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Biomarin Pharmaceutical Inc  (NASDAQ:BMRN)
Q1 2019 Earnings Call
April 25, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the BioMarin First Quarter and Full Year 2018 (ph) 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 -- Vice President of Investor Relations

Thank you, Mary. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., 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 filing with the Securities and Exchange Commission such as 10-Q, 10-K and 8-K reports.

On the call from BioMarin's management team today are J.J. Bienaime, 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.

Please note based on feedback from our last quarterly call, and out of respect for your time, we request that questions not be repetitive during the Q&A portion of the call, so we can try to get to everyone. Bear with us as we try to keep the call to an hour in length. If we do not get your questions, please send me an email or give me a call, and I'll get right back to you. Thank you for your understanding.

Now I'd like to turn the call over to BioMarin's Chairman and CEO, J.J. Bienaime.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Thank you, Traci. Good afternoon and thank you for joining us today on the call. We are pleased that BioMarin marketed products grew 15% year-over-year, contributing to solid topline results of $400 million in the first quarter. We begin 2019 with many important product catalysts on the horizon, beginning with our seventh commercial product, Palynziq, for adult with PKU. Palynziq received an early positive CHMP opinion during the first quarter, and very likely will result in a corrective action from the European Commission in the second quarter of this year, this quarter basically.

The pace of the US Palynziq launch continues to be very strong, having grown our commercial base of patients to 414 patients at the end of the first quarter. Recall that we were 252 Palynziq at the end of the fourth quarter 2018, that's a 60% increase in Q1 over Q4 of last year. So we are very pleased with the expansion of the US market.

Importantly, (inaudible) continues to progress and even more importantly, our adult PKU patients have been highly motivated to work through the titration phase in order to achieve maintenance dosing and optimal efficacy with Palynziq. Actually, we are also hearing from patients that Palynziq is actually life changing therapy for them and it's changing their lives for the better. On the heels of this success, Jeff and his team are preparing for a potential European launch later this year.

Moving now to Brineura. As we said last quarter, we have treated the subset of patients from the Phase 3 that could support accelerated approval. We are also on track to complete enrollment of the entire Phase 3 study for full (ph) approval in the third quarter of this year.

Feedback from patients, physicians and payers has been extremely positive based on the potential transformational characteristics of gene therapy treatment for people living with severe hemophilia A. As we advance the valrox program and get closer to key data readouts, and a decision whether or not to pursue a potential accelerated approval pathway, excitement is continuing to build across the hemophilia community and here at BioMarin.

I want to acknowledge the truly groundbreaking work that's being accomplished by our teams in R&D across our clinical organization and in technical operations, who are literally making history in the field of the hemophilia and gene therapy. We are really proud to be again at the forefront of developing an emerging therapeutic modality and we look forward to the next valrox milestones with great anticipation.

Turning briefly to vosoritide. We completed an enrollment of the 52-week treatment arm of the Phase 3 trial last year and the results are just around the corner at the end of this year. Hank will provide an update on the global program of vosoritide in a moment. Needless to say, we are very excited to be in the final development stages with vosoritide, which, if approved, could potentially address the needs of nearly 25,000 children with achondroplasia in our current commercial territories.

As we anticipate our potential growth trajectory over the coming one to three years, vosoritide are -- and valrox are front and center. These opportunities combined represent over 50,000 patients across our commercial footprints. The potential for one or both of these products to transform BioMarin is exciting to contemplate as we near completion of both global development programs.

Turning to the financial outlook today based on current approved products. We are on track to deliver approximately $1.7 billion in revenues this year and $2 billion in 2020 before a potential contribution from valrox or vosoritide.

Now, I would like to turn the call over to Hank to provide an update on our development programs. Hank?

Henry J. Fuchs -- President, Worldwide Research and Development

Thank you, J.J. First for Palynziq Europe, we announced on March 1st that the CHMP adopted a positive opinion for the Company's marketing authorization application for Palynziq. Importantly, the CHMP noted in their press release that with continued long-term treatment, patients psychiatric and cognitive symptoms improved. We look forward to learning the outcome of the European Commission opinions later this quarter and to making Palynziq available to European, PKU patients shortly after approval.

Moving to vosoritide, all of the studies currently under way across our global development program are progressing smoothly. Our most recently open study with children, newborn to five years of age, is enrolling very rapidly as families have shown a high level of interest in the treatment. Cohort 1, which includes children 24 to 60 months of age, will complete enrolling this year. Cohort 2, which includes patients six to 24 months of age, has enrolled in the four sentinel subjects and will also complete enrolling this year, followed by enrollment of the youngest participants in Cohort 3, children up to six months of age.

As stated, the FDA Advisory Committee Meeting on achondroplasia last spring, there is strong support for starting treatment early in life because it may afford the most dramatic benefit for children with achondroplasia. We look forward to keeping you apprised of our progress, especially as we look toward our Phase 3 data readout later this year and we also want to thank the many families who have chosen to participate in our study.

Turning to valrox and as J.J. said the subset of patients from Phase 3 study, whose results could support an accelerated approval, have all been treated with valrox. In addition, the three manufacturing campaigns required for the expedited filing have now completed and are in the process of being analyzed for inclusion in our CMC package.

Ahead of our valrox updates over the coming months, I want to reiterate how we intend to communicate new information. As we have said previously, we have a comprehensive data access plan in place, which precludes everyone on the BioMarin management team for previewing (ph) any valrox data. We all remain completely (inaudible) valrox data including a Phase 2 data.

We've not seen Phase 2 valrox data since our two-year update at the World Federation of Hemophilia last May. Once we are invited to see the Phase 3 -- Phase 2 three year data, we will put together a publication -- a public communication that provides a topline update on Factor VIII levels, determined both by the one-stage and the chromogenic assay, annualized bleed rate and Factor VIII usage at year three. As we have indicated, we will provide as much granularity as possible in the topline update without front running a potential late breaker presentation at ISTH should we be grant one.

Deadline for submitting the late breaker abstract is June 7. So you should expect that topline communication before that time. After that and assuming we have a late breaker at ISTH, we will provide another Phase 2 three-year public communication that reflects any additional information that is included in the late breaking presentation that wasn't already communicated. We understand that there is a high level of interest and a very detailed topline update, so we'll do our very best to provide that for you without jeopardizing the integrity of the potential late breaker.

The next meaningful communication regarding valrox will be our decision on whether or not to pursue an accelerated approval pathway in the United States. That decision will be provided before the end of the year and will be based on quote checking off unquote the following components, including number one a pre-specified number or (inaudible) subjects from the subset of the Phase 3 patients need to achieve at least 40 IU per deciliter at 23 weeks.

Two, the manufacturing campaigns demonstrating similarity or comparability across all lots, including the filing -- in the CMC filing package. Three, data from the Phase 2 study demonstrating continued safety and durability, but no statistical threshold has been assigned to this component. And four, data that describes the discrepancy between the one-stage and the chromogenic assays will be supplied as part of the BLA package.

So to summarize, you should expect a topline Phase 2 three-year update by the time of the late breaker ISTH submission deadline on June 7. Should we get a late breaker, you should expect the more granular data update that reflects ISTH presentation on the day that's presented in Australia. And finally, you should expect to learn of our decision on whether or not to pursue an accelerated approval path forward by the end of the year based on the components just outlined. We're all very excited about what is to come over the next few weeks, months and quarters and like you, we look forward to seeing the valrox data when it becomes available.

And finally turning to other developments in the R&D organisation expected later this year. We are in the final stages of preparing the IND filing of our phenylketonuria gene therapy product, BMN 307. Recall the pre-clinical data we shared in January based on experiments conducted in the ENU2 mouse model, which we use for Palynziq and which is close to the human PKU phenotype.

We demonstrated that within two weeks, Phe levels were normalized with BMN 307 treatment out to 80 weeks, well beyond the expected lifespan of the untreated in ENU2 mouse. We look forward to putting this product in the clinic and to leveraging our valrox manufacturing experience to initiate clinical studies with commercial scale material.

In summary, we are extremely pleased with the productivity coming out of the worldwide research and development organization. We've learned so much over the past years on how to best focus our development programs, to enable rapid and effective drug development in BioMarin and anticipate continuing flow of new development candidates from our research organization.

As we prepare for the highly anticipated valrox and vosoritide data readouts, my team and I are more inspired than ever to continue our good work for the benefit of patients with rare disorders. Now I'll turn the call over to Jeff who will review the commercial business in more detail.

Jeff?

Jeff Ajer -- Vice President and Chief Commercial Officer

Thank you, Hank. As we begin 2019, I'm very pleased with the team's performance across all brands and all regions. In the first quarter, net product revenue contributions from BioMarin's marketed brands grew 15% year-over-year. Total revenues totaled $400 million in the quarter and then included contributions from Aldurazyme and other revenues. Starting with Palynziq, as we move past the initial launch phase in the US, we're very pleased with the performance and trajectory of this launch. The team is principally focused on managing patients through the continuum from enrollment to first injection, followed by titration, the phase that the majority of patients are still working through. Notably, we finished Q1 with over 600 enrollments, representing 15% of the in-clinic adult population. So very strong results less than a year since receiving approval in the US.

Starting with commercial reimbursed patients. As of the end of the first quarter, we had a total of 414 patients on reimbursed Palynziq. Of those 136 transitioned from our clinical studies and 278 are formerly naive to Palynziq. At quarter end, there were an additional 140 naive patients with complete enrollment and pending shipment of their first injection. Very nice pipeline of new patients.

Our efforts to convert adult Kuvan patients, who might benefit from additional Phe lowering from Palynziq have been quite successful. Only 37% of new Palynziq enrollments are Kuvan patient conversions. The team is doing a tremendous job, leveraging our deep experience on relationships in the PKU community to promote the availability of Palynziq treatment in the US. We can now confirm that there were 89 unique clinics of the 125 PKU clinics in the United States that had at least one complete enrollment.

Considering the time required to titrate a typical naive patient to daily dosing, Q1 results are tracking to plan. Palynziq net product revenues were $12.3 million in the first quarter of 2019. Now based on the number of patients, who began treatment with Palynziq last year, we expect an increasing number of patients to be achieving maintenance dosing, and those patients will be driving revenue to PPACA in the next quarters of 2019.

In summary, we are past the initial launch phase, commercial uptake is going according to plan and we now turn our focus to execution in the US for the remainder of the year.

Turning now to other product revenues in the quarter starting with Vimizim. Vimizim contributed $125.8 million in the first quarter, representing 7% year-over-year growth, benefiting from sales increases across all regions. Net patient growth was 12% year-over-year. For Naglazyme, revenues totaled $86.9 million. This represented a 16% year-over-year growth for the well-established brand, coupled with 6% patient growth. As with Vimizim, the difference between patient and revenue growth are largely due to order timing. Next, for Kuvan, we saw an 8% increase in net product revenues. In the United States, as anticipated, we experienced the seasonal decline in Q1 due to insurance plan changes as well as Palynziq conversions. Year-over-year net product revenue increased to $106.9 million, keeping the brand on track to achieve fiscal year guidance in 2019.

And finally, Brineura contributed $12.2 million in net product revenues, which was relatively flat over Q4 due to uneven order timer -- order patterns late in Q4. Importantly, Q1 saw growth and diversification in patients with the addition of four new markets, bringing the country counts deficit to 19. Net patient growth year-over-year was 79%, suggesting that we are making good progress in our efforts to raise awareness of CLN2. We expect that this steady growth will continue throughout the rest of 2019. All-in-all, first quarter results were strong and encouraging and I'm very pleased with revenue performance on all fronts.

Now, I'd like to turn the call over to Dan to review financial results in more detail. Dan?

Dan Spiegelman -- Executive Vice President and Chief Financial Officer

Thank you, Jeff. Please see today's press release for full details summarizing our financial results for the first quarter. As Jeff has already reviewed Q1 individual product revenue results, I will cover other items in the first quarter. Consistent with our communicated goals, we anticipate 15% topline growth for full year 2019, based on achieving the midpoint of $1.68 billion to $1.75 billion. This would be solely on the currently approved products. In addition as J.J. reiterated, 2020 total revenues should grow an additional 15% and be approximately $2 billion with the expectation that contributions from vosoritide and valrox will take us significantly above that growth rate in the years beyond.

Now turning to quarterly results. First, to a revenue item that Jeff did not cover. Aldurazyme revenues for the first quarter of 2019 of $45.3 million were 31% below the Q1 2018 level. This reduction was due entirely to the timing of product shipments to Genzyme. You may recall that under the new GAAP revenue recognition rules that went into place last year, we are now required to recognize our estimate of the full revenue we will see from Genzyme at the time they accept delivery of the product from us and not when they sell it to the end user. Significantly, Aldurazyme net product sales reported by Genzyme increased to $75.7 million in the first quarter or up 20% compared to $62.9 million in the same quarter in 2018.

Moving to R&D expenses, which have largely stabilized, with Q1 '19 and Q1 '18 levels essentially unchanged at $184 million. And the full year 2019 R&D spending still looking to be less than a 10% increase over 2018 even with the continued progress of our late-stage programs. On a product level, valrox, which is near full enrollment of its Phase 3 study and the vosoritide Phase 3 is fully enrolled, driving increases in expenses in these programs compared to the first quarter of 2018. These expenses were largely offset by reductions in R&D expenses for Brineura and Palynziq, following their launch and a reduction in BMN 250 or tralesinidase alfa manufacturing expenses. These trends should continue throughout the year and we remain on track with our full year R&D guidance of $740 million to $780 million.

Sales and marketing expenses in the first quarter of 2009 (ph) compared to last year due to the US launch of Palynziq and valrox launch preparation as we look forward a potential accelerated approval pathway decision later this year. However, SG&A expenses of $162 million were essentially flat compared to the prior quarter Q4, 2018.

Moreover while expense levels, and sales and marketing will expand slightly throughout the year as we launch Palynziq in Europe and continue to prepare for valrox and vosoritide, full year SG&A guidance of $650 million to $690 million remains intact.

Turning to bottom line operating results. We reported a GAAP net loss of $56.5 million in the first quarter, compared to $44.1 million GAAP net loss in the same quarter of 2018, primarily due to increased SG&A expenses that is just outlined, a reduction in the GAAP tax benefit and an increase in contingent consideration expense due to the continued progress of Palynziq and the associated increased probability of certain milestone payments to Merck Serono.

Non GAAP income of $24.8 million in the first quarter was a slight improvement over 2018 non-GAAP income of $21.3 million. For both GAAP and non-GAAP results, our original guidances remains unchanged and we look for a nearly break even results of $45 million to $85 million loss on a GAAP basis and non-GAAP income of $130 million to $170 million.

Finally cash and investments ended Q1 at $1.2 billion. And while working capital timings can have small impact on actual quarter end cash levels, with our planned GAAP and non-GAAP results, we expect cash balances at the end of the year to be similar to the current level, consistent with our limited cash usage in 2018.

Now I would like to open the call for questions and we'll ask the operator to open the line. Please remember that as Traci mentioned at start of the call, based on your feedback, we plan to wrap up this call by 5:30 pm Eastern time. If we end the call and you still have follow up questions, please feel free to reach out to Traci this afternoon or tomorrow morning. In order to keep to this timeline, we request that you limit yourself to a single one-part question. Operator, please open the line.

Questions and Answers:

Operator

Sure. (Operator Instructions) Our first question is from the line of Ying Huang from Bank of America. Your line is open.

Ying Huang -- Bank of America Merrill Lynch -- Analyst

Hi. Thanks for taking my question. I'll abide by the one question rule. So maybe Hank, I want to ask about the importance of bleeding rate because investors have squarely focused on the Factor VIII level from the three-year update. So in your discussion with agency and also maybe even payers, how important is the bleeding rate in their consideration? Thank you.

Henry J. Fuchs -- President, Worldwide Research and Development

Bleeding rates pretty darn important to the FDA. For accelerated approval, the basis approval is about faster and there are no statistical tests on bleeding. They do want to have evidence to support the notion that achieving factor levels in the non-hemophiliac range are reasonably likely to reduce bleeding, but there's no statistical tests associated with it. Where bleeding rates become really important from a regulatory perspective is in the full approval scenario, where for the US is the primary endpoint of the ongoing confirmatory clinical trial. So, for accelerated approval, they are part of the reasonably likely expectation. No statistical test for full approval, a full statistical test for regulatory decision making in the US.

Ying Huang -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

Our next question is from the line of Cory Kasimov from JP Morgan. Your line is open.

Cory Kasimov -- JP Morgan -- Analyst

Hey, good afternoon guys. Thank you for taking my question. I'm not surprisingly wanted to ask about valrox as well. And as we get closer to the three-year update early this summer obviously, investors are speculating quite a bit on what you might report and what would be good or not so good, but I'm curious what would you consider as success in terms of Factor VIII levels and ABR, what are you hoping to see to give you that much more confidence in this program, which you obviously already have a lot of confidence in?

Jeff Ajer -- Vice President and Chief Commercial Officer

Hi, Cory. So, if I were to bifurcate, I would say, by far and away the most important thing out of the three-year update is the bleeding data. And the two reasons for that are, one that's the clinical morbidity of a patient's experience, it's what cost the healthcare system a lot of money, it's going to be what payers care a lot about, that's not to say that they won't care about other things, but for sure they're going to care about bleeding rate data. And so, what I think about that is little to no bleeding in the third year is going to be great.

If there is breakthrough bleeding, we'll have to understand in whom and at what frequency and of what type and it's a little bit premature to kind of speculate about how to interpret all of that, but one way to think about that is, if breakthrough bleeding as of a relatively innocent type that is in target joints or patients who push themselves extremely, physically or in patients who on a particular day had a low factor activity that may not be problematic at all. So good outcomes are going to pertain to evidence of sustained reduction in bleeding.

As far as factor activity goes, I don't have -- I don't think we have a specific number in our mind's eye about what we would consider to be great or good. And the reason for that is twofold. First, there is quite a bit of inter and intra patient variability in factor expression, so such that at any given time point, a subsequent time point could look different up or down. So the variability makes it difficult to be reasonably accurate, reliable, certain about what trajectory might exist in the data. And the second challenge is the assigning a clinical relevance to a number of a Factor VIII level. And as you know, the relationship of transgene Factor VIII and bleeding control hasn't been established as the first company to follow the patients for a long period of time, we're going to be building that database.

So for two reasons, I can't give you a specific number. So zoom back out and kind of an amalgam with Ying's question earlier, bleeding most important thing, factor levels have to look at them because people are interested in prognosticating, going to be very difficult to prognosticate of. And I think that's why you have to go back to how did the bleeding data look, what was its time course, if it happened.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

To reiterate what Hank said earlier for full approval, which we will need by the way whether or not we get accelerated approval, we need full approval or full approval Factor VIII does not enter into the FDA's consideration at all. And second, regarding payers, because we forgot to answer the questions from the previous person. On the payers, the main thing payers want to know is how much money are they going to save with our product. And especially in Factor VIII that zero impact on the (inaudible). What impacts the reimbursement levels are Factor VIII usage -- recombinant Factor VIII usage and this recombinant Factor VIII usage is generally pretty directly linked to annualized bleeding rates, which is a primary endpoint of the full study.

Cory Kasimov -- JP Morgan -- Analyst

Okay. Got it. Appreciate all the color.

Jeff Ajer -- Vice President and Chief Commercial Officer

Thank you.

Operator

Our next question is from the line -- our next question is from the line of Salveen Richter from Goldman Sachs. Your line is open.

Marianna -- Goldman Sachs -- Analyst

Yes, hi. Thank you for taking our question. This is Marianna (ph) for Salveen. I actually had a follow-up on valrox. And I was wondering given that we have seen some data from Nathwani study, out to eight years, is it reasonable comparison to hemophilia A and would make any significant differences allow the comparison to be made or not?

Henry J. Fuchs -- President, Worldwide Research and Development

I think that's a great question, and I think the field knowledge of the durability of factor expression in hemophilia after gene therapy is highly informed by Nathwani's six and eight-year data. And let me just remind you, he started, I think, it was in 2011, published and updated '14 in NASH. In December, he presented a eight-year update on the low and the mid dose cohort of his original study and a six-year update on his high dose study. Factor levels were sustained flat and through six and eight years, according to all three doses and more importantly, bleeding was substantially reduced in spite of the fact by the fact that the high dose cohort only got the 5% Factor IX levels.

So the community is really encouraged by that. Experience is establishing a precedent of durability and an expectation. And I think that although there are substantial numbers of scientific differences between his Factor IX program and our Factor VIII program, I think the essential message is, there is evidence in humans with hemophilia given gene therapy a durable expression for six or eight years.

There are a couple of other pieces of evidence which inform expectation. Uniqure is out now, passed two years. Spark is now passing two years in Factor IX and durability looks good in those programs. There's pre-clinical data in canines with canine hemophilia, given the canine trans gene about correction for their entire life. So provided that your gene therapy vector is a high quality product, the expectation in the field is that durable expression will be established after gene transfer.

Operator

Our next question is from the line of Chris Raymond from Piper Jaffray. Your line is open.

Christopher Raymond -- Piper Jaffray -- Analyst

Thanks. Maybe I'll give Hank a break here and ask him non-valrox question. On Palynziq, maybe Jeff. So you have 414 paying patients, I guess now on therapy. And 278 naive, I think you said. Just trying to see if I can get a sense -- if you can give us a sense of where the discontinuation rate has gone. I think in the clinical experience, it was around 11%. And I think Jeff you guys mentioned last quarter, you had seven or so of the 212 naive patients had discontinued. So can you give that number now and is it sort of relatively -- is it a stable rate or any color would be appreciated. Thanks.

Jeff Ajer -- Vice President and Chief Commercial Officer

Great question, Chris. And we're watching that closely. I'll caveat my answer by saying that for most patients on commercial balance that are naive, the treatment, it's still relatively early in their course of therapy. So things could change and to put that in context, patients have started mid Q3, for example, would just be now getting to the point where in the fastest possible titration schedule, they would be reaching 24 weeks of 20 milligram once per day. So just a little bit of context about that kind of long pass up the induction and titration schedule.

So far the experience has been with discontinuations that they are materially less than what we experienced in the clinical trial, consistent one quarter later with the number that I quoted, last quarter and no real surprises inside of those discontinuation figures. Some patients discontinuing due to tolerability issues, other patients discontinuing for other reasons.

And I will point out that we've got -- we've learned a lot about the use of Palynziq through the clinical trial program. Those learnings really shaped our thinking about how to support the commercial use of Palynziq. So, got a number of clinical coordinators out in the field working with US clinics and providing support with their patients to try to ensure that they're following the guidance of their clinics and getting the best possible experience as they induct and titrate their way up to a maintenance dose. Thank you.

Christopher Raymond -- Piper Jaffray -- Analyst

So just be clear. So, when you say materially lower than the 11% number, so is it safe to say you're still in the low-single digit?

Jeff Ajer -- Vice President and Chief Commercial Officer

Yes, consistent with the numbers I quoted last quarter.

Christopher Raymond -- Piper Jaffray -- Analyst

Okay. Thank you.

Operator

Our next question is from the line of Phil Nadeau from Cowen & Company. Your line is open.

Philip Nadeau -- Cowen & Company -- Analyst

Good afternoon. Thanks for taking my question. First, I'm going to go back to Hank on valrox. Hank, appreciating everything that you said about bleeding rates being the most important. I'm certain that when the topline data, three-year data released, people are going to look at the trends and fact to determine the longevity of the clinical effect, in particular people are going to assume that when patients factor levels fall below 12%, they're going to become susceptible to bleeds even if they aren't currently. So what do you think of this analysis. Would you dissuade us from doing it? What point should we keep in mind as we interpret the data and try to extrapolate to figure out the longevity of the effect?

Henry J. Fuchs -- President, Worldwide Research and Development

Oh! boy, Phil, would be my first instance reaction. Just simply because there's just too many -- it's so subject to multiplicity. Meaning you could construct a regression curve to give you almost any answer you wanted to and you could tell yourself anything you want to about transient factor in bleeding. And so, I think that people have to remember we're in year three of a seven patient of experience of something that's never been done at industrial scale in the world. And that measure of durability of gene transfer and to interpret its surrogate significance in a long-term setting and I'm keen that we left the data and form our understanding of these relationships rather than speculate about it. So that's my best perspective on advice to give about prognosticating Factor VIII levels into the future and the clinical relevance of those factors.

Jeff Ajer -- Vice President and Chief Commercial Officer

I mean I agree 100% with Hank, I would just also add that actually the data that Hank (inaudible) in his previous answers, with Factor IX as we contradict this 12% threshold being a magic threshold. And again I'm not making these comments because I know it's going to be below 12%. We have no idea again, but the Factor IX data, six year, eight years where they were still bleeding control as per the presentation from Dr. Nathwani at ASH last December, the Factor IX levels are around 3% to 4%, but six and eight years and the patients have bleeding control with chromogenic assay.

Henry J. Fuchs -- President, Worldwide Research and Development

And I might add that I don't know that payers are going to be excited about letting patients go back to factor replacement therapy at $500,000 a year because their factor level fell to 11.9% especially, if they're not bleeding. So I think we have to suspend our overly keen interest in factor levels. For the time being, I understand that they play a role in the overall picture that's going to be developed, but let's try to understand the context of where we are right now.

Philip Nadeau -- Cowen & Company -- Analyst

That's helpful. Thank you.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

And also I want to point out (inaudible) because I've heard this call like, we are pointing out to the (inaudible) around 3% to 4%, not because we believe that this is where we are going to be, but it is because this is the only video available.

Traci McCarty -- Vice President of Investor Relations

Next question?

Operator

Our next question is from the line of Joseph Schwartz from SVB Leerink. Your line is open. (Operator Instructions)

Traci McCarty -- Vice President of Investor Relations

Okay. Let's go to the next operator. Thank you.

Operator

We already have the line of Joseph.

Joseph Schwartz -- SVB Leerink -- Analyst

Hello, can you guys hear me?

Henry J. Fuchs -- President, Worldwide Research and Development

Hi, Joseph.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Yeah.

Joseph Schwartz -- SVB Leerink -- Analyst

Hey there. Not sure what happened there. So recognizing that predictability is such an important attribute for one-time gene therapy and you've had considerable variability, are you doing any work to determine the factors that correspond with patients who respond more or less to their valrox administration?

Henry J. Fuchs -- President, Worldwide Research and Development

We've done a little bit of work in that area, Joe on the seven patients. As you know, there's a little bit of variability in the group that got to trans gene expression levels above 40 IU per deciliter in the first year, but there's also the variability of one patient who only got to -- who didn't make it into the non-hemophiliac range. So we've looked at that one patient versus all the six, the other six patients can identify anything that's significantly different between that one patient and the other six or seven patients -- six patients.

We've also looked at a lot of chemistry manufacturing control attributes to see if we can understand if there's a product related predictor and we haven't been able to identify product level predictors of patient responsiveness and I think that it's going to take more and for us to better understand if we can at all factors that determine the magnitude of the initial response.

Now, what I hope that we'll be talking about by the end of the year is a repeat of what we've already seen in the 201 study, which is in spite of this variability, the vast majority of patients have an awesome response to gene transfer consisting of turning off of bleeding, elimination of target joints, sustained treatment benefit. So we will keep an eye out and try to learn more about predictors of variability in the go forward, but at this point, all we have to go on is, we've got a really robust response from our patients.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Yeah, I would say, although there has been variability in factor levels, there has been no variability in response to bleeding in our control and even the patients move -- the one patient who has had lower Factor VIII levels from the get-go at year two was -- has had his bleeding under control and was not found in recombinant Factor VIII injections, right?

Henry J. Fuchs -- President, Worldwide Research and Development

Yes.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

So, the clinical assay is not variable.

Joseph Schwartz -- SVB Leerink -- Analyst

Thanks. I'll leave it there.

Operator

Our next question is from the line of Josh Schimmer from Evercore. Your line is open.

Joshua Schimmer -- Evercore ISI -- Analyst

Thanks for taking the questions. Hank, despite all your previous answers to all the prior questions, I'm still going to ask, if it does turn out to the Factor VIII levels continue to decline at three years, and there are questions about durability, despite your commentary about the challenges interpreting that. Do you have a strategy then to consider either redosing or alternative vectors? And then considering the strategic importance of that information, potentially the need to move quickly to consider some alternatives or solutions, why blind yourself to that information? Thank you.

Henry J. Fuchs -- President, Worldwide Research and Development

Hi, Josh. Thanks for the question. Nobody said anything about blinding ourselves to the consideration of potential for redosing. What we've done is, blinded Wall Street to our research activities and our redosing program and part of the reason for that is that is competitive obviously, but also part of the reason for that is, we're fairly limited and focused in what we're doing in the redosing area largely because the expectation as I said before going in as we said that clinical benefit of gene transfer will persist.

I suppose that one could imagine the results of a subsequent clinical trial. I can only look forward to the year six update and we're talking about at that point somebody actually did lose materials and a gene expression and then it will be relevant to ask the redosing question, but we haven't triggered a major investment in redosing, but it doesn't mean that we're not thinking about it and it doesn't mean we're doing nothing about it. It means that we're doing stuff about it that it's proprietary.

Joshua Schimmer -- Evercore ISI -- Analyst

I guess why blind yourself to the data, because the data may be informative for potential strategies and urgency of those strategies?

Henry J. Fuchs -- President, Worldwide Research and Development

Joshua, you're on question two. So all my friends here pointing at me, but what I would say is, I think, we undertook a strategy to manage the conduct of the clinical trial and we baked into it all of the things that we could think of in terms of why you might want to know the data earlier and out of all of that team, our decision to keep the data at arm's length from us. And the most just positive element of that decision really is, just try out integrity and trying to understand the relationship between factor activity and unbiased interpretation of bleeding data for a very good discussion with health authorities about a very big decision that was going to be made about the availability -- accelerated availability of a gene therapy product. So as I said before, once we decided to move into the pivotal registration phase, we put all of the data into the data monitoring committee's hands and if they had significant concerns that suggested we needed to reactivate a -- or increase our activity around that redosing, we'd have heard that. And so we made the decision about how to manage the trial and here's where we are, we're sticking with the decision.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

I just want to clarify that what we -- Hank meant by the integrity of the trial is the integrity of the pivotal Phase 3 trial. That's critical here.

Joshua Schimmer -- Evercore ISI -- Analyst

Thank you very much.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Especially as we are trying to shoot for accelerated approval, the data has to be squeaky clean. And that was what is very important. Actually we are, as Hank said, we don't want to advertise us, but we actually are working on the potential redosing strategy, not that much for our own product as we believe there will be a lot of opportunities to redose patients who fail our competitors' therapies.

Operator

Our next question is from the line of Robyn Karnauskas from Citi. Your line is open.

Robyn Karnauskas -- Citi -- Analyst

Hi, thanks for the question. Just going back to Palynziq. So, given that you have about almost for every patients that are new on drugs, do you see any changes in the trajectory, as you go forward and then also you mentioned a broad European label, what does that mean for you, for the market opportunity, for Palynziq in Europe? Thanks.

Jeff Ajer -- Vice President and Chief Commercial Officer

Great questions, which I heard is two, but I think we can cover. (multiple speakers)

Robyn Karnauskas -- Citi -- Analyst

You can skip one.

Jeff Ajer -- Vice President and Chief Commercial Officer

I think we can cover them both. The trajectory question first. If you look at the numbers that we reported or not -- on commercial therapy that were previously naive to Palynziq treatment at the end of Q4. You take the mid-quarter update that we provided a little while ago, you add in the end of Q1 data, what you see is basically a pretty straight line pointed in the same direction, which is up in total. And that would imply that the trajectory is staying pretty stable and because of those patients that we reported at the end of Q4 were largely patient referrals that we got early ish in Q3 that points to kind of a lot of stability in the uptake of patients. The other number that you can watch and say, hey, that looks pretty stable, is the number of patients that are enrolled, but not yet on therapy. So that's a good looking number too. It kind of indicates that if we continue doing our job right, the trajectory of patients on therapy should remain about the same. That's our expectation. The number of patients kind of in queue, that's our pipeline, if that stays steady, that's a good indication that we're getting patients continuing to enroll and getting them steadily on to treatment. So that's good.

In terms of the European label, we won't know if that is entirely until we've got an easy approval, but the draft label language that we've seen looks very positive and I think that will give us -- if that holds up, that'll give us a really nice market opportunity in Europe, which is a very large pool of potential patients to deal with. So really excited about that prospect.

Robyn Karnauskas -- Citi -- Analyst

Great. Thank you.

Operator

Our next question is from the line of Paul Matteis from Stifel. Your line is open.

Nate Tower -- Stifel -- Analyst

Hey, thanks for taking the question. This is Nate on for Paul. How quickly are patients progressing from REMS enrollment for Palynziq to their first treatment and has it been gated by the titration protocol in anyway?

Henry J. Fuchs -- President, Worldwide Research and Development

Sorry, I just want to make sure I heard your question correctly. Your question was how quickly our patients progressing through enrollment to -- from REMS enrollment to initiation of therapy, and is induction titration a barrier to -- is the REMS a barrier to induction titration, perfect. So far the REMS has not been a barrier to enrollment or to patients start. It's an added step, but we've been really well organized around that. And it's not an onerous additional step.

The time for enrollment to starting therapy has been pretty steady the last couple of quarters and not in consistent with our experience with other drugs in the United States, including Kuvan, Naglazyme and Vimizim. It's currently running between two and three months on average with some variability by patients. And what we know about -- so far what we know about the induction and titration schedule is, the label basically defines the fastest path. I don't have -- I don't have anything other than anecdotal reports on that schedule of patients. But anecdotally, what I've heard is pretty consistent, which is a lot of patients and as we expect it requires some slow down steps along the way. And clinics that are new to using Palynziq are being more conservative than they're -- than the clinics that were experienced with Palynziq through the clinical trial. And I just want to reinforce all according to expectations, no problems or surprises there.

Nate Tower -- Stifel -- Analyst

Great, thanks.

Operator

Our next question is from the line of Ellie Merle from Cantor Fitzgerald. Your line is open.

Eliana Merle -- Cantor Fitzgerald -- Analyst

Thanks for taking my question. So in terms of your gene therapy strategy outside of valrox, just given your clear manufacturing and rare disease expertise, when do you think that you might unleash this capability into say expanding into new programs. And I mean I guess what are say like the gating factors from you having, like five gene therapy clinical programs in 2020 versus the two that you currently guide for. I mean is it sort of the pre-clinical work or vector optimization that's taking time or is it more of a strategic choice to just initially prioritize hemophilia and PKU? Thanks.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

So it's more an assessment of the business opportunity of every -- of every possible gene therapy product as compared to other pre-clinical candidates that we have in the clinical pipeline. So because as we have said before although gene therapy is a very important component of BioMarin in the future, at this time, we are not planning on turning into a gene therapy company. So there are other components that are -- candidates here after a gene therapy, (inaudible) gene therapy, but so the relativity factor is actually bit more financial than anything else. And but it's slightly -- so we like though we have to decide what's going to be our next idea after PKU gene therapy hopefully next year, sometime next year and there are gene therapy candidates, there are non-gene therapy candidates that we just need to prioritize them depending on what we believe, probably a technical success of the competitive levels, the size of the market and all those considerations. So that's kind of what enters into the generation here. You want to say a few words about the manufacturing component of this, Robert?

Robert A. Baffi -- Executive Vice President, Technical Operations

Certainly, we have substantial capacity to produce the gene therapy programs both for valrox and 307. And as Hank and his team evaluate additional gene therapy candidates, we propose to put those into the clinic, we can certainly accommodate additional programs with our current capacity.

Operator

Our next question is from the line of Timothy Lugo from William Blair. Your line is open.

Myles Minter -- William Blair & Company -- Analyst

Hi, this is Myles on for Tim. Thanks for taking the question. Just one on the PKU gene therapy. Considering that the strength in the public quest relates to the positive decision for Palynziq, started neurocognitive benefit. I'm wondering whether potential trials for your gene therapy program would actually have to happen neurocognitive endpoint predisposed there and if Palynziq would be the benchmark that you'd be looking to (inaudible). Thanks

Henry J. Fuchs -- President, Worldwide Research and Development

Clearly, health authorities like controlled clinical trials better than uncontrolled clinical trials. But, what I think you could expect is that, if the effect of gene therapy is large and larger than might have otherwise ever been observed in a natural setting, I don't think that there will be a requirement to compare gene therapy to either Palynziq, or to Kuvan, or to an untreated control group.

Now, we haven't launched our clinical program yet. As I said in my comments, we're going to file our IND later this year. So stay tuned to more explicit and specific descriptions, but from what I know of the regulatory landscape at least so far, while you could certainly get a health authority to say, let's do a controlled clinical trials, let's compare things, I do believe that there's ample reason to believe that patients with their own control study, looking for very large effect on blood Phe would support registration and I'll just remind you that blood Phe have supported registration of Kuvan in the United States, Kuvan in Europe, Palynziq in the United States, will support Palynziq in Europe. So there's no real evidence that anything beyond Phe would be required for an endpoint for regulatory approval.

Myles Minter -- William Blair & Company -- Analyst

Thanks for the question.

Operator

Our next question is from the line of Kennen MacKay from RBC Capital Markets. Your line is open.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hi. Thanks for taking the question and congrats on the quarter. I will give the team a break from valrox and maybe just ask how you're thinking about competition in achondroplasia both from sort of a mechanistic and clinical standpoint as well as the potential commercial standpoint. On the commercial side, I mean how should we be thinking about physicians choosing to put patients on theoretically commercial valrox in a couple of years versus potential registrational trials of competitor agent? Thanks so much.

Henry J. Fuchs -- President, Worldwide Research and Development

You said valrox in the middle of the -- end of your answer. I think this is all about vosoritide --

Kennen MacKay -- RBC Capital Markets -- Analyst

Sorry, achondroplasia, yes. I'm sorry

Henry J. Fuchs -- President, Worldwide Research and Development

Yeah, well so first of all, from a mechanism and competitive view, there are a number of competitors taking different approaches to restoring growth in achondroplasia and without getting into the details about every single one, we like the target specificity of the approach that we're taking. There is a competitor, who's taking a very similar approach to us, but approaching this from the point of view of the long-acting preparation of the product. They have single dose data and no biomarker -- new healthy volunteers. So they are years behind us and so now into the other part of your question, how will payments will go or not go on vosoritide according to their own individual interests and wishes, and depending on their experience with vosoritide, they may be more or less amenable to alternative options from other manufacturers.

Now in that time interval, we will be investigating next generation products ourselves. And so, hopefully our expectation is that satisfaction with vosoritide will be relatively high in the first instance and the only thing that would be moving people off of vosoritide is a much better presentation of the product. And we're working on that.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

And also if I may the window, the treatment window for this product is limited. Because as you know one physician work base is closed. There is no -- unlikely there's any opportunity for -- people benefit here. So waiting four or five years for the next miracle product, they would lose about 10 to 15 centimeters of growth.

Operator

Our next question is from the line of Edward Nash from SunTrust Robinson Humphrey. Your line is open.

Fang-Ke Huang -- SunTrust Robinson Humphrey -- Analyst

Hey. Thank you for taking our question. This is Fang-Ke Huang for Edward Nash. Just going back to the variability topic, hemophilia. So based on our observation comparing hemophilia A and hemophilia B gene therapy trials, we kind of always think that what hemophilia A, there is more variable compared to hemophilia B. Do you think that observation is correct based on your experience in the field?

Henry J. Fuchs -- President, Worldwide Research and Development

Sorry. Did you get more questions?

Fang-Ke Huang -- SunTrust Robinson Humphrey -- Analyst

Yeah. Just want to follow up just if that correction is correct and then secondly is there any potential reason behind it?

Henry J. Fuchs -- President, Worldwide Research and Development

I think it's very difficult to compare class clinical trials across diseases, across interventions. So I don't know that I'm ready to make a categorical comparison of Factor VIII and Factor IX gene therapy hemophilia A and hemophilia B, other products and our products. I mean it's still very early days.

Fang-Ke Huang -- SunTrust Robinson Humphrey -- Analyst

Okay. Thanks.

Operator

This will be the end of the Q&A portion of the call, and I will now have the call back over to the Chairman and CEO, J.J. Bienaime. Your -- go ahead.

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Thank you, operator. So as we look forward to the future, we are energized by the prospect of a potential accelerated approval with valrox, the data readouts of our global phase -- vosoritide Phase 3 trial of the year, the start of PKU gene therapy product with BMN 307 at the end of the year, also and continued growth of our current global commercial brands. So BioMarin has never been in a stronger position across the commercial R&D and manufacturing organization. We look forward to a great things ahead in the coming quarters. And thank you for your continued support, and goodbye.

Operator

This concludes today's conference call. Thank you all for joining. You may now disconnect.

Duration: 63 minutes

Call participants:

Traci McCarty -- Vice President of Investor Relations

Jean-Jacques Bienaime -- Chairman and Chief Executive Officer

Henry J. Fuchs -- President, Worldwide Research and Development

Jeff Ajer -- Vice President and Chief Commercial Officer

Dan Spiegelman -- Executive Vice President and Chief Financial Officer

Ying Huang -- Bank of America Merrill Lynch -- Analyst

Cory Kasimov -- JP Morgan -- Analyst

Marianna -- Goldman Sachs -- Analyst

Christopher Raymond -- Piper Jaffray -- Analyst

Philip Nadeau -- Cowen & Company -- Analyst

Joseph Schwartz -- SVB Leerink -- Analyst

Joshua Schimmer -- Evercore ISI -- Analyst

Robyn Karnauskas -- Citi -- Analyst

Nate Tower -- Stifel -- Analyst

Eliana Merle -- Cantor Fitzgerald -- Analyst

Robert A. Baffi -- Executive Vice President, Technical Operations

Myles Minter -- William Blair & Company -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Fang-Ke Huang -- SunTrust Robinson Humphrey -- Analyst

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