BioMarin Pharmaceutical Inc. (BMRN) Q4 2018 Earnings Conference Call Transcript

BioMarin Pharmaceutical Inc. (BMRN 2.87%)
Q4 2018 Earnings Conference Call
February 21, 2017, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants
  
  See all our earnings call transcripts.

Prepared Remarks:

Operator

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, Tracy.

Traci McCarty -- Vice President of Investor Relations

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

To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin's 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 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. Bienaime.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Thank you, Tracy. Good afternoon and thank you for joining us on today's call. 2018 was extremely productive year on execution for BioMarin. During the year when we advanced our three largest product 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 23% demonstrating our continued focus on topline growth, expand controls and improve margins. We are projecting similar financial progress in 2019 as we work toward approval of both Valrox and Vosoritide, the achievement of which will be truly transformational for the company.

Turning first to accomplishments in 2018 and 2019, I would look to Palynziq the treatment of phenylketonuria. US lunch began last July and continue to progress extremely well. The US PKU community has been very enthusiastic about Palynziq, given the dramatic [inaudible] demonstrated across our multi-year clinical program. For Palynziq outside of the US, we now expect the CHMP opinion for our market team 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 second half of this year. In a moment, Jeff will provide more information on European preparation as well as more recent metrics on the US Palynziq launch which is BioMarin's largest market opportunity today.

Moving to another significant potential value driver this year, we look forward to a number of important updates with Valrox. As announced last month, we have completed enrollment of the cohorts of patients in the ongoing Phase 3 study with the 6e13 dose that are intended to satisfy accelerated filing requirements, depending on the results of [inaudible]. We will communicate our decision on whether or not we plan to file an expedited filing in the second half of this year.

Currently we're on track to 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 of the 6e13 dose on the two-year update with the 4e13 dose in the middle of this year. And in a moment, Hank will provide some additional detail on Phase 3 enrollment progress as well as our plans on the Phase 2 data update.

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

Looking beyond these two late-stage products, we are leveraging our Valrox experience to give out in the next wave of gene therapy products, such as BMN307 for the treatment of phenylketonuria. We shared some exciting [inaudible] recently with BMN307 that demonstrated long-lasting normalization of Phe. We're on track to finalize these in the second half of the year with BMN307, and we believe this is just the beginning of our expansion into a broader gene therapy pipeline.

In conclusion, we are very pleased with our accomplishments in 2018, and we are excited by 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 few years are going to be truly transformational for the company.

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

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

Thank you, JJ. Starting with the US 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 physician communities have been tremendously enthusiastic about Palynziq since approval in the US last May, and the numbers speak for themselves.

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

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

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

Turning now to Palynziq revenues, we were pleased with the 2018 full year contribution of just over $12 million. Considering the time required to get patients started on therapy following enrollment the deliberate titration protocol for new patients that results in partial revenue per patient for at least their first eight weeks of treatment and the pacing of transitioning clinical patients to commercial Palynziq sales in 2018 tracked to plan. Based on the growing number of patients we expect the transition from the induction titration stage to daily dosing combined with current and expected enrollment rates are 2019 full year Palynziq revenue guidance is $70 million-$100 million.

Should we receive EU approval of Palynziq in 2019, though we don't expect material EU revenues in 2019, we would expect to see a meaningful revenue contribution from that region beginning in 2020?

Now, turning to other products in our commercial portfolio which drove 14% growth in nearly $1.5 billion for the full year 2018, first I'm glad to announce the fifth anniversary of the approval of Vimizim, the one and only product approved for the treatment of Morquio A. In 2018, Vimizim revenue grew 17% to $482 million for the full year compared to 2017. Uneven quarter to quarter ordering patterns from the Latin American region were offset by increased revenue from the Umea region resulting in a strong results for the full year.

We expect to see continued steady growth of Vimizim now that pricing and reimbursement has been established in the vast majority of our commercial markets and then it's important to focus on annual revenue guidance for Vimizim and all of our global brands. For full-year 2019, we expect Vimizim net product revenues of $530-$570 million as we anticipate new patient growth in established markets and continued progress gaining access in smaller markets.

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

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

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

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

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

Daniel Spiegelman -- Executive Vice President and Chief Financial Officer

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

Starting with revenues, full-year 2018 topline 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 topline growth to between $1.6 billion to $1.75 billion based solely on currently approved products. Moreover, as JJ noted, 2020 total revenue should grow an additional 15% and be approximately $2 billion with the expectation and the contributions from Vosoritide and Valrox take us significantly beyond those levels in the years ahead.

Importantly, expense growth was less than revenue growth resulting in improved bottom-line results and reduced cash usage. Starting with GAAP net loss in 2018, it decreased 34% to a loss of $77 million for the full year and for full year 2019 we expect GAAP net loss to decline an additional approximately 16% based on the midpoint loss guidance of $45-$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 $270 million in income.

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

Moving to operating expenses, R&D expenses increased to $696 million for full year 2018 compared to $611 million for the full year 2017. The increase in R&D in 2018 compared to 2017 was primarily due to increased Valrox production and 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 BMN250 production expenses.

Looking forward, R&D expenses in 2019 as a percent of revenues will continue to decline and on an absolute basis should expand modestly relative to 2018 consistent with the potential accelerated path and the AAV5 with Valrox, the IND filing for BMN307 as well as other clinical programs, such as 0 to 5-year-old study with Vosoritide. To support the numerous development programs advancing in 2019, full-year R&D expenses are expected to be $740-$780 million.

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

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

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

Henry Fuchs -- President, Worldwide Research & Development

Thanks, Dan. Since the team has already outlined a number of our anticipated catalysts, I will touch on a few other items before we open the call to questions and answers. First, for Palynziq Europe, the marketing authorization application is under review and tracking to an anticipated CHMP opinion this quarter. We'll keep you posted on developments with the application but suffice to say European health authorities are well aware of the dramatic Phe lowering properties of Palynziq and the importance of lifetime treatment of phenylketonuria. We look forward to sharing news of the CHMP opinion in the near future and for 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 as demonstrated by the high level of interest in our infant and toddler study. I stated the FDA advisory committee on account of pleasure last spring, their strong support for starting treatment early in life as it may afford the most dramatic benefit for children with achondroplasia.

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

To summarize, we're very pleased with the progress of our global Vosoritide development program including the large contemporaneous natural history study is under way, we believe results from our four-pronged development program will support improved clinical outcomes for children with achondroplasia. Results from our ongoing Phase 2 in older children have been encouraging, demonstrating an average age additional height gain of 5.7 cm in 42 months. Enrollment in the Phase 2 infant toddler studies 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 topline Phase 3 data readout by the end of the year.

Briefly on Valrox, as we stated in January, we look forward to completing the next steps needing the support of BLA filing to the accelerated approval pathway. The completed enrollment of the initial cohort for the Generate 1 Phase 3 study intended to support this BLA and our focus now turned toward completing the manufacturing components of the CMC package, we expect to complete all manufacturing campaigns for a potential accelerated approval filing by the end of this quarter 1Q 2019. We're making great progress in all aspects of the BLA filing package, and as we have communicated, we will inform you of our decision of whether or not to pursue an accelerated path forward by the second half of this year.

Turning now to ongoing enrollment in the Phase 3 Generate 1 study using 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 the transgene. Of these subjects who have determined through the 902 study to be eligible for the Generate 1 study and Generate 2 studies, 95% or more are indicating their preference for the dose 6e13 dose over the 4e13 dose in the 302 study. Recall that the full 301 studies are full approval, 52-week study powered to demonstrate superior R&D versus standard of care and reducing bleeding. Achieving this enrollment milestone marks another achievement in our Valrox program, much as been accomplished in a very short period of time.

Pioneering and develop of innovative products to improve health outcomes for patients with rare diseases is not new for BioMarin and we look forward to leveraging this experience with the endeavor to transform the treatment landscape for patients living with severe hemophilia A. The Valrox development journey has been fast and furious at times but 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 is exactly what has been demonstrated in the Valrox Phase 2 study today.

I'm very proud of what's been accomplished thus far, and we look forward to learning more about Valrox 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 a medical meeting. I would like to share with you today that we are planning to present the more detailed three-year Phase 2 Valrox data at the International Society on Thrombosis and Hemostasis or ISTH whose abstract deadline for submission of late breakers is June 6.

And finally to remind you of the other developments expected this year, in the middle of preparing to file for the IND filing for our PKU gene therapy product BMN307, recall the preclinical data we shared in January using NU-2 mouse model, which were used for Palynziq and which is close to the human PKU phenotype, we demonstrated that within two weeks the levels would normalize with BMN307 treatment continuing out to 80 weeks, well beyond the expected lifespan of the untreated NU-2 mouse. We look forward to putting this product in the clinic and to leveraging our Valrox manufacturing experience to initiate clinical studies with commercial scale material.

These are the highlights of 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.

Questions and Answers:

Operator

At this time, I would like to inform everyone in order to ask questions; please press *1 on your telephone keypad, again, that would be *1 on your telephone keypad. We have your first question comes from the line of Slaveen Richter from Goldman Sachs; your line is now open.

Slaveen Richter -- Goldman Sachs -- Analyst

Thanks for taking my question. Two questions for me, one is, do you have any other hypothesis for the pullback in expression levels that you saw with the hemophilia A program versus the circulating to noncirculating DNA? And then secondly, what is the gating factor to higher penetration into the MPS6 market, it seems per hour models that you're roughly a little higher than 50% penetrated at this time point? Thanks.

Henry Fuchs -- President, Worldwide Research & Development

Yeah, hi Slaveen, I'll start, and then I'll turn it over to Jeff. Other hypotheses to depict the pullback in factor expression levels have been surfaced to include considerations like endoplasmic reticulum stress, we measure biomarkers of that both pre-clinically and clinically and are unable to document endoplasmic reticulum stress, we considered the possibility that corticosteroids are falsely elevating expression, we don't find evidence for that. We considered the possibility that there's promoter silencing or [inaudible] the vector, we don't see evidence of that. And so, we are left with speculating that the reason for the pullback in Factor VIII expression is a function of metabolizing the vector.

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

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

Slaveen, this is Jeff, I'd like to address your question about penetration of the MPS6 patient population, at least that was on when your questions. We are at and have been at a little over 85% penetration of known patients for several years. The gating factor on growth of Naglazyme is almost entirely the identification of new patients, the vast majority of which we are able to get to treatment in a relatively short period of time.

In the event your question was directed toward the Morquio A patient population, we are currently about 65% penetrated of known identified patients there, a substantially larger patient population. We've been added for less time, and we're still trying to get into some markets that we don't have commercial access to. So, probably the gating factor on higher penetration of the Morquio A patient population is getting into the secondary and tertiary commercial markets, and we're making progress on that.

Slaveen Richter -- Goldman Sachs -- Analyst

Great, thank you.

Operator

Question comes from the line of Matthew Harrison from Morgan Stanley; your line is now open.

Ishmael Niang -- Morgan Stanley -- Analyst

Hi, this is Ishmael Niang for Matthew, thank you for taking our question. Can you comment on the enrollment progress for the 4e13 dose in the hemophilia gene therapy study and what impact, if any, will the data have on an accelerated filing strategy?

Henry Fuchs -- President, Worldwide Research & Development

Hi Ishmael, 4e, we've said all along, was going to go slower than the 6e and my comment today that asked where screening patients for A85 positivity and running them through the baseline prospective bleed rate study, patients are like 95 to 5 holding their hand up for the 6e dose. We're going to continue to enroll in the baseline observational study once we conclude fully over enrolling it for the 301 6e dose, we can start talking to patients about whether they are interested in rolling in the 4e study or waiting for commercial 6e program. But we had always anticipated that the 4e was gonna go slower. Patients are very much voting with their feet; they want a higher level of factor expression if they can get it.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Again, this has zero impact on the timing of our accelerated filing. Hank just said, we've heard many rumors that patients would like lower levels they would prefer that, but we have here on a sample of over 100 patients faced with the decision of which [inaudible] they wanna have the low dose or the high dose which could generate higher Factor VIII level, 95% of them.

Operator

The next question comes from the line of Phil Nadeau from Cohen and Company; your line is now open.

Phillip Nadeau -- Cowen & Company -- Analyst

Good evening, thanks for taking my question. Hank, just to start with you on your guidance around the ISTH meeting, are we to take from your comments that were likely to see that top line released around the deadline for the late-breaker abstract submission, so maybe early June we get the top line release with the full data at the meeting in July?

Henry Fuchs -- President, Worldwide Research & Development

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.

Phillip Nadeau -- Cowen & Company -- Analyst

Okay. And then --

Henry Fuchs -- President, Worldwide Research & Development

It's not crazy to say you're interested in Valrox being around in early June.

Phillip Nadeau -- Cowen & Company -- Analyst

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

Henry Fuchs -- President, Worldwide Research & Development

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

Phillip Nadeau -- Cowen & Company -- Analyst

Got it, OK.

Henry Fuchs -- President, Worldwide Research & Development

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

Phillip Nadeau -- Cowen & Company -- Analyst

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

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

Well, starting with the dose and titrations schedule, it had been sometime since we had been dosing new patients in the clinical trial and if you recall, in the clinical trial setting one of the things that we adjusted during that program was to a docent titration schedule along with recommended premeds that would maximize the response and minimize and toward effects. So, so far, no surprises, most of the clinics that are dosing patients are following the package insert in the dose titration schedule, and we are starting to see some patients that are getting to an efficacy response that 20 mg patients or 20 mg per day, I think I reported nine at the J.P. Morgan 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 mg daily or progress to 40 mg daily and we don't have enough time yet to observe any patients moving up to the 40 mg dose. And maybe I would ask Hank to comment on what he seeing and anaphylaxis.

Henry Fuchs -- President, Worldwide Research & Development

Sure, Jeff's team and my team keep a real close eye on this together and we see and anaphylaxis rate crudely which is consistent with or maybe even slightly lower than what we observe in the package insert, although as Jeff just observed there's not a huge amount of and yet since we just launched the drug in July, and it took a little while for some of the naive patients to get commercial authorization. So, we are really just coming up on the wave were going to get into triple digit numbers of patients who have been on drug for at least six months.

I think one of the things I am very encouraged about, about this, is we do see anaphylaxis occurring, but the majority of patients who have it are successfully rechallenged so that in the commercial setting, which we capitulate to what we saw in the clinical study, in the clinical trial studies, the majority of patients who had an anaphylactic event are able to successfully receive continued Palynziq safely and the fact that doctors are doing that in the commercial setting as well bodes really well because I think that the key thing to keep your eye on is discontinuations due to adverse events. We want to keep that number as low as possible because we can get you past 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 things on that.

Phillip Nadeau -- Cowen & Company -- Analyst

That's very helpful, thanks for taking my questions.

Operator

The next question comes from the line of Martin Auster from Credit Suisse; your line is now open.

Mark Nguyen-- Credit Suisse -- Analyst

Hi, this is Mark Nguyen for Marty, thanks for taking my question. I guess my question is related to the Valrox high titer study, would you be able to provide an update of enrollment of that study and potential timing for data there? And in addition, could you outline what the immunosuppression protocol is for that study? Thank you.

Henry Fuchs -- President, Worldwide Research & Development

Yeah, OK. So, if we're talking about the high titer study if that study 203 and AA85 positive patients, their titers are actually not that high. In the while, people don't really have a lot of titer to AA85, certainly nothing remotely like the titer that developed after you been treated with the A80 capsid. We are starting at relatively even lower titer patients first to see if we can affect gene transfer in those patients. Unfortunately, that study is going a little slowly, finding AA85 positive patients, they are not the majority of patients as we've said before and so I can't give you any more specific enrollment update.

You asked about the immunosuppressive regimen that's used in that has the potential to be a very confusing question and let me take a bit of a step back first. We talk about immunosuppression, I think with the field most significantly thinking about is the prevention of a cytotoxic T response close gene transfer which can kill the liver and cause the loss of Factor VIII expression. We don't see that phenomenon in AA85 capsid, and we've gone into some length into previously explaining what our data are at least on our Phase 2 study and were very grateful to Dr. Mingozzi whose lab has done all the characterization of the side effects of T response. You'll recognize that name; he is a key opinion leader in the field, he's also Spark's Chief Scientific Officer so, I think it carries some extra credibility when his lab is not able to document T cell responses to our capsid.

So, we're not giving corticosteroids to affect and immunosuppression to block the catastrophic loss of Factor VIII expression and Doc Spark is in the process of testing the hypothesis that their immunosuppressive regimen can block catastrophic loss of factor expression. I'd say stay tuned to that data on the one side, but on the other side, it's not really especially relevant to us.

The other thing that people talk about is if you have a pre-existing or you develop a titer to AA85, can you immunosuppress to enable subsequent treatment. Now as I said, for us that's a relatively lower bar because AA85 serum prevalence is relatively low and the titers are relatively low. So, we've got some laboratory concepts of what we want to do from an immunosuppressive point of view, but first, we want to see if we can affect gene transfer in relatively lower titer patients who are in this 203 AA85 positive study.

Now, way in the back in the back of people's minds are what if you got an AA85 dose, and 10 years later, 15 years later you need another dose, you been drinking a lot, you been taking a lot of acetaminophen, whatever, your liver is worn out, and you need another dose of Valrox. We have, because of how far that problem is in front of us, we haven't put together a clinical trials concept for how we might achieve immunosuppression in that context yet just because we haven't observed enough loss of expression to make us want to investigate that climate.

So, big picture, immunosuppression not a big thing for BioMarin, relevant to other members in the community. Our evidence is both stock data as well as don't see catastrophic loss of Factor VIII expression accompanying T cell satisfactory response and stay tuned for more data on whether you need to even immunosuppress patients who have borderline low titers of AA85 positive. Hopefully, that was comprehensive answer to a relatively short question.

Mark Nguyen-- Credit Suisse -- Analyst

Got it, thank you.

Operator

The next question comes from the line of Joseph Schwartz from SVB Leerink; your line is now open.

 Joseph Schwartz -- SVB Leerink -- Analyst

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 you experienced in the United States? Are there any notable differences in the issues that are most important to the different agencies?

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

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

Henry Fuchs -- President, Worldwide Research & Development

The end of the first quarter is not very far from now.

Joseph Schwartz -- SVB Leerink -- Analyst

That's very helpful, thank you.

Henry Fuchs -- President, Worldwide Research & Development

Useful direction.

Joseph Schwartz -- SVB Leerink -- Analyst

Absolutely, thanks again. So, then on Valrox, given that development has been fast and furious at times, how are you planning to coordinate or perhaps already coordinating with payors 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 -- Executive Vice President and Chief Commercial Officer

That's a great question, Joe, and we see the payor 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 US but in other markets that are not accustomed to dealing with this. On the positive side, I think that a 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 payors participating in cross-stakeholder groups addressing this issue for a year and a half at least. So, we've been pretty active on that front. We meet with payors individually now in the United States and in Europe we've been meeting with them not only in cross-stakeholder groups but in groups organized solely by BioMarin. Probably the US the more challenging environment for a couple of reasons. One is the fragmentation of payors and different type of payors. You've got commercial payors, you've got Medicaid payors, you've got Medicare payors. And the second is kind of the overlay of the government pricing rules and the price reporting rules such that the things that you want to do with certain payors could read through to really bad discount levels that would have to be extended to government payors.

We are not alone in addressing that, I think their stakeholders inside of the government and other payors that are trying to address this. We've got a little time to work this out and so forth. It's certainly possible in the US if that was our first approval, that we could be starting on kind of a traditional one-time payment while models for other types of payment structures were being worked out and facilitated.

And finally, we do see some players already taking shape in the United States so; there's Luxturna that's on the market, watching that. Novartis could add an SMA gene therapy on the market in the not-too-distant future and before Valrox hits the market and that would also be instructive to watch the experience there. So, in short, we haven't solved for this problem, but we are really active and were all over it.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Let me add that it's likely that we might end up with different paying structures in different parts of the world or even in the US we also may have different paying structures depending on the payors. Some might be more interested in paying most of the value of the product up front, some overtime, some overtime based on performance. We are very open to those needs and willing to satisfy the different needs of the different segments in the market. But I just want to also emphasize even if we file for accelerated approval, it's likely 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 in seeing episodes and elimination or significantly reduce need for Factor VIII injections which is kind of the basis of the cost-effectiveness of the product.

Joseph Schwartz -- SVB Leerink -- Analyst

Right, thank you.

Operator

The next question comes from the line of Cory Kasimov from J.P. Morgan; your line is now open.

Cory Kasimov -- JP Morgan -- Analyst

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 compares, 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 anaphylaxis event but are you finding that any of the naive patients drop off as they start to go through the administration process or are, they able to put up with it and kind of learn to get through it?

Henry Fuchs -- President, Worldwide Research & Development

Hi Cory, this is Hank. I'll start and then Jeff I don't know if 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 than what we observed in the clinical trials. We challenged success occurring in the majority of patients just as we had observed in the clinical trials. And the overall dropout rate is relatively low, and in fact, it has more to do with the logistics and in one case internal family planning considerations in another case. So, relatively infrequent dropouts and relatively encouraging news about a relatively low anaphylaxis rate and positively challenged safety. Jeff, did you want to add anything about your current experience?

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

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

Joseph Schwartz -- SVB Leerink -- Analyst

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

Henry Fuchs -- President, Worldwide Research & Development

Boy, so, Factor VIII levels versus bleeding rates, let's start with that part first. Basically, what they have communicated to us is that you can apply for accelerated approval, will approve on the basis of Factor VIII levels alone provided that you convince us that the assay that you're using is a valid measure of Factor VIII activity and that you can document that a substantial proportion of patients who are treated with your gene therapy get 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 played a role. It doesn't really play much of a role in the full approval consideration per se, and so far, it hasn't played any role in durability discussions that we've had.

I suppose that confirmation of continued expression, which is what we at BioMarin expect to be the midyear update will be reassuring to the FDA and I suppose that if the data are unexpected that we'll have to have new conversation 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 if you put the turn key in, it's going to stay in. And so, they don't have a lot of questions about durability other than we just want to see the data.

Joseph Schwartz -- SVB Leerink -- Analyst

Okay, great, thank you very much.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

And again, I think we have communicated this, but there is a precedence with Factor IX in patients, Dr. Nortiore presented data last year from patients that were eight years now after the treatment, you know they had T Factor IX levels in the mid-teens and then after several years they were below 10%, at eight years they were definitely below 10% and the patient still had no significant spontaneous bleeding episode after eight years with blood levels, with Factor IX levels significantly under 10% and no need for Factor IX infusions. That reassured that company.

Henry Fuchs -- President, Worldwide Research & Development

They didn't start as high as we are starting so, our expectations maintained factor levels much closer to the non-hemophiliac range than what JJ was saying. We are not setting you up to expect 5% at ISP.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

No, we're not.

Joseph Schwartz -- SVB Leerink -- Analyst

Okay, that's good, thanks, guys.

Operator

The next question comes from the line of Chris Raymond from Piper Jaffray; your line is open.

Chris Raymond -- Piper Jaffray -- Analyst

Hey, thanks, guys. I guess since we're only asking about Palynziq and Valrox, I'll follow the pattern if that's OK. So, two questions, I guess on Palynziq, just eyeballing the trends between naive and clinical trial patients, it seems like the naive patient load seems to be accelerating I guess faster than the clinical trial participants and by my count for example since the end of the year, you added 72 naive patients but only 11 clinical trial patients? I think I remember you guys talking about at launch that you had hoped 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?

Henry Fuchs -- President, Worldwide Research & Development

So, good observation Chris, I think your observations are correct, and we just need to give you kind of the simple answer behind that. So, they were approaching 200 patients in the clinical trial program some of which stayed in an extension study and have continued in that extension study because they have dose that's higher than the label dose. That, I think we communicated at the time, there were about 160 patients at the labeled doses of up to 40 mg that we would expect to be transitioning to commercial and we've been working on that.

What we've experienced at that 160, we have some patients that have lacked insurance and some patients we had kind of extended periods of times working through reimbursement approvals. So, at the end of January at JP Morgan, we reported 112 of those patients were on reimburse therapy as of 12/31, that's gone up to 123 as of February 15, and we're continuing to make progress against that 160 patient or so number from the clinical trial.

At the same time, the rate of new patient referral has been going on. It's about six weeks on average from a new patient referral coming into the time that we start those patients. So, we've got more momentum going on with new patients. So, we'll be working on both of those different cohorts, but the new patients or the previously naive patients are going to start overwhelming completely the clinical trial population this year.

Joseph Schwartz -- SVB Leerink -- Analyst

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

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

In the long term, not in the short term.

Joseph Schwartz -- SVB Leerink -- Analyst

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

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

Well, payors are focused in part on durability, you know that's a big variable for them and payors are very pragmatic and practical people and they say well, we'll want to see the data when you get there in terms of durability and recognizing that nobody's gonna wait around for 10 years to see what 10 year data looks like before patients get treated. This has them talking about well, how do we risk mitigate against the variable of durability if we are approving patients for treatment and what's clear is that when the payors are thinking about durability, they are thinking about two things. First is annual bleed rates or bleed rates and the second is concomitant utilization or not of factor replacement. Those are the two things that they care about.

Joseph Schwartz -- SVB Leerink -- Analyst

Great, thank you.

Operator

The next question comes from the line of Ying Huang from Bank of America Merrill Lynch; your line is now open.

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Hey, guys, it's Aspen on for Ying, thanks for taking our questions. So, first for Valrox, can you remind us the FDA requirements on the accelerated filings, specifically what saturate were looking for with which assay? And then on the Vosoritide, can you talk at all about how the Phase 2 patients are doing beyond the 42 months? Are you still seeing durable effect on AGB? Thank you.

Henry Fuchs -- President, Worldwide Research & Development

So, what factoring level, which assay. So, chromogenic substrate assay, non-hemophiliac range above 40 IU per deciliter. What we haven't specified is the statistical test in what numerator, what denominator, but we have good clear-eyed discretion with the FDA about that, and as we said at J.P. Morgan earlier, we have already enrolled the sufficient denominator and now we're waiting for the data to mature before talking about it with the FDA as to its file ability. As far as --

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

The timeframe is 6 to 12 months?

Henry Fuchs -- President, Worldwide Research & Development

Measured as early as 23 to 26 weeks and taking no longer than 52 weeks to gather all of the data that's pertinent to that accelerated approval filing package. We just reported the 42-month data two months ago, three months ago, so, I would say don't look for another update from us until maybe a year from now roughly. And the key catalyst that's happening between now and then anyway is the pivotal 301 randomized, double-blind clinical trial.

I think we've very convincingly established that the effective sorta durable adds up, now we just have to finish our pivotal trial in the other three prongs of our program.

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Thanks.

Operator

The next question comes from the line of Robyn Karnauskas from Citi; your line is now open.

Traci McCarty -- Vice President of Investor Relations

Maybe go to the next, operator?

Operator

Your line is now open.

Traci McCarty -- Vice President of Investor Relations

Operator, maybe we'll go to the next caller? Thank you.

Operator

The next question comes from the line of Tim Lugo from William Blair; your line is now open.

Tim Lugo -- William Blair Company -- Analyst

Thanks for the question. For the Phase 2 of 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 may be natural history and what normal healthies look like?

Henry Fuchs -- President, Worldwide Research & Development

Yeah, there was a slide I think the agency showed it at the AMCOM that's from a Julie Hoover Fong study published in 2008 which looked at AGV and achondroplasia as a function of age and over the first two to three or four years of life, AGV drops dramatically before stabilizing from about your age five to the prepubescent at about 5 cm per year, or 4 cm per year I should say. So, when you ask what's the expected growth rate for the under-five population, it very much depends on whether you're talking about a four-year-old or three-year-old or two-year-old and the range can be as much as for example 8 cm off the top of my head, I want to say that the average growth velocity for four-year-old, but for a one-year-old might be expected to grow more.

Off the top of my head, I don't know what number. So, there's a very steep decline in the AGV untreated natural history population. And that's a big part of why people are so interested in treating patients from an earlier time point. I mean that's when most of the disproportionality sets in, and that's when most of the loss of stature happens.

Tim Lugo -- William Blair Company -- Analyst

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

Henry Fuchs -- President, Worldwide Research & Development

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

Tim Lugo -- William Blair Company -- Analyst

Okay, in this will only inform safety in the package that you eventually submit and not efficacy for this patient population?

Henry Fuchs -- President, Worldwide Research & Development

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

Tim Lugo -- William Blair Company -- Analyst

Yep, understood, thank you.

Operator

The next question comes from Akash Tewari from Wolfe Research; your line is now open.

Akash Tewari -- Wolfe Research -- Analyst

Hi, thanks for taking my questions. So, according to our calculations, it seems that factor levels are somewhere between 35 and 40 at year two using a chromogenic assay. With that in mind, with the team internally be surprised that in the three year update factor levels had drifted below 30 and I guess more broadly, are you comfortable with this idea of where the street is where this midyear Valrox update is now becoming kind of a -- it's gonna prove whether circularization theory is true or not. 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 humanized construct and what type translational work are you doing with nonhuman primates in order to get a better understanding on how 307 will behave in patients? Thanks so much.

Henry Fuchs -- President, Worldwide Research & Development

Wow, want to take a shot at BioMarin because that was a lot of stuff that we want to cover. So, let me start by first clarifying that we show the two-year data the World Federation for Hemophilia using the one stage assay, at the end of that two-year time point, I think the mean off the top of my head was about 46%. We've also said that the chromogenic is about 60% of the value of the one stage assay. So, you might've been a little high when you were using numbers for the two-year chromogenic. I think our number would be at around 26%. So, we would regard stabilization as not to minus within that 26%.

As far as long-term durability, how much will we be informed about hypothesis, I'd be willing to bet all my money that no matter what we present ISTH, there's going to be another hypothesis about why it's gonna wear off next week and so I would just pull back a little bit and just remind that the people have been working on vector design for a long time, and durability of expression has been a huge consideration in 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 when she gets the vector in and regardless of short-term expressions in protein, the vector stays in. That's also assuming by the way that there's no immune hepatitis as others have observed, not us.

So, our expectation is that there will be a long-term durable expression, that it will validate that the way we design the vector recapitulates what's been observed in prior vector designed work and that we will face a well of additional new hypotheses that are generated at that year for in year five and 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 construct in the mirroring species studies giving the heterologous nature of the protein. So, the experiments that -- meaning foreign species, so the experiments that documented durable expression were done with the mirroring construct. We have no reason to expect in humans; the human construct will behave any differently.

And I think your last question was about nonhuman primates, but I think we've covered a lot of ground right here.

Traci McCarty -- Vice President of Investor Relations

Operator, next question.

Operator

Participants, please limit your questions to one. So, our next question comes from the line of Paul Mateis from Stifel; your line is now open.

Nate Tower -- Stifel -- Analyst

Hi, thanks for taking the question, this is Nate on for Paul. I guess just one on Vosoritide. Beyond growth velocity, are there any other key elements of the data may be bone ratios or any other or any other medical complications or something like that that might be important from a regulatory perspective?

Henry Fuchs -- President, Worldwide Research & Development

Safety, and not because there's a particular safety hypothesis but just that when you ask about any other, and we are accumulating a fairly large safety database. We have an ongoing randomized pivotal trial that will be fairly definitive for evaluating safety and getting rid of any concerns about hypotensive episodes. Safety in the younger populations we'll have available for market authorization submission. So, in terms of the FDA initial decision, benefit, risk, benefit is good to be principally driven by consideration of the height velocity gain, risk, safety, overall with no particular signal generated so far.

Functionality, proportionality, bone health, all academically interesting, all scientifically interesting, not particularly key from a regulatory perspective. All around pretty covered by in May giving advice to the FDA on design of clinical trials in the achondroplasia patients and if you go back to that, you'll see our program pretty closely matches the FDA's advisory committees' recommendations for development program. So, mainly efficacy, AGV, long-term outcomes, height gains, and then safety considerations mainly in the target population but also in very younger patients.

Operator

The next question comes from the line of Eliana Merle from Cantor Fitzgerald; your line is now open.

Eliana Merle -- Cantor Fitzgerald -- Analyst

Hey guys, thanks for squeezing me in. Just on hemophilia again, you guys seem 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 plans or timelines for your other gene therapy programs at all? And I guess how much of your manufacturing capacity are you holding for hemophilia? Thanks.

Henry Fuchs -- President, Worldwide Research & Development

We haven't done a lot of scenario planning around durability post-ISTH simply because of the expectation of that expression will be durable, and I don't know if JJ want to add anything else?

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

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 threefold factor in terms of dramatic reduction in bleeding episodes and Factor VIII replacement units. So, we're not really planning on this scenario. And also, I mean it will depend if anything happens as to what are the reasons, but I mean right now, we're going full blast on the PKU gene therapy program, very unlikely that that's gonna change.

Robert Baffi -- Executive Vice President of Technical Operations

This is Robert Baffi --

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Based on the manufacturing.

Robert Baffi -- Executive Vice President of Technical Operations

Yeah, so what we reported at R&D day is we have capacity for 4000 patients per year at the highest dose, and we are prepared to apply that capacity to ensure that we can meet all of the commercial demand for Valrox when approved.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

And next year we can move to 5000 patients with a minimum investment in the same facility and adding some equipment should we need to have capacity beyond 5000 patients, by the way, that would be a combination of potentially Valrox and PKU clinical trials and PKU infusion therapy. We already are making plans for a second facility, it's a little early to pull the trigger for that one, and I'm looking forward to the day when we have -- we are running out of capacity at 5000 patients per year at about $2-$3 million patient.

Operator

The next question comes from the line of Whitney Ijem from Guggenheim line is now open.

Whitney Ijem -- Guggenheim Investments -- Analyst

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

Henry Fuchs -- President, Worldwide Research & Development

Yeah, I went to a great symposium that was sponsored by Sparks on factor levels all that matters are just some of the other considerations matter. And you're absolutely right that there's more to this than just factor expression and one of the things that we are very intrigued by is our quality of life data which kind of ties to micro-bleeds, very difficult to measure clinically, micro-bleed. More straightforward to measure quality of life. We use this instrument called Hemoqual Validated and Hemophilia studies, and what was shown in the use of that instrument was that all domains improved from pretreatment baseline and that improvement continues in year two over year one even while this pullback as Slaveen like to call it, and the factor expression levels was occurring.

So, we think that there's good strong evidence for there being more to gene therapies benefit restoring Factor VIII levels or stopping ABR's, stopping Factor VIII is improving quality of life. This, by the way, is very important as Jeff Ajer sitting to my right because the value proposition for patients is contained in way more just simply the offset of factor use. Now having said all of that, you are asking about what the patient's perspective. A patient was a panelist on the symposium that I went to it 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 a choice between a gene therapy which produces let's say a mild degree of protection or a more wholesome degree of protection , which would you rather take?

And the patient said are you kidding me? I want the high dose stuff. And so, I thought that was also pretty profound because it speaks directly to the question you're asking, what patients prefer. They want the whole package, they want ABR reduction, they won't factor reduction, they want durable expression, they want bleed control persisting through a number of years, they want improved quality of life. They want to live as close to a normal life as they can. They want to increase their activity, which you can't really do when you're mildly hemophiliac. So, they want the values to be as close to the non-hemophiliac ranges they can get.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

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

Operator

The next question comes from the line of Edward Nash from SunTrust; your line is now open.

Edward Nash -- SunTrust -- Analyst

Thanks for taking the question. The first question I want to ask on the MPS3 program, can you guys give us some guidance in terms of your regulatory strategies?

Henry Fuchs -- President, Worldwide Research & Development

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

Operator

The next question comes from the line of Kennen MacKay from RBC Capital Markets; your line is now open.

Kennen MacKay -- RBC Capital Markets -- Analyst

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 sort of across the portfolio versus prior years and how that's baked into guidance if we're sort of seeing increased headwinds here? And then additionally, on the Palynziq patient switch guidance it 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 pediatric and adolescent and potentially susceptible to this cannibalization and is that 35% switch trend baked into the Kuvan guidance? Thank you.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

I'll start, and then I'll have Jeff answer your question on the patient switch on Palynziq. For the net pricing, I don't know exactly what you mean. If you mean the issue of gross versus net, we got a rebate which is something that happens a lot in the big Pharma industry. At BioMarin, we do not rebate whatsoever, so if this is your question, the fact of this potential regulation or changing regulation of BioMarin is zero. Was that your question? Rebates related?

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

Maybe a take on the other question about Kuvan to Palynziq switch. So, our experience so far is 35% of our naive to treatment patients' referrals are coming straight over from Kuvan and based on the total number of enrollments we've got that is 344 as of well, I'll quote a different number, just 35%, we were talking about a little bit over 120 patients that are coming over from Kuvan so far and in terms of our guidance, it's exactly 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 in the guidance that we provided.

Kennen MacKay -- RBC Capital Markets -- Analyst

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

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

It's about a 40/60 mix adult and pediatric,

Kennen MacKay -- RBC Capital Markets -- Analyst

In the US.

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

In the US.

Kennen MacKay -- RBC Capital Markets -- Analyst

So, the 100 as a relatively small fraction of the overall Kuvan adult population.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Yeah, although again, I think in the long term this is good for BioMarin to switch adult Kuvan patients to Palynziq because as you know, it is anticipated that generic competition will occur in the Q4 of 2020. So, that is not something we want to prevent, that something we want to encourage.

Operator

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

Liana Moussatos -- Wedbush Securities -- Analyst

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

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

So, what I said is that let's assume we can demonstrate in 4 to 5 years of clinical banking in terms of the need for recombinant factor injections or any treatment of the hemophiliac patients. The metric is just this is background metrics, the metric is that if you look at severe hemophilia patients is on prophylactic Factor VIII therapy, 2 to 3 times per week or a few patients that will potentially be taking Hemlibra, the price for an adult patient between $700,000 and $800,000 a year. So, you multiply this by four or five, and that's the background of the pharmaco-economics we are dealing with. I would not be giving the price, but this is just the metrics are there.

Operator

There are no further questions; I'll turn the call back over to Chairman and CEO JJ Bienaime,

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Well, thank you, operator, and thank you all for participating in our call today. So, 2018 was a notable year for BioMarin. We grew revenues to nearly $1.5 billion while we advanced 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, we all want to thank you think, we want to thank you for your continued support, and we look forward to keeping you apprised of our progress throughout the year. Goodbye.

Operator

This completes today's conference call, you may now disconnect.

Duration: 85 minutes

Call participants:

Traci McCarty -- Vice President of Investor Relations

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Jeffrey Robert Ajer -- Executive Vice President and Chief Commercial Officer

Daniel Spiegelman -- Executive Vice President and Chief Financial Officer

Henry Fuchs -- President, Worldwide Research & Development

Robert Baffi -- Executive Vice President of Technical Operations

Slaveen Richter -- Goldman Sachs -- Analyst

Ishmael Niang -- Morgan Stanley -- Analyst

Phillip Nadeau -- Cowen & Company -- Analyst

Mark Nguyen-- Credit Suisse -- Analyst

Joseph Schwartz -- SVB Leerink -- Analyst

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Tim Lugo -- William Blair Company -- Analyst

Akash Tewari -- Wolfe Research -- Analyst

Nate Tower -- Stifel -- Analyst

Eliana Merle -- Cantor Fitzgerald -- Analyst

Whitney Ijem -- Guggenheim Investments -- Analyst

Edward Nash -- SunTrust -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Liana Moussatos -- Wedbush Securities -- Analyst

More BMRN analysis

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