BioMarin Pharmaceutical Inc. (BMRN) CEO Jean-Jacques Bienaimé on Q4 2018 Results - Earnings Call Transcript

About: BioMarin Pharmaceutical Inc. (BMRN)
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Earning Call Audio

BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) Q4 2018 Earnings Conference Call February 21, 2019 4:30 PM ET

Company Participants

Traci McCarty - Vice President, Investor Relations

Jean-Jacques Bienaimé - Chairman & Chief Executive Officer

Jeffrey Robert Ajer - Executive Vice President & Chief Commercial Officer

Daniel Spiegelman - Executive Vice President & Chief Financial Officer

Hank Fuchs - President, Worldwide Research & Development

Robert Baffi - Executive Vice President of Technical Operations

Conference Call Participants

Salveen Richter - Goldman Sachs

Phil Nadeau - Cowen & Company

Joseph Schwartz - SVB Leerink

Cory Kasimov - JPMorgan

Chris Raymond - Piper Jaffray

Tim Lugo - William Blair

Paul Matteis - Stifel

Ellie Merle - Cantor Fitzgerald

Whitney Ijem - Guggenheim

Edward Nash - SunTrust

Kennen Mackay - RBC Capital Markets

Liana Moussatos - Wedbush Securities


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

Traci McCarty

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

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

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

Jean-Jacques Bienaimé

Thank you, Traci. Good afternoon and thank you for joining us on today's call. So 2018 was an extremely productive year of execution for BioMarin. During the year when we advances our three largest products opportunities to-date, we grew the base business 14% to nearly $1.5 billion in revenues which is our best full year results.

And year-over-year GAAP net loss decreased 34%. And non-GAAP income improved grew 23%, demonstrating our continued focus on top line growth, expense controls and the improved margins.

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

Turning first to accomplishment in 2018 and 2019 outlook for Palynziq for the treatment of phenylketonuria. The U.S. launch begun last July and continues to progress extremely well. The U.S. PKU community has been very enthusiastic about Palynziq even the dramatic evenly demonstrated across our multiyear clinic program. For Palynziq outside of the U.S., we now expect the CHMP opinion for our Marketing Authorization Application in this first quarter of 2019.

If the opinion is positive, we expect European commission action in the second quarter followed by the potential launch of Palynziq in US in the second half of this year.

And in a moment, Jeff will to provide more information on European preparation as well as more recent metrics on the U.S. Palynziq launch which is BioMarin’s largest market opportunity to-date. We reached to another significant potential value driver this year. We look forward to a number of important updates in valrox.

As announced last month, we have completed enrollment of the cohort of patients in the ongoing Phase 3 study in the 6e13 dose that are intended to satisfy the requirements depending on the results observed. We will communicate our decision whether or not to plan to file an expedited filing in the second half of this year.

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

Turning now to vosoritide for children with achondroplasia, we were very encouraged by the 42 months data that we shared at our R&D Day last November, demonstrating an average cumulative height gain of 5.7 centimeters which is a significant outcome for the children in our Phase 2 study. We hope to prove efficacy in our global Phase 3 which completed enrollment last November and is expected to readout at the end of this year.

Looking beyond these two late-stage products, we are leveraging our valrox experience to develop the next wave of gene therapy products such as BMN 307 for this treatment of phenylketonuria.

We share some exciting critical data recently with BMN 307 that demonstrated long-lasting normalization of Phe. We are on track to file an IND in the second half of year, with BMN 307 and we believe this is just the beginning of our expansion into a grower gene therapy pipeline.

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

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

Jeffrey Robert Ajer

Thank you, J.J. Starting with the U. S. launch of our seventh commercial drug Palynziq. We want to provide some additional color on patient and physician demand since our last update in January.

Both the patient and the physician communities have been tremendously enthusiastic about Palynziq, since approval in the U.S. last May and the numbers speak for themselves.

Starting with commercial reimbursed patients. As of last Friday, February 15, we had a total of 335 patients on reimbursed Palynziq. Of those 123 transition from our clinical studies and 212 are formerly naive to Palynziq. We're very pleased with the opportunity that Palynziq provides to expand our reach into a broader patient population.

We are seeing high levels of interest and enthusiastic from adult patients that had formally been on trial KUVAN, but were at the time of Palynziq referral, as well as patients naive to both KUVAN and Palynziq.

In addition, our strategy is to proactively convert adult KUVAN patients who might benefit from additional fee low rent propellency [ph] has been quite successful. Only 35% of new Palynziq referrals are current KUVAN patients.

Physicians are engaged and our commercial team is doing a tremendous job leveraging our experience and relationships on the PKU community to promote the availability of the Palynziq presence in the U.S.

Also contributing to robust update is the number of clinics that have at least one complete patient enrollment defined as a patient having a complete enrollment form with RareConnections coupled with a complete friend’s enrollment.

We can confirm that they are now 80 unique clinics of the 125 PKU clinics in the U.S. that now have at least one complete patient enrollment.

One finally leading indicator of patient demand we want to share is the number of patients who are enrolled yet have not received their first commercial dose. As of Friday, February 15, that number was 131. So, a robust pipeline of patients awaiting their first treatment with Palynziq.

Turning now to Palynziq revenues. We were pleased with the 2018 full year contribution of just over $12 million. Considering the time required to get the patient started on therapy following enrollment, the deliberate titration protocol for new patients that results in partial revenue per patients for at least their first eight weeks of treatment and the pacing of transitioning clinical patients to commercial Palynziq, sales in 2018 track to plan. Based on the growing number of patients, we expect the transition from the induction/titration stage to daily dosing.

Combined with current and expected enrollment rates, our 2019 full year Palynziq revenue guidance is $70 million to $100 million. Should we receive EU approval of Palynziq in 2019, though we don't expect material EU revenues in 2019, we would expect to see a meaningful revenue contribution from that region beginning in 2020.

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

Earnings in quarter-over-quarter ordering patterns from the Latin American region were offset by increased revenue from the EMEA region, resulting in a strong result for the full year.

We expect to see continued steady growth of Vimizim now the pricing and reimbursement has been established in the vast majority of our commercial markets and it is important to focus on annual revenue guidance for Vimizim and all of our global brands.

For the full year 2019, we expect Vimizim net product revenues of $530 million to $570 million, as we anticipate new patient growth in established markets and continued progress gaining access in smaller markets.

Similar market dynamics were in place with Naglazyme. Despite uneven ordering patterns in the fourth quarter, strong results in the first three quarters and 2018 contributed to revenue of $346 million or a 4% increase for the full year.

Importantly, recall that Naglazyme represents a steady cornerstone of our NPS franchise after 13 years on the market has demonstrated by single-digit growth of 6% in 2018. We expect that study trend to continue in 2019 and expect Naglazyme revenue for full year 2019 of $350 million to $380 million.

Moving now to Brineura for the treatment of CLN2, which contributed almost $40 million of revenues in 2018. In the fourth quarter of 2018, we continue to add new commercial patients, resulting in net revenue of just over $12 million.

Our teams around the world continue to focus our efforts on education of the early signs and symptoms of CLN2 disease and the importance of early diagnosis. We believe our efforts have increased awareness and testing of CLN2 will resolve in the study diagnosis of children with CLN2. We anticipate Brineura revenue $55 million to $75 million in 2019.

Finally, moving onto Kuvan, which achieved 6% growth or $434 million of revenue in 2018. As we declared Kuvan market dynamics in U.S. in 2019, it is important to remember that many adult patients are choosing to start therapy with Palynziq, including patients converting from Kuvan. New Kuvan patients tend to be children and teenagers who consume relatively smaller – total dose compared to adults and that's contribute smaller revenue per patient.

For 2019, we anticipate full year Kuvan revenue of $420 million to $460 million due in part on our brand to focus on converting U.S. Kuvan adults to Palynziq treatment given its superior efficacy profile.

To summarize, I'm very pleased with our commercial team's performance across the globe in 2018, and believe we are well-positioned for continued meaningful growth in 2019.

As the commercial team works toward other key priorities and 2019 and beyond, we are extremely excited by the prospects of launching Palynziq in the EU launching the first gene therapy products for the treatment of severe hemophilia A as well as the first treatment for children with achondroplasia and we are preparing for all three potential approvals accordingly.

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

Daniel Spiegelman

Thank you, Jeff. Please see today's press release, summarizing our financial results for the fourth quarter and the full year 2018. Overall, our excellent 2018 financial results showed that we are tracking towards our long-term financial goals, including growing revenues, controlling expenses, expanding margins, and ultimately delivering GAAP profitability.

Starting with the revenues. Full year 2018 top-line growth was 14% to just under $1.5 billion. And for full year 2019 consistent with our prior long-term guidance, we anticipate approximately 15% further top line growth to between $1.68 billion and $1.75 billion base solely on currently approved products.

Moreover as J.J. noted 2020 total revenue should grow an additional 15% and be approximately $2 billion with the expectation that contributions from vosoritide and valrox take us significant beyond those levels in the years ahead. Importantly, expense growth was less than revenue growth, resulting in improved bottom line results and reduced cash usage.

Starting with GAAP net loss, in 2018 it decrease 34% to a loss $77 million for the full year. And for full year 2019, we expect GAAP net loss to decline an additional approximately 16% based on the midpoint loss guidance of $45 million to $85 million.

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

Consistent with our financial progress in 2018, excluding repayment of the convertible debt, our net usage of our cash and investments was $87 million for the full year.

Recall that last October, we repaid the principal amount for our convertible bonds using $375 million of cash, resulting in cash, cash equivalents and cash investments totaling $1.3 billion as of December 31, 2018, as compared to $1.8 billion on December 31, 2017.

Moving to operating expenses. R&D expenses increased to $696 million for full year 2018 compared to $611 million for the full year of 2017. The increase in R&D in 2018 compared to 2017 was primarily due to increased valrox production in support of process qualification activities to satisfy a potential accelerated filing and clinical trial expenses in support of the Phase 3 program, vosoritide clinical expenses as we completed enrollment in the Phase 3 and BMN 250 production of expenses.

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

SG&A expenses for 2018 expanded marginally compared to 2017 to $604 million compared to $554 million for the full year of 2017. The increase was primarily driven by Palynziq and Brineura product launch campaigns and preliminary valrox commercialization effort.

SG&A expenses in 2019 will increase to $650 million to $690 million, driven primarily by activities associated with the global Palynziq launch and valrox market preparations and general commercials expansion.

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

By contrast in 2018 we had a $55 million tax benefit driven by $50 million of orphan drug tax credits recognized in 2018 -- increased losses in the U.S.. Our U.S. based operating loss for tax purposes increased in 2018 as a result of shifts and our global tax strategy due to tax reform, whereby we recorded higher U.S. based R&D expense than in prior years.

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

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

Hank Fuchs

Thanks Dan. Since the team has already outlined a number of our anticipated catalysts. I'll touch on a few other items before we open the call to questions and answers. First, for Palynziq gear up the marketing authorization application is under review and tracking to an anticipated CHMP opinion this quarter.

TP posted on developments with the application but it's suffice to say, European Health Authorities are well aware of the dramatic de-lowering properties of Palynziq and importance of lifetime treatment with -- of phenylketonuria. We look forward to sharing news with a CHMP opinion in the near future and to potentially making Palynziq available to European phenylketonuria patients soon.

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

We look forward to data from our 0 to 5 year old study to providing important insight into the potential benefits saturating from historic-type treatment early in life. The study is enrolling very well.

We've nearly completed enrollment of cohort 1 which includes children from 24 months to 50 months of age. And having entered the expansion phase, cohort 2 which includes 6 months to 24 months old infants has been authorized to enroll [indiscernible] and this will be followed by extension of the enrollment phase and the track included by the year-end.

To summarize we're very pleased with the progress of our global vosoritide development program including the large contemporary international history underway. We believe results from our four pronged development program will support the improved clinic outcomes for children with achondroplasia.

Results from our ongoing phase II in older children have been encouraging demonstrating an average additional hygienic 5.7 centimeters at 42 months. Enrolling in Phase II infant-type os study is going well and thus far vosoritide has been generally well tolerated with no symptomatic adverse effects identified. We look forward to the next significant catalyst in the program with top line Phase III data read out by the end of the year.

Briefly on Valrox as we stated in January, we look forward to completing the next steps needed to support the FLA filing through the accelerated approval pathway. To complete enrollment of the initial cohort for the generate one Phase III study intended to support this VLA and our focus now turns towards completing the manufacturing components of the CMC package.

We extend to complete all manufacturing campaign for a potential accelerated approval filing by the end of this quarter 1Q, 2019. We're making a progress -- great progress on all aspects of the VLA filing package. And as we had communicated we inform you of our decision of whether or not to pursue an accelerated path forward by the second half of this year.

Turning onto ongoing enrollment and the Phase 3 GENEr8-1 study using the 6e13 dose for valrox also known as the 301 study. We are pleased to share today that we have now enrolled over 100 subjects in the so-called 902 or non-interventional study whose purpose is to collect baseline leading rate data prospectively prior to treatment with valrox to transgene.

Of the subjects who have determined through the 902 study to be eligible to the GENEr8-1 study -- in the GENEr8-2 studies, 95% or more are indicating their preference for the 6e13 dose over the 4e13 in the 302 study.

Recall that the full 301 studies are full approvals 52-week study cohorts and demonstrate superior RD versus standard of care and reducing bleed. Achieving this enrollment milestone marks another important achievement in our valrox program much has been accomplished in a very short period of time.

Pioneering the development of innovative products to improve health outcomes for patients with rear disease is not new for BioMarin and we look forward to leveraging this experience to seeing endeavor transform landscape for patients living with severe hemophilia A.

The valrox development journey has been fast and in times, but it is important to remember what has been accomplished. Durably control for severe hemophilia A patients was an inconceivable concept only a couple of years ago and that has exactly been what’s' demonstrated the valrox safety study today.

I'm very proud of what’s been accomplished thus far and we look forward to learning more about valrox since we plan -- as we prepare for the upcoming three-year data update of our Phase 2 program.

As communicated previously, we expect to provide a top line data update in the middle of this year, followed by more detailed data presentation at the medical meeting. I would like to share with you today that we're planning to present a more detailed three-year Phase 2 valrox data at the International Society on Thrombosis and Haemostasis or ISTH through abstract deadline for submission of late breakers is June 6.

And finally to remind you of the other development expected this year, we are in the middle preparing for the IND filing for our PKU gene therapy product BMN 307. We call the preclinical data we shared in January using the site [ph] maps model, which we used for Palynziq, and which is close to taking a PKU phenotype.

We demonstrated that within two weeks C-levels would normalize with BMN 307 treatment, continuing out to 80 weeks, well beyond the expected lifespan of the untreated mouse.

We look forward to putting this product in the clinic and deleveraging our valrox manufacturing experience to initiate clinical studies with commercial scale material.

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

Question-and-Answer Session


[Operator Instructions] We have your first question comes from the line of Salveen Richter from Goldman Sachs. Your line is now open.

Salveen Richter

Thanks for taking my questions and two questions from me. One is, do you've any of the hypostasis for the pullback and expression levels that you saw with hemophilia A program versus the circulating to non-circulating DNA?

And then secondly, what is the getting factor here to higher penetration into the MPS VI market. It seems per our models that you are roughly a little higher than 50% penetrated at this time in point? Thanks.

Jean-Jacques Bienaimé

Yeah. Hi, Salveen. I'll start and turn it over to Jeff. The other hypothesis to pullback in Factor expression levels have been surfaced to include considerations like endoplasmic reticulum stress and we measure biomarkers of that both pre-clinically and clinically and are unable the document endoplasmic reticulum stress. We consider the possibility that corticosteroids are possibly elevating expression. We don't find evidence for that.

We consider a possibility that this promoter silencing or modernization of Factor we don't see evidence of that. And so that we are left with the speculating that the reason for that pullback in Factory expression is a function of analyzing the vector.

And, of course, in several months we'll see where year three sits in regard -- not that's just a Factor VIII which is interesting, but not as dramatically important to patients as long-term clinical outcomes such as sustained reduction simply to improve quality of life. Jeff?

Jeffrey Robert Ajer

Salveen, this is Jeff. I'd like to address your question about penetrations of the MTS six patient population we said was only in your question. We are at and have been at a little over 85% penetration of known patients for several years.

The gating factor on both of Naglazyme is almost entirely the identification of new patients the vast majority of which were able to get treatment relatively a short period of time. In the events your question was directed towards the Morquio A patient population, we're currently about 65% penetrated of known identified patients there, substantially larger patient population we have been added for last time and we are still trying to get into some markets that we don’t have commercial access to.

So probably the gating factor on higher penetration of Morquio A patient population is getting into the secondary and tertiary commercial markets and we are making progress on that.

Salveen Richter

Great. Thank you.


Next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open.

Unidentified Analyst

Hi, this is Ishmel on for Matthew. Thank you for taking our questions. Can you comment on the enrollment progress for the 4e13 dose in the hemophilia gene therapy study? And what impacted any what it have on the accelerated filing strategy?

Jeffrey Robert Ajer

Yeah, hi, Ishmel. 4e13, we said along was kind of dose slower than the 6e and my comment today was that as we screening patients AV positivity and running them to the baseline prospective bleeding rate study, patients are like 95 to five holding their hand out for the 6e dose.

We are going to continue to enroll in the baseline observational study once we conclude fully over enrolling it for the 301 6e dose we can start talking to patients about whether they’re interested in enrolling in the 4a study or our waiting for commercial 60 patients.

But we are always anticipated that the 4a was going to go slower. Patients are very much value where they would be. They want a higher leverage of factor expression that they can get.

Jean-Jacques Bienaimé

Again, so this has zero impact on the timing of our accelerated filing. They don't emphasize with -- Hank just said, we've heard rumors that maybe patients would like to lower levels and they will prefer that.

But we have here, on a sample, over 100 patients faced with the decision of which two therapies they we want to have. It all goes to the high dose which could generate higher factor VIII level. 95% of them.


Next question comes from the line of Phil Nadeau from Cowen & Company. Your line is now open.

Phil Nadeau

Good evening. Thanks for taking my questions. Hank, just to start with you on your guidance around the ISTH meeting. We take from your comments that we're likely to see the top line release around the deadline for the FDA [ph] submission, so maybe early June we get the top line release with the full data demeaning in July?

Jean-Jacques Bienaimé

Well, Phil, all I said literally was the late breaker deadline was June 6 and I need to let you do the rest of the calculations.

Phil Nadeau

Okay. And then…

Jean-Jacques Bienaimé

But not crazy to say, you're interested valrox staying around in early June.

Phil Nadeau

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

Jean-Jacques Bienaimé

Well, my view of that is that, the bleeding is what people care about is what payers care about, quite a lot also what people care about. But I'm also very aware that people are trying to use factor expression levels to try to predict for how long valrox will last for people. So I would imagine that that will be an element of the top line as well.

Phil Nadeau

Got it. Okay.

Jean-Jacques Bienaimé

I think one of the most important things to – sorry, for you to keep in mind about the top line is, again, people need to remembering one stage and chromogenic substrate assays and when we provide the data, we'll try to put that in a easy-to-understand format so everybody understands which values we're we talking about.

Phil Nadeau

That's very clear. And then just one commercial close question on Palynziq. Are you seeing anything different in the commercial settings about the dose titration that is being used versus what you had thought, based on the clinical trials?

And also the side effect profile, so the immune reactions, are they at all in different frequencies of severity in the commercial setting versus with your clinic trials?

Jean-Jacques Bienaimé

Well, starting with the dose and titration schedule, it had been sometime since we had been dozing new patients in the clinical trial. And if you recall in the clinical trial settings, one of the things that we adjusted during that program was to a dose and titration schedule along with recommended premeds that would maximize their response and minimize and towards effects.

So, so far no surprises. Most of the clinics that are dosing patients are following back at June 3 and the dose titration schedule and we're starting to see some patients that are getting to an efficacy response at 20-milligram patients or 20 milligrams per day.

I think I recorded nine at the JPMorgan conference and that number has gone up in the last six weeks. So that's encouraging. What we don't know yet is whether that efficacy response is going to stop at 20 milligrams daily or progress to 40 milligrams daily.

And we don't have enough time yet to observe any patients moving up to the 40-milligram dose. And maybe I would ask Hank to comment on what he is seeing anaphylaxis?

Hank Fuchs

Sure. Testing in 2019 keep a real close eye on this together. And we see anaphylaxis rate prudently, which is consistent with or maybe even slightly lower than what we've observed in the package insert. Although, it's just as observes, that's not a huge amount and yet since we launched the drug in July and it took a little while for some the naive patients to get commercial authorization.

So we're really just cutting up on the way where we're going to get triple-digit numbers of patients have been on drug for at least six months. I think one of the things I am very encouraged about this is we do see anaphylaxis occurring. But with the majority of the patients who have had are successfully re-challenged.

So that in the commercial setting, which we perpetually saw in the clinical setting -- in the clinical trial setting the majority of patients who had an anaphylactic event are able to successfully to see continued Palynziq safely.

And the fact that doctors are doing them in commercial setting as well bodes really well, because I think that the key thing to keep your eye on is discontinuation due to adverse events.

We want to keep that number as low as possible because we can get you pass for the first six months. The odds are you're going to stay on Palynziq for a very, very long time. So Jeff and I and our teams are keeping a very close eye on this element.

Phil Nadeau

That's very helpful. Thanks for taking my questions.


Next question comes from the line of Martin Auster from Credit Suisse. Your line is now open.

Unidentified Analyst

Hi. This is Mark on for Martin. Thanks for taking my question. I guess, my question relates to the valrox high titer study. Would you be able to provide an update on enrollment of that study and potential timing for data there? And in addition, could you outline where the immunosuppression protocol is for that study? Thank you.

Jean-Jacques Bienaimé

Yeah. Okay. So if you're talking about the high titer study that study 203 in AAV5 positive patients. The titer actually are not that high. In the while people don't really have a lot of titer to AAV5. Certainly nothing remotely like the titer that developed after you've been treated with the AAV capsid.

We're looking at relatively even lower titer patients first to see if we can effect gene transfer in those patients. Unfortunately, I'd say it's going a little slowly. Finding AAV5 positive patients there are not the majority of the patients as we've said before. And so I can't give you any more special enrollment update.

You asked about the immunosuppressive regimens used. And that has the potential to be used very confusing question. And let me take a bit of a step back first. When we talk about immunosuppression I think with the field is most significantly thinking about is the prevention of cytotoxic T response post gene transfer, which can kill the liver and cause the loss of factory expression.

We don't see that phenomenon in AAV5 capsid. And we've gone into some length in previously explaining what our data are at least based on our Phase 2 study and we’re very grateful to doctor Mingozzi whose lab has done all the characterization of the cytotoxic T responses. You'll organize that he is key opinion leader in the field. He's also Spark’s Chief Scientific Officer.

So I think he carries some extra credibility when his lab is not able to document T-Cell responses to our capsules. So, we are not giving corticosteroids to affect and immunosuppression to block the catastrophic loss of effect suppression. And thus far is the process of testing the hypothesis that there in a suppressive regimen can block cash out of these [ph] factory expression. I'd say stay tuned to that data on the one side, but on the other side, it's really essential relevant to us.

The other thing that people talk about is if you have a pre-existing or new developer AAD5 can you immunosuppress to enable subsequent treatment. Now, as I said for us, that's a relatively lower bar, because AAD5 relatively low and that tighter are relatively low. So, we've got some laboratory concepts of what we wanted to from an immunosuppressive point of view.

But first we want to see if we can affect gene transfer in relatively lower tighter patient who are in this 203 AAD5 positive study. Now way in the back of people's minds are what if we got in an AAV5 those and 10 years later, 15 years later, you need another dose. You've been drinking a lot, you've been taking a lot of Acetaminophen whatever. Your level is worn out and you need another dose of valrox.

We have it -- because how far that problem is in front of us we have put together a clinical trials concept for how we have achieved immunosuppression in that context year just because we've observed enough loss of expression to make us want to investigate that primary.

So, big picture, immunosuppression, not providing something relative to other members of the community. Our evidence is both stock, data as well as these [ph] factory expression accompanying T-Cell side factory response and stay-tuned for more data on where there immunosuppressed patients borderline low AAD5000. Hopefully, that was a comprehensive answer to relatively short question.

Unidentified Analyst

Got it. Thank you.


Next question comes from the line of Joseph Schwartz from SVB Leerink. Your line is now open.

Joseph Schwartz

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

Jeffrey Robert Ajer

Hi Joe. I'd say it's qualitative. It's going better actually than where we were in the U.S. And I think to talk about that concretely we need to get little farther into the -- we need to get to the tail end of the process where we can put exclamation and the point on top it. But just to say I think it's going better. We've seen, for example, drafts of some of the language that will be relevant and we're encouraged buy that.

When we're saying that we're guiding to the opinion at March, if you're an aficionado of the CHMP process, they met at regulatory schedule times, you have to meet certain submission dates. So, we're pretty tight in on what we think is going to happen and when we think it's going to happen. Mark the end of the first quarter is not very far from here.

Joseph Schwartz

Great, that's very helpful. Thank you. Absolutely. Thanks again. And so then on valrox given that development has been fast and furious, how are you -- at times, how are you planning to coordinator or perhaps already coordinating with payers in order to support a smooth rollout in the marketplace when the time comes that's consistent with current perspectives of value in healthcare.

Jeffrey Robert Ajer

That's great question Joe. And we see the payer perspective as one of the unique challenges of commercializing valrox as others have stated often we're talking about a change in paradigm from chronic treatment to one-time curative therapy and healthcare systems, not only in the U.S. but other markers that are not accustomed to dealing with this.

On the positive side, I think that our commercial experience in the United States and around the world puts us in a uniquely good position to deal with that challenge. We've been meeting with payers participating in cross stakeholder groups addressing this issue for 1.5 years at least. So we have been pretty active on that front.

We meet with payers individually now in the United States. And in Europe, we've been meeting with them not only in cross stakeholders group, but in groups organized solely by BioMarin. Probably the U.S. is going to be the more challenging environment for a couple of reasons.

One is the fragmentation of payers and different types of payers. You've got commercial payers, you've got Medicaid payers, you’ve got Medicare payers. And the second is the -- is kind of the overlay of the government pricing rules and the price reporting rules such that creative things that you want to do with certain payers could reach through to really bad discount levels of what has to be extended to government payers.

We're not alone in addressing that. I think there's stakeholders inside of the government and the other payers that are trying to address this. We've got a little time to work this out and solve for it.

It's certainly possible in the U.S. if that's was our first approval that we could be starting on kind of a traditional onetime payment while models for other types of payments structures were being worked out and facilitated. And finally, we do see some payers already taking shape in the United States.

So there is much that’s on the market we are watching that. Nevada you could have [Indiscernible] on the market and not too distant future and before valrox hits the market and that would also be instructive to watch the experience there. So in short we haven't solved with this problem. But we're really active and we're all over it.

Jean-Jacques Bienaimé

So let me add. I mean, it's lucky that we will -- we might end up different paying structures in different parts of the world or even in U.S. we can also add different paying structures depending on the payers. Some might be more interested in paying with the -- some over time. Some overtime based on performance. We're very open to those needs and we need to satisfy the different needs on the different segments of the market.

But I just want also emphasize that, even if we file for extended approval expecting that by the time we get approval we will have between four and five years of data with the Phase 2 patients, whereby we will hopefully be able to demonstrate sustained reduction bleeding episodes and elimination or significantly increase need for Factor VIII injections which is kind of the basis of cost effectiveness of the product.

Joseph Schwartz

Right. Thank you.


Next question comes from the line of Cory Kasimov from JPMorgan. Your line is now open.

Cory Kasimov

Hey, guys. Thanks for taking my questions. I also have one on Palynziq and one on valrox. So first a follow-up on the tolerability profile of Palynziq. Can you talk a little bit about how the dropout rate for the drug, it compares -- or in the real world compares with what you saw in clinical trials?

We also heard from a KOL who said patients are able to continue with the drug post an anaphylaxis event? But are you finding that any of the naive patients dropout off as they start to go through the administration process? Or they able to put up with it and learn to do it and get through it?

Hank Fuchs

Yeah. Hi, Cory, it's Hank. I'll -- sorry, Jeff, I don’t know, you want to add some color. But just the tolerability profile that we see today, relatively low sample size because of relatively just getting started in July with commercialization. But it's tracking to be at or lower what we observe in the clinical trials.

We challenged success occurring in the majority of the patients just as we had observed in the clinical trials. And the overall drop-out rate is relatively low. And in fact it has more to do with the logistics. And in one case, maternal – family planning considerations in another case.

So relatively infrequent dropouts and relatively encouraging news about a relatively low anaphylaxis rate and a positively rechallenged safety. Jeff, do you want to add anything about your current experience?

Jeffrey Robert Ajer

Well, in – going back to Hank's earlier comment about anaphylaxis. An issue here is, our total anaph patients is growing pretty rapidly, but kind of the area under the curve overtime, there's not that much time for many of those patients to draw conclusions. But we did note in the press release how many commercial patients we've got on therapy.

In total, so far we've lost -- we've had seven patients that were naive to treatment, discontinued therapy. And kind of for a mix of, I would say, generally tolerability coupled with lifestyle considerations.

We also lost a couple of patients that discontinued for family planning purposes. So ends are pretty small, but I'm really encouraged that a drop off of seven patients at this stage in the game is not overly concerning so far.

Cory Kasimov

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

Jeffrey Robert Ajer

Look, so Factor VIII level versus bleeding rates, I'll start with that part first. Basically what they have communicated to us is that you can apply for accelerated approval. You can -- you will approve a drug on the basis of Factor VIII levels alone provided that you convince us with the assay that you're using is a valid measure of Factor VIII activity.

And you can document that a substantial proportion of patients are treated with your gene therapy getting into the non-hemophiliac range. And you can document that their bleeding rate that you've observed post gene transfer is reasonably likely to predict clinical outcomes.

So that's how to think about where Factor VIII plays the role, it doesn't really play much of a role in the fall -- consideration per se. And so far it hasn't played any role in durability discussions that we've had.

I suppose that confirmation of continued expression which is what we BioMarin expect to do the mid-year update we will be reassuring to the FDA. And I supposed that if the data are unaccepted that we will have to have new conversations based on new expectations.

But so far that has not been -- durability of expression beyond two or three years has not been a key concern of the FDA. And I have to say when I interact with the medical community their working assumption is that if you put the tracking and it’s going to stay in. And so they don't have a lot of questions about durability other than we just want to see the data.

Cory Kasimov

Okay. Great. Thank you very much.

Jeffrey Robert Ajer

And again, I think we have communicated this but there is a precedent with Factor IX in patients that I think Doctor [indiscernible] represented data as this year. Some patients they were eight years in after the treatment they have Factor IX levels you know, in the mid-teens.

And then after several years they were below 10%. At eight years they were definitely below 10% and patients still had no significant continuous bleeding episode after eight years, with blood level, with Factor IX level significantly under 10% and no need for back to Factor IX fusions, they ensure [ph] that company.

Jean-Jacques Bienaimé

They didn't start as high as we're starting. So we're going to be -- our expectations maintained Factor levels much closer to the non-hemophilic range than what J.J. said. So you want to expect 5% at …

Jeffrey Robert Ajer

No, no.

Cory Kasimov

Okay. That's good. Thanks, guys.


Next question comes from the line of Chris Raymond from Piper Jaffray. Your line is now open.

Chris Raymond

Hi. Thanks, guys. I guess since we're only asking about Palynziq and valrox, I'll follow the pattern if that's okay. So two questions. And I guess on Palynziq, just eyeballing the trends between naive and clinical trial patients. It seems like the naive low patients load seems to be accelerating I guess faster than the clinical trial participants.

And by my account, for example, since the end of the year you added 72 naive patients, but only clinical trial patients. And I think I remember you guys talking about at launch that you had a hope to get that full 200 number sort of converted of clinical trial patients.

Can you maybe talk about what's going on there with those that have yet to convert those clinical trial patients?

Jeffrey Robert Ajer

So good observations, Chris. I think your observations are correct and we just need to give you a simple answers behind that. So they were approaching 200 patients in the clinical trial program some of which stated in extension study and have continued in that extension study because they have a dose that's higher than the level dose.

That I think we communicated at the time they were about 160 patients as the label doses of up to 40 milligrams that we would expect to be transitioning through commercial. And we have been working on that.

What we've experienced at that 160 we have some patients that have lacked insurance and some patients we had kind of extended period of time working through a reimbursement approvals.

So at the end of January at JPMorgan, we reported 112 o f those patients who were on reimbursed therapy as of 12, 31 that's going up to 123 as of February 15. And we're continuing to make progress against that 160 patient-or-so number from the clinical trial.

At the same time, the rate of new patient referral has been going on. It's about six weeks on average from a new patient referral coming in through the time that we start those patients.

We've got more momentum going on with new patients. So we'll be working on both of those different cohorts. But just the new patients previously naïve to patients are going to start overwhelming completing with clinical trial populations this year.

Chris Raymond

Great. And then maybe if you will bear with me on other valrox question and this in the fact of whole issue around the factor levels. We do get a ton of questions from investors what to expect. And maybe I hear what you're seeing with respect to FDA cares most about AVR rates et cetera. But may be Jeff.

Jeffrey Robert Ajer

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

Chris Raymond

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

Jeffrey Robert Ajer

Payers are focused in part on durability. That's a big variable for them. And payers are very pragmatic practical people. And they say well we want to see the data when you get there in terms of durability. And recognizing that nobody is going to wait around for 10 years to see what 10-year data look before patients that get treated.

I'm talking about how do we risk mitigate against the variable of durability if we're approving patients for treatment. And what's clear is that when the payers are thinking about durability they're thinking about two things: First is annul bleed rates or bleed rates; and the second is concomitant utilization or not a factor replacement. Those are the two things that they care about.

Chris Raymond

Great. Thank you.


Next question comes from the line of Ying Huang from Bank of America Merrill Lynch. Your line is now open.

Unidentified Analyst

Hey guys, its Aspen for Ying. Thanks for taking our questions. So, first with valrox, can you remind us the FDA requirements on the accelerated filings, specifically what factory are we looking for which assay? And then on vosoritide, can you talk it all about how the Phase 2 patients are doing beyond the 42 months? Are you still seeing a durable effect on AGV? Thank you.

Jeffrey Robert Ajer

So, what factory level? Which assay? So, chromogenic substrate assay, non-hemophiliac range above 40 IU per deciliter, what we haven't specified a statistical test and how many -- what numerator, what denominator, but we had good clear discussion with the FDA about that.

And as we said at JPMorgan earlier, we have already enrolled the sufficient denominator and now are waiting for the data to mature before talking about what the FDA as to its filavailability. As far as--

Jean-Jacques Bienaimé

As far as -- the timeframe is -- six to 12 months.

Jeffrey Robert Ajer

Measured as early as 22 to 26 weeks and taking no longer than 52 weeks to gather all of the data that's prudent to the accelerated approval final package.

On vosoritide, we just reported the 42 months data two months ago, three months ago. So, we -- I would say don't look for another update from us until may be a year from now roughly. And the key catalyst that's happening between now and then anyway is the pivotal 301 clinical -- randomized double-blind clinical trial.

I think we've very convincingly established that sort of durable and now we have to finish our pivotal trial and the other three filings are approved here.

Unidentified Analyst



Next question comes from the line of Robyn Karnauskas from Citi. Your line is now open.

Jean-Jacques Bienaimé

Hello Robyn?

Traci McCarty

May be we go to the next. Operator.


Robyn your line is now open.

Traci McCarty

Operator, May be wed go to the next caller. Thank you.


Next question comes from the line of Tim Lugo from William Blair. Your line is now open.

Tim Lugo

Thanks for the question. For the Phase 2 vosoritide infant and young children study, what is the growth you're seeing for that three-month baseline run in? And how does that compare versus what you noted in the older patients and maybe natural history and what normal HealthEast look like?

Hank Fuchs

Yes, there is a slide I think the agency showed at the AdCom that's from a - refine study published in 2018 which looked at AGV and contemplated as a function of age. And over the first two to three to four years of life, AGV drops dramatically before stabilizing from about year age five to the [Indiscernible] period about five centimeters a year. So -- or four centimeters per year I should say.

So when you asked what's the expected growth rate for the under-five population? It very much dependents on what you're talking about, four-year old, or three-year old, or two-year old. And the range can be as much as, for example, eight centimeters off the top of my head.

I want to say that the average velocity for a four-year old. But for one-year old -- the one-year old might be expected to grow more off the top of head, I don't what number. But -- so it's a very steep decline in the AGV untreated natural history population.

And that's a big part of why people are so interested in treating patients from an earlier time play. I mean, that’s when most of the disproportionality sets in and that's where most of the losses et cetera happens.

Tim Lugo

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

Jeffrey Robert Ajer

Well, over five-year-old study and the under five-year old study to placebo control for a year. So there won’t be meaning far matching for a year long. Where matching could be relevant is what did it all add up to in terms of cumulative gain compared to untreated population.

That's where our ongoing natural history set they’ll be very important. Where we can match patient by say tenure stage, gender, baseline age, baseline forensic height, where one group is nervous for oral treatment and the other group has got say four or five years of treatment. That's how we can get to the -- what did it all add up to portion of the discussion?

Tim Lugo

Okay. And this will only informed safety and the package that you eventually submit and not efficacy for this patient population?

Jeffrey Robert Ajer

Well, it’s little early to talk about what going to be in the package. You could imagine by supporting both and understand -- people really do care, by putting child on short side or any growth agent, what can I expect is the ultimate outcome.

So I don’t want to project when the agency is going to come out, but it’s certainly been an important topic of discussion between us and them and we’re doing a fairly robust evaluation of what does that all add up to.

So I would b e surprised if it doesn't make it's way into our package. But we got double…

Tim Lugo

Thanks. Yeah, understood. Thank you.


Next question comes from the line of Akash Tiwari [ph] from Wolfe Research. Your line is now open.

Unidentified Analyst

Hi. Thanks for taking my questions. So according to our calculations, it seems like factory levels are somewhere between 35 and 40 using -- you're too using a chromogenic assay. With that in mind, would the team internally be surprised that ion the three-year update factory levels had drifted below 30?

And I guess more broadly, are you comfortable with this idea where the street is, where this midyear valrox update is now becoming kind of a -- it's going to prove whether circularization theory is true or not? Like how instructive is the three-year update in terms of that long-term theory?

And then on your PKU gene therapy. So it looks like the data we got at the R&D Day was using your metering construct. So just to clarify, are you able to show lifetime durability using a human eyes construct?

And what type of translational work are you doing with nonhuman primates in order to get a better understanding on how your -- how 307 will behave in patients? Thanks so much.

Jean-Jacques Bienaimé

I want to take a shot at BioMarin, because that was a lot of stuff that you want to cover. So, let me start with first clarifying that we show the two-year data at the World Federation of Hemophilia using a one-stage assay. At the end of the two-year timeframe I think the mean -- off the top of my head was about 46%.

We've also suspect in the one-stage. We've also said that chromogenic is about 60% of the value of the one-stage assay. So you might have been a little high when you were using numbers to the two-year chromogenic type. I think our number would be is around 26%. And we would regards stabilization as a massive minus within that 26%.

As far as long-term durability and how much will be informed about hypothesis? I'll be willing to bet all my money that no matter what we present at ICH there's going to be another hypothesis about why it's going to wear off next week.

And so I would just go back a little bit and just remind that the people have been working on vector design for a long time. And durability of expression is a huge consideration and the relationship between durable forms of the vector and vector design has really been investigated quite intensely.

And our expectation about durable expression really comes from those experiments as well as experiments that we've done as well as other investigators that have shown that once you get the vector in and regardless of short-term expressions in protein, the vector stays in. That's also assuming by the way there is no autoimmune hepatitis as others have observed not us.

So our expectation is that there will be long-term durable expression that it will validate that the way we design the vector recapitulate what’s been observed. And prior vector design work and that we will face a wall of additional new hypotheses that are generated about year four, year five or year six.

As far as the constructs used for 307, we showed you both the mirroring construct going out a really long time and shorter duration experiments for the human construct. You can't evaluate durability of expression of the human contract in a mirroring species given the hydrologists nature of the protein. So the experiments that meaning one species.

So the experiments have document durable expressions we've done with the mirroring construct. We have no reason to expect that humans to human construct well-behaved any differently. I think your last question is about non-human primates. But I think we’ve covered a lot of ground right here.

Traci McCarty

Operator, next question please.


[Operator Instructions] So, your next question comes from the line of Paul Matteis from Stifel. Your line is now open.

Paul Matteis

Hi. Thanks for taking the question. This is Nate on for Paul. I guess, just on vosoritide, beyond growth velocity, are there any other key elements of the data maybe bone ratios or any other medical complications something like that that might not be important from a regulatory perspective?

Jean-Jacques Bienaimé

Safety. And not because there's particular safety hypothesis, but just that you're asking about any other. And we’re accumulating a very large safety database. We have ongoing randomized pivotal trial that will be fairly definitive for evaluating safety and getting rid of any concerns about hypertensive episodes.

Safety in younger population will have available for market authorization submission. So in terms of the FDA initial decision benefit risk, benefit is going to be principally driven by consideration of the high velocity gain risk safety overall with no particular of signal generated so far.

Functionality, proportionality, bone health, all academically interesting, all scientifically interesting. Not particularly key from a regularly perspective. All ground clearly well covered by the advisory community in May, giving advice to the FDA, design the clinical trials in the contemplative patients.

And if you go back to that, you'll see our program pretty close matches the FDAs advisory committee's recognitions for a development program. So mainly in efficacy, AGV, long-term outcomes, health gain and then safety considerations, mainly in the target population but also in very younger patients.


Next question comes from the line of Ellie Merle from Cantor Fitzgerald. Your line is now open.

Ellie Merle

Hey, guys. Thanks for squeezing me in. Just on hemophilia again, you guys have been very confident in seeing durability after year three. If you do not see durability to the way that you define it, would this change anything about sort of your future plan or timelines for your other gene therapy programs at all? And I guess how much of the manufacturing capacity are you holding for hemophilia? Thanks.

Hank Fuchs

Having done a lot of scenario planning around durability post ISCH, simply because the expectation is that expression will be durable on objective than anything else.

Jean-Jacques Bienaimé

Ellie, I mean, based on everything we know and again the animal data, the Factor IX experience, we believe that it's likely that we're going to have a durable people effect here in terms of dramatically reduction in bleeding after dose and Factor VIII retention units.

And so we're not replanning on this scenario. And also, I mean, it will depend if anything happens to whatever the reasons. But I mean, right now, we're going full blast on the PKU gene therapy program, very unlikely that that’s going to change.

Robert Baffi

This is Robert Baffi

Jean-Jacques Bienaimé

Based on the manufacturing aspect…

Robert Baffi

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

Jean-Jacques Bienaimé

And actually we could move to 5,000 patients with a minimum investments in same facility, adding some equipments should we need to have capacity beyond 5,000 patients, that by the way that will be combination of potentially valrox and some PKU clinical trials and analytic new gene therapy.

And so we already are making plans for a second facility basically now into Puerto Rico for that one. And I am looking forward to the day when we have – we are running out of capacity at 5000 patients per year, at about $2 million or $3 million per patient.


Next question comes from the line of Whitney Ijem from Guggenheim. Your line is now open.

Whitney Ijem

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

Hank Fuchs

Yeah. I went to a great symposium that was sponsored by Spark on sector level, all that matters are some of the other considerations matter. And you're absolutely right that, that there is more to this than just factor expression.

And one of the things I -- that we're very intrigued by, is our quality of life data which kind of ties to microbial, its very difficult to measure clinically microbial, more straightforward to measure quality of life. We use this instrument called EMA Qual validated in hemophilia studies.

And what was shown in that in the use of that instrument is that all domains improve from pre-treatment baseline and then improvement continues in year two over a year one even while this holdback SLV like to call it in the factor expression levels was occurring.

So we think that there's good strong evidence for there being more to gene therapies benefits than restoring factory levels or stopping ADRs study and factoring is improving quality of life. This either way it's very important to see what is [indiscernible]? Because the value proposition for patients is contained and weigh more than just simply the offset of factor use.

Now having said all of that, you're asking about what’s the patient perspective? A patient was a panelist on this symposium that, I went to was really interesting because he spoke about all the other considerations and benefits.

But at the end, the chair of the panel asked the patient, so if you were given the choice between a gene therapy which produces let's say, a mild degree of correction or more fulsome degree of protection which would you rather take?

And the patient said, are you kidding me. I want the high dose stuff. And so I thought that was also pretty profound because it speaks directly to the question you're asking to. You know what patients prefer? They want the whole package, they want ADR reduction, they want factor reduction, they want durable expression, they want blip control persisting through a number of years they want improve quality of life.

They want to live as close to a normal life as they can. They want to increase their activity which you can't really do when you're mildly hemophiliac. They want the values to be as close to the non-hemophiliac range as they can get.

Jean-Jacques Bienaimé

And that answer from this space, our competitor podium is consistent again with the 95% of the patients that are preferring the high dose to the low dose in our own trial.


Next question comes from the line of Edward Nash from SunTrust. Your line is now open.

Edward Nash

Hey thank you for taking our question. This is Funk on Edward. The first question I want to ask is on NPS 3P program can guys give us some guidance in terms of your repertory strategy?

Jean-Jacques Bienaimé

Not much more than we’ve said previously which is that you know we put out a guidance document for a slowly progressive diseases we're studying it very carefully. There's almost certainly an accelerated approval pathway there based on normalization of the substrate which accumulates in the placebo for the disease.

But we're still in the collecting the primary data phase. So it's a little early to be talking about regulatory strategy other than just awareness of the evolving regulatory landscape for enzyme replacement therapy.


Next question comes from the line of Kennen Mackay from RBC Capital Markets. Your line is open.

Kennen Mackay

Hi. Thanks for taking the question. Maybe just a housekeeping question, I was wondering if you could comment sort of globally what the impact of net pricing has been of across the portfolio versus prior years and how that's baked in the guidance for sort of seeing increased headwinds here and then additionally on the policy to patient switch guidance seems like maybe about 50 patients so far have switched from KUVAN, some of these adult patients.

Could you maybe help us understand what percent of KUVAN patients are adult versus pediatrics and adolescents and potentially susceptible to this cannibalization? And is that 35% switch trend baked into the KUVAN guidance. Thank you.

Jean-Jacques Bienaimé

And I will start and I will have answer your question on the patient switch on Palynziq. The net pricing I don't know exactly what you mean? If you mean the issue of gross versus net regarding rebate which is something happens a lot in the big pharma industry.

At BioMarin we do not rebate whatsoever. So if this is your question, the impact of this potential regulations or change in regulation on BioMarin is zero. Was that your question? Rebate related?

Jeffrey Robert Ajer

Okay. Maybe I'll take on the other about KUVAN to Palynziq switch. So our experience so far is 35% of our naïve to treatment patient referrals are coming straight over -- our patients coming straight over from KUVAN.

And based on the total number of enrollments we've got that is 344 as of -- put a different number, just 35%, we're talking about a little over 140 patients that are coming over from KUVAN so far.

And in terms of our guidance is exactly correct that we've taken that into account when providing the 2019 guidance is exactly correct that we've taken that into account when providing the 2019 guidance.

So, we're expecting that our adult patient population on KUVAN is going to reduce modestly and not dramatically that we will continue to see increases in our pediatric population on KUVAN and the combination of that results and the guidance that we've provided--

Kennen Mackay

And how many adults on KUVAN, that was another part of the question.

Jeffrey Robert Ajer

Indeed, it's about 40/60 mixed adults and pediatrics.

Kennen Mackay

In U.S.?

Jeffrey Robert Ajer

In the U.S.

Kennen Mackay

So, the 100 is a relatively small fraction of the overall clinical population.

Jeffrey Robert Ajer

Yes. Although again I think even in a long-term, we -- this is good for BioMarin to switch doctor and patients to [Indiscernible] as you know is anticipated that generic competition will occur in the Q4 of 2020. So, that is not something we want to present, that's something we want to crush.


Next question comes from the line of Liana Moussatos, Wedbush Securities. In the interest of time, this will be the last question today. Liana, your line is now open.

Liana Moussatos

Thank you. So, for valrox's pricing did I hear J&J, JJ correctly say two million to three million per patient in the manufacturing question? And if not, what would be an appropriate range and would you include re-dosing?

Jean-Jacques Bienaimé

So, what I say is that, let's assume we can demonstrate four to five years of clinical benefit in terms of elimination of need for becoming infective injections or any treatment of the hemophilia A patients. The metric is, it just background metric, the metric is that if you look at severe hemophilia patients on factor VIII fairly two to three times a week or you know they shows that the few species that will potentially be taking - for an adult patients between $700000 and $800000 dollars a year. So you multiply this by four or five and that's the background of the pharmacokinetics we’re getting it. I was not going to be getting the price, but this is just the metric there.


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

Jean-Jacques Bienaimé

Well thank you operator and thank you all for participating on our call today. So 2018 was another good year for BioMarin. We grew revenues to nearly $1.5 billion while we advanced the three potential blockbuster products which are our largest market opportunities today. So our financial discipline, our focus on expense controls and margin improvements will continue throughout 2019 and beyond.

So I want to thank you. We want to thank you for your continued support and we look forward to keeping you apprised of our progress throughout the year. Good bye.


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