BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(Unaudited)

OptionsIn addition to the options included in the above table, options to purchase approximately 0.31.5 million and 0.9 million shares of common stock were outstanding during the first quarter ofthree and six months ended June 30, 2008, respectively, but were not included in the computation of diluted earnings per share because they were anti-dilutive during the period using the treasury stock method. These options were anti-dilutive because the fair value of the Company’s stock exceeded the assumed proceeds. Additionally, approximately 26.4 million of the underlying shares of the Company’s convertible debt were not included in the diluted average common shares outstanding because they were antidilutive during both the periodthree and six months ended June 30, 2008 using the “if-converted” method whereby the related interest expense on the convertible debt is added to net income for the period.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

(k) Stock-Based Compensation

Stock-based compensation is accounted for in accordance with SFAS No. 123R, “Share-Based Payment”Share-Based Payment and related interpretations. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining the fair value of share-based awards at the grant date requires judgment, including estimating future stock price volatility and employee stock option exercise behaviors. If actual results differ significantly from these estimates, stock-based compensation expense and results of operations could be materially impacted.

Expected volatility is based upon proportionate weightings of the historical volatility of the Company’s stock and the implied volatility of traded options on the Company’s stock. The expected life of options is based on observed historical exercise patterns, which can vary over time.

As stock-based compensation expense recognized in the consolidated statementstatements of operationsoperation is based on awards ultimately expected to vest, the amount of expense has been reduced for estimated forfeitures. SFAS No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience.

If factors change and different assumptions are employed in the application of SFAS No. 123R, the compensation expense recorded in future periods may differ significantly from what was recorded in the current period. See Note 3 for further discussion of the Company’s accounting for stock-based compensation.

(l) Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. There was a full valuation allowance against net deferred tax assets of $294.4 million at December 31, 2007, which remained at March 31, 2008.2007. Future taxable income and ongoing prudent and feasible tax planning strategies have been considered in assessing the need for the valuation allowance. An adjustment to the valuation allowance would increase or decrease income in the period such adjustment was made. For the three and six months ended March 31, 2007 andJune 30, 2008, the Company recognized $26,000$0.2 million and $0.1$0.3 million of income tax expense related to income earned in certain of the Company’s international subsidiaries, respectively.respectively compared to $0.4 million in both the three and six months ended June 30, 2007. Despite the Company’s earningrecording net income during the second quarter and first quarterhalf of 2008, the Company’s analysis under FASB Interpretation No. 18, “Accounting for Income Taxes In Interim Periods (An Interpretation of APB Opinion No. 28)”, resulted in a projected ordinary loss for 2008 due to the exclusion of uncertain development milestone revenue and other permanent and temporary differences between book and tax income. Therefore the Company has not recorded current U.S. Federal or state income tax expense and has not adjustedreleased the valuation allowance against net deferred tax assets.

(m) Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards BoardFASB released Statement of Financial Accounting Standards (SFAS)SFAS No. 141(R),“Business Combinations”.Combinations.This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which would impact business combinations in the year ending December 31, 2009 for the Company.completed after January 1, 2009. The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. The effect of this statement on the Company’s consolidated financial position, results of operations or cash flows will depend on the potential future business combinations entered into by the Company that will be subject to the statement.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(Unaudited)

In December 2007, the Financial Accounting Standards BoardFASB released SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51”.51.This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which for the Company is the year ending December 31, 2009, and the interim periods within that fiscal year. ManagementThe Company does not expect the adoption of SFAS No. 160 to have a material effect on the Company’sits consolidated financial position, results of operations or cash flows.statements.

In March 2008, the FASB issued SFAS No. 161(n) Accumulated Other Comprehensive Income

Comprehensive loss includes net lossDisclosures About Derivative Instruments and certain changes in stockholders’ equity that are excluded from net loss, such as changes in unrealizedHedging Activities - an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 amends SFAS No. 133 by requiring expanded disclosures about an entity’s derivative instruments and hedging activities. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on the Company’s available-for-sale securitiesderivative instruments, and changesdisclosures about credit-risk-related contingent features in the Company’s cumulative foreign currency translation account. Comprehensive lossderivative instruments. SFAS 161 is effective for the three months ended March 31, 2007 and 2008Company as of January 1, 2009. The Company is included instill evaluating the Company’s consolidated statements of stockholders’ equity. There were no tax effects allocated to any components of other comprehensive income during the first quarter of 2007 or 2008.

Comprehensive income was approximately $1.9 million for the three months ended March 31, 2008 and comprehensive loss was approximately $9.3 million for the three months ended March 31, 2007, and included the following changes in accumulated other comprehensive income (in thousands):

(o) Reclassifications

Certain items in the prior years’impact SFAS 161 will have on its consolidated financial statements have been reclassified to conform to the current presentation.

(3) STOCK-BASED COMPENSATIONstatements.

BioMarin records compensation expense associated with stock options and other forms of equity compensation in accordance with SFAS No. 123R, “Share Based Payment”, as interpreted by SAB No. 107. Effective January 1, 2006, BioMarin adopted the modified prospective transition method provided for under SFAS No. 123R, and consequently has not retroactively adjusted results from prior periods. Under this transition method, compensation cost associated with stock options now includes: (1) amortization related to the remaining unvested portion of all stock option awards granted prior to January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123; and (2) amortization related to all restricted stock and stock option awards granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R. In addition, the Company records expense related to shares issued under its employee stock purchase plan over the offering period.

The compensation expense for stock-based compensation awards includes an estimate for forfeitures and is recognized over the requisite service period of the options using the straight-line method. Benefits of tax deductions in excess of recognized compensation costs are recorded as a financing cash inflow rather than as a reduction of taxes paid. For the three months ended March 31, 2008, net excess tax benefits recognized from option exercises were insignificant due to the Company’s valuation allowance. The Company evaluated the need to record a cumulative effect adjustment for estimated forfeitures upon the adoption of SFAS No. 123R and determined the amount to be insignificant. Pursuant to the income tax provisions included in SFAS 123R, the Company has elected the long method of computing its hypothetical additional paid-in capital pool.

Stock-based compensation expense for the three months ended March 31, 2008 totaled $4.5 million, of which $2.7 million was included in selling, general and administrative expense, $1.6 million was included in research and development expense and $0.2 million was included in cost of sales. Stock-based compensation expense for the three months ended March 31, 2007 totaled $3.6 million, of which $2.1 million was included in selling, general and administrative expense, $1.3 million was included in research and development expense and $0.2 million was included in cost of sales. Stock-based compensation of $0.4 million and $0.9 million was capitalized into inventory for the three months ended March 31, 2007 and 2008, respectively, and will be recognized as cost of sales when the related product is sold.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31,June 30, 2008

(Unaudited)

In May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles. SFAS No. 162 becomes effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to Statement on Auditing Standards No. 69,The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, for periods completed after January 1, 2009. The Company does not expect that the adoption of SFAS No. 162 to have a material effect on its consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position No. FAS 142-3,Share Incentive PlanDetermination of the Useful Life of Intangible Assets(FSP FAS 142-3), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142,Goodwill and Other Intangible Asset. FSP FAS 142-3 also requires expanded disclosure related to the determination of intangible asset useful lives. This Statement is effective for fiscal years beginning on or after December 15, 2008, which for the Company is the year ending December 31, 2009. The Company is currently evaluating the potential impact the adoption of FSP FAS 142-3 will have on its consolidated financial statements.

BioMarin’s 2006 Share Incentive Plan, which was approved(n) Accumulated Other Comprehensive Income (Loss)

Comprehensive income/loss includes net income/loss and certain changes in June 2006stockholders’ equity that are excluded from net income/loss, such as changes in unrealized gains and replaceslosses on the Company’s previous stock option plansavailable-for-sale securities, unrealized gains and losses on foreign exchange hedges, and changes in the Company’s cumulative foreign currency translation account. There were no tax effects allocated to any components of other comprehensive income (loss) during the second quarters or first six months of 2007 or 2008.

Comprehensive income was approximately $2.9 million and $4.8 million for new grants, providesthe three and six months ended June 30, 2008, respectively, compared to comprehensive loss of $3.9 million and $13.1 million for grantsthe three and six months ended June 30, 2007, respectively. Comprehensive income (loss) included the following changes in accumulated other comprehensive income (loss) (in thousands):

(o) Reclassifications and Adjustments

Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current presentation.

In the second quarter of options2008, the Company recorded an out of period adjustment to employees to purchase common stockcorrect inventory and property, plant and equipment balances for sales taxes associated with purchases made between April 2007 and March 2008 that were erroneously expensed at the fair market valuetime of such shares onpurchase. The correction reduced operating expenses by $1.2 million during the grant date,second quarter of 2008. The amounts capitalized into inventory will be recognized into cost of goods sold as well as other formsthe inventory is sold and the amounts capitalized into property, plant and equipment will be depreciated over the assets’ respective estimated useful lives. The Company determined that the impact of equity compensation, such as restricted stock units. As of Marchthe adjustment was not material to prior periods or to the expected results for the year ended December 31, 2008, awards issuedand as such the adjustment was recorded in the second quarter of 2008 under the provisions of Accounting Principles Board Opinion (APB) No. 28,Interim Financial Reporting.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

(3) STOCK-BASED COMPENSATION

The Company’s stock-based compensation plans include the 2006 Share Incentive Plan include both stock options and restricted stock units. Stock option awards generally vest over a four-year period on a cliff basis six months after the grant date and then monthly thereafter. The termESPP. These plans are administered by the Compensation Committee of the outstanding options is generally ten years. Options assumed under past business acquisitions generally vest over periods ranging from immediately upon grantBoard of Directors, which selects persons to five years fromreceive awards and determines the original grant datenumber of shares subject to each award and havethe terms, ranging from two to ten years. Restricted stock units granted to employees generally vest in four equal annual tranches on each anniversaryconditions, performance measures and other provisions of the grant date. Restricted stock units grantedaward. Readers should refer to directors generally vestNote 3 of the Company’s consolidated financial statements in full onethe Annual Report on Form 10-K for the fiscal year afterended December 31, 2007, for additional information related to these stock-based compensation plans.

Determining the grant date.Fair Value of Stock Options

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model and the assumptions noted in the table below. The expected life of options is based on observed historical exercise patterns. Groups of employees that have similar historical exercise patterns were considered separately for valuation purposes, but none were identified that had distinctly different exercise patterns as of March 31,June 30, 2008. The expected volatility of stock options is based upon proportionate weightings of the historical volatility of BioMarinthe Company’s stock and the implied volatility of traded options on the Company’s stock for fiscal periods in which there is sufficient trading volume in options on the Company’s stock. The risk free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield reflects that BioMarinthe Company has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future.

The During the first six months of 2008, the Company recorded $3.6granted 2.9 million and $4.5 million of compensation expense related to current period vesting of stock options for the three months ended March 31, 2007 and 2008, respectively, recognized in accordance with SFAS No. 123R. As of March 31, 2008, there was $44.6 million of total unrecognized compensation cost related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.8 years.

A summary of stock option activity under all plans, including plans that were suspended upon adoption of the 2006 Share Incentive Plan, with a weighted average fair value of $38.28. The Company also granted approximately 42,000 options under the ESPP with a weighted average fair value of $19.11 during the first six months of 2008. The assumptions used to estimate the fair value of stock options granted and stock purchase rights granted under the Company’s ESPP for the three and six months ended March 31,June 30, 2007 and 2008 is presentedare as follows:

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

Restricted Stock Units

Restricted stock units (RSUs) are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. The aggregate intrinsic value for outstanding options is calculated asCompany expenses the difference between the exercise pricecost of the underlying awards andRSUs, which is determined to be the quoted pricefair market value of the Company’s common stock as ofshares underlying the end of the period. There were 10.0 million options that were in-the-moneyRSU at March 31, 2008. The aggregate intrinsic value of options exercised was determined as of the date of option exercise.grant, ratably over the period during which the vesting restrictions lapse. During the six months ended June 30, 2007, the Company granted 114,750 RSUs with a fair market value of $17.33 pet share. For the six months ended June 30, 2008, the Company granted 157,630 RSUs with a fair market value of $38.45 per share.

Stock-based Compensation Expense

The compensation expense that has been included in the Company’s consolidated statement of operations for stock-based compensation arrangements were as follows (in thousands):

Stock-based compensation of $1.0 million and $2.0 million was capitalized into inventory for the six months ended June 30, 2007 and 2008, respectively. Capitalized stock-based compensation is recognized into cost of sales when the related product is sold.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31,June 30, 2008

(Unaudited)

An initial option is granted to each new outside member of BioMarin’s Board of Directors to purchase 30,000 shares of common stock at the fair value on the date of the grant. On the date of each annual meeting of stockholders, other than newly elected directors, each outside director is granted options for the purchase of 15,000 shares of common stock and 2,500 restricted stock units. The options vest over one year and have a term of ten years. The restricted stock units vest on the anniversary of the date of grant.

A summary of non-vested restricted stock unit activity under the plan for the three months ended March 31, 2008 is presented as follows:

The Company recorded $0.1 million of compensation expense related to restricted stock units for the three months ended March 31, 2008, recognized in accordance with SFAS No. 123R. There were no restricted stock unit grants prior to the second quarter of 2007 and therefore no compensation expense was recognized related to restricted stock units in previous periods. As of March 31, 2008, there was $1.7 million of total unrecognized compensation cost related to unvested restricted stock units. These costs are expected to be recognized over a weighted average period of 3.1 years.

At March 31, 2008, an aggregate of approximately 11.3 million unissued shares were authorized for future issuance under the Company’s stock plans, which include shares issuable under the Company’s 2006 Share Incentive Plan and the Company’s Employee Stock Purchase Plan. Awards under the 2006 Share Incentive Plan that expire or are cancelled without delivery of shares generally become available for issuance under the plan. Awards that expire or are cancelled under the Company’s suspended 1997 Stock Plan or 1998 Director Option Plan may not be reissued.

Employee Stock Purchase Plan

Under BioMarin’s Employee Stock Purchase Plan, which was approved in June 2006 and replaces the Company’s previous plan, U.S. employees meeting specific employment qualifications are eligible to participate and can purchase shares on established dates semi-annually through payroll deductions at the lower of 85% of the fair market value of the stock at the commencement or each purchase date of the offering period. Each offering period will span up to two years. The Employee Stock Purchase Plan permits eligible employees to purchase common stock through payroll deductions for up to 10% of qualified compensation, up to an annual limit of $25,000. The Employee Stock Purchase Plan has been treated as a compensatory plan. The Company recorded compensation expense of $0.1 million and $0.3 million related to the Employee Stock Purchase Plan in the three months ended March 31, 2007 and 2008, respectively.

The fair value of each award is estimated on the date of grant using the Black-Scholes valuation model and the assumptions noted in the table below. The expected volatility of Employee Stock Purchase Plan shares is based on the implied volatility of traded options on the Company’s stock for periods in which there is sufficient trading volume in those options. Otherwise, historical volatility is utilized. The risk free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield reflects that BioMarin has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(Unaudited)

(4) JOINT VENTURE

Effective January 2008, the Company and Genzyme restructured BioMarin/Genzyme LLC. Under the revised structure, the operational responsibilities for BioMarin and Genzyme did not significantly change, as Genzyme will continuecontinues to globally market and sell Aldurazyme and BioMarin will continuecontinues to manufacture Aldurazyme. As of January 1, 2008, instead of sharing all costs and profits equally through the 50/50 joint venture, Genzyme will recordrecords sales of Aldurazyme to third party customers and will paypays BioMarin a tiered payment ranging from approximately 39.5 to 50 percent of worldwide net product sales depending on sales volume, which will beis recorded by BioMarin as product revenue. In addition, the Company recognizes product transfer revenue when product is shipped to Genzyme. The amount of product transfer revenue will eventually beis deducted from royalties earned when the product is sold by Genzyme. Certain research and development activities and intellectual property related to Aldurazyme and intellectual property will continuecontinues to be managed in the joint venture with the costs shared equally by BioMarin and Genzyme. Pursuant to the terms of the joint venture restructuring, the Company received distributions of $16.7 million of cash and $26.8 million of inventory from the joint venture in the first quarter of 2008.

The Company will also presentpresents the related cost of sales and its Aldurazyme-related operating expenses as operating expenses in the consolidated statements of operations. Equity in the lossincome (loss) of BioMarin/Genzyme LLC subsequent to the restructuring will includeincludes BioMarin’s 50% share of the net income/loss of BioMarin/Genzyme LLC related to intellectual property management and ongoing research and development activities. The results of the joint venture’s operations for the three and six months ended March 31,June 30, 2007 and 2008 are presented in the table below (in thousands).

At MarchDecember 31, 2007 and June 30, 2008, the summarized assets and liabilities of the joint venture and the components of the Company’s investment in the joint venture are as follows (in thousands):

The critical accounting policies of BioMarin/Genzyme LLC relevant to its operations prior to the restructuring are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31,June 30, 2008

(Unaudited)

(5) SUPPLEMENTAL BALANCE SHEET INFORMATION

As of December 31, 2007 and MarchJune 30, 2008, short-term investments consisted of the following (in thousands):

As of December 31, 2007 and June 30, 2008, inventory consisted of the following (in thousands):

As of December 31, 2007 and June 30, 2008, accounts payable and accrued liabilities consisted of the following (in thousands):

As of December 31, 2007 and March 31,June 30, 2008, other long-term liabilities consisted of the following (in thousands):

As of December 31, 2007 and March 31, 2008, inventory consisted of the following (in thousands):

		December 31, 2007			June 30, 2008
Long-term portion of deferred rent		$	1,635		$	1,140
Long-term portion of capital lease liability			—			191
Long-term portion of deferred compensation liability			447			777
Total other long-term liabilities		$	2,082		$	2,108

As of December 31, 2007 and March 31, 2008, short-term investments consisted of the following (in thousands):BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

(6) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 2007 and March 31,June 30, 2008, consisted of (in thousands):

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(Unaudited)

Depreciation for the three and six months ended March 31, 2007 andJune 30, 2008 was $1.7$2.9 million and $2.4$5.3 million, respectively, of which $0.8 million and $1.3 million was capitalized into inventory, respectively. Depreciation for the three and six months ended June 30, 2007 was $1.9 million and $3.6 million, respectively, of which $0.4 million and $0.6$0.8 million was capitalized into inventory, respectively.

Capitalized interest related to the Company’s fixed assetproperty, plant and equipment purchases during the three and six months ended March 31,June 30, 2007 and 2008 was insignificant.

In January 2008, the Company purchased its previously leased laboratory/office building located at 300 Bel Marin Keys Drive and retained ownership of all leasehold improvements made to the property. The purchase price of the facility wasfor approximately $12.0 million, of which $11.5 million was paid in cash in January 2008 and a $0.5 million deposit was paid in 2007.million. As a result of the purchase, the Company capitalized certain pre-existing deferred rent liabilities of approximately $0.5 million as a reduction to the acquisition cost of the building.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

(7) CONVERTIBLE DEBT

In April 2007, the Company sold approximately $324.9 million of senior subordinated convertible notesSenior Subordinated Convertible Notes due on April 23, 2017. The debt was issued at face value and bears interest at the rate of 1.875% per annum, payable semi-annually in cash. The debt is convertible, at the option of the holder, at any time prior to maturity or redemption, into shares of Company common stock at a conversion price of approximately $20.36 per share, subject to adjustment in certain circumstances. There is no call provision included and the Company is unable to unilaterally redeem the debt prior to maturity on April 23, 2017. The Company also must repay the debt if there is a qualifying change in control or termination of trading of its common stock.

In connection with the placement of the April 2007 debt, the Company paid approximately $8.5 million in offering costs, which have been deferred and are included in other assets. They are being amortized as interest expense over the life of the debt, and thedebt. The Company recognized $0.2 million and $0.4 million of amortization expense during the three and six months ended March 31, 2008.June 30, 2008, respectively. Amortization expense was $0.2 million for both the three and six months ended June 30, 2007.

In March 2006, the Company sold $172.5 million of senior subordinated convertible debtSenior Subordinated Convertible Notes due on March 29, 2013. The debt was issued at face value and bears interest at the rate of 2.5% per annum, payable semi-annually in cash. The debt is convertible, at the option of the holder, at any time prior to maturity or redemption, into shares of Company common stock at a conversion price of approximately $16.58 per share, subject to adjustment in certain circumstances. There is no call provision included and the Company is unable to unilaterally redeem the debt prior to maturity inon March 29, 2013. The Company also must repay the debt if there is a qualifying change in control or termination of trading of its common stock. During the first quarter of 2008, certain note holders voluntarily exchanged $0.1 million of convertible notes for shares of the Company’s common stock.

In connection with the placement of the March 2006 debt, the Company paid approximately $5.5 million in offering costs, which have been deferred and are included in other assets. They are being amortized as interest expense over the life of the debt, and the Company recognized $0.2 million and $0.4 million of amortization expense during eachthe three and six months ended June 30, 2008, respectively. Amortization expense was $0.2 million and $0.4 million during the three and six months ended June 30, 2007, respectively. During the first six months of 2008, certain note holders voluntarily exchanged an insignificant number of convertible notes for shares of the three months ended March 31, 2007 and 2008.Company’s common stock.

Interest expense for the three and six months ended March 31, 2007 andJune 30, 2008 was $2.3$4.1 million and $4.1$8.2 million, respectively, and each period included $1.1 million and $2.2 million, respectively, in imputed interest expense related to the Company’s acquisition obligation.

(8) DERIVATIVE FINANCIAL INSTRUMENTS

The Company periodically enters into foreign currency forward contracts, which have a maturity of less than one year. At March 31, 2008, Interest expense for the Company had net outstanding foreign exchange forward contracts to sell $16.2 million, comprised of sell contracts of $17.0 million of equivalent Eurosthree and $5.0 million of equivalent British Pounds and buy contracts of $5.8 million of equivalent Euros, all of which have a term of less than 3 months. The notional settlement value of all foreign currency forward contracts outstanding as of December 31,six months ended June 30, 2007 was $12.9 million.$3.7 million and $6.1 million, respectively, and included $1.1 million and $2.3 million in imputed interest expense, respectively.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31,June 30, 2008

(Unaudited)

(8) DERIVATIVE FINANCIAL INSTRUMENTS

NoneForeign Currency and Other Hedging Instruments

The Company follows the provisions of SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities and requires the Company to recognize these as either assets or liabilities on the balance sheet and measure them at fair value. The accounting for gains and losses resulting from changes in fair value is dependent on the use of the Company’sderivative and whether it is designated and qualifies for hedge accounting.

Economic and Accounting Hedging—Hedges of Forecasted Transactions

The Company uses forward foreign exchange contracts to hedge certain operational exposures resulting from changes in foreign currency exchange rates. Such exposures result from portions of our forecasted revenues being denominated in currencies other than the U.S. dollar, primarily the Euro. These foreign exchange contracts have durations of six months or less and are entered into in the normal course of business; as such they are not speculative.

All hedging relationships are formally documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash flows within the meaning of SFAS No. 133 to be a qualifying hedge. The effectiveness of the qualifying hedge contract, excluding the time value of money, is assessed quarterly using regression analysis. The Company records changes in the fair value of the derivative instruments designated as qualifying hedges of forecasted non-U.S. dollar revenue from product sales in other current assets and other current liabilities. Gains or losses resulting from changes in the fair value of qualifying hedges is initially reported as a component of accumulated other comprehensive income/loss in stockholders’ equity, until the forecasted transaction occurs. When the forecasted transaction occurs this amount is reclassified into revenue. As of June 30, 2008 the Company expects the entire amount in other comprehensive income to be reclassified to earnings within twelve months. Any non-qualifying portion of the gains or losses resulting from changes in fair value, if any, is reported in the Company’s statement of operations in operating expenses.

In the event the underlying forecasted transaction does not occur, or it becomes remote that it will occur, the gain or loss on the related hedge is reclassified from accumulated other comprehensive income/loss to other income on the consolidated statement of income at that time. During the quarter, there were no such net gains or losses recognized.

As of June 30, 2008, the Company had open contracts totaling $21.2 million that qualified for hedge accounting, $0.4 million in other comprehensive income representing the anticipated loss to be reclassified to revenue over the next twelve months as the forecasted transactions occur. During the second quarter the Company recognized a net loss of $15,000 in revenue relating to hedged transactions which occurred. The ineffective portion of the gains or losses resulting from changes in fair value was insignificant. The loss representing time value excluded from the assessment of the hedge effectiveness was immaterial and is included in operating expense on the Company’s statement of operations.

The Company did not enter into any derivative transactions which qualified for hedge accounting under SFAS No. 133. As a result,133, as amended, prior to the fair value changes of all contracts are reported in earnings as foreign exchange gain or loss. For the three months ended March 31, 2008, approximately $1.1 million of net loss has been included in the Company’s consolidated statement of operations with respect to these forward exchange contracts, as compared to $48,000 for the three months ended March 31, 2007.

(9) SUPPLEMENTAL CASH FLOW INFORMATION

The following significant non-cash transactions took place in the periods presented (in thousands):

Cash paid for interest for each of the three months ended March 31, 2007 and 2008 was $2.2 million.

Cash paid for income taxes for the three months ended March 31, 2007 and 2008 was $0 and $0.1 million, respectively.

(10) FINANCIAL INSTRUMENTS—CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and accounts receivable. All cash, cash equivalents, and short-term investments are placed in financial institutions with strong credit ratings, which minimizes the risk of loss due to nonpayment. Accounts receivable as of March 31, 2008 related to net product sales of Naglazyme and Kuvan and Aldurazyme product transfer and royalty revenues. A significant portion of net product sales are made to a limited number of financially viable specialty pharmacies and distributors. The Company’s two largest customers accounted for 49% and 13% of Naglazyme net product sales, respectively. The Company’s three largest customers accounted for 32%, 20% and 19% of Kuvan net product sales. Genzyme accounted for all of the Aldurazyme net product revenues. For the firstsecond quarter of 2008, net product sales of Naglazyme were $5.1 million from customers based in the U.S. and $22.6 million from customers based outside of the U.S, as compared to $4.2 million and $14.2 million for the first quarter of 2007, respectively. All net product sales of Kuvan were from customers based in the U.S. during the first quarter of 2008. Significant specific concentrations of the Company’s total net product sales include net product sales of Naglazyme related to sales in Germany and France totaling $5.3 million and $3.3 million, respectively, for the three months ended March 31, 2008, and $5.0 million and $2.0 million, respectively, for the year ended March 31, 2007.

The Company does not require collateral from its customers, but performs periodic credit evaluations of its customers’ financial condition and requires immediate payment in certain circumstances. The Company has not experienced any significant losses related to its financial instruments and management does not believe a significant credit risk existed at March 31, 2008.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31,June 30, 2008

(Unaudited)

(9) FAIR VALUE MEASUREMENTS

In the first quarter ofJanuary 2008, the Company adopted SFAS No. 157, “Fair“Fair Value Measurements”Measurements” for financial assets and liabilities. SFAS No. 157 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 involves observable inputs such as unadjusted quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 involves inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, which include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 involves unobservable inputs that reflect the reporting entity’s own assumptions. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including available-for-sale fixed income and equity securities, other equity securities and foreign currency derivatives. The table below presents the fair value of these certain financial assets and liabilities determined using the inputs defined at March 31,June 30, 2008, by SFAS No. 157.

In February 2008, the FASB issued FASB FSP 157-2 which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (atat least annually),annually, until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The partial adoption of SFAS No. 157 for financial assets and liabilities did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Fixed income available-for-sale securities primarily include money market funds (48% of total), commercial paper (34% of total) and corporate bonds (9 % of total). Included in fixed income available-for-sale securities is approximately $300.1 million of cash equivalents. Cash equivalents consist of $32.6 million in instruments with original maturities of three months or less at the date of purchase. The remaining balance of cash equivalents consists primarily of money market funds, for which the carrying amount is a reasonable estimate of fair value.

Foreign currency derivatives include forward foreign exchange contracts for the Euro and the British Pound.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)

(10) REVENUE AND CREDIT CONCENTRATIONS

The Company considers there to be revenue concentration risks for regions where net product revenue exceed 10% of consolidated net product revenue. The concentration of the Company’s revenue within the regions below may expose the Company to a material adverse effect if sales in the respective regions were to experience difficulties. The table below summarizes revenue concentrations by region for the three and six months ended June 30, 2007 and 2008.