eight trials they range from almost completely enrolled probably they are further still ongoing as one or two additional patients to go into the study. We have got a couple of that are still are on IRB stage that we do not have the first patient and it’s really a scattering of patients between those two extremes. The product is used in all of the PKU related investigators following to trials we do provide free drug trials outside of PKU and we do that with couple of those going as well.

Joseph Schwartz - Leerink Swann

Okay, great. Thank you.

JJ Bienaimé

If I can maybe read between the lines on your question and If you previously ask about one large trial, it seem to be going pretty slow and that trial is ramped up significantly and we are seeing good patient accrual on outfits on that by early next year.

Operator

Your next question comes from the line of Liana Moussatos of Wedbush. Please procced.

Liana Moussatos - Pacific Growth Equities

JJ, you said just kind of following up on Lucie’s questions about business development you had said earlier this year that there is a potential for a late stage opportunity in licensing this summer that you guys were still in active negotiations which is after the Kuvan announcement is that still a possibility?

JJ Bienaime

Yeah. I mean that’s no, we keep looking at the business development opportunities on ongoing basis that is the possibility such as in business development, you never show up any deals until that you resize and the price is established and the parameters of the deals are established. So that will happen but we are very cheerful. As to how we are going spend our money, we are not looking at major acquisitions such that we are looking at product yield that would leverage our infrastructure in Europe and also the rest of the world and also the US country. So there are actually several big wishes is going on no guarantee of anything happening.

Liana Moussatos - Pacific Growth Equities

Okay and you had said that if something late stage was going to happen, it would happen in the summer or Q3 still the same or you do not want to define as that much?

JJ Bienaimé

I think I don’t want to differentiate; it’s far it early but far from being sure.

Liana Moussatos - Pacific Growth Equities

Okay and could you repeat as part of product sales guidance, you are giving guidance on transfer fees and things that were non-organic. So can you repeat that please?

Jeff Cooper

Are you referring to Aldurazyme?

Liana Moussatos - Pacific Growth Equities

Aldurazyme and I think there is something with Kuvan?

Jeff Cooper

No, no we had provided the Aldurazyme, the revenue to for more end of the guidance that we provided was $69 million to $74 million in total and I think I noted during earlier discussions that about $3 million to $7 million related to net incremental part of revenue.

Liana Moussatos - Pacific Growth Equities

Okay and none of the other one type to anything like that?

Jeff Cooper

But the only other thing for Kuvan is, we have Kuvan guidance of $70 million to $80 million and how was that, I noted by the 1.5 million relates to products transfer revenue and royalties that would go to look sort of.

Liana Moussatos - Pacific Growth Equities

Okay, thank you very much.

Operator

You have a question from the line of [Jose Chamber of FBN], please proceed.

Jose Chamber - FBN

Hey thanks for taking my question, for the [muti-yeild] program besides from the safety what efficacy or disease measures will you be evaluating in Phase I/II study what activity will you be looking for is specifically and how will you decide about the appropriate dose is to move into phase III? Thanks.

JJ Bienaimé

I am sorry, we are going to test three different doses and we are going to look at a bunch of biological markers in the activity which conclude care measurements in both plasma and urine. In addition, looking at some other biological markers up in inbound production and turnover were aboard inflammatory still the patients. I think one of the most important and exciting aspects of the program is the opportunity to observe improvements in the function of well being of patients. Which could be measured either in terms of pulmonary function tests or lock test.

As you know with the other anti-replacement therapies for less than storage disease. The treatment in fact has been so dramatic is to be roughly evident early on in the clinical trials. And so we will be paying very careful attention to clinical efficacy outcome measures and these trials different doses and using that information together with a registry side. We are going to pick phase III dose and design in end points.

Jose Chamber - FBN

Great. Thanks so much.

Operator

Your next question comes from the line of [Shiv Kapoor of Morgan Josef]. Please proceed.

Shiv Kapoor - Morgan Josef

Hi, I have got two questions. First on business development. It seems like you have got three drugs that are growing pretty fast and you got a strong pipeline. You just announced that there is two additional undisclosed drug candidates that could do, you could do an R&D pretty soon. I want to know why do you feel that you need to in license more drugs and perhaps the question should be, has that need decreased over the past six months?

JJ Bienaimé

No, we don’t have seriously needs to relaxes something to keep growing. I would say by having another late stage products like late phase II, phase III products. We maximized our chances to maintain healthy double digit top line growth for year and years to come. In clinical developments you need to cut them short all because some project its an nature of product development and biopharmaceutical work.

So, we are desperate that we like we absolutely need to license something or we are going to trouble or if not the case that's why we are sticking in. So the rest of your question I think increase or decrease about remaining of our flat. There is no increase need to license something that I say to be fine.

If we find the right product at a right price over the license it just a question of financial analysis and product analysis. We had over $500 million of the cash over two years now, I mean we are careful with it there is no reason why we hit this, this is option on right when we are finishing the work there was very limited amount of money and the fact that we have money doesn’t mean we need to spend it, it just it's available in case we find the right opportunity and it's true that there are lots of assets which priced and declined significantly in the past six to nine months. But the fact they are cheap doesn’t mean they are good.

So we are I think it's good business to keep looking available specifically one some asset are for sale are available and we do that and actually we might or license something we like to do something. And we have couple of things in the past some of you know and when the price got us beyond what you believe what the right price in the asset. We stopped and we didn’t buy this to do a deal strategically that way.

Shiv Kapoor - Morgan Josef

So what I am hearing is you are not desperate so you'll won’t do a deal until it’s very strategically beneficial and leverages your infrastructure?

JJ Bienaimé

If it financially beneficial.

Shiv Kapoor - Morgan Josef

Sure, I’ll ask a second question on Naglazyme can you go over some intra-quarter trends, it seems like you have got the marketing approval in Brazil and although you have been able to sell there before, it seems according to my calculations, your penetration there is still only 30%, 35%, have you seen a stronger trend towards the end of this quarter on Naglazyme?

JJ Bienaimé

I’ll just correct one of your statements and let’s see where the question is. That in Brazil although we did not have approval until January of this year, we have been selling in Brazil in fact a couple of years already and the main patient base but I will let Steve elaborate here.

Steve Aselage

I think that the change in Brazil, the approval gives us the ability to go out educate much more aggressively about identification and treatment of MPS VI patients. In the course of the very good time since that approval came in. We ran three educational meetings in different parts of Brazil one in Salvador one in Rio, one in Sao Paulo but we had almost 50 physicians, specialists in genetic diseases along with experts both from the US and from the genetic centers in Brazil did a lot of work with Naglazyme.

And we were able to do a tremendous amount of work in terms of increasing awareness, facilitating referrals and initiation of therapy for patients in Brazil. Also allows us to work much closer with the diagnostic labs working with the labs given the ability again to find patients sooner get them started, sooner improve their lives and increase our business.

I would say that your comment about 30% penetration in Brazil is a little iffy. There are known patients in Brazil right now, we have a substantially better penetration in there. We also know that there are significant numbers of patients in Brazil, or at least we believe that there are significant numbers of patients in Brazil that we have not identified yet. And we think that there is a significant upside potential, now that we have approval to be more aggressive in going out and trying to find those patients.

Shiv Kapoor - Morgan Josef

Okay thanks.

Steve Aselage

Sure.

Operator

Your next question comes from the line of Andrew Vaino of Roth Capital. Please proceed.

Andrew Vaino - Roth Capital

Thanks for taking my question. With the words you mean serious adverse events with the.

JJ Bienaimé

Could you speak you a little louder, we have a hard time to hear you.

Andrew Vaino - Roth Capital

You mentioned that there are no serious Aes with PEG-PAL, I wonder if you could mention what percentage of patients had antibodies raised to PEG-PAL?

JJ Bienaimé

You know, we are actually just finishing the analysis of those data and I think we are going to need a little bit more time to pull all together the data and have it presented for you.

Andrew Vaino - Roth Capital

Okay. Thank you.

Operator

Your next question comes from the line of Steven Willey of Thomas Weisel Partner. Please proceed.

Stephen Willey - Thomas Weisel Partner

Hi, thanks for taking my question. I just want to question on the GALNS compound that was just moving the clinic, could you just update us what the IT is there and maybe you just comment on what R&D is doing over in Europe? Thanks.

JJ Bienaimé

The product we are developing is wild type enzyme so there is no composition on the drug. We are looking at different season to be that could be patented. But as you know in this field, the true protection is a fact that you need to have a major investment in manufacturing process developments and clinical to launch of products more in there is (inaudible) be and as our often protection for what 70 years now and they feel no about receivables that is not until $1.2 billion.

Right, so got in Vivandi, we understanding is exceeding operations, their assets are for sale and so we don’t believe that they are likely competitors of ours, and that’s like an so basically they are discontinued operations then as far as we know discontinued give development of that an there.

Operator

Your next question comes from the line of Joseph Schwartz of Leerink Swann, please proceed.

Joseph Schwartz - Leerink Swann

Thanks for taking the follow up, At a higher level I was wondering if our could help us understand how do you asses the risk of pricing controls for your growths in current area we are in and how prepared you to counter that risk with pharmaco economic data?

JJ Bienaimé

I will get started and may be Steve can elaborate but in the US we have not se seen in all the rough plan for health and forum, we haven’t see anything that specifically target orphan drugs at this time. That could change but we have no reason to be more worried than any other some as a good manufacturer. Good news is that most of our party may care components is very small if not non-existent so we are less exposure in this respect and I will let Steve elaborate and talk about this time.

Stephen Aselage

Yeah, I think it’s a similar situation actually US is well what think about traditional pharmaco economics and quality adjusted life here is in cost payer willing to pay for quality. Those type of calculations just don’t fit with these type or orphan diseases and we have a code LCA with Naglazyme which we use with pricing authorities around the world. We adjust that LCA to any specific countries requirements, if they have additional information that they want. And we have been reasonably successful I think in working payers, government payers with the disease of the impacted disease, the cost of the disease, the cost of Naglazyme and the benefits to the patients receiving Naglazyme. This is not a drug that where you can say, you spend X dollars on Naglazyme to save 2X dollars with fewer hospitalizations. I think government has to be willing to say we are going to spend extra money to improve the lives of these patients.

Today, most developed countries have been willing to do that. We work closely with the payers and had some recent success with additional countries. There has been sign to date out of the economic crisis is going to change that.

Joseph Schwartz - Leerink Swann

And as I said to you some of these related to this act is going to seize data that is are also often diseases where the impact on any payer whether it’s a private payer or government payer can be easily calculated by the payers, so they know what is the maximum exposure that they have. And also for our at least Naglazyme or Aldurazyme there is very little risk of off label use. It should not the case for all Aldurazyme product, as you know the prior product in our Aldurazyme. We only work in MPS one patients and Naglazyme only (inaudible) patients and there is no risk of major treats, on usage and major explosion of usage in not stable indication. And with Kuvan it is done extremely limited to PKU and I don’t think net expenses in Naglazyme do we do?

Stephen Aselage

That’s correct, and besides that we have generally gone positive response from the payers regarding what we have done with the 30 day started program. By the time payer has to make a decision, they know that there is a significant beneficial impact from the Kuvan therapy that they have not hesitate for. What frustrates many of the payers in the US for these drugs that you know have a 30% or 40% or 50% response rate a very expensive impair are paying for things that are not working, we can show them with Kuvan, if they are paying for it's because the patients too having the benefit.

Joseph Schwartz - Leerink Swann

I would think that these drugs would stack up well on a quality just in life years basis because you are adding quality to the early part of the patients life as suppose to the latter part as with the cancer drug with the life, is that correct? And what about the ability to reduce surgeries and things like that. These are very sick patients that often need a lot of other interventions. Do you have data that you are able to use defend yourself if that ever came to past?

Stephen Aselage

Again, that is not an approach we take. In all probability surgeries are reduced, that there is no way we can quantify that, we dollaries that. The basic equation that payers have to look at within on replacement, is it are they willing to pay more money to improve the lives of the patients. And again, to date that is an approach that is worked and worked reasonably well.

Joseph Schwartz - Leerink Swann

Great. Thank you.

Stephen Aselage

Sure.

Operator

Your next question comes from the line of Carol Werther of Summer Street. Please proceed.

Carol Werther - Summer Street

Thanks for taking the question. I was just wondering, what different parameters we’re going to deciding whether you will go ahead with [sicliso] anemia or PAH. So, markets are quite different I guess the length of trial you might have do a quite different?

Stephen Aselage

Absolutely and that's why we would take all these things into account in addition to the weight of transfer the evidence that actually we have so far like they were up and cost of clinical development and then the potential market opportunity and the probability of success always kept into account before we decide.

Carol Werther - Summer Street

Do you have all the information now that you need?

Stephen Aselage

Pretty much.

Carol Werther - Summer Street

Okay. Thank you.

Operator

Your next question comes from the line of Liana Moussatos of Wedbush. Please proceed.

Liana Moussatos - Wedbush Morgan Securities Inc.

I am just wondered of the 39.4 million in Q1 Naglazyme sales, how much was in the US, Europe, rest of the world or how do you want to break it down geographically?

Stephen Aselage

Sure. I have that information. US sales were $5.1 million. EU sales were16.7 and rest of the world was 17.6.

Liana Moussatos - Wedbush Morgan Securities Inc.

Thank you.

Operator

There are no further questions in the queue. I would now like to turn the call over to Mr. J.J. Bienaime. Please proceed.

J.J. Bienaime

Thank you. So, in summary, we have three growing commercial products treating lysosomal disorders and Naglazyme, Aldurazyme are stable recurring revenue streams which are well protected. We believe (inaudible) and reimbursement stress. We also have a growing pipeline of products in developments, including PEG-PAL for BKU and the BMN110 for MPS IVA, as well as earlier stage products.

We are making some investments in our R&D programs to ensure to achieve double digit revenue growth in the coming years. So we remain cautious about the allocation of our resources to maximize long-term value to BioMarin and our shareholders. We are committed to be expense of our pipeline. We continue to pursue objectives later stage-in licensing or acquisition opportunities. And we look forward to keeping you up-to-date in our progress.

So, I want to thank you for your continued support and for joining us on today’s call. Bye.

Operator

Thank you for your participation in today’ conference. This concludes the presentation. You may now disconnect. Good day.

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