Washington, D.C. 20549

(Mark One)

☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~

2021

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-26727

______________________________________

BioMarin Pharmaceutical Inc.

(Exact name of registrant as specified in its charter)

______________________________________

~~Delaware~~

~~68-0397820~~

Delaware

68-0397820

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

770 Lindaro Street

San Rafael ~~California~~

California

94901

(Address of principal executive offices)

(Zip Code)

(415) 506-6700

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

BMRN

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

Large Accelerated Filer

☒

Accelerated Filer

☐

~~Non-accelerated filer~~

☐ ~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company~~

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging ~~growth company~~

Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~175,621,277~~183,593,434 shares of common stock, par value $0.001, outstanding as of October ~~25, 2017.~~

~~BIOMARIN PHARMACEUTICAL INC.~~

~~TABLE OF CONTENTS~~

26, 2021.

		~~Page~~
~~PART I.~~		~~FINANCIAL INFORMATION~~	3
~~Item 1.~~	~~Financial Statements~~	3
	~~Condensed Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016~~	3
	~~Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and nine months ended September 30, 2017 and 2016~~	4
	~~Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the nine months ended September 30, 2017~~	5
	~~Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2017 and 2016~~	6
	~~Notes to Unaudited Condensed Consolidated Financial Statements~~	7
~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	29
~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~	42
~~Item 4.~~	~~Controls and Procedures~~	42
~~PART II.~~	~~OTHER INFORMATION~~	43
~~Item 1.~~	~~Legal Proceedings~~	43
~~Item 1A.~~	~~Risk Factors~~	44
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	66
~~Item 3.~~	~~Defaults Upon Senior Securities~~	66
~~Item 4.~~	~~Mine Safety Disclosures~~	66
~~Item 5.~~	~~Other Information~~	66
~~Item 6.~~	~~Exhibits~~	67
~~SIGNATURES~~		69

Table of Contents

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “BioMarin,” the “Company,” “we,” “us,” and “our” refer to BioMarin Pharmaceutical Inc. and, where appropriate, its wholly owned subsidiaries.

BioMarin®, Brineura®, ~~Vimizim~~^Kuvan®, Naglazyme®, ~~Kuvan~~^Palynziq®and ~~Firdapse~~^Vimizim®are our registered trademarks. ~~Kyndrisa~~^TMVOXZOGO™ is our trademark. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. All other brand names and service marks, trademarks and other trade names appearing in this report are the property of their respective owners.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under securities laws. Many of these statements can be identified by the use of terminology such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “may,” “will,” ~~��projects,~~“could,” would,” “projects,” “continues,” “estimates,” “potential,” “opportunity” or the negative versions of these terms and other similar expressions. Our actual results or experience could differ significantly from the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in “Risk Factors,” in Part II, Item 1A of this Quarterly Report on Form 10-Q as well as information provided elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, which was filed with the Securities and Exchange Commission (the SEC) on February ~~27, 2017.~~26, 2021. You should carefully consider that information before you make an investment decision.

You should not place undue reliance on these types of forward-looking statements, which speak only as of the date that they were made. These forward-looking statements are based on the beliefs and assumptions of the Company’s management based on information currently available to management and should be considered in connection with any written or oral forward-looking statements that the Company may issue in the future as well as other cautionary statements the Company has made and may make. Except as required by law, the Company does not undertake any obligation to release publicly any revisions to these forward-looking statements after completion of the filing of this Quarterly Report on Form 10-Q to reflect later events or circumstances or the occurrence of unanticipated events.

The discussion of the Company’s financial condition and results of operations should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and the related Notes thereto included in this Quarterly Report on Form 10-Q.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, financial condition, operating results, cash flows or stock price. Discussion of the risks listed below, and other risks that we face, are discussed in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Business and Operational Risks

•The COVID-19 pandemic could continue to materially adversely affect our business, results of operations, and financial condition.

•Because the target patient populations for our products are small, we must achieve significant market share and maintain high per-patient prices for our products to achieve and maintain profitability.

•If we fail to obtain and maintain an adequate level of coverage and reimbursement for our products by third-party payers, the sales of our products would be adversely affected or there may be no commercially viable markets for our products.

•If we fail to compete successfully with respect to product sales, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product and our revenues could be adversely affected.

•Changes in methods of treatment of disease could reduce demand for our products and adversely affect revenues.

•If we fail to develop new products and product candidates or compete successfully with respect to acquisitions, joint ventures, licenses or other collaboration opportunities, our ability to continue to expand our product pipeline and our growth and development would be impaired.

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•The sale of generic versions of Kuvan by generic manufacturers has adversely affected and will continue to adversely affect our revenues and results of operations.

•If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our product candidates may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.

Regulatory Risks

•If we fail to obtain regulatory approval to commercially market and sell our product candidates, or if approval of our product candidates is delayed, we will be unable to generate revenues from the sale of these product candidates, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will increase.

•Any product for which we have obtained regulatory approval, or for which we obtain approval in the future, is subject to, or will be subject to, extensive ongoing regulatory requirements by the Food and Drug Administration (FDA), the European Medicines Agency (EMA) and other comparable international regulatory authorities, and if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, we may be subject to penalties, we will be unable to generate revenues from the sale of such products, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will be increased.

•To obtain regulatory approval to market our products, preclinical studies and costly and lengthy clinical trials are required and the results of the studies and trials are highly uncertain. Likewise, preliminary, initial or interim data from clinical trials should be considered carefully and with caution because the final data may be materially different from the preliminary, initial or interim data, particularly as more patient data become available.

•Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our current and future products, which would adversely affect our revenues and results of operations.

•Government healthcare reform could increase our costs and adversely affect our revenues and results of operations.

Risks Related to Valoctocogene Roxaparvovec

•Our valoctocogene roxaparvovec program is based on a gene therapy approach, which, as a novel technology, presents additional development and treatment risks in relation to our other, more traditional drug development programs.

•As compared to our other, more traditional products, our gene therapy product candidate valoctocogene roxaparvovec, if approved, may present additional problems with respect to the pricing, coverage, and reimbursement and acceptance of the product candidate.

Financial and Financing Risks

•If we continue to incur operating losses or are unable to sustain positive cash flows for a period longer than anticipated, we may be unable to continue our operations at planned levels and be forced to reduce our operations.

Manufacturing Risks

•If we fail to comply with manufacturing regulations, our financial results and financial condition will be adversely affected.

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•If we are unable to successfully develop and maintain manufacturing processes for our product candidates to produce sufficient quantities at acceptable costs, we may be unable to support a clinical trial or be forced to terminate a program, or if we are unable to produce sufficient quantities of our products at acceptable costs, we may be unable to meet commercial demand, lose potential revenue, have reduced margins or be forced to terminate a program.

•Supply interruptions may disrupt our inventory levels and the availability of our products and product candidates and cause delays in obtaining regulatory approval for our product candidates, or harm our business by reducing our revenues.

Risks Related to International Operations

•We conduct a significant amount of our sales and operations outside of the United States (U.S.), which subjects us to additional business risks that could adversely affect our revenues and results of operations.

•A significant portion of our international sales are made based on special access programs, and changes to these programs could adversely affect our product sales and revenues in these countries.

Intellectual Property Risks

•If we are unable to protect our intellectual property, we may not be able to compete effectively or preserve our market shares.

•Competitors and other third parties may have developed intellectual property that could limit our ability to market and commercialize our products and product candidates, if approved.

Table of Contents~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~

~~Financial Statements~~

BIOMARIN PHARMACEUTICAL INC.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2021 and 2020	4
	Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the three and nine months ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65

SIGNATURES		67

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, ~~2017~~2021 and December 31, ~~2016~~

2020

(In thousands, ~~of U.S. dollars,~~ except share amounts)

September 30,

December 31,

2017

2016(1)

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$
431,399

$
408,330

Short-term investments

825,700

381,347

Accounts receivable, net

251,891

215,280

Inventory

457,393

355,126

Other current assets

83,646

61,708

Total current assets

2,050,029

1,421,791

Noncurrent assets:

Long-term investments

416,304

572,711

Property, plant and equipment, net

878,624

798,768

Intangible assets, net

530,957

553,780

Goodwill

197,039

197,039

Deferred tax assets

484,759

446,786

Other assets

22,985

32,815

Total assets

$
4,580,697

$
4,023,690

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$
364,920

$
370,505

Short-term convertible debt, net

—

22,478

Short-term contingent acquisition consideration payable

52,609

46,327

Total current liabilities

417,529

439,310

Noncurrent liabilities:

Long-term convertible debt, net

1,166,036

660,761

Long-term contingent acquisition consideration payable

126,790

115,310

Other long-term liabilities

56,780

42,034

Total liabilities

1,767,135

1,257,415

Stockholders’ equity:

Common stock, $0.001 par value: 500,000,000 shares authorized; 175,495,350 and
172,647,588 shares issued and outstanding as of September 30, 2017 and December
31, 2016, respectively.

176

173

Additional paid-in capital

4,435,449

4,288,113

Company common stock held by Nonqualified Deferred Compensation Plan (NQDC)

(14,473
)

(14,321
)
Accumulated other comprehensive income (loss)

(21,434
)

12,816

Accumulated deficit

(1,586,156
)

(1,520,506
)
Total stockholders’ equity

2,813,562

2,766,275

Total liabilities and stockholders’ equity

$
4,580,697

$
4,023,690

~~(1)~~

December 31, 2016 balances were derived from the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 27, 2017.


	September 30, 2021		December 31, 2020 (1)
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	617,143	$	649,158
Short-term investments	462,333		416,228
Accounts receivable, net	374,937		448,351
Inventory	749,406		698,548
Other current assets	107,751		129,934
Total current assets	2,311,570		2,342,219
Noncurrent assets:
Long-term investments	466,618		285,473
Property, plant and equipment, net	1,024,787		1,032,471
Intangible assets, net	388,487		417,271
Goodwill	196,199		196,199
Deferred tax assets	1,445,109		1,432,150
Other assets	144,705		142,237
Total assets	$	5,977,475	$	5,848,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	466,711	$	492,548
Short-term contingent consideration	48,187		—
Total current liabilities	514,898		492,548

Noncurrent liabilities:
Long-term convertible debt, net	1,078,093		1,075,145
Long-term contingent consideration	15,204		60,130
Other long-term liabilities	103,131		114,195
Total liabilities	1,711,326		1,742,018
Stockholders’ equity:
Common stock, $0.001 par value: 500,000,000 shares authorized; 183,567,424 and 181,740,999 shares issued and outstanding, respectively.	184		182
Additional paid-in capital	5,133,742		4,993,407
Company common stock held by Nonqualified Deferred Compensation Plan (the NQDC)	(10,225)		(9,839)
Accumulated other comprehensive income (loss)	10,239		(16,139)
Accumulated deficit	(867,791)		(861,609)
Total stockholders’ equity	4,266,149		4,106,002
Total liabilities and stockholders’ equity	$	5,977,475	$	5,848,020

(1)December 31, 2020 balances were derived from the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~

INCOME (LOSS)

Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~

2020

(In thousands, ~~of U.S. dollars,~~ except per share amounts)

~~(Unaudited)~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

REVENUES:

Net product revenues

$
298,752

$
278,262

$
916,868

$
812,195

Royalty and other revenues

35,396

1,634

38,473

4,568

Total revenues

334,148

279,896

955,341

816,763

OPERATING EXPENSES:

Cost of sales

59,480

50,738

165,791

145,473

Research and development

154,103

160,831

442,145

486,663

Selling, general and administrative

130,532

118,758

394,056

333,635

Intangible asset amortization and contingent consideration

3,760

9,654

26,096

(34,318
)
Impairment of intangible assets

—

—

—

599,118

Total operating expenses

347,875

339,981

1,028,088

1,530,571

LOSS FROM OPERATIONS

(13,727
)

(60,085
)

(72,747
)

(713,808
)
Equity in the loss of BioMarin/Genzyme LLC

(253
)

(104
)

(996
)

(374
)
Interest income

3,976

1,633

10,031

4,561

Interest expense

(10,884
)

(9,980
)

(31,043
)

(29,767
)
Other income, net

267

1,723

4,282

504

LOSS BEFORE INCOME TAXES

(20,621
)

(66,813
)

(90,473
)

(738,884
)
Benefit from income taxes

(8,094
)

(29,388
)

(24,823
)

(199,394
)
NET LOSS

$
(12,527
)

$
(37,425
)

$
(65,650
)

$
(539,490
)
NET LOSS PER SHARE, BASIC

$
(0.07
)

$
(0.22
)

$
(0.38
)

$
(3.29
)
NET LOSS PER SHARE, DILUTED

$
(0.07
)

$
(0.22
)

$
(0.38
)

$
(3.30
)
Weighted average common shares outstanding, basic

175,103

167,714

174,071

163,963

Weighted average common shares outstanding, diluted

175,103

167,714

174,071

164,216

COMPREHENSIVE LOSS

$
(19,303
)

$
(39,795
)

$
(99,900
)

$
(558,365
)
(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
REVENUES:
Net product revenues	$	393,840	$	460,741	$	1,348,279	$	1,368,816
Royalty and other revenues	14,902		16,043		48,186		39,522
Total revenues	408,742		476,784		1,396,465		1,408,338
OPERATING EXPENSES:
Cost of sales	103,537		188,793		350,765		398,134
Research and development	157,869		147,053		467,701		471,449
Selling, general and administrative	183,333		179,450		541,812		542,157
Intangible asset amortization and contingent consideration	17,222		17,429		52,648		48,018
Gain on sale of nonfinancial assets	—		—		—		(59,495)
Total operating expenses	461,961		532,725		1,412,926		1,400,263
INCOME (LOSS) FROM OPERATIONS	(53,219)		(55,941)		(16,461)		8,075

Equity in the income (loss) of BioMarin/Genzyme LLC	177		(921)		(1,349)		(1,077)
Interest income	1,827		4,004		8,737		13,539
Interest expense	(3,870)		(9,597)		(11,491)		(24,560)
Other income, net	8,925		1,239		11,788		1,886
INCOME (LOSS) BEFORE INCOME TAXES	(46,160)		(61,216)		(8,776)		(2,137)
Benefit from income taxes	(9,666)		(846,019)		(2,594)		(839,138)
NET INCOME (LOSS)	$	(36,494)	$	784,803	$	(6,182)	$	837,001
NET INCOME (LOSS) PER SHARE, BASIC	$	(0.20)	$	4.33	$	(0.03)	$	4.63
NET INCOME (LOSS) PER SHARE, DILUTED	$	(0.20)	$	4.01	$	(0.03)	$	4.39
Weighted average common shares outstanding, basic	183,214		181,142		182,616		180,592
Weighted average common shares outstanding, diluted	183,214		197,674		182,616		194,959

COMPREHENSIVE INCOME (LOSS)	$	(25,316)	$	765,138	$	20,196	$	827,222

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Nine Months Ended September 30, ~~2017~~

2021 and 2020

(In ~~thousands of U.S. dollars)~~

~~(Unaudited)~~

thousands)

Company

Accumulated

Additional

Common

Other

Total

Common stock

Paid-in

Stock Held

Comprehensive

Accumulated

Stockholders'

Shares

Amount

Capital

by NQDC

Income (Loss)

Deficit

Equity

Balance at December 31, 2016

172,648

$
173

$
4,288,113

$
(14,321
)

$
12,816

$
(1,520,506
)

$
2,766,275

Net loss

—

—

—

—

—

(65,650
)

(65,650
)
Other comprehensive loss

—

—

—

—

(34,250
)

—

(34,250
)
Issuances under equity incentive
  plans, net of tax

1,648

2

7,550

—

—

—

7,552

Issuances of common stock under
  the Employee Stock Purchase Plan
  (the ESPP)

95

—

6,704

—

—

—

6,704

Conversion of convertible notes, net

1,104

1

22,476

—

—

—

22,477

Common stock held by NQDC

—

—

—

(152
)

—

—

(152
)
Stock-based compensation

—

—

110,606

—

—

—

110,606

Balance at September 30, 2017

175,495

$
176

$
4,435,449

$
(14,473
)

$
(21,434
)

$
(1,586,156
)

$
2,813,562

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Shares of common stock, beginning balances (1)	183,322		181,148		181,741		179,838
Issuances under equity incentive plans	246		344		1,827		2,172
Repurchase of common stock	—		—		—		(518)
Shares of common stock, ending balances	183,568		181,492		183,568		181,492

Total stockholders' equity, beginning balances (1)	$	4,241,571	$	3,236,679	$	4,106,002	$	3,122,381
Common stock:
Beginning balances (1)	183		181		182		180
Issuances under equity incentive plans, net of tax	1		—		2		1
Ending balance	184		181		184		181
Additional paid-in capital:
Beginning balance (1)	5,083,831		4,885,637		4,993,407		4,832,707
Issuances under equity incentive plans, net of tax	(460)		7,319		(11,551)		17,601
Stock-based compensation	50,353		44,757		151,500		136,688
Repurchase of common stock	—		—		—		(50,000)
Common stock held by the NQDC	18		78		386		795
Ending balance	5,133,742		4,937,791		5,133,742		4,937,791
Treasury stock:
Beginning balance (1)	—		—		—		—
Purchase of treasury stock	—		—		—		(50,000)
Retirement of treasury stock	—		—		—		50,000
Ending balance	—		—		—		—
Company common stock held by the NQDC:
Beginning balance (1)	(10,207)		(10,678)		(9,839)		(9,961)
Common stock held by the NQDC	(18)		(78)		(386)		(795)
Ending balance	(10,225)		(10,756)		(10,225)		(10,756)
Accumulated other comprehensive income (loss):
Beginning balance (1)	(939)		30,050		(16,139)		20,164

Other comprehensive income (loss)	11,178		(19,665)		26,378		(9,779)
Ending balance	10,239		10,385		10,239		10,385
Accumulated Deficit:
Beginning balance (1)	(831,297)		(1,668,511)		(861,609)		(1,720,709)

Net income (loss)	(36,494)		784,803		(6,182)		837,001
Ending balance	(867,791)		(883,708)		(867,791)		(883,708)
Total stockholders' equity, ending balances	$	4,266,149	$	4,053,893	$	4,266,149	$	4,053,893

(1)The beginning balances for the nine-month periods were derived from the audited Consolidated Financial Statements included in Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

BIOMARIN PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~

2020

(In ~~thousands of U.S. dollars)~~

~~(Unaudited)~~

thousands)

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$
(65,650
)

$
(539,490
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

59,197

76,805

Non-cash interest expense

23,792

22,276

Accretion of discount on investments

2,162

681

Stock-based compensation

106,678

97,220

(Gain) loss on the sale of equity investments

(3,252
)

2,020

Impairment of intangible assets

—

599,118

Deferred income taxes

(36,150
)

(218,700
)
Unrealized foreign exchange (gain) loss

4,348

(10,961
)
Non-cash changes in the fair value of contingent acquisition consideration payable

3,382

(56,954
)
Other

4,657

1,044

Changes in operating assets and liabilities:

Accounts receivable, net

(21,598
)

(52,023
)
Inventory

(80,885
)

(59,802
)
Other current assets

(20,787
)

(1,556
)
Other assets

(1,030
)

(5,002
)
Accounts payable and accrued liabilities

(1,732
)

(77,852
)
Other long-term liabilities

3,497

(4,451
)
Net cash used in operating activities

(23,371
)

(227,627
)
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment

(159,329
)

(96,806
)
Funds held in escrow for the purchase of real property

—

(8,383
)
Maturities and sales of investments

325,678

302,801

Purchase of available-for-sale securities

(609,794
)

(370,393
)
Business acquisitions, net of cash acquired

—

(1,467
)
Other

(1,560
)

(150
)
Net cash used in investing activities

(445,005
)

(174,398
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercises of stock options and the ESPP

46,119

49,498

Taxes paid related to net share settlement of equity awards

(31,863
)

(55,241
)
Proceeds from public offering of common stock, net

—

712,938

Proceeds from convertible senior subordinated note offering, net

481,713

—

Payment of contingent acquisition consideration payable

(1,894
)

—

Other

(26
)

—

Net cash provided by financing activities

494,049

707,195

Effect of exchange rate changes on cash

(2,604
)

5,139

NET DECREASE IN CASH AND CASH EQUIVALENTS

23,069

310,309

Cash and cash equivalents:

Beginning of period

$
408,330

$
397,040

End of period

$
431,399

$
707,349

SUPPLEMENTAL CASH FLOW DISCLOSURES:

Cash paid for interest, net of interest capitalized into fixed assets

4,287

4,564

Cash paid for income taxes

21,744

95,163

Stock-based compensation capitalized into inventory

12,077

8,960

Depreciation capitalized into inventory

17,899

13,402

SUPPLEMENTAL CASH FLOW DISCLOSURES FOR NON CASH INVESTING AND FINANCING ACTIVITIES:

Decrease in accounts payable and accrued liabilities related to fixed assets

(25,047
)

(13,988
)
Conversion of convertible debt

22,477

8,924

Accrual for inventory purchases related to the acquisition of the Merck PKU Business

—

1,322

(unaudited)


	Nine Months Ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(6,182)	$	837,001
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	82,053		77,814
Non-cash interest expense	3,114		14,766
Amortization of premium on investments	3,279		175
Stock-based compensation	153,372		142,125
Gain on sale of nonfinancial assets	—		(59,495)
Inventory reserves, net of stock-based compensation	—		75,609
Deferred income taxes	(12,020)		(854,199)
Unrealized foreign exchange (gain) loss	(1,347)		9,082
Non-cash changes in the fair value of contingent consideration	6,254		1,352
Other	(1,317)		388
Changes in operating assets and liabilities:
Accounts receivable, net	65,513		(32,915)
Inventory	(19,125)		(73,310)
Other current assets	27,029		32,848
Other assets	(407)		(5,543)
Accounts payable and accrued liabilities	(7,129)		(76,174)
Other long-term liabilities	269		9,225
Net cash provided by operating activities	293,356		98,749
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(66,840)		(83,286)
Maturities and sales of investments	502,112		345,224
Purchases of available-for-sale securities	(737,144)		(369,942)
Proceeds from sale of nonfinancial assets	—		67,159
Purchase of intangible assets	(8,026)		(14,369)
Investment in convertible note	—		(8,709)
Other	(994)		(725)
Net cash used in investing activities	(310,892)		(64,648)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of awards under equity incentive plans	32,877		60,268
Taxes paid related to net share settlement of equity awards	(44,428)		(42,667)

Repurchase of common stock	—		(50,000)
Proceeds from convertible senior subordinated note offering, net	—		585,752

Principal repayments of financing leases	(2,492)		(6,080)
Other	(401)		—
Net cash provided by (used in) financing activities	(14,444)		547,273
Effect of exchange rate changes on cash	(35)		(3,145)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(32,015)		578,229
Cash and cash equivalents:
Beginning of period	$	649,158	$	437,446
End of period	$	617,143	$	1,015,675
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes	$	15,531	$	4,355
Cash paid for interest	$	6,673	$	5,615
SUPPLEMENTAL CASH FLOW DISCLOSURES FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Decrease in accounts payable and accrued liabilities related to fixed assets	$	(7,690)	$	(13,281)
Increase (decrease) in accounts payable and accrued liabilities related to intangible assets	$	9,389	$	(3,043)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

(1) NATURE OF OPERATIONS ~~AND BUSINESS RISKS~~

BioMarin Pharmaceutical Inc. (the Company) is a global biotechnology company that develops and commercializes innovative therapies for people with serious and life-threatening rare diseases and medical conditions. The Company selects product candidates for diseases and conditions that represent a significant unmet medical need, have well-understood biology and provide an opportunity to be first-to-market or offer a significant benefit over existing products. The Company’s ~~therapy~~ portfolio consists of ~~six approved~~several commercial products and multiple clinical and ~~pre-clinical~~preclinical product ~~candidates.~~

candidates for the treatment of various diseases. Voxzogo (formerly known as vosoritide) was granted marketing approval in the European Union (EU) on August 27, 2021.

The Company expects to continue to finance future cash needs that exceed its operating activities primarily through its current cash, cash equivalents ~~short-term~~ and ~~long-term~~ investments and through proceeds from debt or equity offerings, commercial borrowing, or through collaborative agreements with corporate partners. If the Company elects to increase its spending on development programs significantly above current long-term plans or enters into potential licenses and other acquisitions of complementary technologies, products or companies, the Company may need additional capital.

The Company is subject to a number of risks, including: the financial performance of its commercial products; the potential need for additional financings; the Company’s ability to successfully commercialize its approved products; the uncertainty of the Company’s research and development (R&D) efforts resulting in future successful commercial products; the Company’s ability to successfully obtain regulatory approval for new products; significant competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; dependence on corporate partners and collaborators; and possible restrictions on reimbursement from governmental agencies and healthcare organizations, as well as other changes in the health care industry. Please see “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q for a more detailed discussion of these risks.

(2) BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements have been prepared pursuant to United States generally accepted accounting principles (U.S. GAAP) and the rules and regulations of the ~~SEC~~Securities and Exchange Commission (the SEC) for Quarterly Reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements, although the Company believes that the disclosures herein are adequate to ensure that the information presented is not misleading. The Condensed Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended December 31, ~~2016~~2020 included in the Company’s Annual Report on Form 10-K.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021 or any other period.

U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from those estimates. The Condensed Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The full extent to which the novel coronavirus (referred to as COVID-19) pandemic could continue to directly or indirectly impact the Company’s business, results of operations ~~for~~and financial condition, including revenues, expenses, reserves and allowances, manufacturing, clinical trials and research and development costs, will depend on future developments that remain uncertain at this time, particularly as virus variants continue to spread. As events continue to evolve and additional information becomes available, the ~~three and nine months ended September 30, 2017 are not necessarily indicative of the results that~~Company’s estimates may ~~be expected for the fiscal year ending December 31, 2017 or any other period.~~

change materially in future periods.

Management performed an evaluation of the Company’s activities through the date of filing of this Quarterly Report on Form 10-Q, and has concluded that there were no subsequent events or transactions that occurred subsequent to the balance sheet date prior to filing this Quarterly Report on Form 10-Q that would require recognition or disclosure in the Condensed Consolidated Financial Statements.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, ~~2017,~~2021, as compared to the significant accounting policies disclosed in Note 3 – Summary of ~~the Consolidated Financial Statements~~Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

2020.

(4) RECENT ACCOUNTING PRONOUNCEMENTS

~~Except as described below, there~~

There have been no new accounting pronouncements adopted by the Company or ~~changes to~~new accounting pronouncements issued by the Financial Accounting Standards Board during the nine months ended September 30, ~~2017,~~2021, as compared to the recent accounting pronouncements described in Note 4 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, that the Company believes are of significance or potential significance to the Company.

~~Effective January, 1, 2018, the Company will adopt Accounting Standards Update (ASU) No. 2014-09 (ASU 2014-09),~~ ~~Revenue from Contracts with Customers, as amended (commonly referred to as ASC Topic 606), which provides principles for recognizing revenue to depict the transfer~~

Table of ~~promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.~~

As of September 30, 2017, the Company has not elected to early adopt ASC Topic 606 and plans to adopt the new standard using the modified retrospective method. The Company has formed a task force that is in the process of analyzing the Company’s customer contracts and the potential impacts the standard may have on previously reported revenues and future revenues. As the Company completes its analysis of the accounting for the Company’s customer contracts under the new revenue standard, management is assessing the required changes to the Company’s accounting policies, systems and internal control over financial reporting. Based on management’s preliminary analysis of the Company’s material contracts with customers, management does not anticipate that ASC Topic 606 will have a material impact on the timing of revenue recognition for the products that are marketed by the Company. Management is still assessing the application of ASC Topic 606 to Aldurazyme revenues earned from Genzyme Corporation (Genzyme).

~~In January 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-01 (ASU 2016-01),~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~. ASU 2016-01 changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, the update clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The guidance will become effective for the Company’s fiscal year beginning January 1, 2018 and must be adopted using a modified retrospective approach, with certain exceptions. Early adoption is permitted for certain provisions. The Company is currently evaluating the impact that the standard will have on its Consolidated Financial Statements. Management’s assessment indicates that the amendment will not have a significant impact as the Company currently has no significant equity investments, however, the update may have a significant impact in the future. As of September 30, 2017, the Company has not elected to early adopt the amendments of ASU 2016-01.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (ASU 2016-02). The amended guidance requires balance sheet recognition of lease right-of-use (ROU) assets and liabilities by lessees for leases classified as operating leases, with an option to not recognize lease ROU assets and lease liabilities for leases with a term of 12 months or less. The amendments also require new disclosures providing additional qualitative and quantitative information about the amounts recorded in the financial statements. Lessor accounting is largely unchanged. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, but, as of September 30, 2017, the Company has not made the election to do so. ASU 2016-02 will be effective for the Company’s fiscal year beginning January 1, 2019. The amendments require a modified retrospective approach with optional practical expedients.

As of September 30, 2017, the Company has formed a task force that is in the process of analyzing the Company’s lease contracts and the potential impacts the standard may have on its Consolidated Financial Statements and related disclosures. After completing the analysis of the accounting for the Company’s lease contracts under the amendments, management will assess the required changes to the Company’s accounting policies, systems and internal control over financial reporting. Based on management’s preliminary analysis, the Company anticipates the amendments may have a material impact on the Company’s Consolidated Balance Sheets due to the requirement to recognize lease ROU assets and corresponding liabilities related to leases on the Company’s Consolidated Balance Sheets, but they are not anticipated to have a material impact on the Company’s other Consolidated Financial Statements.

Contents~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting~~ (ASU 2017-09). The amendment provides clarification about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and early adoption is permitted. The Company has

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

~~elected to early adopt ASU 2017-09, which did not have a material impact on~~

(5) FINANCIAL INSTRUMENTS

All marketable securities were classified as available-for-sale at September 30, 2021 and December 31, 2020.

The following tables show the Company’s ~~Consolidated Financial Statements because the~~cash, cash equivalents and available-for-sale securities by significant investment category for each period presented:


	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-term Marketable Securities (1)		Long-term Marketable Securities (2)
Level 1:
Cash	$	294,209	$	—	$	—	$	294,209	$	294,209	$	—	$	—

Level 2:
Money market instruments	291,735		—		—		291,735		291,735		—		—
Corporate debt securities	560,004		1,230		(198)		561,036		703		177,468		382,865
U.S. government agency securities	210,444		416		(7)		210,853		12,999		161,207		36,647
Commercial paper	129,818		1		(1)		129,818		17,497		112,321		—
Asset-backed securities	55,182		26		(23)		55,185		—		8,272		46,913
Foreign and other	3,114		150		(6)		3,258		—		3,065		193
Subtotal	1,250,297		1,823		(235)		1,251,885		322,934		462,333		466,618
Total	$	1,544,506	$	1,823	$	(235)	$	1,546,094	$	617,143	$	462,333	$	466,618


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-term Marketable Securities (1)		Long-term Marketable Securities (2)
Level 1:
Cash	$	370,325	$	—	$	—	$	370,325	$	370,325	$	—	$	—

Level 2:
Money market instruments	264,833		—		—		264,833		264,833		—		—
Corporate debt securities	413,137		3,261		(8)		416,390		—		220,551		195,839

U.S. government agency securities	265,298		1,555		(1)		266,852		14,000		192,488		60,364
Asset-backed securities	31,659		85		(2)		31,742		—		3,189		28,553
Foreign and other	549		168		—		717		—		—		717
Subtotal	975,476		5,069		(11)		980,534		278,833		416,228		285,473
Total	$	1,345,801	$	5,069	$	(11)	$	1,350,859	$	649,158	$	416,228	$	285,473

(1) The Company’s ~~policies had already been~~short-term marketable securities mature in ~~compliance.~~

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives~~one year or less.

(2) The Company’s long-term marketable securities mature between one and ~~Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~ (ASU 2017-12). The amendment changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and presenting all items that affect earnings in the same income statement line as the hedged item. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. Although the Company is currently evaluating the impact that the standard will have on its Consolidated Financial Statements, adoption of the amendment is not expected to have a material impact due to the nature of the Company’s hedging activity. five years.

As of September 30, ~~2017, the Company has not elected to early adopt the amendments of ASU 2017-12.~~

~~(5) ACQUISITIONS~~

~~The Merck PKU Business~~

On October 1, 2015, the Company entered into a Termination and Transition Agreement with Ares Trading S.A. (Merck Serono), as amended and restated on December 23, 2015 (the A&R Kuvan Agreement), to terminate the Development, License and Commercialization Agreement, dated May 13, 2005, as amended (the License Agreement), between the Company and Merck Serono, including the license to Kuvan2021, the Company had ~~granted~~the ability and intent to ~~Merck Serono under~~hold all investments that were in an unrealized loss position until maturity. The Company considered its intent and ability to hold the ~~License Agreement. Also on October 1, 2015,~~securities until recovery of amortized cost basis, the ~~Company and Merck Serono entered into a Termination Agreement (the Pegvaliase Agreement)~~extent to ~~terminate the license to pegvaliase the Company had granted to Merck Serono under the License Agreement. On January 1, 2016, pursuant~~which fair value is less than amortized cost basis, conditions specifically related to the ~~A&R Kuvan Agreement~~security’s industry and ~~the Pegvaliase Agreement, the Company completed the acquisition from Merck Serono~~geography, payment structure and ~~its affiliates of certain rights~~history and other assets with respect to Kuvan and pegvaliase (the Merck PKU Business). As a result, the Company acquired all global rights to Kuvan and pegvaliase from Merck Serono, with the exception of Kuvan in Japan. Previously, the Company had exclusive rights to Kuvan in the U.S. and Canada and pegvaliase in the U.S. and Japan. ~~In connection with the acquisition of the~~ ~~Merck PKU Business, the Company recognized transaction costs of $0.6 million, of which $0.3 million was recognized in each of the years ended December 31, 2016 and 2015.~~

~~Pursuant~~changes to the ~~A&R Kuvan Agreement,~~ratings (if any) in determining that the ~~Company paid Merck Serono~~ ~~$374.5 million~~,decline in ~~cash, the majority of which was paid in January 2016, and~~fair value compared to carrying value is ~~obligated to pay Merck Serono up~~not related to a ~~maximum of~~ €~~60.0 million,~~credit loss.

The Company has certain investments in ~~cash, if future sales milestones~~non-marketable equity securities, measured using unobservable valuation inputs and remeasured on a nonrecurring basis, which are ~~met. Pursuant to the Pegvaliase Agreement, the Company is obligated to pay Merck Serono up to a maximum of~~ €125.0 million, in cash, if future development milestones are met. Merck Serono transferred certain inventory, regulatory materials and approvals, and intellectual property rights to the Company and will perform certain transition services for the Company.collectively considered strategic investments. As of December 31, 2016, the inventory acquired from Merck Serono had been sold through to customers. The Company and Merck Serono have no further rights or obligations under the License Agreement with respect to Kuvan or pegvaliase.

Prior to the consummation of the transactions described above, the Company sold Kuvan to Merck Serono at a price near its manufacturing costs, and Merck Serono resold the product to end-users outside the U.S., Canada and Japan. The royalty earned by the Company from Kuvan product sold by Merck Serono was included as a component of Net Product Revenues in the period earned.

Kuvan is a commercialized product for the treatment of patients with phenylketonuria (PKU) and/or for primary BH4 deficiency in certain countries. At the time of the acquisition, pegvaliase was in pivotal studies as a potential therapeutic option for adult patients with PKU. In March 2016, the Company announced that its pivotal Phase 3 PRISM-2 study of pegvaliase met the primary endpoint of change in blood Phe compared with placebo (p<0.0001); and the Company submitted a marketing application in the U.S. in June 2017 and announced its plans to submit an application for registration in the European Union (EU). Kuvan has Orphan Drug exclusivity in the EU until 2020, and pegvaliase has Orphan Drug designation in the U.S. and the EU.

The acquisition date fair value of the contingent acquisition consideration payments, Kuvan global marketing rights, with the exception of Japan, and pegvaliase in process research and development (IPR&D) acquired was estimated by applying a probability-based income approach utilizing an appropriate discount rate. This estimation was based on significant inputs that are not observable in the market, referred to as level 3 inputs. Key assumptions include a discount rate and various probability factors. The range of outcomes and assumptions used to develop these estimates has been updated to estimate the fair value of the contingent acquisition consideration payable as of September 30, ~~2017.~~ ~~See Note 13 to these Condensed Consolidated Financial Statements for additional~~

2021 and

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

~~discussion regarding fair value measurements of the contingent acquisition consideration payable included on the Company’s Condensed~~ ~~Consolidated~~ ~~Balance Sheet.~~

~~The following table presents the final allocation of the purchase consideration for the~~ ~~Merck PKU Business~~ acquisition, including the contingent acquisition consideration payable based on the acquisition date fair value. The allocation of the purchase price below reflects an inventory adjustment in the second quarter of 2016.

Cash payments

$
374,545

Estimated fair value of contingent acquisition consideration payable

138,974

Total consideration

$
513,519

Kuvan intangible assets

$
172,961

Pegvaliase IPR&D

326,359

Inventory

14,199

Total identifiable assets acquired

$
513,519

~~The amount allocated to the Kuvan intangible assets is considered to be finite-lived and will be amortized on a straight-line basis over its estimated useful life through 2024.~~

The amount allocated to acquired pegvaliase IPR&D is considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Company becomes aware of any events occurring or changes in circumstances that would indicate the reduction in the fair value of the IPR&D assets below their respective carrying amounts. When development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point. See Note 8 to these Condensed Consolidated Financial Statements for further discussion of the indefinite-lived intangible assets.

~~(6) NET LOSS PER COMMON SHARE~~

Potentially issuable shares of common stock include shares issuable upon the exercise of outstanding employee stock option awards, common stock issuable under the Company’s ESPP, unvested restricted stock units (RSUs), common stock held by the NQDC and contingent issuances of common stock related to convertible debt.

~~The following table sets forth the computation of basic and diluted earnings per common share (in thousands of common shares):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Numerator:

Net loss, basic

$
(12,527
)

$
(37,425
)

$
(65,650
)

$
(539,490
)
Less: gain on common stock held by the NQDC

—

—

—

1,753

Net loss, diluted

$
(12,527
)

$
(37,425
)

$
(65,650
)

$
(541,243
)
Denominator:

Weighted-average common shares outstanding, basic

175,103

167,714

174,071

163,963

Effect of dilutive securities:

Common shares held by the NQDC

—

—

—

253

Weighted-average common shares outstanding, diluted

175,103

167,714

174,071

164,216

Net loss per common share, basic

$
(0.07
)

$
(0.22
)

$
(0.38
)

$
(3.29
)
Net loss per common share, diluted

$
(0.07
)

$
(0.22
)

$
(0.38
)

$
(3.30
)

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

The table below presents potential shares of common stock that were excluded from the computation of basic and diluted earnings per common share as they were anti-dilutive using the if-converted or treasury stock method (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Options to purchase common stock

8,328

9,610

8,328

9,610

Common stock issuable under the 2017 Notes

—

1,105

—

1,105

Common stock issuable under the 2018 and 2020 Notes

7,966

7,966

7,966

7,966

Common stock issuable under the 2024 Notes

3,970

—

3,970

—

Unvested restricted stock units

2,923

2,728

2,923

2,728

Common stock potentially issuable for ESPP purchases

365

330

365

330

Common stock held by the NQDC

224

253

224

—

Total number of potentially issuable shares

23,776

21,992

23,776

21,739

The potential effect of the capped call transactions with respect to the Company’s 0.75% senior subordinated convertible notes due in 2018 (the 2018 Notes) and the Company’s 1.50% senior subordinated convertible notes due in 2020 (the 2020 Notes) was ~~excluded from the diluted net income/loss per share~~ as the Company’s closing stock price on September 30, 2017 and 2016 did not exceed the conversion price of $94.15 per share for the 2018 Notes and the 2020 Notes. There is no similar capped call transaction associated with the Company’s 0.599% senior subordinated convertible notes due in 2024 (the 2024 Notes). See Note 11 to these Condense Consolidated Financial Statements for information on the Company’s debt.

~~(7) AVAILABLE-FOR-SALE SECURITIES~~

~~All investments were classified as available-for-sale at September 30, 2017 and~~ December 31, 2016. The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s available-for-sale securities by major security type at September 30, 2017 and December 31, 2016 are summarized in the tables below:

Amortized Cost

Gross
Unrealized
Holding Gains

Gross
Unrealized
Holding Losses

Aggregate Fair
Value at
September 30, 2017

Corporate debt securities

$
762,462

$
413

$
(1,091
)

$
761,784

Commercial paper

28,039

—

—

28,039

U.S. government agency securities

434,533

2

(980
)

433,555

Foreign and other

18,525

123

(22
)

18,626

Total

$
1,243,559

$
538

$
(2,093
)

$
1,242,004

Amortized Cost

Gross
Unrealized
Holding Gains

Gross
Unrealized
Holding Losses

Aggregate Fair
Value at
December 31, 2016

Certificates of deposit

$
2,800

$
—

$
—

$
2,800

Corporate debt securities

641,670

329

(2,282
)

639,717

Commercial paper

16,075

—

—

16,075

U.S. government agency securities

310,635

37

(747
)

309,925

Foreign and other

48

86

—

134

Total

$
971,228

$
452

$
(3,029
)

$
968,651

As of December 31, 2016, the Company had one investment in marketable equity securities, measured using quoted prices in its active market, which was considered a strategic investment. In the first quarter of 2017, the strategic investment was sold for a realized gain of $3.3 million. As of December 31, 2016,2020, the fair value of the Company’s ~~marketable equity securities~~strategic investments was ~~$4.1 million, which included an unrealized gain of $2.3~~$16.3 million and ~~was~~$10.5 million, respectively. These investments were recorded in Other Assets in the Company’s Condensed Consolidated Balance ~~Sheet.~~

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands~~Sheets.

(6) SUPPLEMENTAL BALANCE SHEET INFORMATION

Inventory consisted of ~~U.S. dollars, except per share amounts or~~the following:


	September 30, 2021		December 31, 2020
Raw materials	$	75,328	$	76,673
Work-in-process	412,434		308,286
Finished goods	261,644		313,589
Total inventory	$	749,406	$	698,548

Inventory as ~~otherwise disclosed)~~

~~The fair values of available-for-sale securities by contractual maturity were as follows:~~

September 30,

December 31,

2017

2016

Maturing in one year or less

$
825,700

$
395,940

Maturing after one year through five years

416,304

572,711

Total

$
1,242,004

$
968,651

Impairment assessments are made at the individual security level each reporting period. When the fair value of an investment is less than its cost at the balance sheet date, a determination is made as to whether the impairment is other-than-temporary and, if it is other-than-temporary, an impairment loss is recognized in earnings equal to the difference between the investment’s amortized cost and fair value at such date. As of September 30, ~~2017, some~~2021 included $4.8 million of Voxzogo pre-launch manufacturing-related costs incurred during the ~~Company’s investments were in an unrealized loss position,~~third quarter of 2021 that are intended for the U.S. Voxzogo, which the Company considers temporary in nature. The Company has the ability and intent to hold all investments that have been in a continuous loss position until maturity or recovery, thus no other-than-temporary impairment is deemed to have occurred.

~~See Note 13 to these Condensed Consolidated Financial Statements for additional discussion regarding the fair value of the Company’s available-for-sale securities.~~

~~(8) INTANGIBLE ASSETS~~

~~Intangible assets consisted of the following:~~

September 30,

December 31,

2017

2016

Intangible assets:

Finite-lived intangible assets

$
303,297

$
305,122

Indefinite-lived intangible assets

332,199

332,199

Gross intangible assets:

635,496

637,321

Accumulated amortization

(104,539
)

(83,541
)
Net carrying value

$
530,957

$
553,780

~~Indefinite-Lived Intangible Assets~~

Intangible assets related to IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Company becomes aware of any events occurring or changes in circumstances that would indicate a reductionwas granted marketing approval in the ~~fair value of the IPR&D assets below their respective carrying amounts. If and when development~~EU on August 27, 2021, is ~~complete, which generally occurs if and when regulatory approval to market~~still a product ~~is obtained,~~candidate in other regions, including the ~~associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.~~

During the second quarter of 2016, the Company recorded impairment charges of $574.1 million based on the status of development efforts. These impairments reduced the remaining book value of certain IPR&D assets to zero due to the termination of the Kyndrisa and other exon programs. During the second quarter of 2016, the Company also recognized an impairment charge of $25.0 million related to the reveglucosidase alfa IPR&D assets due to the decision to terminate that development program. When a triggering event occurs, management evaluates both IPR&D assets and goodwill for possible impairments. Although management concluded these IPR&D assets were impaired as of June 30, 2016, management determined that goodwill was not impaired as of June 30, 2016. Because the Company’s single reporting unit is the consolidated entity, management compares the total carrying value of the single reporting unit, including goodwill, to the fair value of the reporting unit, as evidenced by the Company’s market capitalization. As of June 30, 2016, the Company’s capitalization exceeded the carrying value of its single reporting unit supporting management’s conclusion that goodwill was not impaired.

In July 2017, the Company executed a license agreement and a settlement agreement (the Agreements) with Sarepta Therapeutics (Sarepta) that provide Sarepta with global exclusive rights to our Duchenne muscular dystrophy (DMD) patent estate for EXONDYS 51 and all future exon-skipping products. The Agreements resolved the ongoing worldwide patent proceedings related to

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of~~ U.S. ~~dollars, except per share amounts or as otherwise disclosed)~~

~~the use of EXONDYS 51 and all future exon-skipping products~~, for the treatment of ~~DMD. Pursuant to~~achondroplasia in children, the ~~Agreements, Sarepta paid~~most common form of disproportionate short stature in humans. The Company must receive marketing approval from the ~~Company a one-time upfront fee of $35.0 million, which was recognized as license revenue. Under~~U.S. Food and Drug Administration (FDA) before the Agreements, Sarepta may pay certain additional regulatory and commercial milestone fees for exons 51, 45, 53 and possibly on future exon-skipping products to the Company if certain development and sales milestones are achieved. Additionally, Sarepta will pay the Company royalties based on 5% of net salesVoxzogo inventory can be sold commercially in the U.S. ~~through~~Starting in 2021, the ~~end~~Company believed that material uncertainties related to the ultimate regulatory approval of ~~2023 and 8%~~Voxzogo had been significantly reduced. A number of ~~net sales through September 30, 2024~~factors were taken into consideration, including the current status in the EUdrug development process, pivotal clinical trial results for the underlying product candidate, results from meetings with the relevant regulatory authorities, historical experience, as well as potential impediments to the approval process such as product safety or efficacy, as well as commercialization and in other countries where certain of the Company’s patents exist. The Company retained the right to convert the license to a co-exclusive right in the event it decides to proceed with an exon-skipping therapy for DMD.

marketplace trends.

See Note ~~7 to the Consolidated Financial Statements~~ 3 – Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 for additional information related to the Company’s ~~intangible assets.~~

~~(9) PROPERTY, PLANT AND EQUIPMENT~~

policies on inventory produced prior to regulatory approval.

Property, ~~plant~~Plant and ~~equipment, net~~Equipment, Net consisted of the following:

September 30,

December 31,

2017

2016

Building and improvements

$
636,697

$
510,805

Manufacturing and laboratory equipment

284,269

242,899

Computer hardware and software

139,241

129,506

Leasehold improvements

43,900

44,184

Furniture and equipment

29,451

27,229

Land improvements

4,881

4,881

Land

62,702

55,412

Construction-in-progress

68,204

126,446

1,269,345

1,141,362

Accumulated depreciation

(390,721
)

(342,594
)
Total property, plant and equipment, net

$
878,624

$
798,768


	September 30, 2021		December 31, 2020
Property, plant and equipment, gross	$	1,724,702	$	1,668,066
Accumulated depreciation	(699,915)		(635,595)
Total property, plant and equipment, net	$	1,024,787	$	1,032,471

~~The construction-in-process balance primarily includes costs related to the Company’s significant in-process projects at its facilities in Marin County, California, and in Shanbally, Ireland.~~

Depreciation expense, net of amounts capitalized into inventory, for the three and nine months ended September 30, ~~2017~~2021 was ~~$19.4~~$11.4 million and ~~$54.8~~$35.7 million, ~~respectively,~~respectively. Depreciation expense, net of ~~which $6.1 million and $17.9 million, respectively, was~~amounts capitalized into ~~inventory. Depreciation expense~~inventory, for the three and nine months ended September 30, ~~2016~~2020 was ~~$23.2~~$11.1 million and ~~$56.1~~$31.1 million, respectively, of which $4.4 million and $13.4 million, respectively, was capitalized into inventory. Capitalized interest related to the Company’s property, plant and equipment purchases for each of the three and nine months ended September 30, 2017 and 2016 was insignificant.

~~(10) SUPPLEMENTAL BALANCE SHEET INFORMATION~~

~~Inventory~~respectively.

Intangible Assets, Net consisted of the following:

September 30,

December 31,

2017

2016

Raw materials

$
48,355

$
51,250

Work-in-process

262,840

167,788

Finished goods

146,198

136,088

Total inventory

$
457,393

$
355,126


	September 30, 2021		December 31, 2020
Finite-lived intangible assets	$	661,781	$	644,087
Less: Accumulated amortization	(273,294)		(226,816)
Net carrying value	$	388,487	$	417,271

~~In the third quarter~~

Table of 2016, process qualification production activities commenced in the Company’s Shanbally facility related to the Brineura manufacturing process. As of September 30, 2017, the value of the Shanbally qualification campaign was $25.4 million, which was capitalized into inventory because the product is expected to be sold commercially. While the Company believes it is unlikely that the manufacturing process will not be approved for Brineura, should that occur, the value of the inventory would be expensed at that time.

Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

Accounts Payable and Accrued Liabilities consisted of the following:

	September 30,		December 31,
	2017		2016			September 30, 2021		December 31, 2020
Accounts payable and accrued operating expenses	$	157,024	$	191,353	Accounts payable and accrued operating expenses	$	203,321	$	191,429
Accrued compensation expense		100,481		109,038	Accrued compensation expense	158,130		165,023
Accrued rebates payable		38,321		34,737	Accrued rebates payable	68,329		65,526
Accrued royalties payable		16,419		15,151	Accrued royalties payable	14,512		17,155
Lease liabilities					Lease liabilities	9,659		11,754
Forward foreign currency exchange contracts					Forward foreign currency exchange contracts	5,323		17,798
Value added taxes payable		10,577		7,848	Value added taxes payable	1,412		9,562
Forward foreign currency exchange contracts		14,428		5,201
Deferred Revenue		17,430		985
Accrued income taxes					Accrued income taxes	564		9,661
Other		10,240		6,192	Other	5,461		4,640
Total accounts payable and accrued liabilities	$	364,920	$	370,505	Total accounts payable and accrued liabilities	$	466,711	$	492,548

~~(11) DEBT~~

~~Convertible Notes~~

~~In August 2017, the~~

(7) FAIR VALUE MEASUREMENTS

The Company ~~issued $495.0 million~~measures certain financial assets and liabilities at fair value in ~~aggregate principal amount of senior subordinated convertible notes with a maturity date of August 1, 2024. T~~he ~~2024 Notes~~ ~~were issued to the public at 98% of face value and bear interest at the rate of 0.599% per annum. Interest is payable semi-annually in cash~~ ~~on February 1 and August 1 of each year, beginning February 1, 2018. The 2024 Notes are convertible, at the option of the holder i~~nto shares of the Company’s common stock. The initial conversion rate for the 2024 Notes is 8.0212 shares per $1,000 principal amount of the 2024 Notes, which represents a conversion price of approximately $124.67 per share, subject to adjustment under certain conditions. Following certain corporate transactions, the Company will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2024 Notes in connection with such corporate transactions by a number of additional shares of the Company’s common stock. A holder may convert fewer than all of such holder’s 2024 Notes so long as the amount of the 2024 Notes converted is an integral multiple of $1,000 principal amount. Net proceeds from the offering were $481.7 million.

The 2024 Notes are senior subordinated, unsecured obligations, and rank (i) subordinated in right of payment to the prior payment in full of any of the Company’s existing and future senior debt, (ii) equal in right of payment to any of the Company’s existing and future senior subordinated debt, (iii) senior in right of payment to any of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2024 Notes, and (iii) effectively subordinated to any of the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness and structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. Upon the occurrence of a “fundamental change,” as defined in the indenture governing the 2024 Notes, the holders may require the Company to repurchase all or a portion of such holder’s 2024 Notes for cash at 100% of the principal amount of the 2024 Notes being purchased, plus any accrued and unpaid interest.

~~In connection~~accordance with the ~~issuance~~policy described in Note 3 – Summary of the 2024 Notes, the Company recorded a discount on the 2024 Notes of $9.9 million, which will be accreted and recorded as additional interest expense over the life of the 2024 Notes. During each of the three and nine months ended September 30, 2017, the Company recognized $0.2 million of debt discount accretion. The Company also incurred $3.4 million of issuance costs. These costs were deferred and are being amortized over the life of the 2024 Notes and recorded as additional interest expense. During each of the three and nine months ended September 30, 2017, the Company recognized $0.1 million of amortization of deferred issuance costs related to the 2024 Notes.

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

~~The following table summarizes information regarding the Company’s convertible debt:~~

September 30,

December 31,

2017

2016

Convertible Notes due in 2017

$
—

$
22,503

Unamortized deferred offering costs

—

(25
)
Convertible Notes due in 2017, net

—

22,478

Convertible Notes due in 2018

374,980

374,980

Unamortized discount

(16,329
)

(27,566
)
Unamortized deferred offering costs

(2,030
)

(3,484
)
Convertible Notes due in 2018, net

356,621

343,930

Convertible Notes due in 2020

374,993

374,993

Unamortized discount

(43,593
)

(53,239
)
Unamortized deferred offering costs

(3,954
)

(4,923
)
Convertible Notes due in 2020, net

327,446

316,831

Convertible Notes due in 2024

495,000

—

Unamortized discount

(9,707
)

—

Unamortized deferred offering costs

(3,324
)

—

Convertible Notes due in 2024, net

481,969

—

Total convertible debt, net

$
1,166,036

$
683,239

Fair value of fixed rate convertible debt

Convertible Notes due in 2017 ⁽¹⁾

$
—

$
90,977

Convertible Notes due in 2018 ⁽¹⁾

417,956

423,202

Convertible Notes due in 2020 ⁽¹⁾

454,334

442,754

Convertible Notes due in 2024 ⁽¹⁾

502,960

—

Total

$
1,375,250

$
956,933

~~(1)~~

~~The fair value of the Company’s fixed rate convertible debt is based on open market trades and is classified as Level 1 in the fair value hierarchy.~~

~~Interest expense on the Company’s convertible debt consisted of the following:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Coupon interest

$
2,692

$
2,466

$
7,250

$
7,491

Amortization of issuance costs

1,138

826

2,910

2,476

Accretion of debt discount

7,054

6,688

20,883

19,800

Total interest expense on convertible debt

$
10,884

$
9,980

$
31,043

$
29,767

In April 2017, the Company’s 1.875% senior subordinated convertible notes due in 2017 (the 2017 Notes) matured, with holders thereof converting $22.5 million of the 2017 Notes prior to the maturity date into 1,103,704 shares of the Company’s common stock. During three and nine months ended September 30, 2016, certain existing holders of the Company’s 2017 Notes elected to convert $2.0 million and $8.9 million, respectively, in aggregate principal amount of the 2017 Notes into 97,348 and 438,315 shares of the Company’s common stock, respectively.

~~See Note 13 to the Consolidated Financial Statements~~Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016 for additional information related to~~2020.

The following tables present the classification within the fair value hierarchy of financial assets and liabilities not disclosed elsewhere in these Condensed Consolidated Financial Statements that are remeasured on a recurring basis as of September 30, 2021 and December 31, 2020. Other than the Company’s fixed-rate convertible ~~debt.~~

debt disclosed in Note 9 – Debt, there were no financial assets or liabilities that were remeasured using a quoted price in active markets for identical assets (Level 1) as of September 30, 2021 or December 31, 2020.


	Fair Value Measurements as of September 30, 2021
		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Other current assets:
NQDC Plan assets		$	2,089	$	—	$	2,089

Other assets:
NQDC Plan assets		22,521		—		22,521
Restricted investments (1)		2,835		—		2,835
Total other assets		25,356		—		25,356
Total assets		$	27,445	$	—	$	27,445
Liabilities:
Current liabilities:
NQDC Plan liability		$	2,089	$	—	$	2,089
Contingent consideration		—		48,187		48,187
Total current liabilities		2,089		48,187		50,276
Other long-term liabilities:
NQDC Plan liability		22,521		—		22,521
Contingent consideration		—		15,204		15,204
Total other long-term liabilities		22,521		15,204		37,725
Total liabilities		$	24,610	$	63,391	$	88,001

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

~~Revolving Credit Facility~~

~~In November 2016, the Company entered into a credit agreement (the Credit Agreement) with Bank of America, N.A., as the administrative agent, swing line lender and letter of credit issuer.~~


	Fair Value Measurements as of December 31, 2020
	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Other current assets:
NQDC Plan assets	$	2,415	$	—	$	2,415


Other assets:
NQDC Plan assets	19,962		—		19,962
Restricted investments (1)	4,487		—		4,487

Total other assets	24,449		—		24,449
Total assets	$	26,864	$	—	$	26,864
Liabilities:
Current liabilities:
NQDC Plan liability	$	2,415	$	—	$	2,415


Other long-term liabilities:
NQDC Plan liability	19,962		—		19,962
Contingent consideration	—		60,130		60,130
Total other long-term liabilities	19,962		60,130		80,092
Total liabilities	$	22,377	$	60,130	$	82,507

(1) The Credit Agreement provides for up to $100.0 million in revolving loans (the Revolving Credit Facility), a $10.0 million letter of credit subfacility and a $15.0 million swing line loan subfacility. The maturity date of the Revolving Credit Facility will occur on November 29, 2018. Interest on any outstanding balance of the Revolving Credit Facility is payable quarterly and draws may be voluntary prepaidrestricted investments at any time without penalty. In connection with entering into the Credit Agreement, $0.6 million in financing costs were incurred and will be amortized as Interest Expense over the term of the Credit Agreement. As of September 30, ~~2017~~2021 and December 31, ~~2016, there~~2020 secure the Company's irrevocable standby letters of credit obtained in connection with certain commercial agreements.

There were no ~~outstanding amounts due under~~transfers between levels during the ~~Revolving Credit Facility.~~

~~In connection with the Revolving Credit Facility, the Company~~three and certain of its subsidiaries are required to comply with covenants, including, among other things, restrictions on the Company’s and such subsidiaries’ ability to incur additional indebtedness, dispose of its assets, incur liens, make investments, and pay dividends or other distributions, in each case subject to specified exceptions. The Credit Agreement also contains customary indemnification obligations and customary events of default. If the Company’s Global Liquidity, which is defined as the sum of the market value of unrestricted cash, marketable securities and other assets to the extent constituting “cash and cash equivalents,” “short-term investments” or “long-term investments” as reflected in the Company’s Condensed Consolidated Balance Sheet, in each case, held by the Company or certain of the Company’s subsidiaries at such time, regardless of where such assets are domiciled, falls below $225.0 million at the end of any month or at the time of any borrowing or issuance of a letter of credit under the Revolving Credit Facility, then the Company’s obligations under the Credit Agreement will also be secured by the assets held by the Company in the custody account, which was established in the first quarter of 2017. As ofnine months ended September 30, ~~2017, the Company and certain~~2021.

Liabilities measured at fair value using Level 3 inputs primarily consisted of ~~its subsidiaries that serve as guarantors were in compliance with all covenants.~~

~~(12)~~contingent consideration. The following tables represent a roll-forward of contingent consideration.


Contingent consideration as of December 31, 2020	$	60,130
Changes in the fair value of contingent consideration	6,254
Foreign exchange remeasurement of Euro denominated contingent consideration	(2,993)
Contingent consideration as of September 30, 2021	$	63,391

(8) DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

The Company uses ~~forward~~ foreign currency exchange forward contracts (forward contracts) to hedge certain operational exposures resulting from potential changes in foreign currency exchange rates. Such exposures result from portions of the Company’s forecasted revenues and operating expenses being denominated in currencies other than the U.S. dollar, primarily the Euro.

The Company designates certain of these forward foreign currency exchange contracts as hedging instruments and enters into some forward foreign currency exchange contracts that are considered to be economic hedges that are not designated as hedging instruments. Whether designated or undesignated, these forward foreign currency exchange contracts protect against the reduction in value of forecasted foreign currency cash flows resulting from product revenues, royalty revenues operating expenses and asset or liability positions designated in currencies other than the U.S. dollar. The fair values of forward foreign currency exchange contracts are estimated using current exchange rates and interest rates, and take into consideration the current creditworthiness of the counterparties or the Company, as applicable. Information regarding the specific instruments used by the Company to hedge its exposure to foreign currency exchange rate fluctuations is provided below. See Note 13 to these Condensed Consolidated Financial Statements for additional discussion regarding the fair value of forward foreign currency exchange contracts.

~~The Company enters into forward foreign currency exchange contracts in order to protect against the fluctuations in revenue~~ and operating expenses associated with foreign currency-denominated cash flows. The Company has formally designated these forward foreign currency exchange contracts as cash flow hedges and expects them to be highly effective in offsetting fluctuations in operating expenses denominated in Euros and revenues denominated in currencies other than the U.S. ~~dollar related~~Dollar (USD), primarily the Euro. Certain of these forward contracts are designated as cash flows hedges and have maturities of up to ~~changes in foreign currency exchange rates.~~

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

~~The following table summarizes the Company’s designated forward foreign currency exchange contracts outstanding as of September 30, 2017 (notional amounts in millions):~~

Aggregate Notional

Number of

Amount in

Foreign Exchange Contracts

Contracts

Foreign Currency

Maturity
Brazilian Reais – Sell

2

33.0

Oct. 2017
Canadian Dollars – Sell

6

6.1

Oct. 2017 - Dec. 2017
Colombian Pesos – Sell

3

15,576.0

Oct. 2017 - Dec. 2017
Euros – Purchase

72

116.7

Oct. 2017 - Sep. 2020
Euros – Sell

304

381.9

Oct. 2017 - Sep. 2020
Total

387

The maximum length of time over which the Company is hedging its exposure to the reduction in value of forecasted foreign currency revenues through forward foreign currency exchange contracts is through September 2020. Over the next twelve months, the Company expects to reclassify unrealized losses of $12.9 million from accumulated other comprehensive income (loss) to earnings as the forecasted revenue and operating expense transactions occur.

two years. The Company also enters into forward contracts to manage foreign ~~currency~~ exchange risk related to asset or liability positions denominated in currencies other than USD. Such forward contracts ~~that~~are considered to be economic hedges, are not designated as ~~hedges for accounting purposes.~~hedging instruments and have maturities of up to three months. The changes in fair value of these forward foreign currency exchange contracts are included as a part of selling, general and administrative (SG&A) expense in the Company’s Condensed Consolidated Statements of Comprehensive Loss.

~~The following table summarizes the Company’s non-designated forward foreign currency exchange contracts outstanding as of September 30, 2017 (notional amounts in millions):~~

Aggregate Notional

Number of

Amount in

Foreign Exchange Contracts

Contracts

Foreign Currency

Maturity
Brazilian Reais – Purchase

1

33.0

Oct. 2017
British Pounds – Sell

1

5.2

Oct. 2017
Euros – Purchase

4

109.8

Oct. 2017
Total

6

~~The fair value carrying amounts of the Company’s~~Company does not use derivative instruments ~~were as follows:~~

Asset Derivatives

Liability Derivatives

September 30, 2017

September 30, 2017

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Forward foreign currency exchange contracts

Other current assets

$
3,096

Accounts payable and accrued liabilities

$
14,428

Forward foreign currency exchange contracts

Other assets

4,414

Other long- term liabilities

11,380

Total

7,510

25,808

Derivatives not designated as hedging instruments:

Forward foreign currency exchange contracts

Other current assets

1,139

Accounts payable and accrued liabilities

—

Total

1,139

—

Total value of derivative contracts

$
8,649

$
25,808

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

Asset Derivatives

Liability Derivatives

December 31, 2016

December 31, 2016

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Forward foreign currency exchange contracts

Other current assets

$
13,048

Accounts payable and accrued liabilities

$
5,176

Forward foreign currency exchange contracts

Other assets

8,194

Other long- term liabilities

2,342

Total

21,242

7,518

Derivatives not designated as hedging instruments:

Forward foreign currency exchange contracts

Other current assets

964

Accounts payable and accrued liabilities

25

Total

964

25

Total value of derivative contracts

$
22,206

$
7,543

~~The effect of the Company’s derivative instruments on the Condensed Consolidated Financial Statements~~ for ~~the three and nine months ended September 30, 2017 and 2016 was as follows:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Derivatives Designated as Hedging Instruments:

Net gain (loss) recognized in accumulated other
comprehensive loss ⁽¹⁾

$
(10,569
)

$
(1,984
)

$
(33,933
)

$
(5,857
)
Net gain (loss) reclassified from accumulated
other comprehensive income (loss) into earnings⁽²⁾

(3,700
)

1,486

(489
)

4,616

Net gain recognized in net loss ⁽³⁾

689

9

2,395

5,276

Derivatives Not Designated as Hedging Instruments:

Net gain (loss) recognized in net loss⁽⁴⁾

$
1,655

$
826

$
7,286

$
(2,446
)

~~(1)~~

~~Net change in the fair value of the effective portion classified as accumulated other comprehensive income (loss).~~

~~(2)~~

~~Effective portion classified as Net Product Revenues and SG&A expense.~~

~~(3)~~

~~Ineffective portion and amount excluded from effectiveness testing classified as SG&A expense.~~

~~(4)~~

~~Classified as SG&A expense.~~

speculative trading purposes. The Company is exposed to counterparty credit risk on ~~all of~~ its ~~derivative financial instruments.~~derivatives. The Company has established and maintains strict counterparty credit guidelines and enters into ~~hedges only~~hedging

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

agreements with financial institutions that are investment grade or better to minimize the Company’s exposure to potential defaults. The Company ~~does~~is not ~~require~~required to pledge collateral ~~to be pledged~~ under these agreements.

The following table summarizes the aggregate notional amounts for the Company’s derivatives outstanding as of the periods presented.


Foreign Exchange Contracts	September 30, 2021		December 31, 2020
Derivatives designated as hedging instruments:
Sell	$	654,516	$	782,327
Purchase	$	168,080	$	189,540

Derivatives not designated as hedging instruments:
Sell	$	77,040	$	98,343
Purchase	$	37,285	$	12,277

The fair value carrying amounts of the Company’s derivatives, as classified within the fair value hierarchy, were as follows:


Balance Sheet Location	September 30, 2021		December 31, 2020
Derivatives designated as hedging instruments:
Asset Derivatives - Level 2 (1)
Other current assets	$	11,883	$	6,268
Other assets	4,320		3,148
Subtotal	$	16,203	$	9,416

Liability Derivatives - Level 2 (1)
Accounts payable and accrued liabilities	$	5,257	$	17,551
Other long-term liabilities	1,486		11,020
Subtotal	$	6,743	$	28,571

Derivatives not designated as hedging instruments:
Asset Derivatives - Level 2 (1)
Other current assets	$	252	$	84


Liability Derivatives - Level 2 (1)
Accounts payable and accrued liabilities	$	66	$	247



Total Derivatives Assets	$	16,455	$	9,500
Total Derivatives Liabilities	$	6,809	$	28,818

(1) For additional discussion of fair value measurements, see Note 3 – Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The following tables summarize the impact of gains and losses from the Company's derivatives on its Condensed Consolidated Statements of Comprehensive Income (Loss) for the periods presented.

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

~~(13) FAIR VALUE MEASUREMENTS~~

~~The~~


	Three Months Ended September 30,
	2021				2020
Derivatives Designated as Cash Flow Hedging Instruments			Cash Flow Hedging Gains (Losses) Reclassified into Earnings				Cash Flow Hedging Gains (Losses) Reclassified into Earnings

Net product revenues as reported	$	393,840	$	401	$	460,741	$	2,693
Operating expenses as reported	$	461,961	$	(268)	$	532,725	$	(815)

Derivatives Not Designated as Hedging Instruments			Gains (Losses) Recognized in Earnings				Gains (Losses) Recognized in Earnings
Operating expenses			$	1,302			$	4,166


	Nine Months Ended September 30,
	2021				2020
Derivatives Designated as Cash Flow Hedging Instruments			Cash Flow Hedging Gains (Losses) Reclassified into Earnings				Cash Flow Hedging Gains (Losses) Reclassified into Earnings

Net product revenues as reported	$	1,348,279	$	(5,034)	$	1,368,816	$	17,301
Operating expenses as reported	$	1,412,926	$	81	$	1,400,263	$	(4,274)

Derivatives Not Designated as Hedging Instruments			Gains (Losses) Recognized in Earnings				Gains (Losses) Recognized in Earnings
Operating expenses			$	2,310			$	9,600

As of September 30, 2021, the Company ~~measures certain financial assets~~expects to reclassify unrealized gains of $6.2 million from Accumulated Other Comprehensive Income (AOCI) to earnings as the forecasted revenues and ~~liabilities at fair value on a recurring basis, including available-for-sale fixed income securities and foreign currency derivatives. The tables below present~~operating expense transactions occur over the ~~fair value~~next 12 months. For additional discussion of ~~these financial assets and liabilities determined using the following input levels.~~

balances in AOCI see Note 10 – Accumulated Other Comprehensive Income.

Fair Value Measurements at September 30, 2017

Quoted Price in
Active Markets
For Identical
Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

Assets:

Cash and cash equivalents:

Money market instruments

$
—

$
223,845

$
—

$
223,845

Total cash and cash equivalents

—

223,845

—

223,845

Available-for-sale securities:

Short-term:

Corporate debt securities

—

444,966

—

444,966

Commercial paper

—

28,039

—

28,039

U.S. government agency securities

—

334,241

—

334,241

Foreign and other

—

18,454

—

18,454

Long-term:

Corporate debt securities

—

316,818

—

316,818

U.S. government agency securities

—

99,314

—

99,314

Foreign and other

—

172

—

172

Total available-for-sale securities

—

1,242,004

—

1,242,004

Other current assets:

NQDC Plan assets

—

1,226

—

1,226

Forward foreign currency exchange contract⁽¹⁾

—

4,235

—

4,235

Restricted investments ⁽²⁾

—

14,878

—

14,878

Total other current assets

—

20,339

—

20,339

Other assets:

NQDC Plan assets

—

11,272

—

11,272

Forward foreign currency exchange contract⁽¹⁾

—

4,414

—

4,414

Total other assets

—

15,686

—

15,686

Total assets

$
—

$
1,501,874

$
—

$
1,501,874

Liabilities:

Current liabilities:

NQDC Plan liability

$
2,635

$
1,226

$
—

$
3,861

Forward foreign currency exchange contract⁽¹⁾

—

14,428

—

14,428

Contingent acquisition consideration payable

—

—

52,609

52,609

Total current liabilities

2,635

15,654

52,609

70,898

Other long-term liabilities:

NQDC Plan liability

$
18,405

$
11,272

—

29,677

Forward foreign currency exchange contract⁽¹⁾

—

11,380

—

11,380

Contingent acquisition consideration payable

—

—

126,790

126,790

Total other long-term liabilities

18,405

22,652

126,790

167,847

Total liabilities

$
21,040

$
38,306

$
179,399

$
238,745

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

Fair Value Measurements at December 31, 2016

Quoted Price in
Active Markets
For Identical
Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

Assets:

Cash and cash equivalents:

Money market instruments

$
—

$
235,571

$
—

$
235,571

Corporate debt securities

—

8,593

—

8,593

U.S. government agency securities

—

6,000

—

6,000

Total cash and cash equivalents

—

250,164

—

250,164

Available-for-sale securities:

Short-term:

Certificates of deposit

—

2,800

—

2,800

Corporate debt securities

—

193,974

—

193,974

Commercial paper

—

16,075

—

16,075

U.S. government agency securities

—

168,498

—

168,498

Long-term:

Corporate debt securities

—

437,150

—

437,150

U.S. government agency securities

—

135,427

—

135,427

Greek government-issued bonds

—

134

—

134

Total available-for-sale securities

—

954,058

—

954,058

Other current assets:

NQDC Plan assets

—

163

—

163

Forward foreign currency exchange contract⁽¹⁾

—

14,012

—

14,012

Restricted investments ⁽²⁾

—

3,754

—

3,754

Total other current assets

—

17,929

—

17,929

Other assets:

NQDC Plan assets

—

9,121

—

9,121

Forward foreign currency exchange contract⁽¹⁾

—

8,194

—

8,194

Strategic investment ⁽³⁾

4,064

—

—

4,064

Total other assets

4,064

17,315

—

21,379

Total assets

$
4,064

$
1,239,466

$
—

$
1,243,530

Liabilities:

Current liabilities:

NQDC Plan liability

$
2,073

$
163

$
—

$
2,236

Forward foreign currency exchange contract⁽¹⁾

—

5,201

—

5,201

Contingent acquisition consideration payable

—

—

46,327

46,327

Total current liabilities

2,073

5,364

46,327

53,764

Other long-term liabilities:

NQDC Plan liability

17,303

9,121

—

26,424

Forward foreign currency exchange contract⁽¹⁾

—

2,342

—

2,342

Contingent acquisition consideration payable

—

—

115,310

115,310

Total other long-term liabilities

17,303

11,463

115,310

144,076

Total liabilities

$
19,376

$
16,827

$
161,637

$
197,840

~~(1)~~

~~See Note 12 to these Condensed Consolidated Financial Statements for further information regarding the derivative instruments.~~

(9) DEBT

~~(2)~~

~~The restricted investments at September 30, 2017 and December 31, 2016 secure the Company’s irrevocable standby letter of credit obtained in connection with certain commercial agreements.~~

Convertible Notes

As of September 30, 2021, the Company had outstanding fixed-rate notes with varying maturities for an undiscounted aggregate principal amount of $1.1 billion (collectively the Notes). The Notes are senior subordinated convertible obligations, and interest is payable in arrears, semi-annually. The following table summarizes information regarding the Company’s convertible debt:


	September 30, 2021		December 31, 2020
1.25% senior subordinated convertible notes due in May 2027 (the 2027 Notes)	$	600,000	$	600,000
Unamortized discount net of deferred offering costs	(11,478)		(12,995)
2027 Notes, net	588,522		587,005

0.599% senior subordinated convertible notes due in August 2024 (the 2024 Notes)	495,000		495,000
Unamortized discount net of deferred offering costs	(5,429)		(6,860)
2024 Notes, net	489,571		488,140

Total convertible debt, net	$	1,078,093	$	1,075,145

Fair value of fixed rate convertible debt (1):
2027 Notes	$	600,858	$	627,090
2024 Notes	510,954		530,714
Total fair value of fixed rate convertible debt	$	1,111,812	$	1,157,804

(1) The fair value of the Company’s fixed-rate convertible debt is based on open market trades and is classified as Level 1 in the fair value hierarchy. For additional discussion of fair value measurements, see Note 3 – Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Interest expense on the Company’s convertible debt consisted of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Coupon interest expense	$	2,617	$	4,255	$	7,849	$	9,443
Accretion of discount on convertible notes	835		4,696		2,503		13,201
Amortization of debt issuance costs	148		535		445		1,565
Total interest expense on convertible debt	$	3,600	$	9,486	$	10,797	$	24,209

See Note 13 - Debt included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional information related to the Company’s convertible debt.

Revolving Credit Facility

In October 2018, the Company entered into an unsecured revolving credit facility of up to $200.0 million which includes a letter of credit subfacility and a swingline loan subfacility. The credit facility is intended to finance ongoing working capital needs and for other general corporate purposes. In May 2021, the Company entered into an amendment agreement in respect of the credit facility, extending the maturity date from October 19, 2021 to May 28, 2024, among other changes. The amended credit facility contains financial covenants including a maximum leverage ratio and a minimum interest coverage ratio. As of September 30, 2021, there were no amounts outstanding under the credit facility and the Company and certain of its subsidiaries that serve as guarantors were in compliance with all covenants.

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

~~(3)~~

The Company had investments in marketable equity securities measured using quoted prices in an active market that were considered strategic investments. See Note 7 to these Condensed Consolidated Financial Statements for additional discussion regarding the Company’s strategic investment.

~~There were no transfers between levels during the three and nine months ended September 30, 2017.~~

The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

The Company validates the prices provided by its third-party pricing services by understanding the models used, obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming those securities traded in active markets. See Note 6 to these Condensed Consolidated Financial Statements for further information regarding the Company’s financial instruments.

~~Liabilities measured at fair value using Level 3 inputs consisted of contingent acquisition consideration payable and asset retirement obligations.~~

The Company’s contingent acquisition consideration payable is estimated using a probability-based income approach utilizing an appropriate discount rate. Key assumptions used by management to estimate the fair value of contingent acquisition consideration payable include estimated probabilities, the estimated timing of when a milestone may be attained and assumed discount periods and rates. Subsequent changes in the fair value of the contingent acquisition consideration payable, resulting from management’s revision of key assumptions, will be recorded in Intangible Asset Amortization and Contingent Consideration in the Company’s Condensed Consolidated Statements of Comprehensive Loss. The probability-based income approach used by management to estimate the fair value of the contingent acquisition consideration is most sensitive to changes in the estimated probabilities.

Contingent acquisition consideration payable at December 31, 2016

$
161,637

Milestone payments to former Huxley Pharmaceuticals, Inc. shareholders

(3,500
)
Reversal of contingent liability related to revised estimate of Firdapse FDA
acceptance and approval milestones

(4,245
)
Changes in the fair value of other contingent acquisition consideration payable

7,627

Foreign exchange remeasurement of Euro denominated contingent
acquisition consideration payable

17,880

Contingent acquisition consideration payable at September 30, 2017

$
179,399

Under certain of the Company’s lease agreements, the Company is contractually obligated to return leased space to its original condition upon termination of the lease agreement. The Company records an asset retirement obligation liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation, when estimable. In subsequent periods, for each such lease, the Company records interest expense to accrete the asset retirement obligation liability to full value and depreciates each capitalized asset retirement obligation asset, both over the term of the associated lease agreement. As of September 30, 2017, the balance of the asset retirement obligation liability was $4.1 million.

~~The Company acquired intangible assets as a result of various business acquisitions. The estimated fair value of these long-lived assets was measured using Level 3 inputs as of the acquisition date.~~

~~(14) STOCK-BASED COMPENSATION~~

The Company’s stock-based compensation plans include the 2017 Equity Incentive Plan (the 2017 Equity Incentive Plan) and the ESPP. The 2017 Equity Incentive Plan, which was approved by the Company’s stockholders on June 6, 2017 and became effective that same date, and is the successor to and continuation of the Company’s Amended and Restated 2006 Share Incentive Plan (the 2006 Share Incentive Plan), provides for awards of RSUs and stock options as well as other forms of equity compensation. No additional awards will be granted under the 2006 Share Incentive Plan; however, there are vested and unvested awards outstanding under the 2006 Share Incentive Plan. Stock option awards granted to employees generally vest over a four-year period on a cliff basis one year after the grant date and then monthly thereafter. The contractual term of the outstanding options is generally ten years. RSUs granted to employees generally vest annually on a straight-line basis over a four-year period after the grant date. RSUs granted to directors

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

generally vest in full one year after the grant date. Shares formerly reserved for future issuance under the 2006 Share Incentive Plan were transferred to the 2017 Equity Incentive Plan, from which future shares shall be issued. The Company’s stock-based compensation plans are administered by the Company’s Board of Directors, or designated Committee thereof, which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the awards.

~~Determining the Fair Value of Stock Options and Stock Purchase Rights~~

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 tables below. The expected life of options is based on observed historical exercise patterns. Groups of employees that have similar historical exercise patterns are considered separately for valuation purposes. The Company has identified two groups with distinctly different exercise patterns. The two groups identified are executive and non-executive employees. The executive employee group has a history of holding options for longer periods than non-executive employees. The expected volatility of stock options is based upon the weighted-average of the historical volatility of the Company’s common stock and the implied volatility of traded options on the Company’s common stock for fiscal periods in which there is sufficient trading volume in options on the Company’s common 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 the Company has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future. Effective January 1, 2016, forfeitures were accounted for as they occurred. The assumptions used to estimate the per share fair value of stock options granted under the 2017 Equity Incentive Plan and the 2006 Share Incentive Plan were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016
Expected volatility

38 – 40%

38 – 40%

38 – 40%

36 – 44%
Dividend yield

0.0%

0.0%

0.0%

0.0%
Expected life

4.9 – 6.6 years

5.0 – 6.7 years

4.9 – 6.6 years

5.0 – 8.1 years
Risk-free interest rate

1.8 – 2.1%

1.1 – 1.4%

1.8 – 2.2%

1.1 – 2.1%

~~During the~~ ~~nine~~ ~~months ended September 30, 2017, the Company granted options to purchase 785,300 shares of common stock with a weighted-average fair value of $36.11 per share.~~

~~The Company did not issue any new stock purchase rights under the ESPP during the three months ended September 30, 2017.~~

~~Restricted Stock Unit Awards with Service-Based Vesting Conditions~~

RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair value of the shares of common stock underlying the RSUs at the date of grant, based on the closing price of the Company’s common stock on that date, ratably over the period during which the vesting restrictions lapse. During the ~~nine~~ ~~months ended September 30, 2017, the Company granted 1,312,350 RSUs with service-based vesting conditions with a weighted-average fair value of $87.82 per share.~~

~~Restricted Stock Unit Awards with Performance Conditions~~

On March 22, 2017, pursuant to Board approval, the Company granted 133,250 RSUs with performance-vesting conditions (the 2017 Base RSUs) under the 2006 Share Incentive Plan to certain executive officers. The award of the RSUs under this specific grant is contingent upon the achievement of a 2017 revenue target and the awarded RSUs, if any, vest ratably over a three-year service period. The number of RSUs to be awarded upon achievement of the performance condition may range between 50% and 200% of the 2017 Base RSUs, dependent on the percentage of 2017 “managed revenues” (defined as the Company’s net product revenues, excluding net revenues attributable to Aldurazyme) achieved against the target managed revenues with a threshold achievement level of 75% of target and a ceiling achievement level of 125% of target. Stock-based compensation for these awards will be recognized over the service period beginning in the period the Company determines it is probable that the revenue target will be achieved. The cost of the 2017 Base RSUs was determined to be $87.42 per RSU, based on the fair value of the common stock underlying the 2017 Base RSUs on the grant date based on the closing price of the Company’s common stock on that date. The Company evaluated the 2017 revenue target in the context of its current 2017 revenue forecast and related confidence level in the forecast, and determined that attainment of the revenue target was probable for accounting purposes commencing with the first quarter of 2017. As a result, the Company recognized $1.2 million and $2.8 million of compensation expense related to these awards during the three and nine months ended September 30, 2017, respectively.

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

On March 15, 2016, pursuant to Board approval, the Company granted 130,310 RSUs with performance-vesting conditions (the 2016 Base RSUs) and a three-year service period, under the 2006 Share Incentive Plan, to certain executive officers. Based on the Company’s performance against the 2016 revenue target, the Company applied a multiplier of 103% and issued 134,219 RSUs with a grant date fair value of $83.43 per RSU. The Company recognized $0.9 million and $3.2 million of compensation expense related to these awards during the three and nine months ended September 30, 2017, respectively. The Company recognized $1.0 million and $2.1 million of compensation expense related to these awards during the three and nine months ended September 30, 2016, respectively.

On March 3, 2015, pursuant to Board approval, the Company granted 58,300 RSUs with performance-vesting conditions (the 2015 Base RSUs) and a three-year service period, under the 2006 Share Incentive Plan, to certain executive officers. ~~Based on the Company~~’s performance against the 2015 revenue target, the Company applied a multiplier of 111% and issued 64,713 RSUs with a grant date fair value of $108.36 per RSU. The Company recognized $0.5 million and $1.7 million of compensation expense related to these awards during the three and nine months ended September 30, 2017, respectively. The Company recognized $0.6 million and $1.8 million of compensation expense related to these awards during the three and nine months ended September 30, 2016, respectively.

~~Compensation expense included in the Company’s Condensed Consolidated Statements of Comprehensive Loss for all stock-based compensation arrangements was as follows:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Cost of sales

$
3,007

$
2,092

$
7,803

$
5,943

R&D

13,832

14,165

39,973

42,929

SG&A

19,064

16,645

58,902

48,348

Total stock-based compensation expense

$
35,903

$
32,902

$
106,678

$
97,220

~~The Company adopted ASU No. 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting, in 2016, noting that the impact of the election to use actual forfeitures rather than estimated forfeitures on quarterly reporting was not significant.~~

Stock-based compensation expense of $4.5 million and $12.1 million was capitalized into inventory for the three and nine months ended September 30, 2017, respectively, compared to stock-based compensation expense of $3.5 million and $9.0 million that was capitalized into inventory for the three and nine months ended September 30, 2016, respectively. Capitalized stock-based compensation is recognized as cost of sales when the related product is sold.

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

~~(15)~~(10) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes amounts reclassified out of Accumulated Other Comprehensive Income (Loss) (AOCI) and their effect on the Company’s Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016.

Three Months Ended September 30,

Nine Months Ended September 30,

Consolidated Statement of
Details about AOCI Components

2017

2016

2017

2016

Comprehensive Loss Classification
Gains (losses) on cash flow hedges:

Forward foreign currency exchange
   contracts

$
(4,643
)

$
1,436

$
18

$
4,036

Net product revenues
Forward foreign currency exchange
   contracts

943

50

(507
)

4,874

SG&A
Total gain (loss) on cash flow hedges

(3,700
)

1,486

(489
)

8,910

Gain (loss) on sale of available-for-sale
   securities

—

7

3,252

(2,020
)

Other income
Income tax effect of the above

—

(2
)

(1,176
)

735

Benefit from income taxes

$
(3,700
)

$
1,491

$
1,587

$
7,625

Net loss

The following tables summarize changes in the accumulated balances for each component of ~~AOCI,~~Accumulated Other Comprehensive Income (Loss) (AOCI), including ~~current period~~current-period other comprehensive income (loss) and reclassifications out of AOCI, for the ~~three and nine months ended September 30, 2017 and 2016.~~

periods presented.

	Three Months Ended September 30, 2017
	Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Available-for-Sale Securities			Foreign Currency Items			Total				Three Months Ended September 30, 2021
AOCI balance at June 30, 2017	$	(13,569	)	$	(1,080	)	$	(9	)	$	(14,658	)
														Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Available for-Sale Debt Securities		Other		Total
AOCI balance at June 30, 2021													AOCI balance at June 30, 2021	$	(2,760)	$	1,821	$	—	$	(939)
Other comprehensive income (loss) before reclassifications		(10,569	)		147			2			(10,420	)	Other comprehensive income (loss) before reclassifications	11,914		(786)		—		11,128
Less: net loss reclassified from AOCI		(3,700	)		—			—			(3,700	)
Less: gain (loss) reclassified from AOCI													Less: gain (loss) reclassified from AOCI	133		—		—		133
Tax effect		—			(56	)		—			(56	)	Tax effect	—		183		—		183
Net current-period other comprehensive income (loss)		(6,869	)		91			2			(6,776	)	Net current-period other comprehensive income (loss)	11,781		(603)		—		11,178
AOCI balance at September 30, 2017	$	(20,438	)	$	(989	)	$	(7	)	$	(21,434	)
AOCI balance at September 30, 2021													AOCI balance at September 30, 2021	$	9,021	$	1,218	$	—	$	10,239

	Three Months Ended September 30, 2016
	Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Available-for-Sale Securities			Foreign Currency Items			Total				Three Months Ended September 30, 2020
AOCI balance at June 30, 2016	$	2,305		$	2,231		$	(8	)	$	4,528
														Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Available for-Sale Debt Securities		Other		Total
AOCI balance at June 30, 2020													AOCI balance at June 30, 2020	$	22,963	$	7,087	$	—	$	30,050
Other comprehensive income (loss) before reclassifications		(1,984	)		1,738			(1	)		(247	)	Other comprehensive income (loss) before reclassifications	(16,094)		(2,201)		—		(18,295)
Less: gain reclassified from AOCI		1,486			7			—			1,493
Less: gain (loss) reclassified from AOCI													Less: gain (loss) reclassified from AOCI	1,878		—		—		1,878
Tax effect		—			(630	)		—			(630	)	Tax effect	—		508		—		508
Net current-period other comprehensive income (loss)		(3,470	)		1,101			(1	)		(2,370	)	Net current-period other comprehensive income (loss)	(17,972)		(1,693)		—		(19,665)
AOCI balance at September 30, 2016	$	(1,165	)	$	3,332		$	(9	)	$	2,158
AOCI balance at September 30, 2020													AOCI balance at September 30, 2020	$	4,991	$	5,394	$	—	$	10,385


	Nine Months Ended September 30, 2021
	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Available for-Sale Debt Securities		Other		Total
AOCI balance at December 31, 2020	$	(20,028)	$	3,889	$	—	$	(16,139)
Other comprehensive income (loss) before reclassifications	24,096		(3,470)		—		20,626
Less: gain (loss) reclassified from AOCI	(4,953)		—		—		(4,953)
Tax effect	—		799		—		799
Net current-period other comprehensive income (loss)	29,049		(2,671)		—		26,378
AOCI balance at September 30, 2021	$	9,021	$	1,218	$	—	$	10,239


	Nine Months Ended September 30, 2020
	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Available for-Sale Debt Securities		Other		Total
AOCI balance at December 31, 2019	$	16,614	$	3,565	$	(15)	$	20,164
Other comprehensive income (loss) before reclassifications	1,404		2,379		15		3,798
Less: gain (loss) reclassified from AOCI	13,027		—		—		13,027
Tax effect	—		(550)		—		(550)
Net current-period other comprehensive income (loss)	(11,623)		1,829		15		(9,779)
AOCI balance at September 30, 2020	$	4,991	$	5,394	$	—	$	10,385

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~– (Continued)~~

- (continued)

(In thousands of U.S. ~~dollars,~~Dollars, except per share amounts or as otherwise disclosed)

Nine Months Ended September 30, 2017

Unrealized Gains (Losses) on Cash Flow Hedges

Unrealized Gains (Losses) on Available-for-Sale Securities

Foreign Currency Items

Total

AOCI balance at December 31, 2016

$
13,006

$
(178
)

$
(12
)

$
12,816

Other comprehensive income (loss) before
reclassifications

(33,933
)

1,981

5

(31,947
)
Less: gain (loss) reclassified from AOCI

(489
)

3,252

—

2,763

Tax effect

—

460

—

460

Net current-period other comprehensive income (loss)

(33,444
)

(811
)

5

(34,250
)
AOCI balance at September 30, 2017

$
(20,438
)

$
(989
)

$
(7
)

$
(21,434
)
For additional discussion of reclassifications from AOCI see Note 8 – Derivative Instruments and Hedging Strategies.

Nine Months Ended September 30, 2016

Unrealized Gains (Losses) on Cash Flow Hedges

Unrealized Gains (Losses) on Available-for-Sale Securities

Foreign Currency Items

Total

AOCI balance at December 31, 2015

$
13,602

$
7,441

$
(10
)

$
21,033

Other comprehensive income (loss) before
reclassifications

(5,857
)

(8,477
)

1

(14,333
)
Less: gain (loss) reclassified from AOCI

8,910

(2,020
)

—

6,890

Tax effect

—

2,348

—

2,348

Net current-period other comprehensive income (loss)

(14,767
)

(4,109
)

1

(18,875
)
AOCI balance at September 30, 2016

$
(1,165
)

$
3,332

$
(9
)

$
2,158

(11) REVENUE, ~~AND~~ CREDIT CONCENTRATIONS

Net Product Revenue - The Company considers there to be revenue concentration risks for regions where net product revenue exceeds 10% of consolidated net product revenue. The concentration of the Company’s net product revenue within the regions below may have a material adverse effect on the Company’s revenue and results of operations if sales in the respective regions experience difficulties.

The table below summarizes consolidated net product revenue concentrations based on patient location for Brineura, Firdapse, Kuvan, Naglazyme, and Vimizim, which are sold directly by the Company, and global sales of Aldurazyme, which is marketed by Genzyme. Genzyme is the Company’~~s sole customer for Aldurazyme and is responsible for marketing and selling Aldurazyme to third-parties.~~

AND GEOGRAPHIC INFORMATION

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

United States

43
%

38
%

39
%

38
%
Europe

22
%

23
%

21
%

23
%
Latin America

9
%

14
%

13
%

13
%
Rest of world

19
%

16
%

20
%

19
%
Total net product revenue marketed by the Company

93
%

91
%

93
%

93
%
Aldurazyme net product revenues marketed by Genzyme

7
%

9
%

7
%

7
%
Total net product revenues

100
%

100
%

100
%

100
%

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Customer A

20
%

19
%

18
%

19
%
Customer B

16
%

13
%

14
%

13
%
Customer C

11
%

10
%

10
%

10
%
Total

47
%

42
%

42
%

42
%

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net product revenues by product:

Aldurazyme

$
22,341

$
23,751

$
61,681

$
58,819

Brineura

3,107

—

3,361

—

Firdapse

5,086

4,981

14,051

13,685

Kuvan

105,837

90,899

300,127

257,806

Naglazyme

72,083

77,728

238,392

221,575

Vimizim

90,298

80,903

299,256

260,310

Total net product revenues

$
298,752

$
278,262

$
916,868

$
812,195

The following table disaggregates total Net Product Revenues by product.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net product revenues by product:
Vimizim	$	136,744	$	147,891	$	466,697	$	401,789
Naglazyme	71,172		76,323		297,321		271,585
Kuvan	67,687		123,993		217,257		368,604
Palynziq	60,729		46,092		173,702		121,354
Brineura	32,984		25,455		90,641		75,223
Voxzogo	144		—		144		—
Firdapse	—		—		—		1,316
Total net product revenues marketed by the Company	$	369,460	$	419,754	$	1,245,762	$	1,239,871
Aldurazyme net product revenues marketed by Genzyme	24,380		40,987		$	102,517	$	128,945
Total net product revenues	$	393,840	$	460,741	$	1,348,279	$	1,368,816

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

The table below disaggregates total Net Product Revenues based on patient location for products sold directly by the Company, and global sales of Aldurazyme, which is marketed by Genzyme.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
United States	$	166,554	$	203,892	$	491,028	$	582,734
Europe	108,568		115,548		424,144		360,718
Latin America	38,958		44,064		140,911		141,852
Rest of world	55,380		56,250		189,679		154,567
Total net product revenues marketed by the Company	$	369,460	$	419,754	$	1,245,762	$	1,239,871
Aldurazyme net product revenues marketed by Genzyme	24,380		40,987		102,517		128,945
Total net product revenues	$	393,840	$	460,741	$	1,348,279	$	1,368,816

The following table illustrates the percentage of the Company’s total Net Product Revenues attributed to the Company’s largest customers for the periods presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Customer A	20	%	16	%	17	%	15	%
Customer B	16	%	14	%	14	%	14	%
Customer C	11	%	11	%	10	%	12	%
Total	47	%	41	%	41	%	41	%

On a consolidated basis, two customers accounted for 31% and 14% of the Company’s September 30, 2021 accounts receivable balance, respectively, compared to December 31, 2020, when two customers accounted for 24% and 22% of the accounts receivable balance, respectively. As of September 30, 2021, and December 31, 2020, the accounts receivable balance for Genzyme included $83.9 million and $72.1 million, respectively, of unbilled accounts receivable, which becomes payable to the Company when the product is sold through by Genzyme. The Company does not require collateral from its customers, but does perform periodic credit evaluations of its customers’ financial condition and requires prepayments in certain circumstances.

The COVID-19 pandemic continues to affect economies and business around the world. The Company’s global revenue sources, mostly in the form of demand interruptions such as missed patient infusions and delayed treatment starts for new patients, and its business operations were impacted by the COVID-19 pandemic during the nine months ended September 30, 2021 and 2020, and the Company anticipates a continued impact due to COVID-19 on its financial results in the remainder of 2021. The extent and duration of such effects remain uncertain and difficult to predict, particularly as virus variants continue to spread. The Company is actively monitoring and managing its response and assessing actual and potential impacts to its operating results and financial condition, as well as developments in its business, which could further impact developments, trends and expectations. See the risk factor related to the impact of the coronavirus pandemic, “The COVID-19 pandemic could continue to materially adversely affect our business, results of operations and financial condition.” described in “Risk Factors” in Part II, Item 1A of this Quarterly Report, for additional details on the impact of the COVID-19 pandemic.

The Company is mindful that conditions in the current macroeconomic environment could affect the Company’s ability to achieve its goals. The Company sells its products in countries that face economic volatility and weakness. Although the Company has historically collected receivables from customers in certain countries, sustained weakness or further deterioration of the local economies and currencies and effects of the impact of the ongoing COVID-19 pandemic may cause customers in those countries to delay payment or be unable to pay for the Company’s products. The Company believes that the allowances for doubtful accounts related to these countries, if any, are adequate based on its analysis of the specific business circumstances and expectations of collection for each of the underlying accounts in these countries. The Company will continue to monitor these conditions and will attempt to adjust its business processes, as appropriate, to mitigate macroeconomic risks to its business.

(12) STOCK-BASED COMPENSATION

The Company has stockholder-approved equity incentive plans that provide for the granting of service-based restricted stock units (RSUs), market-based RSUs, performance-based RSUs, stock options and other types of awards to its employees,

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

officers and non-employee directors. Compensation expense included in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) for all stock-based compensation arrangements was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of sales	$	4,339	$	10,342	$	16,907	$	20,381
Research and development	17,866		15,705		56,199		45,333
Selling, general and administrative	26,821		24,122		80,266		76,411
Total stock-based compensation expense	$	49,026	$	50,169	$	153,372	$	142,125

(13) NET INCOME (LOSS) PER COMMON SHARE

Potentially issuable shares of common stock include shares issuable upon the exercise of outstanding employee stock option awards, common stock issuable under the Company’s Employee Share Purchase Plan (ESPP), unvested RSUs, the Company’s common stock held by the NQDC and contingent issuances of common stock related to the Company’s convertible debt.

The following table sets forth the computation of basic and diluted earnings per common share (common shares in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net Income (loss), basic	$	(36,494)	$	784,803	$	(6,182)	$	837,001
Add: Interest on convertible notes	—		7,070		—		18,333
Net Income (loss), diluted	$	(36,494)	$	791,873	$	(6,182)	$	855,334
Denominator:
Weighted-average common shares outstanding, basic	183,214		181,142		182,616		180,592
Effect of dilutive securities:
Options to purchase common stock	—		1,731		—		1,728
Common stock issuable under the 2020 notes	—		3,983		—		3,983
Common stock issuable under the 2024 notes	—		3,970		—		3,970
Common stock issuable under the 2027 notes	—		4,365		—		2,373
Unvested RSUs	—		1,926		—		1,765
Common stock potentially issuable for ESPP purchases	—		346		—		337
The Company’s common stock held by the NQDC	—		211		—		211
Weighted-average common shares outstanding, diluted	183,214		197,674		182,616		194,959
Net income (loss) per common share, basic	$	(0.20)	$	4.33	$	(0.03)	$	4.63
Net income (loss) per common share, diluted	$	(0.20)	$	4.01	$	(0.03)	$	4.39

Table of Contents

BIOMARIN PHARMACEUTICAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)

(In thousands of U.S. Dollars, except per share amounts or as otherwise disclosed)

In addition to the equity instruments included in the table above, the table below presents potential shares of common stock that were excluded from the computation of basic and diluted income (loss) per common share as they were anti-dilutive (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Options to purchase common stock	6,649	5,172	6,649	5,175

Common stock issuable under the 2024 Notes	3,970	—	3,970	—
Common stock issuable under the 2027 Notes	4,365	—	4,365	—
Unvested RSUs	5,292	2,900	5,292	3,060
Common stock potentially issuable for ESPP purchases	582	193	582	204
The Company’s common stock held by the NQDC	197	—	197	—
Total number of potentially issuable shares	21,055	8,265	21,055	8,439

The Company’s 1.50% senior subordinated convertible notes due in October 2020 (the 2020 Notes) matured on October 15, 2020 and were settled in cash. The potential effect of the capped call transactions and potential shares issuable under the 2020 Notes were excluded from the calculation of diluted net income (loss) per share in the three and nine months ended September 30, 2020, as the Company’s closing price on September 30, 2020 did not exceed the conversion price of $94.15 per share. There is no similar capped call transaction associated with the 2024 Notes or the 2027 Notes.

(14) COMMITMENTS AND CONTINGENCIES

From time to time the Company is involved in legal actions arising in the normal course of its business. The ~~most significant of these actions are described below.~~

~~The~~ process of

resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these

matters could adversely affect the Company, its results of operations, financial condition ~~and~~or cash flows. The Company’s general

practice is to expense legal fees as services are rendered in connection with legal matters, and to accrue for liabilities when losses are probable and reasonably estimable.

~~Paragraph IV Notices~~

The Company received a paragraph IV notice letter, dated December 23, 2016, from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd. (collectively, DRL), notifying it that DRL had filed an abbreviated new drug application (ANDA) seeking approval of a proposed generic version of Kuvan (sapropterin dihydrochloride) 100 mg oral powder prior to the expiration of the Company’s patents listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book). The Company filed a lawsuit alleging patent infringement against DRL. In August 2017, the Company entered into a settlement agreement with DRL (the DRL Powder Settlement Agreement) that resolved the patent litigation with DRL in the U.S. related to Kuvan 100 mg oral powder. Under the terms of the DRL Powder Settlement Agreement, the Company granted DRL a non-exclusive license to its Kuvan-related patents to allow DRL to market a generic version of sapropterin dihydrochloride in oral powder form in 100 mg and 500 mg packet formulations in the U.S. for the indications approved for Kuvan beginning on October 1, 2020, or earlier under certain circumstances.

The Company also received two separate paragraph IV notice letters, dated January 14, 2016 and January 22, 2015, from Par Pharmaceutical, Inc. (Par), notifying it that Par had filed an ANDA seeking approval of proposed generic versions of Kuvan 100 mg oral powder and Kuvan 100 mg oral tablets, respectively, prior to the expiration of the Company’s patents listed in the FDA’s Orange Book. The Company filed two lawsuits alleging patent infringement against Par (the lawsuit against Par pertaining to the proposed generic version of Kuvan 100 mg oral tablets was filed together with Merck & Cie), and the two Par cases were consolidated. In April 2017, the Company and Merck & Cie entered into a settlement agreement with Par (the Par Settlement Agreement) that resolved both cases against Par. Under the Par Settlement Agreement, the Company granted Par a non-exclusive license to its Kuvan-related patents to allow Par to market a generic version of sapropterin dihydrochloride in 100 mg oral tablets and oral powder in 100 mg and 500 mg packet formulations in the U.S. for the indications approved for Kuvan beginning on: April 1, 2021 if Par is not entitled to the statutory 180-day first filer exclusivity period; October 1, 2020 if Par is entitled to the statutory 180-day first filer exclusivity period; or earlier under certain circumstances.

The Company also received a paragraph IV notice letter, dated October 3, 2014, from DRL notifying it that DRL had filed an ANDA seeking approval of a proposed generic version of Kuvan 100 mg oral tablets prior to the expiration of the Company’s patents

~~BIOMARIN PHARMACEUTICAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(In thousands of U.S. dollars, except per share amounts or as otherwise disclosed)~~

listed in the FDA’s Orange Book. The Company, together with Merck & Cie, filed a lawsuit alleging patent infringement against DRL. In September 2015, the Company and Merck & Cie entered into a settlement agreement with DRL (the DRL Tablet Settlement Agreement) that resolved the patent litigation with DRL in the U.S. related to Kuvan 100 mg oral tablets. Under the terms of the DRL Tablet Settlement Agreement, the Company granted DRL a non-exclusive license to its Kuvan-related patents to allow DRL to market a generic version of sapropterin dihydrochloride 100 mg oral tablets in the U.S. for the indications approved for Kuvan beginning on October 1, 2020, or earlier under certain circumstances.

As of September 30, ~~2017,~~2021, the Company iswas subject to contingent payments totaling approximately ~~$600.2~~$708.8 million upon achievement of certain development and regulatory activities and commercial sales ~~and licensing~~ milestones if they occur before certain dates in the future. Of this amount, ~~$218.3~~$70.0 million ~~(or €185~~were considered probable and comprised of commercial milestones related to the acquisition of certain rights and other assets with respect to Kuvan and Palynziq from a third party, $405.5 million ~~based~~were considered reasonably possible and primarily related to development milestones and $233.3 million were considered remote as the Company is no longer developing the related programs.

As of September 30, 2021, the fair value of contingent liabilities recorded on the ~~exchange rate~~Company’s Condensed Consolidated Balance Sheet was $63.4 million of ~~1.18 USD per Euro in effect on September 30, 2017) relates to the Merck PKU Business acquisition and $53.3~~which $48.2 million ~~relates to programs that are no longer being developed.~~was short term. See Note 137 – Fair Value Measurements to these Condensed Consolidated Financial Statements for further information regarding the fair value of the Company’s contingent ~~acquisition consideration payable.~~

~~As of September 30, 2017, the~~consideration.

The Company ~~has recorded a total of $179.4 million of short-term~~uses experts and ~~long-term contingent acquisition consideration payable on its Condensed Consolidated Balances Sheet, of which $52.6 million is expected~~laboratories at universities and other institutions to ~~be paid in the next twelve months.~~

~~Other Commitments~~

perform certain research and development (R&D) activities. These amounts are included as R&D expense as services are provided. In the normal course of business, the Company enters into various firm purchase commitments primarily related to ~~active pharmaceutical ingredients~~ ~~and certain inventory related items. As of~~ ~~September 30, 2017, these commitments for the next five years were approximately $41.5 million. The amounts primarily represent minimum purchase requirements for~~ active pharmaceutical ingredients, certain inventory-related items and certain third-party R&D services. As of September 30, 2021, such commitments and other minimum contractual obligations for clinical and post-marketing ~~commitments related to the Company’s approved products.~~

~~(19) BENEFIT FROM INCOME TAXES~~

services were estimated at approximately $107.7 million. The Company has ~~historically computed its interim period benefit from income taxes by applying its forecasted effective tax rate~~also licensed technology, for which it is required to ~~year-to-date earnings. However, due~~pay royalties upon future sales, subject to ~~a significant amount~~certain annual minimums.

Item 2. Management’s Discussion and Analysis of U.S. forecasted income used in computing the effective tax rate, the effective tax rate can be highly sensitive to minor fluctuations in U.S. forecasted income. As such, the Company has computed the U.S. componentFinancial Condition and Results of ~~the consolidated benefit~~ from income taxes for the three and nine months ended September 30, 2017 and 2016 using an actual year-to-date tax calculation. Foreign tax expense was computed using a forecasted annual effective tax rate for the three and nine months ended September 30, 2017 and 2016.

Operations

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The following discussion of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes thereto included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the ~~risks~~risk factor related to the impact of the coronavirus pandemic, “The COVID-19 pandemic could continue to materially adversely affect our business, results of operations and ~~uncertainties~~financial condition.” described in “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form ~~10-Q.~~10-Q, amongst the other risk factors. These risks and uncertainties could cause actual results to differ significantly from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition or results of operations. See the section titled “Forward-Looking Statements” that appears at the beginning of this Quarterly Report on Form 10-Q. These statements, like all statements in this report, speak only as of the date of this Quarterly Report on Form 10-Q (unless another date is indicated), and, except as required by law, we undertake no obligation to update or revise these statements in light of future developments.

Our Condensed Consolidated Financial Statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S GAAP) and are presented in U.S. Dollars (USD).

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions, except as otherwise disclosed)

We are a global biotechnology company that develops and commercializes innovative therapies for people with serious

and life-threatening rare diseases and medical conditions. We select product candidates for diseases and conditions that represent

a significant unmet medical need, have well-understood biology and provide an opportunity to be first-to-market or offer a

significant benefit over existing products.

Our ~~therapy~~ portfolio consists of ~~six products~~several commercial therapies and multiple clinical and ~~pre-clinical~~preclinical product candidates. ~~Our~~A summary of our commercial products, ~~are Aldurazyme (laronidase)~~as of September 30, 2021, is provided below:

Commercial Products

Indication

United States Orphan Drug Exclusivity

Expiration (1)

United States Biologic

Exclusivity

Expiration (2)

European Union Orphan Drug Exclusivity

Expiration (1)

Aldurazyme (laronidase)

MPS I (3)

Expired

Brineura (cerliponase alfa)

CLN2 (4)

2024

2029

2027

Kuvan (sapropterin dihydrochloride)

PKU (5)

Expired

Not Applicable

Expired

Naglazyme (galsulfase)

MPS VI (6)

Expired

Palynziq (pegvaliase-pqpz)

PKU (7)

2025

2030

2029

Vimizim (elosulfase alpha)

MPS IVA (8)

Expired

2026

2024

Voxzogo (vosoritide) (9)

Achondroplasia

Not Applicable

2031

(1)See “Government Regulation—Orphan Drug Designation” in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021 for further discussion

(2)See “Government Regulation— Healthcare Reform” in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion

(3)For the treatment of Mucopolysaccharidosis I (MPS I)~~, Brineura (cerliponase alfa) for~~

(4)For the treatment of late infantile neuronal ceroid lipofuscinosis type 2 (CLN2)~~, Firdapse (amifampridine phosphate) for Lambert Eaton Myasthenic Syndrome (LEMS), Kuvan (sapropterin dihydrochloride) for~~

(5)For the treatment of phenylketonuria (PKU)~~, Naglazyme (galsulfase) for~~

(6)For the treatment of Mucopolysaccharidosis VI (MPS VI) ~~and Vimizim (elosulfase alpha) for~~

(7)For adult patients with PKU

(8)For the treatment of Mucopolysaccharidosis IV Type A (MPS ~~IV A).~~

IVA)

(9)Voxzogo (formerly known as vosoritide) was approved by the European Commission (EC) in August 2021 and our New Drug Application (NDA) submission for Voxzogo is under review by the U.S. Food and Drug Administration (FDA) with a Prescription Drug User Fee Act (PDUFA) target action date of November 20, 2021.

A summary of our on-going major development programs, as of September 30, 2021, is provided below:

Major Product Candidates
in Development

Target
Indication

U.S. Orphan
Designation

EU Orphan
Designation

Stage

Valoctocogene roxaparvovec

Severe Hemophilia A

Yes

Clinical Phase 3

Voxzogo (1)

Achondroplasia

Yes

Clinical Phase 3

BMN 307

PKU

Yes

Clinical Phase 1/2

(1) In August 2021, the EC granted marketing approval for Voxzogo in Europe and our NDA submission for Voxzogo is under review by the FDA.

Uncertainty Relating to the COVID-19 Pandemic

The COVID-19 pandemic continues to affect economies and business around the world. Our global revenue sources, mostly in the form of demand interruptions such as missed patient infusions and delayed treatment starts for new patients, and our overall business operations were impacted by the COVID-19 pandemic during the nine months ended September 30, 2021 and 2020, and we anticipate a continued impact due to the COVID-19 pandemic on our financial results for the remainder of 2021. The extent and duration of such effects remain uncertain and difficult to predict, particularly as virus variants continue to spread. We are

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions, except as otherwise disclosed)

actively monitoring and managing our response and assessing actual and potential impacts to our operating results and financial condition, as well as developments in our business, which could further impact the developments, trends and expectations described below. See the risk factor related to the impact of the coronavirus pandemic, “The COVID-19 pandemic could continue to materially adversely affect our business, results of operations and financial condition.” described in “Risk Factors” in Part II, Item 1A of this Quarterly Report, for additional details on the impact of the COVID-19 pandemic.

Business Developments

We continued to ~~grow our commercial business and~~ advance our product candidate pipeline during ~~2017.~~2021. We believe that the combination of our internal research programs, acquisitions and partnerships will allow us to continue to develop and commercialize innovative therapies for people with serious and life-threatening rare diseases and medical conditions. Below is a summary of key business ~~developments~~developments:

Continued Emphasis on Research and Development

•Voxzogo – During the quarter, the EC approved Voxzogo for the treatment of children, ages two years and older. The commercial launch of Voxzogo in ~~2017 to~~Europe is underway, with revenues for the remainder of 2021 expected from France, Germany and select early-access countries. Marketing authorization reviews are in process in Japan, Brazil and Australia, with potential approvals in those countries in 2022. The FDA is reviewing the Voxzogo NDA with the PDUFA target action date:

~~In October 2017, we announced that the FDA had completed its review~~ of ~~the Investigational New Drug (IND) application~~November 20, 2021.

•Valoctocogene roxaparvovec – The European Medicines Agency (EMA) validated our Marketing Authorization Application for valoctocogene roxaparvovec ~~(formerly referred~~resulting in an anticipated Committee for Medicinal Products for Human Use opinion in the first half of 2022, assuming favorable results from the two-year follow-up safety and efficacy data from the GENEr8-1 study. In the U.S., we are targeting a Biologics License Application resubmission for valoctocogene roxaparvovec in the second quarter of 2022 also assuming favorable results from the two-year follow-up safety and efficacy data from the GENEr8-1 study, followed by an expected six-month review procedure by the FDA.

In July 2021, we announced new data from our Phase 3 study, GENEr8-1, at the International Society on Thrombosis and Haemostasis (ISTH) 2021 Virtual Congress. The pivotal study demonstrated superiority to ~~as BMN 270),~~Factor VIII prophylaxis in key clinical efficacy endpoints. Over 90 percent of all participants in the GENEr8-1 study (N=134) had an ~~investigational gene therapy~~Annualized Bleed Rate (ABR) of zero or a lower bleed rate than baseline after week 4 following treatment ~~for severe hemophilia A,~~with valoctocogene roxaparvovec. Mean annualized Factor VIII utilization rate, among a pre-specified group of prior participants in a non-interventional baseline observational study (rollover population; N=112) decreased from baseline on Factor VIII prophylaxis by 99% from 3961.2 (median 3754.4) to 56.9 (median 0) IU/kg/year after week 4 after treatment with valoctocogene roxaparvovec (p-value <0.001).

In addition, we announced at ISTH new data from our open-label Phase 1/2 study with valoctocogene roxaparvovec. Five-year and ~~concluded that we could proceed with its clinical development. The IND application included 52-week data at~~four-year post-treatment follow-up of the 6e13 vg/kg ~~dose~~ and ~~the protocol~~4e13 vg/kg cohorts, respectively, demonstrated that all participants in both cohorts remain off prophylactic Factor VIII treatment. The mean ABR in year five for ~~the Phase 3 study using~~ the 6e13 vg/kg ~~dose. We expect~~cohort was 0.7 with an ABR reduction of 95% and Factor VIII use reduction of 96% through five years, compared to ~~file~~pre-infusion. The mean ABR in year four for ~~approval of valoctocogene roxaparvovec with 52-week data from the Phase 3 studies. The protocol for the second Phase 3 study using~~ the 4e13 vg/kg ~~dose has also been submitted~~cohort was 1.7 with a mean cumulative ABR reduction of 92% and Factor VIII use reduction of 95% through four years, compared to pre-infusion. Mean Factor VIII activity levels of 11.6 IU/dL in year five for the ~~FDA.~~6e13 vg/kg cohort and 5.6 IU/dL in year four for the 4e13 vg/kg cohort as measured by the Chromogenic Substrate Assay.

•BMN 307 – our gene therapy product candidate for PKU. In September 2021, the FDA placed a clinical hold on PHEarless, our Phase 1/2 study evaluating BMN 307, an investigational AAV5-phenylalanine hydroxylase gene therapy, in adults with PKU. The ~~FDA granted valoctocogene roxaparvovec Breakthrough Therapy Designation~~hold was based on pre-clinical study findings from a model designed to understand the durability of BMN 307 activity in ~~October 2017.~~mice bearing two germline mutations, one rendering the mice immunodeficient. The ~~FDA’s Breakthrough Therapy Designation~~clinical significance of these findings is ~~intended~~being evaluated to ~~facilitate~~assure safe and ~~expedite development~~appropriate use of BMN 307. To date, findings appear specific to mice and ~~review of new drugs~~have no known translatability to humans or other gene therapy vectors. We are working with health authorities to address ~~unmet medical need in~~the clinical hold and resume study investigations, as appropriate.

•BMN 255 – for the treatment of a ~~serious condition. We also announced that~~subset of chronic renal disease. The Investigational New Drug application (IND) for BMN 255 is active and we are dosing subjects. Kidney damage can progress to end stage renal disease, and the ~~Phase 3 Clinical Trial Application was approved by the United Kingdom Medicines~~availability of a potent, orally bioavailable, small molecule like BMN 255, may be able to significantly reduce disease and Healthcare Products Regulatory Agency (MHRA). In July 2017, we announced that median and mean Factor VIII levels from week 20 through 52 for the 6e13 vg/kg dose cohort have been consistently within the normal levels post treatment. We expect to initiate the global Phase 3 programtreatment burden in ~~the fourth quarter of 2017.~~

certain people with chronic renal disease.

~~In October 2017, we announced the selection of our next drug development candidate,~~ •BMN 290, a selective chromatin modulation therapy intended for treatment of Friedreich's Ataxia (FA), a rare autosomal recessive disorder that results in disabling neurologic and cardiac progressive decline. Currently, there are no approved disease modifying therapies for FA. BMN 290 is a second-generation compound derived from a compound acquired from Repligen Corporation (Repligen) that had human clinical data demonstrating increases in frataxin in FA patients. BMN 290 was selected for its favorable penetration into the central nervous system and cardiac target tissues, and its preservation of the selectivity of the original Repligen compound. We expect to submit the IND application in the second half of 2018.

•

In October 2017, updated results on the open-label Phase 2 study of vosoritide demonstrated a sustained increase in annualized growth velocity that was accompanied by sustained improvements over time in height compared to age- and gender-matched unaffected children as measure by z-scores. In addition, continued improvement over time in proportionality as measured by a ratio of the upper and lower body measurements, or U/L ratio, was demonstrated. Our on-going Phase 3 trial for vosoritide for the treatment of children with achondroplasia is a randomized, placebo-controlled study of vosoritide in approximately 110 children with achondroplasia ages 5-14 for 52 weeks. This study will be

followed by a subsequent open-label extension. In April 2017, following discussions with global health authorities, we announced plans to augment the growth velocity data in the Phase 3 study with assessments of proportionality, functionality and cumulative growth observed in that study and the ongoing Phase 2 study, as well as safety and efficacy in infants.

In August 2017, the FDA accepted for Priority Review the Biologics License Application (BLA) for pegvaliase, a PEGylated phenylanine-metabolizing enzyme product, to reduce blood phenylalanine (Phe) levels in adult patients with PKU who have uncontrolled blood Phe levels on existing management. The FDA is not currently planning to hold an advisory committee meeting to discuss the BLA. The Prescription Drug User Fee Act (PDUFA) action date is February 28, 2018. However, the FDA has requested additional Chemistry, Manufacturing, and Controls (CMC) information, which we expect, when submitted, will be classified as a major amendment and result in a three month extension of the PDUFA date. We also intend to submit a Marketing Authorization Application to the EMA in the first quarter of 2018.

In August 2017, we entered into a settlement agreement with Dr. Reddy's Laboratories, Inc. and Dr. Reddy's Laboratories, Ltd. (collectively, DRL) that resolves the patent litigation with DRL in the U.S. related to Kuvan 100 mg oral powder. Under the terms of the agreement, we granted DRL a non-exclusive license to our patents related to Kuvan to allow DRL to market a generic version of sapropterin dihydrochloride in oral powder form in 100 mg and 500 mg packet formulations in the U.S. for the indications approved for Kuvan beginning on October 1, 2020, or earlier under certain circumstances.

In July 2017, we executed a license agreement and a settlement agreement (the Agreements) with Sarepta Therapeutics (Sarepta) that provide Sarepta with global exclusive rights to our Duchenne muscular dystrophy (DMD) patent estate for EXONDYS 51 and all future exon-skipping products. The Agreements resolved the ongoing worldwide patent proceedings related to the use of EXONDYS 51 and all future exon-skipping products331 – for the treatment of ~~DMD. Pursuant~~Hereditary Angioedema (HAE). We are leveraging our broad expertise in gene therapy to the Agreements, Sarepta paid us a one-time upfront fee of $35.0 million, which we recognized as license revenue. Under the Agreements, Sarepta may pay certain additional regulatory and commercial milestone fees for exons 51, 45, 53 and possibly on future exon-skipping products to us if certain development and sales milestones are achieved. Additionally, Sarepta will pay us royalties based on 5% of net salesimprove efficiencies in the ~~U.S. through~~development process of BMN 331. The IND for BMN 331 has been allowed by FDA and the first patient is expected to be enrolled around the end of ~~2023~~2021. Patients with HAE may experience benefit from the constitutive expression and 8%stable C1-INH protein levels potentially provided by gene

Table of ~~net sales through September 30, 2024~~Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions, except as otherwise disclosed)

therapy, thus reducing the frequency and severity of attacks and reducing the burden associated with current standard of care.

•BMN 351 – an antisense oligonucleotide therapy for individuals with 51-skip-amenable Duchenne Muscular Dystrophy. IND-enabling studies continue. BMN 351 was developed using familiar chemistry and superior biology, by targeting a novel, upstream, splice enhancer site demonstrating improved binding affinity and metabolic stability in preclinical models. Preclinical data suggest that restored expression of near-full-length dystrophin protein at previously achieved levels of up to 40% will convert phenotypes from rapid loss to durable preservation of strength and ambulation. We anticipate filing an IND for BMN 351 in the ~~EU and in other countries where certain~~first half of ~~our patents exist. We retained the right to convert the license to a co-exclusive right in the event we decide to proceed with an exon-skipping therapy for DMD.~~

2022.

In July 2017, we commissioned our commercial gene therapy manufacturing facility, located in Novato, California, and began Good Manufacturing Practices (GMP) production of valoctocogene roxaparvovec to support clinical development activities and anticipated commercial demand. This facility is capable of supporting the manufacturing of product for approximately 2,000 patients per year, and the production process was developed in accordance with International Conference on Harmonisation guidance for Pharmaceuticals for Human Use facilitating worldwide registration with health authorities.

In June 2017, the European Commission granted marketing authorization for Brineura in the European Union (EU) to treat children with CLN2 disease. The marketing authorization for Brineura includes all 28 countries of the EU, Norway, Iceland and Liechtenstein. Brineura is the first treatment approved in the EU for the treatment of CLN2 disease. We immediately began marketing Brineura in the EU and began shipping the product within the EU in July 2017.

In April 2017, the United States (U.S.) Food and Drug Administration (FDA) approved Brineura to treat children with CLN2 disease. Brineura is the first treatment approved in the U.S. to slow the progression of loss of ambulation in children with CLN2 disease. We immediately began marketing Brineura in the U.S., and began shipping the product within the U.S. in June 2017.

In April 2017, we entered into a settlement agreement with Par Pharmaceutical (Par) that resolves patent litigation in the U.S. with Par related to our Kuvan (sapropterin dihydrochloride) 100 mg oral tablets and powder for oral solution in 100 mg packets. Under the terms of the settlement, we granted Par a non-exclusive license to our patents related to Kuvan to allow Par to market a generic version of sapropterin dihydrochloride 100 mg tablets and powder for oral solution in 100 mg and 500 mg sachets in the U.S. for the indications approved for Kuvan beginning on: April 1, 2021 if Par is not entitled to the statutory 180-day first filer exclusivity period; October 1, 2020 if Par is entitled to the statutory 180-day first filer exclusivity period; or earlier under certain circumstances.

•

In January 2017, we announced preliminary results from a Phase 1/2 trial of BMN 250, an investigational enzyme replacement therapy using a novel fusion of recombinant human NAGLU with a peptide derived from insulin-like growth factor 2 (IGF2), for the treatment of Sanfilippo B syndrome, or MPS IIIB, which began enrolling patients in April 2016. In September 2017, we announced interim data from the dose escalation portion of a Phase 1/2 trial of BMN 250. We

continued to observe that BMN 250 reduced heparan sulfate levels to normal range in cerebral spinal fluid of MPS IIIB patients and observed liver size decreases and Development Quotient stabilization or improvement.

We reported total revenues of $334.1 million $955.3 million for the three and nine months ended September 30, 2017, respectively, compared to $279.9 million and $816.8 million for the three and nine months ended September 30, 2016, respectively.

Financial Highlights

Key components of our results of operations include the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total revenues	$	408.7	$	476.8	$	1,396.5	$	1,408.3
Cost of sales	$	103.5	$	188.8	$	350.8	$	398.1
Research and development (R&D) expense	$	157.9	$	147.1	$	467.7	$	471.4
Selling, general and administrative (SG&A) expense	$	183.3	$	179.5	$	541.8	$	542.2
Intangible asset amortization and contingent consideration	$	17.2	$	17.4	$	52.6	$	48.0
Gain on sale of nonfinancial assets	$	—	$	—	$	—	$	(59.5)
Non-operating income (expense), net	$	7.1	$	(5.3)	$	7.7	$	(10.2)
Benefit from income taxes	$	(9.7)	$	(846.0)	$	(2.6)	$	(839.1)
Net income (loss)	$	(36.5)	$	784.8	$	(6.2)	$	837.0

The Net Loss for the three months ended September 30, 2021 as compared to the Net Income for the three months ended September 30, 2020 was primarily attributed to:

•decreased benefit from income taxes of $836.3 million, primarily due to the completion of an intra-entity transfer of certain intellectual property (IP) rights to an Irish subsidiary where our Ex-US regional headquarters are located and we have significant manufacturing and commercial operations, to better align ownership of IP rights with how the business operates, resulting in a tax benefit of $835.1 million based on the fair value of the transferred IP rights in the three months ended September 30, 2020. There was no similar transaction in the three months ended September 30, 2021; partially offset by

•an increase in gross profit primarily driven by the absence of the $81.2 million inventory charge related to pre-launch valoctocogene roxaparvovec inventory reserves following ~~(in millions):~~

regulatory responses received requesting additional data extending the anticipated regulatory approval timelines in the three months ended September 30, 2020.

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Total revenues

$
334.1

$
279.9

$
955.3

$
816.8

Cost of sales

59.5

50.7

165.8

145.5

Research and development (R&D) expense

154.1

160.8

442.1

486.7

Selling, general and administrative (SG&A) expense

130.5

118.8

394.1

333.6

Intangible asset amortization and contingent consideration
expense

3.8

9.7

26.1

(34.3
)
Impairment of intangible assets

—

—

—

599.1

Net loss

(12.5
)

(37.4
)

(65.7
)

(539.5
)
Stock-based compensation expense

35.9

32.9

106.7

97.2

The Net Loss for the nine months ended September 30, 2021 as compared to the Net Income for the nine months ended September 30, 2020 was primarily attributed to:

•decreased benefit from income taxes of $836.5 million, primarily due to the completion of an intra-entity transfer of certain IP rights to an Irish subsidiary where our Ex-US regional headquarters are located and we have significant manufacturing and commercial operations, to better align ownership of IP rights with how the business operates, resulting in a tax benefit of $835.1 million based on the fair value of the transferred IP rights in the three months ended September 30, 2020. There was no similar transaction in the three months ended September 30, 2021; and

•decreased gain on sale of nonfinancial assets of $59.5 million due to the divestiture and sale of the Firdapse business in the three months ended March 31, 2020; partially offset by

•an increase in gross profit primarily driven by the absence of the $81.2 million inventory charge related to pre-launch valoctocogene roxaparvovec inventory reserves following regulatory responses received requesting additional data extending the anticipated regulatory approval timelines in the three months ended September 30, of 2020.

See ~~“Results~~“Results of Operations” below for ~~a discussion of~~additional information related to the ~~detailed components~~Net Income fluctuations presented above. Our cash, cash equivalents and ~~analysis of the amounts above.~~

~~Total Revenues include net product revenues and royalty and other revenues. Net Product Revenues are generated from the six approved products in our product portfolio~~investments totaled $1.55 billion as of September 30, 2017. In the U.S., our commercial products are generally sold to specialty pharmacies or end-users, such as hospitals, which act as retailers. Outside the U.S., our commercial products are sold to our authorized distributors or directly to government purchasers or hospitals, which act as the end-users. Royalty and Other Revenues include royalties on net sales of products to licensees or sublicensees, collaborative agreement revenues and rental income associated with the tenants in our San Rafael, California facility.

Cost of Sales includes raw materials, personnel and facility and other costs associated primarily with manufacturing Aldurazyme, Brineura, Naglazyme and Vimizim at our production facilities. Cost of Sales also includes third-party manufacturing costs for the production of the active ingredient in Kuvan and Firdapse and third-party production costs related to final formulation and packaging services for all products and cost of royalties payable to third parties for all products.

R&D Expense includes costs associated with the research and development of product candidates and post-marketing research commitments related to our approved products. R&D Expense primarily includes preclinical and clinical studies, personnel and raw materials costs associated with manufacturing product candidates, quality control and assurance, research and development, facilities and regulatory costs.

~~SG&A Expense primarily includes expenses associated with the commercialization of approved products and general~~ and administrative costs to support our operations. These expenses include: product marketing and sales operations personnel; corporate facility operating expenses; information technology expenses and depreciation; and core corporate support functions, including human resources, finance and legal, and other external corporate costs such as insurance, legal fees and other professional services.

~~Our cash, cash equivalents, short-term investments and long-term investments totaled approximately $1.7 billion as of~~ ~~September 30, 2017~~,2021 compared to ~~$1.4~~$1.35 billion as of December 31, ~~2016.~~ 2020. We have historically financed our operations primarily through our cash flows from operating activities and the issuance

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions, except as otherwise disclosed)

of common stock and convertible debt. We ~~expect to fund our operations with~~will be highly dependent on our net product revenues ~~from~~to supplement our current liquidity and fund our operations for the foreseeable future. We may in the future elect to supplement this with further debt or equity offerings or commercial products, cash, cash equivalents, and short-term and long-term investments, supplemented by proceeds from equity or debt financings and loans, or collaborative agreements with corporate partners. The timing and mix of our funding options could changeborrowing. Further, depending on ~~many~~market conditions, our financial position and performance and other factors, ~~including how much~~ we ~~elect~~may in the future choose to ~~spend on our development programs, potential licenses and acquisitions of complementary technologies, products and companies or if we elect to settle all or~~use a portion of our cash, cash equivalents or investments to repurchase our convertible debt ~~in cash.~~or other securities. See “~~Financial~~“Financial Position, Liquidity and Capital ~~Resources~~”Resources” below for a further discussion of our liquidity and capital resources.

Critical Accounting Policies, Estimates and ~~Estimates~~

Judgments

In preparing our Condensed Consolidated Financial Statements in accordance with U.S. ~~generally accepted accounting principles (U.S. GAAP)~~GAAP and pursuant to the rules and regulations promulgated by the Securities and Exchange Commission ~~(SEC)~~(the SEC), we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, ~~revenue~~revenues and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and discuss our critical accounting policies and estimates with the Audit Committee of our Board of Directors. We base our ~~assumptions, judgments and~~ estimates on historical experience and various other ~~factors~~assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.

~~On a regular basis, we evaluate~~

The full extent to which the ongoing COVID-19 pandemic could continue to directly or indirectly impact our ~~assumptions, judgments~~business, results of operations and ~~estimates. We also discuss~~financial condition, including revenues, expenses, reserves and allowances, manufacturing, clinical trials and research and development costs will depend on future developments that continue to remain uncertain at this time, particularly as virus variants continue to spread. As events continue to evolve and additional information becomes available, our ~~critical accounting policies and~~ estimates ~~with the Audit Committee of our Board of Directors. We believe that the assumptions, judgments and estimates involved~~may change materially in the accounting for business combinations, contingent acquisition consideration payable, income taxes, long-lived assets and revenue recognition have the greatest impact on our Condensed Consolidated Financial Statements, so we consider these to be our critical accounting policies. Historically, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results.

future periods.

There have been no significant changes to our critical accounting policies, estimates and ~~estimates~~judgments during the nine months ended September 30, ~~2017,~~2021, compared to the critical accounting policies, estimates and ~~estimates~~judgments disclosed in “~~Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~”Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2020.

Recent Accounting Pronouncements

See Note 4 to our accompanying Condensed Consolidated Financial Statements for a description of recent accounting pronouncements and our expectation of their impact ~~if any,~~ on our results of operations and financial condition.

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Net Loss~~

~~Our net loss for the three months ended~~ ~~September 30, 2017~~ ~~was $12.5 million, compared to a net loss~~ (continued)

(In millions of ~~$37.4 million for the three months ended September 30, 2016. Our net loss for the nine months ended~~ ~~September 30, 2017, was $65.7 million, compared to a net loss~~U.S. dollars, except as otherwise disclosed)

Results of ~~$539.5 million for the nine months ended September 30, 2016. The decrease in net loss was primarily a result of the following (in millions):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

Total revenues

$
334.1

$
279.9

$
54.2

$
955.3

$
816.8

$
138.5

Cost of sales

59.5

50.7

8.8

165.8

145.5

20.3

R&D expense

154.1

160.8

(6.7
)

442.1

486.7

(44.6
)
SG&A expense

130.5

118.8

11.7

394.1

333.6

60.5

Intangible asset amortization and
contingent consideration expense

3.8

9.7

(5.9
)

26.1

(34.3
)

60.4

Impairment of intangible assets

—

—

—

—

599.1

(599.1
)
Other, net ⁽¹⁾

(6.8
)

(6.7
)

(0.1
)

(17.7
)

(25.1
)

7.4

Benefit from income taxes

(8.1
)

(29.4
)

21.3

(24.8
)

(199.4
)

174.6

Net loss

$
(12.5
)

$
(37.4
)

$
24.9

$
(65.7
)

$
(539.5
)

$
473.8

Operations

~~(1)~~

~~Includes Equity in the loss of BioMarin/Genzyme LLC, interest income, interest expense and other income, net.~~

~~The decrease in net loss for the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017~~ was primarily attributed to an increase in total revenues mainly due to a $31.5 million net upfront license payment from Sarepta and patients initiating therapy. The increase in revenues was partially offset by a decrease in the benefit from income taxes for the ~~three and nine~~ ~~months ended~~ ~~September 30, 2017 compared to the same periods in 2016~~. Additionally, during the nine months ended September 30, 2016 we recorded an impairment charge of $599.1 million primarily due to the termination of the Kyndrisa program, which was partially offset by the reversal of the deferred tax liability that had been established for the future amortization of those intangible assets. There was no similar charge during the nine months ended September 30, 2017. See below for additional information related to the net loss fluctuations presented above, including details of our operating expense fluctuations and the aforementioned impairment charge.

Net Product Revenues

~~A summary of our various commercial products, including key metrics as of September 30, 2017, is provided below:~~

Commercial Products

Indication

U.S. Orphan Drug Exclusivity
Expiration

U.S. Biologic
Exclusivity
Expiration

EU Orphan Drug Exclusivity
Expiration
Aldurazyme

MPS I

Expired

Expired

Expired
Brineura

CLN2

2024

2029

2027
Firdapse

LEMS

NA⁽¹⁾

NA

2019
Kuvan

PKU

Expired

NA

2020 ⁽²⁾
Naglazyme

MPS VI

Expired

Expired

Expired
Vimizim

MPS IVA

2021

2026

2024

~~(1)~~

~~Firdapse has not received marketing approval in the U.S. We have licensed the North American rights to develop and market Firdapse to a third party.~~

~~(2)~~

Kuvan has been granted orphan drug status in the EU, which together with pediatric exclusivity, confers 12 years of market exclusivity in the EU that expires in 2020. Furthermore, Merck Serono marketed Kuvan in the EU until January 1, 2016. See Note 5 to our accompanying Condensed Consolidated Financial for further discussion.

Net ~~product revenues~~Product Revenues consisted of the ~~following (in millions):~~

following:

Net Product Revenues include revenues generated from our approved products. In the U.S., our commercial products, except for Palynziq and ~~Vimizim customers include a limited number of~~Aldurazyme, are generally sold to specialty pharmacies ~~and~~or end-users, such as hospitals, ~~and foreign government agencies. We also sell Brineura, Kuvan, Naglazyme and Vimizim to our authorized distributors and to certain larger pharmaceutical wholesalers globally,~~ which act as ~~intermediaries between us~~retailers. Palynziq is distributed in the U.S. through certain certified specialty pharmacies under the Palynziq Risk Evaluation and ~~end-users~~Mitigation Strategy (REMS) program, and ~~generally do not stock significant quantities of~~Aldurazyme is marketed worldwide by Sanofi Genzyme (Genzyme). Outside the U.S., our ~~products. However, in~~commercial products are sold to authorized distributors or directly to government purchasers or hospitals, which act as the end-users. In certain countries, ~~particularly in Latin America,~~ governments place large periodic orders for ~~Naglazyme and Vimizim.~~our products. The timing of these large government orders can be inconsistent and can create significant quarter to quarter variation in our revenues.~~Genzyme Corporation (Genzyme)~~ is

The decrease in Net Product Revenues for the three months ended September 30, 2021 as compared to the three ended September 30, 2020 was primarily attributed to the following:

•a decrease in Kuvan product revenues primarily due to generic competition due to the loss of exclusivity in the U.S.;

•a decrease in Aldurazyme product revenues due to timing of product fulfillment to Genzyme; and

•a decrease in Vimizim and Naglazyme product revenues primarily driven by timing of orders from Europe and the Middle East; partially offset by

•an increase in Palynziq product revenues primarily due to a combination of revenues from more patients in the U.S. achieving maintenance dosing and new patients initiating therapy and to a lesser extent incremental growth in the European, Middle East and African (EMEA) region; and

•an increase in Brineura product revenues due to new patients initiating therapy driven by growth in EMEA and North America.

The decrease in Net Product Revenues for the nine months ended September 30, 2021 as compared to the nine ended September 30, 2020 was primarily attributed to the following:

•a decrease in Kuvan product revenues due to generic competition due to the loss of exclusivity in the U.S.;

•a decrease in Aldurazyme revenues due to timing of product fulfillment to Genzyme; partially offset by

•an increase in Vimizim and Naglazyme product revenues primarily driven by larger government orders primarily from Europe and the Middle East; and

•an increase in Palynziq revenues primarily due to a combination of revenue from more U.S. patients achieving maintenance dosing and new patients initiating therapy and to a lesser extent incremental growth in the EMEA region.

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

We anticipate the COVID-19 pandemic could have a continued impact on future Net Product Revenues during the remainder of 2021 as many of our ~~sole customer~~products are administered via infusions in a clinic or hospital setting and/or by a healthcare professional. Although we worked with our patient community and health care providers to find alternative arrangements where necessary, such as providing infusions at home, the revenues from the doses of our products that were missed by patients and the lost revenues from delayed treatment starts for ~~Aldurazyme~~new patients will never be recouped. See the risk factor “The COVID-19 pandemic could continue to materially adversely affect our business, results of operations and ~~is responsible~~financial condition” in “Risk Factors” included in Part II, Item 1A of this Quarterly Report for ~~marketing~~additional information.

In October 2020, we lost U.S market exclusivity for Kuvan. We anticipated and ~~selling Aldurazyme~~prepared for this loss of exclusivity and the reduction in our market share, as well as the adverse effect on our revenues and results of operations. We may continue to experience adverse effects on our market share and revenues in the future. See the risk factor “The sale of generic versions of Kuvan by generic manufacturers has adversely affected and will continue to adversely affect our revenues and results of operations” in “Risk Factors” included in Part II, Item 1A of this Quarterly Report for additional information. Additionally, we received European approval for Voxzogo in the third ~~parties.~~

quarter of 2021 and are focused on markets where early market access and reimbursement are possible, such as France and Germany.

We face exposure to movements in foreign currency exchange rates, primarily the Euro. We use foreign currency exchange contracts to hedge a percentage of our foreign currency exposure. The following table shows our ~~net product revenues~~Net Product Revenues denominated in ~~U.S. dollar (USD)~~USD and foreign ~~currencies (in millions):~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

Sales denominated in USD

$
178.4

$
168.2

$
10.2

$
544.9

$
473.8

$
71.1

Sales denominated in foreign currencies

120.4

110.1

10.3

372.0

338.4

33.6

Total net product revenues

$
298.8

$
278.3

$
20.5

$
916.9

$
812.2

$
104.7

currencies:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Sales denominated in USD	$	220.5	$	302.6	$	(82.1)	$	732.5	$	846.4	$	(113.9)
Sales denominated in foreign currencies	173.4		158.1		15.3		615.8		522.4		93.4
Total net product revenues	$	393.9	$	460.7	$	(66.8)	$	1,348.3	$	1,368.8	$	(20.5)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Favorable (unfavorable) impact of foreign currency exchange rates on product sales denominated in currencies other than USD	$	(0.7)	$	(4.0)	$	3.3	$	1.8	$	(14.8)	$	16.6

The ~~net~~unfavorable impact ~~of foreign currency exchange rates on product sales denominated~~ in ~~currencies other than USD during the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~was positive by $0.2 million and $1.6 million, respectively, compared to a positive impact of $0.5 million and a negative impact of $3.0 million, respectively, during the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2016~~.

~~The following is additional discussion of our revenue results by product:~~

~~Aldurazyme: The Aldurazyme net product revenues for~~ ~~the three and nine months ended September 30, 2017, compared to~~ ~~the three and nine months ended September 30, 2016, remained relatively flat~~. ~~The modest changes were primarily attributable to~~ ~~the timing of Aldurazyme revenues reported by Genzyme, offset in part by the timing of shipments to Genzyme. Aldurazyme revenues reported by Genzyme totaled $58.4 million and $176.3 million for~~ ~~the three and nine months ended September 30, 2017, respectively,~~ ~~compared to $58.9 million and $168.5 million for~~ ~~the three and nine months ended September 30, 2016, respectively. Although Genzyme sells Aldurazyme worldwide, the net product revenues earned by us on Genzyme~~’~~s net sales are denominated in USD.~~

~~Brineura: The FDA and~~ ~~European Commission~~ granted marketing approval for Brineura in April 2017 and June 2017, respectively. We began marking the product following approval in each of these markets with the first commercial shipments in the U.S. and EU occurring in June 2017 and July 2017, respectively.

~~Kuvan: The increase in Kuvan net product revenues for~~ ~~the three and nine months ended September 30, 2017, compared to~~ ~~the three and nine months ended September 30, 2016, was primarily attributable to an increase in patients on Kuvan therapy in the U.S. and the completion of the transition of the ex-North American territories acquired in 2016.~~

~~Naglazyme: The decrease in Naglazyme net product revenues for~~ the three months ended September 30, ~~2017, compared~~2021 was primarily driven by the weakening of the Argentinian Peso relative to the ~~three months ended September 30, 2016, was mainly due to timing of government orders in Latin America,~~USD, partially offset by ~~new patients initiating therapy.~~the strengthening of the Canadian Dollar and Great British Pound. The ~~increase in Naglazyme net product revenues~~favorable impact for the nine months ended September 30, ~~2017, compared~~2021 was largely driven by the strengthening of the Euro, Great British Pound, Australian Dollar and Canadian Dollar, partially offset by the weakening of the Argentinian Peso and Brazilian Real relative to the ~~nine months ended September 30, 2016, was primarily attributable~~USD. This compares to ~~new patients initiating therapy.~~

~~Vimizim: The increase in Vimizim net product revenues for~~ ~~the three and nine months ended September 30, 2017, compared to~~ ~~the three and nine months ended September 30, 2016, was primarily attributed to new patients initiating therapy.~~

~~Royalty and Other Revenues~~

~~Royalty and Other Revenues~~an unfavorable impact for the three and nine months ended September 30, ~~2017 included recognition~~2020, which were driven primarily by weakening of currencies in certain Latin American markets, such as the ~~$31.5 million net upfront license revenue from Sarepta~~Brazilian Real and ~~$1.4 million in royalty revenue~~Colombian Peso relative to the USD.

Royalty and Other Revenues

Royalty and Other Revenues include royalties earned on ~~Sarepta~~ net sales ~~during the third quarter~~ of ~~2017. We expect to continue earn royalties from Sarepta’s net sales under the terms of the Agreements in future quarters.~~

~~Cost of Sales and Product Gross Margin~~

~~The following table summarizes our cost of goods~~products sold and ~~product gross margin (in millions, except percentages):~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

Total net product sales

$
298.8

$
278.3

$
20.5

$
916.9

$
812.2

$
104.7

Cost of sales

59.5

50.7

8.8

165.8

145.5

20.3

Product gross margin

80
%

82
%

(2.0
)%

82
%

82
%

0
%

~~Product gross margin (defined as net product revenues less cost of sales, expressed as a percentage of net product revenues) for~~milestones achieved by licensees or sublicensees and rental income associated with the ~~three~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to 2016 decreased modestly.~~ tenants in our facilities.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Total royalty and other revenues	$	14.9	$	16.0	$	(1.1)	$	48.2	$	39.5	$	8.7

The decrease in ~~product gross margin~~Royalty and Other Revenues for the three months ended September 30, ~~2017~~2021 compared to the same period in 2020 was primarily ~~attributed~~due to ~~increased Naglazyme~~lower licensing revenues earned from third parties. The increase in Royalty and ~~Vimizim manufacturing costs. Product gross margin~~Other

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

Revenues for the nine months ended September 30, ~~2017~~2021 compared to the ~~comparable~~same period in ~~2016 remained flat.~~ 2020 was primarily due to a license payment received from a third party due to their achievement of a regulatory milestone in the three months ended March 31, 2021.

We expect ~~product gross margin~~ to ~~remain~~continue to earn royalties from third parties in the ~~low 80 percent range over~~future.

Cost of Sales and Gross Margin

Cost of Sales includes raw materials, personnel and facility and other costs associated with manufacturing our commercial products. These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing costs, and internal and external final formulation and packaging costs. Cost of Sales also includes royalties payable to third parties based on sales of our products and charges for inventory valuation reserves. Gross margin is calculated on Total Revenues, which includes Royalty and Other Revenues that usually do not have associated costs.

The following table summarizes our Cost of Sales and gross margin:


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
Total revenues	$	408.7		$	476.8		$	(68.1)		$	1,396.5		$	1,408.3		$	(11.8)
Cost of sales	$	103.5		$	188.8		$	(85.3)		$	350.8		$	398.1		$	(47.3)
Gross margin	74.7		%	60.4		%	14.3		%	74.9		%	71.7		%	3.2		%

Cost of Sales decreased for the ~~next twelve months.~~

three and nine months ended September 30, 2021 compared to the same periods in 2020 primarily due to the $81.2 million pre-launch valoctocogene roxaparvovec inventory charge following regulatory responses received in third quarter of 2020 requesting additional data extending the anticipated regulatory approval timelines. Gross margin for the three and nine months ended September 30, 2021 compared to the same periods in 2020 increased primarily due to the pre-launch valoctocogene roxaparvovec inventory charge in the three months ended September 30, 2020.

Research and Development

~~A summary~~

R&D expense includes costs associated with the research and development of product candidates and post-marketing research commitments related to our ~~on-going major development programs, including key metrics as of~~ ~~September 30, 2017, is provided below:~~

approved products. R&D expense primarily includes preclinical and clinical studies, personnel and raw materials costs associated with manufacturing clinical product, quality control and assurance, other R&D activities, facilities and regulatory costs.

		~~U.S. Orphan~~	~~EU Orphan~~
~~Major Products in Development~~	~~Target Indication~~	~~Designation~~	~~Designation~~	~~Stage~~
~~BMN 250~~	~~MPS IIIB~~	~~Yes~~	~~Yes~~	~~Clinical Phase 1/2~~
~~Pegvaliase~~	~~PKU~~	~~Yes~~	~~Yes~~	~~Marketing authorization~~ ~~regulatory review~~
~~Valoctocogene roxaparvovec~~	~~Hemophilia A~~	~~Yes~~	~~Yes~~	~~Clinical Phase 1/2~~
~~Vosoritide~~	~~Achondroplasia~~	~~Yes~~	~~Yes~~	~~Clinical Phase 3~~

We manage our R&D expense by identifying the R&D activities we anticipate will be performed during a given period and then prioritizing efforts based on scientific data, probability of successful development, market potential, available human and capital resources and other similar considerations. We continually review our product pipeline and the development status of product candidates and, as necessary, reallocate resources among the research and development portfolio that we believe will best support the future growth of our ~~business~~.

R&D Expense decreased to $154.1 million and $442.1 million for the three and nine months ended September 30, 2017, respectively, from $160.8 million and $486.7 million for the three and nine months ended September 30, 2016, respectively. R&D ~~expense consisted of the~~ ~~following (in millions):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

BMN 250

$
17.0

$
11.4

$
5.6

$
37.9

$
35.3

$
2.6

Brineura

10.8

20.2

(9.4
)

39.5

52.4

(12.9
)
Pegvaliase

28.7

19.5

9.2

85.1

59.0

26.1

Valoctocogene roxaparvovec

29.7

12.8

16.9

83.6

38.9

44.7

Vosoritide

13.3

11.6

1.7

39.2

35.5

3.7

Other approved products

17.4

16.2

1.2

54.7

49.9

4.8

Early stage programs

16.3

15.3

1.0

47.7

40.0

7.7

Other and non-allocated

20.9

53.8

(32.9
)

54.4

175.7

(121.3
)
Total

$
154.1

$
160.8

$
(6.7
)

$
442.1

$
486.7

$
(44.6
)

~~For the three and nine months ended September 30, 2017, R&D expense decreased by $6.7 million and $44.6 million, respectively, compared to the same periods in 2016. The decrease~~business. Continued material investment in R&D ~~expense was primarily~~activities that we have strategically prioritized remains a ~~result~~core component of ~~the following:~~

~~a decrease in R&D expense for other~~our business model and ~~non-allocated programs is primarily related to R&D spending in 2016 on the Kyndrisa, other exon-skipping, and reveglucosidase alfa development programs, all of which were terminated in 2016; and~~

future growth plans.

~~a decrease in R&D expense related to Brineura due to the approval of the product in the U.S. and EU in June 2017 and July 2017, respectively; offset by~~

~~an increase in clinical trial activities related to BMN 250, pegvaliase,~~ ~~valoctocogene roxaparvovec and vosoritide~~ ~~product candidates; and~~

~~an increase in pre-clinical activity for our early stage programs.~~

During the remainder of 2017, we expect our R&D spending to increase over 2016 levels due to our BMN 250, pegvaliase, valoctocogene roxaparvovec, and vosoritide programs progressing in their development. We also expect increased spending on pre-clinical activities for our early development stage programs. Additionally, we expect to continue incurring significant R&D expense for the foreseeable future due to long-term clinical activities related to post-approval regulatory commitments for our approved products. We continuously evaluate the recoverability of costs associated with pre-launch ~~or pre-qualification~~ manufacturing activities and capitalize the costs incurred if ~~it is determined that~~ recoverability is highly ~~likely and therefore future revenues are expected,~~likely. We have capitalized $4.8 million of manufacturing-related costs for Voxzogo pre-launch inventory as of September 30, 2021. Voxzogo, which was granted marketing approval in the costs subsequently incurred related to pre-launch or pre-qualification manufacturing activities for purposes of commercial sales will likely be capitalized. When regulatory approval and the likelihood of future revenues forEU on August 27, 2021, is still a product candidate ~~are less certain,~~in other regions, including the ~~related manufacturing costs are expensed~~U.S. See Note 6 to our accompanying Consolidated Financial Statements for additional information regarding our inventory.

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

R&D ~~expenses.~~

~~Selling, General and Administrative~~

~~SG&A Expense increased to $130.5 million and $394.1 million~~expense consisted of the following:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Research and early development	$	59.2	$	35.2	$	24.0	$	148.7	$	123.6	$	25.1
Valoctocogene roxaparvovec	29.1		28.4		0.7		84.0		92.6		(8.6)
Voxzogo	26.1		30.7		(4.6)		99.0		97.8		1.2
Approved products	25.8		31.2		(5.4)		80.5		97.5		(17.0)
BMN 307	14.6		18.6		(4.0)		44.7		53.7		(9.0)
Other	3.1		3.0		0.1		10.8		6.2		4.6
Total R&D expense	$	157.9	$	147.1	$	10.8	$	467.7	$	471.4	$	(3.7)

The increase in R&D expense for the three months ended September 30, 2021 as compared to the same period in 2020 primarily comprised the following:

The decrease in R&D expense for the nine months ended September 30, ~~2017, respectively, from $118.8~~2021 as compared to the same period in 2020 primarily comprised the following:

We expect R&D expense to increase in ~~SG&A expense was~~future periods, primarily ~~a result of the following (in millions):~~

due to increased activities for our research and early development programs while we continue to develop our later stage programs.

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

Sales and marketing (S&M) expense

$
67.0

$
61.3

$
5.7

$
201.9

$
174.9

$
27.0

General and administrative (G&A) expense

63.5

57.5

6.0

192.2

158.7

33.5

Total SG&A expense

$
130.5

$
118.8

$
11.7

$
394.1

$
333.6

$
60.5

Selling, General and Administrative

Three Months Ended September 30,

Nine Months Ended September 30,

S&M expense by product

2017

2016

Change

2017

2016

Change

Brineura

$
8.3

$
4.9

$
3.4

$
20.7

$
9.2

$
11.5

Kuvan

19.4

13.6

5.8

62.6

42.9

19.7

Naglazyme

11.9

12.6

(0.7
)

37.3

36.6

0.7

Vimizim

18.4

16.9

1.5

53.7

48.0

5.7

Other and not allocated

9.0

13.3

(4.3
)

27.6

38.2

(10.6
)
Total S&M expense

$
67.0

$
61.3

$
5.7

$
201.9

$
174.9

$
27.0

Table of ~~$5.7 million~~Contents

Management’s Discussion and ~~$27.0 million in S&M expense, respectively, compared to the same periods in 2016, was primarily related to the following:~~

~~an increase in Kuvan S&M expense due to continued worldwide expansion~~Analysis of ~~commercial activities~~Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as ~~a result of acquiring the worldwide rights to Kuvan, except for Japan, on January 1, 2016;~~

otherwise disclosed)

~~an increase in Brineura S&M expense primarily due to commercial marketing expense related to the launch of Brineura; and~~

~~an increase in Vimizim S&M expense due to continued expansion of our worldwide commercial activities; offset by~~

~~a decrease in other and not allocated S&M expense primarily due to the decrease in S&M expenses related to the terminated programs, primarily Kyndrisa.~~

~~G&A~~administrative (G&A) expense primarily consisted of corporate support and other administrative expenses, including administrative employee-related expenses.

SG&A expenses ~~which increased~~consisted of the following:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
S&M expense	$	97.0	$	101.1	$	(4.1)	$	292.0	$	293.0	$	(1.0)
G&A expense	86.3		78.4		7.9		249.8		249.2		0.6
Total SG&A expense	$	183.3	$	179.5	$	3.8	$	541.8	$	542.2	$	(0.4)

S&M expenses by product were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
PKU Products (Kuvan and Palynziq)	$	29.9	$	30.0	$	(0.1)	$	91.9	$	91.8	$	0.1
MPS Products (Aldurazyme, Naglazyme and Vimizim)	23.9		25.4		(1.5)		76.0		78.0		(2.0)
Voxzogo	18.5		8.2		10.3		52.9		19.9		33.0
Valoctocogene roxaparvovec	13.1		26.9		(13.8)		37.6		70.6		(33.0)
Brineura	8.9		8.5		0.4		26.1		27.3		(1.2)
Other	2.7		2.1		0.6		7.5		5.4		2.1
Total S&M expense	$	97.0	$	101.1	$	(4.1)	$	292.0	$	293.0	$	(1.0)

The decrease in S&M expense for the three and nine months ended September 30, ~~2017,~~2021 as compared to the same periods in 2020 was primarily due to a reduction in valoctocogene roxaparvovec activities based on a change in anticipated timelines for potential approval following regulatory responses received in the third quarter of 2020 requesting additional data, partially offset by an increase in pre-commercialization activities related to Voxzogo.

The increase in G&A expense for the three ~~and~~months ended September 30, 2021 as compared to the same period in 2020 was primarily due to the idle plant time related to maintaining our valoctocogene roxaparvovec manufacturing capabilities.

G&A expense for the nine months ended September 30, ~~2016, primarily due~~2021 compared to ~~increased personnel and related costs mainly due to increased headcount.~~

the same period in 2020 was relatively flat.

We expect SG&A expense to increase in future periods as a result of ~~the continued commercial~~preparing to launch new products and support of ~~Brineura, pre-commercialization efforts related to product candidates, the continued international expansion~~our global business as it grows.

Table of ~~Kuvan~~Contents

Management’s Discussion and ~~Vimizim,~~Analysis of Financial Condition and ~~the increase in administrative support required for our expanding operations.~~

Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

Intangible Asset Amortization and Contingent Consideration

and Gain on Sale of Nonfinancial Assets

Changes during the periods presented for Intangible Asset Amortization and Contingent Consideration and Gain on Sale of Nonfinancial Assets were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Changes in the fair value of contingent consideration (gain) / loss	$	1.8	$	1.9	$	(0.1)	$	6.3	$	1.4	$	4.9
Amortization of intangible assets	15.4		15.5		(0.1)		46.3		46.6		(0.3)
Total intangible asset amortization and contingent consideration	$	17.2	$	17.4	$	(0.2)	$	52.6	$	48.0	$	4.6

Gain on sale of nonfinancial assets	$	—	$	—	$	—	$	—	$	59.5	$	(59.5)

Fair value of contingent consideration – the increase in the fair value of contingent ~~acquisition~~ consideration ~~payable result from updates~~for the nine months ended September 30, 2021 as compared to the estimated probability of achievement or assumed timing of milestones and adjustments to the discount periods and rates. Intangible asset amortization and contingent consideration expense consisted of the following (in millions):

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

Changes in the fair value of contingent
acquisition consideration payable

$
(3.8
)

$
2.1

$
(5.9
)

$
3.4

$
(57.0
)

$
60.4

Amortization of intangible assets

7.6

7.6

—

22.7

22.7

—

Total intangible asset amortization and
contingent consideration

$
3.8

$
9.7

$
(5.9
)

$
26.1

$
(34.3
)

$
60.4

~~The changes~~same period in ~~the fair value of the contingent acquisition consideration payable were primarily~~2020 was attributable to changes in the estimated probability of achieving ~~development~~sales milestones based on the current status of the related development programs as well as the passage of time. The majority of the changes in fair value of contingent acquisition consideration payable for each period presented was attributed to the following:

during the three months ended September 30, 2017, we reduced the estimated probability of achieving the Firdapse FDA approval milestone prior to its expiration date to zero, which resulted in a decrease of $4.2 million due to the reversal of the fair value of a portion of the contingent consideration payable to the former Huxley Pharmaceuticals Inc. shareholders;

during the nine months ended September 30, 2017, the continued progress of the PKU developmental program for pegvaliase, offset by the reversal of the fair value of the Firdapse FDA approval milestone; and

during the nine months ended September 30, 2016, the termination of the Kyndrisa and reveglucosidase alfa development programs that resulted in the reversal of the fair value of the remaining contingent consideration payable to the former Prosensa Holding N.V. and Zystor Therapeutics, Inc. shareholders.

~~Impairment of Intangible Assets~~

~~In the second quarter of 2016, we recorded an impairment charge of $599.1 million~~ related to our PKU products.

Amortization of intangible assets – the ~~Kyndrisa and other exon and reveglucosidase alfa IPR&D assets based on the termination of the internal development of the respective programs. No impairment charges were recorded in~~expense for the three and nine months ended September 30, ~~2017. See Note 8~~2021 as compared to ~~our accompanying Condensed Consolidated Financial Statements for additional information regarding our Intangible Assets.~~

the same periods in 2020 was relatively flat.

Gain on Sale of Nonfinancial Assets – the decrease in the nine months ended September 30, 2021 is due to the recognition of a gain of $59.5 million in the nine months ended September 30, 2020 related to the divestiture and sale of the Firdapse business.

Interest Income

We invest our cash ~~short-term~~equivalents and ~~long-term~~ investments in U.S. government securities and other high credit quality debt securities in order to limit default and market risk. Interest ~~income totaled $4.0 million and $10.0 million~~Income was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Interest income	$	1.8	$	4.0	$	(2.2)	$	8.7	$	13.5	$	(4.8)

Interest Income for the three and nine months ended September 30, ~~2017, respectively,~~2021 decreased as compared to ~~$1.6 million~~same period in 2020 primarily due to lower interest rates and ~~$4.6 million~~total portfolio returns.

We expect interest income to be lower over the next 12 months due to lower interest rates and yields on our cash equivalents and investments.

Interest Expense

We incur interest expense primarily on our convertible debt. Interest Expense for the periods presented was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Interest expense	$	3.9	$	9.6	$	(5.7)	$	11.5	$	24.6	$	(13.1)

Interest Expense for the three and nine months ended September 30, ~~2016, respectively. The increase~~2021 compared to 2020 was lower due primarily to the settlement of the 2020 Notes in the fourth quarter of 2020.

We do not expect interest ~~income during~~expense to fluctuate significantly over the next 12 months.

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

Other Income, Net

Other Income, Net for the periods presented was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Other income, net	$	8.9	$	1.2	$	7.7	$	11.8	$	1.9	$	9.9

Other Income, Net for the three and nine months ~~ended~~ September 30, ~~2017,~~2021 increased compared to the ~~three and nine months ended September 30, 2016 was~~same periods in 2020 primarily due to ~~higher investment balances, which increased due to~~ the ~~investment~~receipt of ~~the net~~insurance proceeds in excess of $481.7 million from the August 2017 issuance of $495.0 million in aggregate principal amount of 0.599% senior subordinated convertible notes due in 2024 (the 2024 Notes) and higher average interest rate on investments. Due to higher investment balances offset in part by planned spend, over the next 12 months we expect an increase in interest income from present levels.

~~Interest Expense~~

~~We incur interest expense on our convertible debt. Interest expense consisted of the following (in millions):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

Change

2017

2016

Change

Coupon interest

$
2.7

$
2.5

$
0.2

$
7.2

$
7.5

$
(0.3
)
Amortization of issuance costs

1.1

0.8

0.3

2.9

2.5

0.4

Accretion of discount on convertible notes

7.1

6.7

0.4

20.9

19.8

1.1

Total interest expense

$
10.9

$
10.0

$
0.9

$
31.0

$
29.8

$
1.2

~~Interest expense primarily consisted of amounts related to our senior subordinated convertible notes. Interest expense~~direct costs incurred in the ~~three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016~~ ~~increased due to the issuance~~third quarter of ~~the 2024 Notes. We expect interest expense to increase over the next 12 months d~~ue to the coupon interest and amortization of issuance costs related to the 2024 Notes. See Note 11 to our accompanying Condensed Consolidated Financial Statements for additional information regarding our debt.

2021.

Benefit from Income Taxes

~~For the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017, we recognized a benefit from income taxes of $8.1 million and $24.8 million, respectively, compared to the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2016~~ ~~when we recognized an~~

The following table summarizes our income tax benefit:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Benefit from income taxes	$	(9.7)	$	(846.0)	$	836.3	$	(2.6)	$	(839.1)	$	836.5

Tax benefit ~~of $29.4 million and $199.4 million, respectively. The benefit from income taxes for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016~~ primarily included the reversal of the deferred tax liability associated with the write-off of the IPR&D related to Kyndrisa and reveglucosidase alfa. We have historically computed our interim period benefit from income taxes by applying our forecasted effective tax rate to year-to-date earnings. However, due to a significant amount of U.S. permanent differences relative to the amount of U.S. forecasted income used in computing the effective tax rate, the effective tax rate can be highly sensitive to minor fluctuations in U.S. forecasted income. As such, we have computed the U.S. component of the consolidated benefit from income taxes for the ~~three and nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and 2016 using an actual year-to-date tax calculation. Foreign tax expense~~ was computed using a forecasted annual effective tax rate for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~.

2020. The ~~benefit~~Benefit from ~~income taxes~~Income Taxes for the three and nine months ended September 30, ~~2017~~2021 and ~~2016 also~~2020 consisted of state, federal and foreign current tax expense ~~that~~which was offset by tax benefits related to stock option exercises and deferred tax benefits from federal orphan drug credits and ~~the federal and California~~ R&D ~~credits,~~credits.

In the three month ended September 30, 2020, we completed an intra-entity transfer of certain IP rights to an Irish subsidiary where our Ex-US regional headquarters are located. The transaction did not result in a taxable gain however, our Irish subsidiary recognized a deferred tax asset for the book and tax basis difference of the transferred IP. As a result, we recognized a deferred tax asset of $835.1 million, and related tax benefit ~~related to stock option exercises during these periods, which resulted in a net tax benefit in both periods. See Note 15 to~~on our Condensed Consolidated Financial Statements ~~included in our Annual Report~~based on ~~Form 10-K for~~ the ~~year ended December 31, 2016 for additional discussion~~fair value of the ~~components of our benefit from income taxes.~~

transferred intellectual property rights.

Financial Position, Liquidity and Capital Resources

As of September 30, ~~2017,~~2021, we had ~~approximately $1.7~~$1.55 billion in cash, cash equivalents and ~~short-term and long-term~~ investments. We expect to fund our operations with our net product revenues from our commercial products, cash, cash equivalents and ~~short-term and long-term~~ investments, supplemented as may become necessary by proceeds from equity or debt financings and loans, or collaborative agreements with corporate partners. We believe that our existing cash, cash equivalents and investments and cash we expect to generate from operations will be sufficient to satisfy our liquidity requirements for the next 12 months. We may require additional financing to fund the repayment of our convertible debt, future milestone payments and our future operations, including the commercialization of our products and product candidates currently under development, preclinical studies and clinical trials, and potential licenses and acquisitions. We will need to raise additional funds from equity or debt securities, loans or collaborative agreements if we are unable to satisfy our liquidity requirements. The timing and mix of our funding options could change depending on many factors, including how much we elect to spend on our development programs, potential licenses and acquisitions of complementary technologies, products and companies or if we elect to settle all or a portion of our convertible debt in cash.

Our ability to raise additional capital may also be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, financial markets in the U.S. and worldwide resulting from the ongoing COVID-19 pandemic.

In managing our liquidity needs in the U.S., we do not rely on unrepatriated earnings as a source of ~~funds and we have not provided for U.S. federal or state income taxes on these undistributed foreign earnings.~~funds. As of September 30, ~~2017, $87.3~~2021, $192.3 million of our ~~$1.7~~$1.55 billion balance of cash, cash equivalents and investments was held in ~~foreign~~non-U.S. subsidiaries, a significant portion of which is required to fund the liquidity needs of these ~~foreign~~non-U.S. subsidiaries. For additional discussion regarding income taxes, see Note 1518 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~.

2020.

We are mindful that conditions in the current macroeconomic environment could affect our ability to achieve our goals. ~~Some~~We sell our products in countries that face economic volatility and weakness. Although we have historically collected receivables from customers in such countries, sustained weakness or further deterioration of the ~~factors that could affect~~local economies and currencies and adverse effects of the impact of the ongoing COVID-19 pandemic may cause customers in those countries to be unable to pay for our business include: future changes to healthcare reform in the U.S., a continuation of uncertainty with respect to, or worsening of, global economic conditions, patent expirations of competitive products and the launch of generic competitors, continued government pricing pressures internationally and the potential volatility in foreign currency exchange rates.products. We will continue to monitor these conditions and will attempt to adjust our business processes, as appropriate, to mitigate ~~these~~macroeconomic risks to our business.

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

Our liquidity and capital resources as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020 were as ~~follows (in millions):~~

follows:

	September 30,		December 31,
	2017		2016		Change				September 30, 2021		December 31, 2020		Change
Cash and cash equivalents	$	431.4	$	408.3	$	23.1		Cash and cash equivalents	$	617.1	$	649.2	$	(32.1)
Short-term investments		825.7		381.3		444.4		Short-term investments	462.3		416.2		46.1
Long-term investments		416.3		572.8		(156.5	)	Long-term investments	466.7		285.5		181.2
Cash, cash equivalents and investments	$	1,673.4	$	1,362.4	$	311.0		Cash, cash equivalents and investments	$	1,546.1	$	1,350.9	$	195.2

Convertible debt	$	1,166.0	$	683.2	$	482.8
Total convertible debt, net								Total convertible debt, net	$	1,078.1	$	1,075.1	$	3.0

Our cash flows for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 are summarized as ~~follows (in millions):~~

follows:

Cash ~~Used in~~Provided by Operating Activities

~~Cash used in~~

Net cash provided by operating activities ~~decreased~~increased by ~~$204.2~~$194.7 million ~~from $227.6~~to $293.4 million ~~during~~in the nine months ended September 30, ~~2016~~2021, compared to ~~$23.4~~cash provided by operating activities of $98.7 million ~~during~~in the nine months ended September 30, ~~2017.~~ ~~Cash used in operating activities~~2020. The increase was primarily ~~consisted~~attributed to the timing of ~~net loss of $65.7 million, adjusted for non-cash items such as $106.7 million for stock-based~~cash receipts from our customers and licensees, lower employee compensation ~~expenses, $59.2 million for depreciation~~related payments and ~~amortization~~ ~~expense, $23.8 million of non-cash interest expense, partially offset by $36.2 million for deferred income taxes and $3.3 million gain on the sale of strategic investments. Cash used in operating activities~~ ~~in the comparable period in 2016 was~~ ~~adjusted for the non-cash~~ ~~impairment of intangible assets of~~ ~~$599.1 million. Changes in operating assets and liabilities~~ ~~during the nine months ended September 30, 2017~~ resulted in a net cash outflow of $122.5 million that consisted primarily of increased cash outflow for increased inventory spending for all commercial products to meet anticipated future sales demand.

tax refund proceeds.

Cash Used in Investing Activities

Net cash used in investing activities increased by ~~$270.6~~$246.3 million ~~from $174.4~~to $310.9 million ~~during~~in the nine months ended September 30, ~~2016~~2021, compared to ~~$445.0~~cash used in investing activities of $64.6 million ~~during~~in the nine months ended September 30, ~~2017.~~ 2020. The increase in ~~net~~ cash used in investing activities ~~during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016~~was primarily attributable to ~~a $216.5~~ ~~million increase in~~higher net purchases of available-for-sale debt securities and the absence of the proceeds received from divestiture and sale of Firdapse to a ~~$62.5 million increase~~third party in the first quarter of ~~capital purchases.~~ ~~We expect to continue to make significant capital investments in our manufacturing~~2020 partially offset by lower purchases of property, plant and ~~administrative facilities to accommodate anticipated demand for new commercial products, clinical studies and the related growth in personnel to support those activities.~~

equipment.

Cash Provided by (Used in) Financing Activities

Net cash ~~provided by~~used in financing activities ~~decreased~~increased by ~~$213.2~~$561.7 million ~~from $707.2~~to $14.4 million ~~for~~in the nine months ended September 30, ~~2016~~2021, compared to ~~$494.0~~cash provided by financing activities of $547.3 million ~~during~~in the nine months ended September 30, ~~2017. The decrease in net cash provided by financing activities for~~2020 primarily due to the ~~nine months ended September 30, 2017 was primarily attributable to a decrease of $712.9 million in~~ ~~proceeds from public~~ ~~offerings~~ ~~of common stock and a~~ ~~$3.4 million decrease in proceeds from employee equity transactions~~, ~~partially offset by~~ ~~$481.7 million of net~~ proceeds from the ~~2024 Notes issued in August 2017~~ ~~and a $23.4 million decrease in taxes paid related to net share settlement of employee equity awards.~~

~~Other Information~~

~~Our indebtedness consists primarily~~issuance of the ~~Company’s 0.75%~~2027 Notes in the second quarter of 2020.

Our $1.1 billion (undiscounted) of total convertible debt as of September 30, 2021 will impact our liquidity due to the semi-annual cash interest payments. As of September 30, 2021, our indebtedness consisted of our 0.599% senior subordinated convertible notes due in ~~2018~~2024 (the ~~2018~~2024 Notes)~~, the Company’s 1.50%~~ and our 1.25% senior subordinated convertible notes due in ~~2020~~2027 (the ~~2020 Notes)~~2027 Notes and together with the 2024 Notes, the Notes), which, if not converted, will be required to be repaid in cash at maturity in ~~2018, 2020~~August 2024 and ~~2024,~~May 2027, respectively. ~~The 2018~~We will need cash not only to pay the ongoing interest due on the Notes ~~2020 Notes and 2024 Notes are referred~~during their term, but also to ~~collectively herein as~~repay the Notes. Our senior subordinated convertible notes due in 2017 matured on April 23, 2017, with conversion of all principal amounts except for a final cash settlement of $26,000. In August 2017, we completed an offering of $495.0 million in aggregate principal amount of the Notes if not converted.

In October 2018, we entered into an unsecured revolving credit facility of up to $200.0 million which includes a letter of credit subfacility and a swingline loan subfacility. The credit facility is intended to finance ongoing working capital needs and for other general corporate purposes. In May 2021, we amended the credit facility agreement, extending the maturity date from October 19, 2021 to May 28, 2024, ~~Notes, which resulted~~among other changes. The amended credit facility contains financial covenants including a

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions of U.S. dollars, except as otherwise disclosed)

maximum leverage ratio and a minimum interest coverage ratio. As of September 30, 2021, there were no amounts outstanding under the credit facility and we and certain of our subsidiaries that serve as guarantors were in ~~net proceeds of~~ $481.7 million, after deducting commissions and offering expenses. The 2024 Notes bear interest at the stated annual rates, which is payable semiannually in arrears on February 1 and August 1 of each year beginning on February 1, 2018. Seecompliance with all covenants.

For additional information related to our convertible debt see Note 119 to our accompanying Condensed Consolidated Financial Statements ~~for additional discussion.~~

~~Our $1.2 billion (undiscounted) of total convertible debt as of September 30, 2017 will impact~~and Note 13 - Debt included in our liquidity due to the semi-annual cash interest payments and will further impact our liquidity if we elect to settle all or portions of the 2018 Notes or the 2020 Notes in cash upon conversion. In addition, in the event the conditional conversion feature of the 2018 Notes or 2020 Notes is triggered, holders of such 2018 Notes and 2020 Notes will be entitled to convert the 2018 Notes and 2020 Notes at any time during specified periods at their option. Our liquidity could be adversely affected if we do not elect to settle conversions of the 2018 Notes and 2020 Notes solely in shares of our common stock. Even if holders of the 2018 Notes or 2020 Notes do not elect to convert their 2018 Notes and 2020 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of such Notes as a current rather than long-term liability (for example, if there are 12 months or less remaining until maturity), which would result in a material reduction of our net working capital. Moreover, if holders of the Notes do not elect to convert their Notes and we are unable to refinance the Notes, we must repay the Notes. We may seek to refinance or repay these obligations through funds raised from third-party financing, or equity or debt financings, none of which may be availableAnnual Report on commercially reasonable terms, if at all. In addition, depending on market conditions, our financial position and performance and other factors, we may in the future choose to use a portion of our cash or cash equivalents to repurchase our convertible debt or other securities.

In August 2016, we sold 7.5 million shares of our common stock at a price of $96.00 per share in an underwritten public offering pursuant to an effective registration statement previously filed with the SEC. We received net proceeds of approximately $712.9 million from this public offering after accountingForm 10-K for the ~~underwriting discount and offering costs.~~

In November 2016 we entered into a credit agreement (the Credit Agreement) providing for up to $100.0 million in revolving loans (the Revolving Credit Facility). We expect to use the proceeds of the Revolving Credit Facility to finance ongoing working capital needs (including timing differences resulting from the strategic management of short-term investments) and for other general corporate purposes. As of September 30, 2017, we had not drawn on the Revolving Credit Facility. Although quarterly interest payments will be due on any outstanding balance due, we anticipate any balance due to be short-term in nature. See Note 11 to our accompanying Condensed Consolidated Financial Statements for additional discussion.

~~We sell our products in other countries, including Southern European countries, Russia, Chile and Brazil, which~~ face economic volatility and weakness. Although we have historically collected receivables from customers in those countries, sustained weakness or further deterioration of the local economies and currencies may cause customers in those countries to be unable to pay for our products.

year ended December 31, 2020.

We cannot estimate with certainty the cost to complete any of our product development programs. Additionally, we cannot precisely estimate the time to complete any of our product development programs or when we expect to receive net cash inflows from any of our product development programs. Please see “~~Risk Factors~~”“Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q, for a discussion of the reasons we are unable to estimate such ~~information, and in particular the following risk factors:~~

If we fail to obtain regulatory approval to commercially market and sell our product candidates, or if approval of our product candidates is delayed, we will be unable to generate revenue from the sale of these product candidates, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will increase;

information.

If we are unable to successfully develop and maintain manufacturing processes for our products to produce sufficient quantities at acceptable costs, we may be unable to meet demand for our products and lose potential revenue, have reduced margins or be forced to terminate a program;

•

If we fail to compete successfully with respect to product sales, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product and our revenue could be adversely affected; and

If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our product candidates may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.

Our investment in our product development programs and continued development of our existing commercial products has a major impact on our operating performance. Our R&D expenses ~~of our major development programs from~~for the period since inception toas of September 30, ~~2017~~2021 were as ~~follows (in millions):~~

follows:

Since Program

Inception

BMN 250

$
136.5

Brineura

227.7

Pegvaliase

485.9

Valoctocogene roxaparvovec

204.7

Vosoritide

213.8

Other approved products

962.4

Other and non-allocated

Not meaningful


	Since Program Inception
	Since Program Inception
Valoctocogene roxaparvovec	$	794.0
Voxzogo	$	669.7
BMN 307	$	224.6
Approved products	$	2,345.2

We may need or elect to increase our spending above our current long-term plans ~~and consequently we may~~to be ~~unable~~able to achieve our long-term goals. This may increase our capital requirements, including: costs associated with the commercialization of our ~~products;~~products; additional clinical trials; investments in the manufacturing of our commercial ~~products; pre-clinical~~products; preclinical studies and clinical trials for our ~~other~~ product candidates; potential licenses and other acquisitions of complementary technologies, products and companies; and general corporate purposes.

Our future capital requirements will depend on many factors, including, but not limited to:

~~product sales and profitability of our products;~~

~~manufacturing, supply or distribution of our product candidates and commercial products;~~

~~progress of our product candidates through the regulatory process and~~ •our ability to successfully ~~commercialize any such products that receive regulatory approval;~~

market and sell our products;

•the time and cost necessary to develop commercial manufacturing processes, including quality systems, and to build or acquire manufacturing capabilities;

~~results~~•the progress and success of our preclinical studies and clinical trials ~~announcements~~(including the manufacture of ~~technological innovations or new products by us or our competitors;~~

materials for use in such studies and trials);

~~generic competition to Kuvan relating to our settlements with DRL (related to Kuvan tablets~~•the timing, number, size and ~~powder) and Par (related to Kuvan tablets and powder) or potential generic competition from future competitors;~~

~~government regulatory action affecting our product candidates, our products or our competitors’ product candidates and products in both the U.S. and non-U.S. countries;~~

~~developments or disputes concerning patent or proprietary rights;~~

~~general market conditions and fluctuations for the emerging growth and pharmaceutical market sectors;~~

~~economic conditions in the U.S. or abroad;~~

~~negative publicity about our company or the pharmaceutical industry;~~

~~broad market fluctuations in the U.S., the EU or in other parts of the world;~~

actual or anticipated fluctuations in our operating results, including due to timing of large order for our products, in particular in Latin America, where governments place large periodic orders for Naglazyme and Vimizim;

~~changes in company assessments or financial estimates by securities analysts;~~

~~acquisitions of products, businesses, or other assets; and~~

~~sales~~scope of our ~~shares~~preclinical studies and clinical trials;

•the time and cost necessary to obtain regulatory approvals and the costs of ~~stock~~post-marketing studies which may be required by ~~us, our significant stockholders, or members~~regulatory authorities; and

•the progress of ~~our management or Board of Directors.~~

research programs carried out by us.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our consolidated financial position or results of operations.

Contractual and Commercial Obligations

We have contractual and commercial obligations under our convertible debt, ~~operating~~ leases and other obligations related to R&D activities, purchase commitments, licenses and sales royalties with annual minimums. ~~Our~~As of September 30, 2021, such commitments and other minimum contractual obligations asfor clinical and post-marketing services were estimated at approximately $107.7 million.

As of September 30, ~~2017~~ ~~are presented in the table below (in millions).~~

Payments Due Within

More

1 Year

>1 -3

> 3 - 5

Than 5

or Less

Years

Years

Years

Total

2018 Notes and related interest

$
2.8

$
376.4

$
—

$
—

$
379.2

2020 Notes and related interest

5.6

11.3

377.8

—

394.7

2024 Notes and related interest

3.0

5.9

5.9

500.9

515.7

Operating leases

8.8

6.2

4.2

12.2

31.4

R&D and purchase commitments

41.5

—

—

—

41.5

Total

$
61.7

$
399.8

$
387.9

$
513.1

$
1,362.5

~~We are~~2021, we were also subject to contingent payments ~~related to~~totaling approximately $708.8 million upon achievement of certain development and regulatory activities and commercial sales ~~and licensing~~ milestones ~~totaling approximately $600.2 million as of September 30, 2017, which are due upon achievement of certain development and commercial milestones, and~~ if they occur before certain dates in the future. Of this amount, ~~$218.3~~$70.0 million ~~(USD equivalent~~were considered probable and comprised of ~~185~~commercial milestones related to the

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(In millions, except as otherwise disclosed)

acquisition of certain rights and other assets with respect to Kuvan and Palynziq from a third party, $405.5 million ~~Euros translated at 1.18 USD per Euro) relates~~were considered reasonably possible and primarily related to ~~the Merck PKU Business acquisition~~development milestones and ~~$53.3~~$233.3 million ~~relates to programs that~~were considered remote as we are no longer ~~being developed. See Note 18~~developing the related programs.

As of September 30, 2021, the fair value of the contingent liabilities recorded on our Condensed Consolidated Balance Sheet was $63.4 million, of which $48.2 million was short term.

Other than as set forth above, there have been no material changes to our ~~accompanying Condensed Consolidated Financial Statements~~contractual and commercial obligations during the nine months ended September 30, 2021, as compared to the obligations disclosed in Management’s Discussion and Analysis in our Annual Report on Form 10-K for ~~additional discussion.~~

the year ended December 31, 2020.

I~~tem 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risks during the nine months ended September 30, ~~2017~~2021 have not materially changed from those discussed in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2016, which was filed with the SEC on February 27, 2017.~~

2020.

I~~tem 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

(a) Controls and Procedures

An evaluation was carried out, under the supervision of and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this report.

Based on the evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of September 30, ~~2017.~~

2021.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management must apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure controls system are met.

There were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. We ~~are utilizing~~continue to utilize the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013 Framework on internal control.

PART II. OTHER INFORMATION

I~~tem 1.~~

~~Legal Proceedings.~~

Item 1. Legal Proceedings

On September 25, 2020, a ~~paragraph IV notice letter, dated~~purported shareholder class action lawsuit was filed against us, our Chief Executive Officer, our President of Worldwide Research and Development and our Chief Financial Officer in the United States District Court in the Northern District of California, alleging violations under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as amended (the Exchange Act). The complaint alleges that the Company made materially false or misleading statements regarding the clinical trials and Biologics License Application (BLA) for valoctocogene roxaparvovec by purportedly failing to disclose that differences between the Company’s Phase 1/2 and Phase 3 clinical studies limited the ability of the Phase 1/2 study to support valoctocogene roxaparvovec’s durability of effect and, as a result, that it was foreseeable that the FDA would not approve the BLA without additional data. The complaint seeks an unspecified amount of damages, pre-judgment and post-judgment interest, attorneys’ fees, expert fees, and other costs. In December ~~23, 2016, from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd. (collectively, DRL), notifying us that DRL had~~2020, the court hearing the case appointed Arbejdsmarkedets Tillægspension as lead plaintiff. The lead plaintiff filed an ~~abbreviated new drug application (ANDA) seeking approval~~amended complaint in February 2021, dropping our Chief Financial Officer as a defendant, and asserting that the Company misled investors about the progress of ~~a proposed generic version of Kuvan (sapropterin dihydrochloride) 100 mg oral powder prior to~~ the ~~expiration~~FDA's review of our ~~patents listed~~BLA for valoctocogene roxaparvovec. Our motion to dismiss the complaint was filed on April 22, 2021. We believe that the claims have no merit and we intend to vigorously defend this action.

On October 22, 2021, a purported securities class action lawsuit was filed against us, our Chief Executive Officer, our current and prior Chief Financial Officers, and our President of Worldwide Research & Development in the ~~FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book). We filed a lawsuit~~United States District Court for the Northern District of California, alleging patent infringement against DRL. In August 2017, we entered into a settlement agreement with DRL (the DRL Powder Settlement Agreement) that resolved the patent litigation with DRL in the U.S. related to Kuvan 100 mg oral powder. Under the termsviolations under Sections 10(b) and 20(a) of the ~~DRL Powder Settlement Agreement,~~Exchange Act. The complaint alleges that the Company made materially false or misleading statements regarding BMN 307 by purportedly failing to disclose information about BMN 307’s safety profile, and by purportedly overstating BMN 307’s clinical and commercial prospects. The complaint seeks an unspecified amount of damages, pre-judgment and post-judgment interest, attorneys’ fees, expert fees, and other costs. We believe that the claims have no merit and we ~~granted DRL a non-exclusive license~~intend to our Kuvan-related patents to allow DRL to market a generic version of sapropterin dihydrochloride in oral powder form in 100 mg and 500 mg packet formulations in the U.S. for the indications approved for Kuvan beginning on October 1, 2020, or earlier under certain circumstances.

We also received two separate paragraph IV notice letters, dated January 14, 2016 and January 22, 2015, from Par Pharmaceutical, Inc. (Par), notifying us that Par had filed an ANDA seeking approval of proposed generic versions of Kuvan 100 mg oral powder and Kuvan 100 mg oral tablets, respectively, prior to the expiration of our patents listed in the FDA’s Orange Book. We filed two lawsuits alleging patent infringement against Par (the lawsuit against Par pertaining to the proposed generic version of Kuvan 100 mg oral tablets was filed together with Merck & Cie), and the two Par cases were consolidated. In April 2017, we and Merck & Cie entered into a settlement agreement with Par (the Par Settlement Agreement) that resolved both cases against Par. Under the Par Settlement Agreement, we granted Par a non-exclusive license to our Kuvan-related patents to allow Par to market a generic version of sapropterin dihydrochloride in 100 mg oral tablets and oral powder in 100 mg and 500 mg packet formulations in the U.S. for the indications approved for Kuvan beginning on: April 1, 2021 if Par is not entitled to the statutory 180-day first filer exclusivity period; October 1, 2020 if Par is entitled to the statutory 180-day first filer exclusivity period; or earlier under certain circumstances.

We also received a paragraph IV notice letter, dated October 3, 2014, from DRL notifying us that DRL had filed an ANDA seeking approval of a proposed generic version of Kuvan 100 mg oral tablets prior to the expiration of our patents listed in the FDA’s Orange Book. We, together with Merck & Cie, filed a lawsuit alleging patent infringement against DRL. In September 2015, we and Merck & Cie entered into a settlement agreement with DRL (the DRL Tablet Settlement Agreement) that resolved the patent litigation with DRL in the U.S. related to Kuvan 100 mg oral tablets. Under the terms of the DRL Tablet Settlement Agreement, we granted DRL a non-exclusive license to our Kuvan-related patents to allow DRL to market a generic version of sapropterin dihydrochloride 100 mg oral tablets in the U.S. for the indications approved for Kuvan beginning on October 1, 2020, or earlier under certain circumstances.

vigorously defend this action.

I~~tem 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

An investment in our securities involves a high degree of risk. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business, financial condition, operating results or cash flows could be materially adversely affected. This could cause the value of our securities to decline, and you may lose all or part of your ~~investment~~.

investment.

We have marked with an asterisk (*) those risk factors below that include a substantive change from or update to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, which was filed with the SEC on February ~~27, 2017.~~

26, 2021.

Business and Operational Risks ~~Related~~

*The COVID-19 pandemic could continue to materially adversely affect our business, results of operations, and financial condition.

The COVID-19 pandemic has resulted in travel restrictions, quarantines, “work-from-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world, including in many countries in which we operate. Our ~~Business~~

global revenue sources, mostly in the form of demand interruptions such as missed patient infusions and delayed treatment starts for new patients, and our overall business operations were impacted by the COVID-19 pandemic, and we expect that the pandemic will continue to adversely impact our financial results and our business generally for at least the remainder of 2021 and potentially longer if the pandemic continues to impact countries in which we operate. Ongoing and future effects of the COVID-19 pandemic (or any future pandemic) on all aspects of our business and operations, including revenues, expenses, reserves and allowances, manufacturing, clinical trials and research and development costs, and the duration of such effects, are highly uncertain and difficult to predict.

The COVID-19 pandemic has adversely affected and will likely continue to adversely impact our product development programs, including preclinical study and clinical trial operations. We have been, and will likely continue to be, unable to initiate or continue conducting clinical trials as originally planned due to the prioritization of hospital resources toward the outbreak, difficulty in recruiting and retaining healthcare providers and staff due to their diversion toward treating COVID-19 patients or their heightened exposure to COVID-19, potential unwillingness of patients to enroll or continue in trials for fear of exposure to COVID-19 at sites, or the inability of patients to comply with clinical trial protocols as quarantines or travel restrictions impede patient movement or otherwise interrupt healthcare services. For example, we experienced delays in certain clinical trials and have had to reevaluate expected timelines for those trials. In addition, we rely on independent clinical investigators, contract research organizations (CROs) and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our preclinical studies and clinical trials, and the outbreak may affect their ability to devote sufficient time and resources to our programs or to travel to sites to perform work for us. Additionally, the COVID-19 pandemic has delayed, and may continue to

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postpone, necessary regulatory inspections and other interactions with regulators regarding our products in development, which could delay review or approval of our regulatory submissions.

COVID-19 could adversely affect our ability to source materials and supplies and successfully manufacture and distribute our product candidates and products. The outbreak could result in reduced operations of third-party suppliers of raw materials and supplies upon whom we rely or otherwise limit our ability to obtain sufficient materials and supplies necessary for production of our therapies. Our manufacturing facilities and those of our contract manufacturers are located in areas impacted by the COVID-19 pandemic, which may result in delays or disruptions in our ability to produce product candidates and products. If we or any third party in our supply or distribution chain are adversely impacted by the COVID-19 pandemic, including as a result of required closures, staffing shortages, production slowdowns and disruptions in delivery systems, our operations may be disrupted, limiting our ability to manufacture and distribute our product candidates for clinical trials and research and development operations and our products for commercial sales.

Our commercial operations have also been, and will likely continue to be, adversely impacted by the COVID-19 pandemic. Many of our products are administered via infusions in a clinic or hospital setting and/or by a healthcare professional. Treating COVID-19 patients has become the priority for many healthcare facilities and workers, so it has become, and may continue to be, difficult for some of our patients to receive our therapies that are administered by infusion. Although we are working with our patient community and healthcare providers to find alternative arrangements where necessary, such as providing infusions at home, the revenue from doses of our products that are missed by patients and the lost revenues from delayed treatment starts for new patients will never be recouped. Moreover, some patients may choose to skip infusions because they do not want to risk exposure to COVID-19 by having a healthcare provider administer the therapy at a healthcare facility or at home. The pandemic has also hindered our ability to find new patients and start treating newly found patients, and it has limited our sales force’s ability to promote our products to distributors, hospitals, clinics, doctors and pharmacies, which could adversely affect our revenues and results of operations. In addition, the COVID-19 pandemic could adversely affect our workforce and the employees of companies with which we do business, thereby disrupting our business operations. We have implemented work-from-home policies for employees whose jobs do not require them to be onsite. Increased reliance by us and the companies with which we do business on personnel working from home may negatively impact productivity, increase cyber security risk, create data accessibility issues, increase the risk for communication disruptions, or otherwise disrupt or delay normal business operations. For our employees whose jobs require them to be onsite, we have taken precautions to avoid the spread of COVID-19 among our employees, but we cannot guarantee our workforce will not face an outbreak that could adversely impact our operations.

While the long-term economic impact and the duration of the COVID-19 pandemic may be difficult to predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which could reduce our ability to access capital and could negatively affect our liquidity and the liquidity and stability of markets for our common stock and convertible notes. In addition, a recession, further market correction or depression resulting from the COVID-19 pandemic could materially adversely affect our business and the value of our common stock and convertible notes.

To the extent the COVID-19 pandemic continues to adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in this Risk Factors section, such as those relating to our conducting a significant amount of our sales and operations outside of the U.S., exposure to changes in foreign exchange rates, our substantial indebtedness, our need to generate sufficient cash flows to service our indebtedness and finance our operations, our ability to comply with the covenants contained in the agreements that govern our indebtedness and the volatility of our stock price.

*Because the target patient populations for our products are small, we must achieve significant market share and maintain high per-patient prices for our products to achieve and maintain profitability.

All of our products target diseases with small patient populations. As a result, our per-patient prices must be relatively high in order to recover our development and manufacturing costs and achieve and maintain profitability. For Brineura, Naglazyme and Vimizim in particular, we must market worldwide to achieve significant market penetration of the product. In addition, because the number of potential patients in each disease population is small, it is not only important to find patients who begin therapy to achieve significant market penetration of the product, but we also need to be able to maintain these patients on therapy for an extended period of time. Due to the expected costs of treatment for our products, we may be unable to maintain or obtain sufficient market share at a price high enough to justify our product development efforts and manufacturing expenses.

*If we fail to obtain and maintain an adequate level of coverage and reimbursement for our products by third-party payers, the sales of our products would be adversely affected or there may be no commercially viable markets for our products.

The course of treatment for patients using our products is expensive. We expect patients to need treatment for extended periods, and for some products throughout the lifetimes of the patients. We expect that most families of patients will not be capable of paying for this treatment themselves. There will be no commercially viable market for our products without coverage and reimbursement from third-party payers. Additionally, even if there is a commercially viable market, if the level of reimbursement is below our expectations, our revenues and gross margin will be adversely affected.

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Third-party payers, such as government or private healthcare insurers, carefully review and increasingly challenge the prices charged for drugs. Reimbursement rates from private companies vary depending on the third-party payer, the insurance plan and other factors. Obtaining coverage and adequate reimbursement for our products may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician. Reimbursement systems in international markets vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis.

Government authorities and other third-party payers are developing increasingly sophisticated methods of controlling healthcare costs, such as by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payers are requiring that drug companies provide them with predetermined discounts from list prices as a condition of coverage, are using restrictive formularies and preferred drug lists to leverage greater discounts in competitive classes, and are challenging the prices charged for medical products. Further, no uniform policy requirement for coverage and reimbursement for drug products exists among third-party payers in the U.S. Therefore, coverage and reimbursement for drug products can differ significantly from payer to payer. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

We cannot be sure that coverage and reimbursement will be available for any product that we commercialize or will continue to be available for any product that we have commercialized and, if reimbursement is available, what the level of reimbursement will be. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval or continue to market any product that has already been commercialized.

Reimbursement in the European Union (EU) and many other territories must be negotiated on a country-by-country basis and in many countries the product cannot be commercially launched until reimbursement is approved. The timing to complete the negotiation process in each country is highly uncertain, and in some countries, we expect that it will exceed 12 months. Even after a price is negotiated, countries frequently request or require reductions to the price and other concessions over time.

For our future products, we will not know what the reimbursement rates will be until we are ready to market the product and we actually negotiate the rates. If we are unable to obtain sufficiently high reimbursement rates for our products, they may not be commercially viable or our future revenues and gross margin may be adversely affected.

Our competitors may develop, manufacture and market products that are more effective or less expensive than ours. They may also obtain regulatory approvals for their products faster than we can obtain them (including those products with orphan drug designation, which may prevent us from marketing our product entirely) or commercialize their products before we do. With respect to valoctocogene roxaparvovec, if the product candidate is approved, we will face a highly developed and competitive market for hemophilia A treatments. As we commercialize valoctocogene roxaparvovec, if approved, we may face intense competition from large pharmaceutical companies with extensive resources and established relationships in the hemophilia A community. If we do not compete successfully, our revenues would be adversely affected, and we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product.

Changes in methods of treatment of disease could reduce demand for our products and adversely affect revenues.

Even if our product candidates are approved, if doctors elect a course of treatment which does not include our products, this decision would reduce demand for our products and adversely affect revenues. For example, if gene therapy becomes widely used as a treatment of genetic diseases, the use of enzyme replacement therapy, such as Aldurazyme, Naglazyme, and Vimizim in MPS diseases, could be greatly reduced. Moreover, if we obtain regulatory approval for valoctocogene roxaparvovec, the commercial success of valoctocogene roxaparvovec will still depend, in part, on the acceptance of physicians, patients and healthcare payers of gene therapy products in general, and our product candidate in particular, as medically necessary, cost effective and safe. Changes in treatment method can be caused by the introduction of other companies’ products or the development of new technologies or surgical procedures which may not directly compete with ours, but which have the effect of changing how doctors decide to treat a disease.

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If we fail to develop new products and product candidates or compete successfully with respect to acquisitions, joint ventures, licenses or other collaboration opportunities, our ability to continue to expand our product pipeline and our growth and development would be impaired.

Our future growth and development depend in part on our ability to successfully develop new products from our research and development activities. The development of biopharmaceutical products is very expensive and time intensive and involves a great degree of risk. The outcomes of research and development programs, especially for innovative biopharmaceuticals, are inherently uncertain and may not result in the commercialization of any products.

Our competitors compete with us to attract organizations for acquisitions, joint ventures, licensing arrangements or other collaborations. To date, several of our former and current product programs have been acquired through acquisitions and several of our former and current product programs have been developed through licensing or collaborative arrangements, such as Aldurazyme, Kuvan and Naglazyme. These collaborations include licensing proprietary technology from, and other relationships with, academic research institutions. Our future success will depend, in part, on our ability to identify additional opportunities and to successfully enter into partnering or acquisition agreements for those opportunities. If our competitors successfully enter into partnering arrangements or license agreements with academic research institutions, we will then be precluded from pursuing those specific opportunities. Because each of these opportunities is unique, we may not be able to find a substitute. Several pharmaceutical and biotechnology companies have already established themselves in the field of genetic diseases. These companies have already begun many drug development programs, some of which may target diseases that we are also targeting, and have already entered into partnering and licensing arrangements with academic research institutions, reducing the pool of available opportunities.

Universities and public and private research institutions also compete with us. While these organizations primarily have educational or basic research objectives, they may develop proprietary technology and acquire patents that we may need for the development of our product candidates. We will attempt to license this proprietary technology, if available. These licenses may not be available to us on acceptable terms, if at all. If we are unable to compete successfully with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop new products and to continue to expand our product pipeline.

*The sale of generic versions of Kuvan by generic manufacturers has adversely affected and will continue to adversely affect our revenues and results of operations.

The Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act, permits the Food and Drug Administration (FDA) to approve abbreviated new drug applications (ANDAs) for generic versions of branded drugs. We refer to this process as the ANDA process. The ANDA process permits competitor companies to obtain marketing approval for a drug with the same active ingredient as a branded drug, but does not generally require the conduct and submission of clinical efficacy studies for the generic product. In place of such clinical studies, an ANDA applicant usually needs only to submit data demonstrating that its product is bioequivalent to the branded product.

Pursuant to the Hatch-Waxman Act, companies were permitted to file ANDA applications for proposed generic versions of Kuvan at any time after December 2011. We own several patents that cover Kuvan, and we have listed those patents in conjunction with that product in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book). The Hatch-Waxman Act requires an ANDA applicant seeking FDA approval of its proposed generic product prior to the expiration of our Orange Book-listed patents to certify that the applicant believes that our patents are invalid or will not be infringed by the manufacture, use or sale of the drug for which the application has been submitted (a paragraph IV certification) and notify us of such certification (a paragraph IV notice). Upon receipt of a paragraph IV notice, the Hatch-Waxman Act allows us, with proper basis, to bring an action for patent infringement against the ANDA filer, asking that the proposed generic product not be approved until after our patents expire. If we commence a lawsuit within 45 days from receipt of the paragraph IV notice, the Hatch-Waxman Act provides a 30-month stay, during which time the FDA cannot finally approve the applicant’s ANDA. If the litigation is resolved in favor of the ANDA applicant during the 30-month stay period, the stay is lifted and the FDA may approve the ANDA if it is otherwise ready for approval. The discovery, trial and appeals process in such a lawsuit is costly, time consuming, and may result in generic competition if the ANDA applicant prevails.

Between 2014 and 2016 we received paragraph IV notice letters from two pharmaceutical companies notifying us that each had filed ANDAs seeking approval of proposed generic versions of Kuvan. We filed lawsuits alleging patent infringement against each company, and between 2015 and 2017 we entered into settlement agreements with the companies that resolved the patent litigation in the U.S. The settlement agreements granted the companies non-exclusive licenses to our Kuvan-related patents to allow them to market generic versions of sapropterin dihydrochloride in the U.S. for the indications approved for Kuvan beginning on October 1, 2020, or earlier under certain circumstances. Generic versions of Kuvan first became available in the U.S. in October 2020, and as expected, our U.S. sales of Kuvan in the fiscal quarters since October 2020 have significantly declined as compared to prior periods. We expect that the continued availability of generic versions of sapropterin dihydrochloride in the U.S. will continue to adversely affect our U.S. sales of Kuvan.

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Any future ANDA or related legal proceeding could have an adverse impact on our stock price, and litigation to enforce our patents has, and is likely to continue to, cost a substantial amount and require significant management attention. If the patents covering Kuvan and its use are not upheld in litigation, or if any ANDA filer we bring suit against is found to not infringe our asserted patents, the resulting generic competition following the expiration of regulatory exclusivity would have a material adverse effect on our revenues and results of operations. Moreover, generic competition following the settlements described above could have a material adverse effect on our revenues and results of operations.

We also face generic competition for Kuvan in certain non-U.S. countries, and there is a process equivalent to the ANDA process under Article 10 of Directive 2001/83/EC in the EU. Our ability to successfully market and sell Kuvan in many countries in which we operate is based upon patent rights or certain regulatory forms of exclusivity, or both. The scope of our patent rights and regulatory exclusivity for Kuvan vary from country to country and are dependent on the availability of meaningful legal remedies in each country. If our patent rights and regulatory exclusivity for Kuvan are successfully challenged, expire, or otherwise terminate in a particular country, the resulting generic competition could have a material adverse effect on our revenues and results of operations.

For planning purposes, we estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings. From time to time, we publicly announce the expected timing of some of these milestones. All of these milestones are based on a variety of assumptions. The actual timing of these milestones can vary dramatically compared to our estimates, in many cases for reasons beyond our control. If we do not meet these milestones as publicly announced, the commercialization of our products may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.

Regulatory Risks

If we fail to obtain regulatory approval to commercially market and sell our product candidates, or if approval of our product candidates is delayed, we will be unable to generate ~~revenue~~revenues from the sale of these product candidates, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will increase.

We must obtain ~~and maintain~~ regulatory approval to market and sell our product candidates. For example, in the U.S., we must obtain ~~Food and Drug Administration (FDA)~~FDA approval for each product candidate that we intend to commercialize, and in ~~Europe~~the EU we must obtain approval from the European Commission, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA). The FDA and EMA approval processes are typically lengthy and expensive, and approval is never certain. Accordingly, there are no assurances that we will obtain regulatory approval for any of our product candidates, including pegvaliase, in any jurisdiction. For example, even though the pivotal Phase 3 PRISM-2 study of pegvaliase met the primary endpoint of change in blood Phe compared with placebo (p<0.0001), we did not demonstrate a statistically significant improvement in inattention or mood scores, a key secondary clinical neurocognitive endpoint. In August 2017, the FDA accepted for Priority Review our Biologics License Application (BLA) for pegvaliase, butcandidates. Furthermore, there iscan be no assurance that approval of one of our product candidates by one regulatory agency will mean that other agencies will also approve the same product candidate. Similarly, regulatory authorities may approve a ~~reduction~~product candidate for fewer or more limited indications than requested. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.

We have had fewer interactions with regulatory authorities outside the U.S. and the EU as compared to our interactions with the FDA and EMA. The approval procedures vary among countries and can involve additional clinical testing, and the time required to obtain approval may differ from that required to obtain FDA or EMA approval. Moreover, clinical trials conducted in ~~blood Phe alone will~~one country may not be ~~sufficient to support~~accepted by regulatory authorities in other countries. Approval by the ~~FDA’s full~~FDA or EMA does not ensure approval by regulatory authorities in other countries, and approval by one or more non-U.S. regulatory authorities does not ensure approval by regulatory authorities in other non-U.S. countries or by the FDA or EMA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The non-U.S. regulatory approval process may include all of ~~pegvaliase.~~

the risks associated with obtaining FDA or EMA approval. We may not obtain non-U.S. regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and even if we file, we may not receive necessary approvals to commercialize our product candidates in any market.

Because of the risks and uncertainties in pharmaceutical development, our product candidates could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. We also rely on independent third-party CROs to file some of our non-U.S. marketing applications and important aspects of the services performed for us by the CROs are out of our direct control. If we fail to adequately manage our CROs, if the CRO elects to prioritize work on our projects below other projects or if there is any dispute or disruption in our relationship with our CROs, the filing of our applications may be delayed.

Although the FDA and the EMA have programs to facilitate expedited development and accelerated approval processes, the timelines agreed under legislative goals or mandated by regulations are subject to the possibility of substantial delays. In

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addition, the FDA, the EMA and other international regulatory authorities have substantial discretion over the approval process for pharmaceutical products. These regulatory agencies may not agree that we have demonstrated the requisite level of product safety and efficacy to grant approval and may require additional data. If we fail to obtain regulatory approval for our product candidates, we will be unable to market and sell those product ~~candidates. Because~~candidates, which would have a negative effect on our business and financial condition.

With respect to valoctocogene roxaparvovec, we may experience challenges specific to gene therapy that cause significant delays or unanticipated costs, or that cannot be solved. Although numerous companies are currently advancing gene therapy product candidates through clinical trials, the FDA has only approved a very small number of vector-based gene therapy products thus far. Moreover, there are very few approved gene therapy products outside the U.S. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for valoctocogene roxaparvovec in any jurisdiction. Regulatory requirements governing gene and cell therapy products are still evolving and may continue to change in the future. For example, in October 2020, it was reported that the Director of the ~~risks~~Center for Biologics Evaluation and ~~uncertainties~~Research, the center of the FDA responsible for reviewing marketing applications for gene therapies, stated that the FDA will assess the importance of durability of effect differently for a gene therapy that treats a disease that has no other available therapies versus a condition for which there are multiple approved treatments. Regulatory review agencies and the new requirements and guidelines they promulgate may lengthen the regulatory review process, require us to perform additional or larger studies, increase our development costs, lead to changes in ~~pharmaceutical development,~~regulatory positions and interpretations, delay or prevent approval and commercialization of our ~~product candidates could take~~treatment candidate or lead to significant post-approval studies, limitations or restrictions. For example, on August 18, 2020 the FDA issued a ~~significantly longer time~~Complete Response Letter (CRL) to ~~gain~~our BLA for valoctocogene roxaparvovec for the treatment of adults with severe hemophilia A. In the CRL, the FDA introduced a new request for two-year follow-up safety and efficacy data on all study participants from our ongoing Phase 3 study of valoctocogene roxaparvovec. The trial will not complete two years of follow-up until November 2021. Continued delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval ~~than~~necessary to bring valoctocogene roxaparvovec to market could have a negative effect on our business and financial condition. Even if we ~~expect~~do obtain regulatory approval, ethical, social and legal concerns about gene therapy arising in the future could result in additional regulations restricting or ~~may never gain approval. We also rely on independent third-party contract research organizations (CROs) to file some~~prohibiting sale of our foreign marketing applications and important aspects of the services performed for us by the CROs are out of our direct control. If we fail to adequately manage our CROs, if the CRO elects to prioritize work on our projects below other projects or if there is any dispute or disruption in our relationship with our CROs, the filing of our applications may be delayed.

product.

In addition, some of our product candidates are intended to be used in combination with a delivery device, such as an injector or other delivery system. Medical products containing a combination of new drugs, biological products or medical devices may be regulated as “combination products” in the U.S. A combination product generally is defined as a product consisting of components from two or more regulatory categories (e.g., drug/device, device/biologic, drug/biologic). Each component of a combination product is subject to the requirements established by the FDA for that type of component, whether a new drug, biologic or device. In order to facilitate pre-market review of combination products, the FDA designates one of its centers to have primary jurisdiction for the pre-market review and regulation of the overall product based upon a determination by the FDA of the primary mode of action of the combination product. The determination whether a product is a combination product or two separately regulated products is made by the FDA on a case-by-case basis. Our product candidates intended for use with such devices, or expanded indications that we may seek for our products used with such devices, may not be approved or may be substantially delayed in receiving approval if the devices do not gain and/or maintain their own regulatory approvals or clearances. Where approval of the drug or biologic product and device is sought under a single application, the increased complexity of the review process may delay approval. The FDA review process and criteria isare not a well-established ~~area,~~areas, which could also lead to delays in the approval process. In addition, because these delivery devices are provided by unaffiliated third-party companies, we are dependent on the sustained cooperation and effort of those third-party companies both to obtain regulatory approval and to maintain their own regulatory compliance. Failure of third-party companies to assist in the approval process or to maintain their own regulatory compliance could delay or prevent approval of our product candidates, or limit our ability to sell a product once it is approved.

From time to time during the development and regulatory approval process for our products and product candidates, we engage in discussions with the FDA and comparable international regulatory authorities regarding our development programs, including discussions about the regulatory requirements for approval. As part of these discussions, we sometimes seek advice in the design of our clinical programs from various regulatory agencies globally, but we do not always follow such guidance. This increases the chance of adverse regulatory actions, but we try to always provide appropriate scientific evidence to support approval. ~~Also,~~For example, when the FDA accepted our new drug application for Voxzogo (formerly known as vosoritide) in late 2020, the agency reiterated its position raised during the Voxzogo Pediatric Advisory Committee and Endocrinologic and Metabolic Drugs Advisory Committee held in May 2018, recommending two, two-year placebo-controlled trials in different age groups. Although our Voxzogo clinical program does not meet every element of the FDA’s recommendation, we designed our studies of Voxzogo in a manner that we believe can demonstrate efficacy and safety of the product candidate for the target patient population. However, the FDA may ultimately disagree with our position that our Voxzogo trials support regulatory approval. Moreover, sometimes different regulatory agencies provide different or conflicting advice. While we attempt to harmonize the advice we receive from multiple regulatory authorities, it is not always practical to do so. Also, we may choose not to harmonize conflicting advice when harmonization would significantly delay clinical trial data or is otherwise inappropriate. If we are unable to effectively and efficiently resolve and comply with the inquiries and requests of the FDA and other non-U.S. regulatory authorities, the approval of our product candidates may be delayed and their value may be reduced.

Aldurazyme, Brineura, Kuvan, Naglazyme and Vimizim have received regulatory approval to be commercially marketed and sold in the U.S., the EU and certain other countries, ~~with the exception of Firdapse, which~~Palynziq has received regulatory approval to be commercially marketed ~~only~~in the U.S., the EU, and Australia, and Voxzogo has received regulatory approval to be commercially marketed in the EU. Any product for which we have obtained regulatory approval, or for which we obtain regulatory approval in the future, along with the manufacturing processes and practices, post-approval clinical research, product labeling, advertising and promotional activities for such product, are subject to continual requirements of, and review by, the FDA, the EMA and other comparable international regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, current good manufacturing practices (cGMP) requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, ~~requirements regarding the distribution of samples to physicians,~~ import and export requirements and ~~recordkeeping.~~

~~Promotional~~record keeping.

An example of the ongoing regulatory requirements our products are subject to is the Palynziq Risk Evaluation and Mitigation Strategy (REMS) program. In the U.S., Palynziq is only available through the REMS program, which is required by the FDA to mitigate the risk of anaphylaxis while using the product. Notable requirements of our REMS program include the following:

•prescribers must be certified by enrolling in the REMS program and completing training;

•prescribers must prescribe auto-injectable epinephrine with Palynziq;

•pharmacies must be certified with the REMS program and must dispense Palynziq only to patients who are authorized to receive it;

•patients must enroll in the REMS program and be educated about the risk of anaphylaxis by a certified prescriber to ensure they understand the risks and benefits of treatment with Palynziq; and

•patients must have auto-injectable epinephrine available at all times while taking Palynziq.

Failure of prescribers, pharmacies or patients to enroll in our REMS program or to successfully complete and comply with its requirements may result in regulatory action from the FDA or decreased sales of Palynziq. The restrictions and requirements under our REMS program, as well as potential changes to these restrictions and requirements in the future, subject us to increased risks and uncertainties, any of which could harm our business. The requirement for a REMS program can materially affect the potential market for and profitability of a drug. We cannot predict whether the FDA will request, seek to require or ultimately require modifications to, or impose additional requirements on, the Palynziq REMS program, or whether the FDA will permit modifications to the Palynziq REMS program that we consider warranted. Any modifications required or rejected by the FDA could make it more difficult or expensive for us to distribute Palynziq in the U.S., impair the safety profile of Palynziq, disrupt continuity of care for Palynziq patients and/or negatively affect sales of Palynziq.

Moreover, promotional communications with respect to prescription drugs, including biologics, are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product's approved labeling. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. Although the FDA and other regulatory authorities do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant civil, criminal and administrative penalties. Thus, we will not be able to promote any products we develop for indications or uses for which they are not approved.

Moreover, if original FDA approval for one of our product candidates is granted via the accelerated approval pathway, we will be required to conduct a post-marketing confirmatory trial to verify and describe the clinical benefit in support of full approval. An unsuccessful post-marketing study or failure to complete such a study with due diligence could result in the withdrawal of the FDA’s marketing approval for a product candidate. In addition, the FDA often requires post-marketing testing and surveillance to monitor the effects of products. The FDA, the EMA and other comparable international regulatory agencies may condition approval of our product candidates on the completion of such post-marketing clinical studies. These post-marketing studies may suggest that a product causes undesirable side effects or may present a risk to the patient.

Discovery after approval of previously unknown problems with any of our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in actions such as:

•restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned ~~trials;~~

•restrictions on product manufacturing processes;

•restrictions on the marketing of a product;

•restrictions on product distribution;

•requirements to conduct post-marketing clinical trials;

•untitled or warning letters or other adverse publicity;

•withdrawal of the products from the market;

•refusal to approve pending applications or supplements to approved applications that we submit;

•recall of products;

•refusal to permit the import or export of our products;

•fines, restitution or disgorgement of profits or revenue;

•

~~injunctions; or~~

•imposition of civil or criminal penalties.

If such regulatory actions are taken, ~~the~~our value ~~of our company~~ and our operating results will be adversely affected. Additionally, if the FDA, the EMA or any other comparable international regulatory agency withdraws its approval of a product, we will be unable to generate ~~revenue~~revenues from the sale of that product in the relevant jurisdiction, our potential for generating positive cash flow will be diminished and the capital necessary to fund our operations will be increased. Accordingly, we continue to expend significant time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, post-marketing studies and quality control.

If we fail to obtain or maintain orphan drug exclusivity for some of our products, our competitors may obtain approval to sell the same drugs to treat the same conditions and our revenues will be reduced.

As part of our business strategy, we have developed and may in the future develop some drugs that may be eligible for FDA and EU orphan drug designation. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is intended to treat a rare disease or condition, defined as a patient population of fewer than 200,000 in the U.S. In the EU, orphan drug designation is granted to drugs intended to treat a rare disease or condition, defined as having a prevalence of no more than five in 10,000 people in the EU, which is equivalent to around 250,000 people or fewer. The company that first obtains FDA approval for a designated orphan drug for a given rare disease receives marketing exclusivity for use of that drug for the stated condition for a period of seven years. Orphan drug exclusive marketing rights may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug. Similar regulations are available in the EU with a ten-year period of market exclusivity.

Because the extent and scope of patent protection for some of our products is limited, orphan drug designation is especially important for our products that are eligible for orphan drug designation. For eligible products, we plan to rely on the exclusivity period under the Orphan Drug Act to maintain a competitive position. If we do not obtain orphan drug exclusivity for our products that do not have broad patent protection, our competitors may then sell the same drug to treat the same condition and our revenues will be reduced.

Even though we have obtained orphan drug designation for certain of our product candidates and even if we obtain orphan drug designation for our future product candidates, due to the uncertainties associated with developing biopharmaceutical products, we may not be the first to obtain marketing approval for any particular orphan indication, which means that we may not obtain orphan drug exclusivity and could also potentially be blocked from approval of certain product candidates until the competitor product’s orphan drug exclusivity period expires. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition and the same drug can be approved for different conditions and potentially used off-label in the orphan indication. Even after an orphan drug is approved and granted orphan drug exclusivity, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is safer or more effective or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

*We may face competition from biosimilars approved through an abbreviated regulatory pathway.

Our Aldurazyme, Brineura, Naglazyme and Vimizim products are regulated by the FDA as biologics under the Federal Food, Drug, and Cosmetic Act (the FDC Act) and the Public Health Service Act (the PHS Act). Biologics require the submission of a BLA and approval by the FDA prior to being marketed in the U.S. Historically, a biologic product approved under a BLA was not subject to the generic drug review and approval provisions of the FDC Act. However, the Biologics Price Competition and Innovation Act of 2009 (BPCIA) created a regulatory pathway under the PHS Act for the abbreviated approval of biological products that are demonstrated to be “biosimilar” or “interchangeable” with an FDA-approved biological product. In order to meet the standard of interchangeability, a sponsor must demonstrate that the biosimilar product can be expected to produce the same clinical result as the reference product, and for a product that is administered more than once, that the risk of switching between the reference product and biosimilar product is not greater than the risk of maintaining the patient on the reference product. Such biosimilars would reference biological products approved in the U.S. The BPCIA establishes a period of 12 years of exclusivity for reference products. Aldurazyme’s exclusivity under the BPCIA expired in 2015, Brineura’s exclusivity under the BPCIA expires in 2029, Naglazyme’s exclusivity under the BPCIA expired in June 2017, and Vimizim’s exclusivity under the BPCIA expires in 2026. Our products approved under BLAs, as well as products in development that may be approved under BLAs in the future, could be reference products for biosimilar marketing applications.

As part of the drug development process we must conduct, at our own expense, preclinical studies in the laboratory, including studies in animals, and clinical trials on humans for each product candidate. ~~We expect the~~The number of preclinical studies and clinical trials that ~~the~~ regulatory authorities ~~will~~ require ~~will vary~~varies depending on the product candidate, the disease or condition the drug is being developed to address and regulations applicable to the particular drug. Generally, new drugs for diseases or conditions that affect larger patient populations, are less severe, or are treatable by alternative strategies must be validated through additional preclinical and clinical trials and/or clinical trials with higher enrollments. With respect to our early stage product candidates, we may need to perform multiple preclinical studies using various doses and formulations before we can begin clinical trials, which could result in delays to our development timeline. Furthermore, even if we obtain favorable results in preclinical studies, the results in humans may be significantly different. After we have conducted preclinical studies, we must demonstrate that our product candidates are safe and efficacious for use in the targeted human patients in order to receive regulatory approval for commercial sale. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials, and favorable data from interim analyses do not ensure the final results of a trial will be favorable. From time to time, we have and may in the future publish or report preliminary, initial or interim data from our clinical trials, such as the data we have announced from the GENEr-8-1 study for valoctocogene roxaparvovec. Preliminary, initial or interim data from our clinical trials may not be indicative of the final results of the trial and are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and/or more patient data become available. In this regard, such data may show initial evidence of clinical benefit, but as patients continue to be followed and more patient data become available, there is a risk that any therapeutic effects will not be durable in patients and/or will decrease over time or cease entirely. Preliminary, initial or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from such preliminary, initial or interim data. As a result, preliminary, initial or interim data should be considered carefully and with caution until the final data are available.

Product candidates may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials, or despite having favorable data in connection with an interim analysis. A number of companies in the biopharmaceutical industry ~~including us with respect to Kyndrisa,~~ have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Also, as noted above, we do not always follow the advice of regulatory authorities or comply with all of their requests regarding the design of our clinical programs. In those cases, we may choose a

development program that is inconsistent with the advice of regulatory authorities, which may limit the jurisdictions where we conduct clinical trials and/or adversely affect our ability to obtain approval in those jurisdictions where we do not follow the regulatory advice.

Adverse or inconclusive clinical results could stop us from obtaining regulatory approval of our product candidates. Additional factors that can cause delay or termination of our clinical trials include:

•slow or insufficient patient enrollment;

•slow recruitment of, and completion of necessary institutional approvals at, clinical sites;

•budgetary constraints or prohibitively high clinical trial costs;

•longer treatment time required to demonstrate efficacy;

•lack of sufficient supplies of the product candidate;

							Company			Accumulated
					Additional		Common			Other						Total
	Common stock				Paid-in		Stock Held			Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital		by NQDC			Income (Loss)			Deficit			Equity
Balance at December 31, 2016		172,648	$	173	$	4,288,113	$	(14,321	)	$	12,816		$	(1,520,506	)	$	2,766,275
Net loss		—		—		—		—			—			(65,650	)		(65,650	)
Other comprehensive loss		—		—		—		—			(34,250	)		—			(34,250	)
Issuances under equity incentive plans, net of tax		1,648		2		7,550		—			—			—			7,552
Issuances of common stock under the Employee Stock Purchase Plan (the ESPP)		95		—		6,704		—			—			—			6,704
Conversion of convertible notes, net		1,104		1		22,476		—			—			—			22,477
Common stock held by NQDC		—		—		—		(152	)		—			—			(152	)
Stock-based compensation		—		—		110,606		—			—			—			110,606
Balance at September 30, 2017		175,495	$	176	$	4,435,449	$	(14,473	)	$	(21,434	)	$	(1,586,156	)	$	2,813,562

Cash payments	$	374,545
Estimated fair value of contingent acquisition consideration payable		138,974
Total consideration	$	513,519

Kuvan intangible assets	$	172,961
Pegvaliase IPR&D		326,359
Inventory		14,199
Total identifiable assets acquired	$	513,519

	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value at September 30, 2017
Corporate debt securities	$	762,462	$	413	$	(1,091	)	$	761,784
Commercial paper		28,039		—		—			28,039
U.S. government agency securities		434,533		2		(980	)		433,555
Foreign and other		18,525		123		(22	)		18,626
Total	$	1,243,559	$	538	$	(2,093	)	$	1,242,004

			Aggregate Notional
	Number of		Amount in
Foreign Exchange Contracts	Contracts		Foreign Currency		Maturity
Brazilian Reais – Sell		2		33.0	Oct. 2017
Canadian Dollars – Sell		6		6.1	Oct. 2017 - Dec. 2017
Colombian Pesos – Sell		3		15,576.0	Oct. 2017 - Dec. 2017
Euros – Purchase		72		116.7	Oct. 2017 - Sep. 2020
Euros – Sell		304		381.9	Oct. 2017 - Sep. 2020
Total		387

	Asset Derivatives			Liability Derivatives
	September 30, 2017			September 30, 2017
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Forward foreign currency exchange contracts	Other current assets	$	3,096	Accounts payable and accrued liabilities	$	14,428
Forward foreign currency exchange contracts	Other assets		4,414	Other long- term liabilities		11,380
Total			7,510			25,808
Derivatives not designated as hedging instruments:
Forward foreign currency exchange contracts	Other current assets		1,139	Accounts payable and accrued liabilities		—
Total			1,139			—
Total value of derivative contracts		$	8,649		$	25,808

	Asset Derivatives			Liability Derivatives
	December 31, 2016			December 31, 2016
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Forward foreign currency exchange contracts	Other current assets	$	13,048	Accounts payable and accrued liabilities	$	5,176
Forward foreign currency exchange contracts	Other assets		8,194	Other long- term liabilities		2,342
Total			21,242			7,518
Derivatives not designated as hedging instruments:
Forward foreign currency exchange contracts	Other current assets		964	Accounts payable and accrued liabilities		25
Total			964			25
Total value of derivative contracts		$	22,206		$	7,543

	Fair Value Measurements at September 30, 2017
	Quoted Price in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash and cash equivalents:
Money market instruments	$	—	$	223,845	$	—	$	223,845
Total cash and cash equivalents		—		223,845		—		223,845
Available-for-sale securities:
Short-term:
Corporate debt securities		—		444,966		—		444,966
Commercial paper		—		28,039		—		28,039
U.S. government agency securities		—		334,241		—		334,241
Foreign and other		—		18,454		—		18,454
Long-term:
Corporate debt securities		—		316,818		—		316,818
U.S. government agency securities		—		99,314		—		99,314
Foreign and other		—		172		—		172
Total available-for-sale securities		—		1,242,004		—		1,242,004
Other current assets:
NQDC Plan assets		—		1,226		—		1,226
Forward foreign currency exchange contract⁽¹⁾		—		4,235		—		4,235
Restricted investments ⁽²⁾		—		14,878		—		14,878
Total other current assets		—		20,339		—		20,339
Other assets:
NQDC Plan assets		—		11,272		—		11,272
Forward foreign currency exchange contract⁽¹⁾		—		4,414		—		4,414
Total other assets		—		15,686		—		15,686
Total assets	$	—	$	1,501,874	$	—	$	1,501,874
Liabilities:
Current liabilities:
NQDC Plan liability	$	2,635	$	1,226	$	—	$	3,861
Forward foreign currency exchange contract⁽¹⁾		—		14,428		—		14,428
Contingent acquisition consideration payable		—		—		52,609		52,609
Total current liabilities		2,635		15,654		52,609		70,898
Other long-term liabilities:
NQDC Plan liability	$	18,405	$	11,272		—		29,677
Forward foreign currency exchange contract⁽¹⁾		—		11,380		—		11,380
Contingent acquisition consideration payable		—		—		126,790		126,790
Total other long-term liabilities		18,405		22,652		126,790		167,847
Total liabilities	$	21,040	$	38,306	$	179,399	$	238,745

Contingent acquisition consideration payable at December 31, 2016	$	161,637
Milestone payments to former Huxley Pharmaceuticals, Inc. shareholders		(3,500	)
Reversal of contingent liability related to revised estimate of Firdapse FDA acceptance and approval milestones		(4,245	)
Changes in the fair value of other contingent acquisition consideration payable		7,627
Foreign exchange remeasurement of Euro denominated contingent acquisition consideration payable		17,880
Contingent acquisition consideration payable at September 30, 2017	$	179,399

	Three Months Ended September 30,						Nine Months Ended September 30,						Consolidated Statement of
Details about AOCI Components	2017			2016			2017			2016			Comprehensive Loss Classification
Gains (losses) on cash flow hedges:
Forward foreign currency exchange contracts	$	(4,643	)	$	1,436		$	18		$	4,036		Net product revenues
Forward foreign currency exchange contracts		943			50			(507	)		4,874		SG&A
Total gain (loss) on cash flow hedges		(3,700	)		1,486			(489	)		8,910
Gain (loss) on sale of available-for-sale securities		—			7			3,252			(2,020	)	Other income
Income tax effect of the above		—			(2	)		(1,176	)		735		Benefit from income taxes
	$	(3,700	)	$	1,491		$	1,587		$	7,625		Net loss

	Nine Months Ended September 30, 2017
	Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Available-for-Sale Securities			Foreign Currency Items			Total
AOCI balance at December 31, 2016	$	13,006		$	(178	)	$	(12	)	$	12,816
Other comprehensive income (loss) before reclassifications		(33,933	)		1,981			5			(31,947	)
Less: gain (loss) reclassified from AOCI		(489	)		3,252			—			2,763
Tax effect		—			460			—			460
Net current-period other comprehensive income (loss)		(33,444	)		(811	)		5			(34,250	)
AOCI balance at September 30, 2017	$	(20,438	)	$	(989	)	$	(7	)	$	(21,434	)

	Nine Months Ended September 30, 2016
	Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Available-for-Sale Securities			Foreign Currency Items			Total
AOCI balance at December 31, 2015	$	13,602		$	7,441		$	(10	)	$	21,033
Other comprehensive income (loss) before reclassifications		(5,857	)		(8,477	)		1			(14,333	)
Less: gain (loss) reclassified from AOCI		8,910			(2,020	)		—			6,890
Tax effect		—			2,348			—			2,348
Net current-period other comprehensive income (loss)		(14,767	)		(4,109	)		1			(18,875	)
AOCI balance at September 30, 2016	$	(1,165	)	$	3,332		$	(9	)	$	2,158

Commercial Products	Indication	U.S. Orphan Drug Exclusivity Expiration	U.S. Biologic Exclusivity Expiration	EU Orphan Drug Exclusivity Expiration
Aldurazyme	MPS I	Expired	Expired	Expired
Brineura	CLN2	2024	2029	2027
Firdapse	LEMS	NA⁽¹⁾	NA	2019
Kuvan	PKU	Expired	NA	2020 ⁽²⁾
Naglazyme	MPS VI	Expired	Expired	Expired
Vimizim	MPS IVA	2021	2026	2024

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017		2016		Change		2017		2016		Change
Sales denominated in USD	$	178.4	$	168.2	$	10.2	$	544.9	$	473.8	$	71.1
Sales denominated in foreign currencies		120.4		110.1		10.3		372.0		338.4		33.6
Total net product revenues	$	298.8	$	278.3	$	20.5	$	916.9	$	812.2	$	104.7

	Three Months Ended September 30,							Nine Months Ended September 30,
S&M expense by product	2017		2016		Change			2017		2016		Change
Brineura	$	8.3	$	4.9	$	3.4		$	20.7	$	9.2	$	11.5
Kuvan		19.4		13.6		5.8			62.6		42.9		19.7
Naglazyme		11.9		12.6		(0.7	)		37.3		36.6		0.7
Vimizim		18.4		16.9		1.5			53.7		48.0		5.7
Other and not allocated		9.0		13.3		(4.3	)		27.6		38.2		(10.6	)
Total S&M expense	$	67.0	$	61.3	$	5.7		$	201.9	$	174.9	$	27.0

	Since Program
	Inception
BMN 250	$	136.5
Brineura		227.7
Pegvaliase		485.9
Valoctocogene roxaparvovec		204.7
Vosoritide		213.8
Other approved products		962.4
Other and non-allocated	Not meaningful

	Payments Due Within
							More
	1 Year		>1 -3		> 3 - 5		Than 5
	or Less		Years		Years		Years		Total
2018 Notes and related interest	$	2.8	$	376.4	$	—	$	—	$	379.2
2020 Notes and related interest		5.6		11.3		377.8		—		394.7
2024 Notes and related interest		3.0		5.9		5.9		500.9		515.7
Operating leases		8.8		6.2		4.2		12.2		31.4
R&D and purchase commitments		41.5		—		—		—		41.5
Total	$	61.7	$	399.8	$	387.9	$	513.1	$	1,362.5

~~Exhibit Number~~	~~Description~~
Exhibit Number		Description
~~2.1~~		Purchase Agreement, dated as of November 23, 2014, among BioMarin Falcons B.V., BioMarin Pharmaceutical Inc. and Prosensa Holding N.V., previously filed with the SEC on November 26, 2014 as Exhibit 2.01 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated by reference herein.
2.1
~~2.2~~	Amended and Restated Termination and Transition Agreement, dated as of December 23, 2015, between BioMarin Pharmaceutical Inc. and Ares Trading S.A., previously filed with the SEC on January 7, 2016 as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated herein by reference. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment. Omitted portions have been filed separately with the SEC.

~~2.3~~ 2.2		Termination Agreement, dated as of October 1, 2015, between BioMarin Pharmaceutical Inc. and Ares Trading S.A., previously filed with the SEC on January 7, 2016 as Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated herein by reference. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment. Omitted portions have been filed separately with the SEC.

~~2.4~~	Termination and Transition Agreement, dated as of October 1, 2015, between BioMarin Pharmaceutical Inc. and Ares Trading S.A., previously filed with the SEC on January 7, 2016 as Exhibit 2.3 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated herein by reference. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment. Omitted portions have been filed separately with the SEC.

~~2.5~~ 2.3		First Amendment, dated as of December 12, 2016, to the Amended and Restated Termination and Transition Agreement, dated as of December 23, 2015 and effective as of October 1, 2015, between BioMarin Pharmaceutical Inc. and Ares Trading S.A., previously filed with the SEC on February 27, 2017 as Exhibit 2.6 to the Company’s Annual Report on Form 10-K (File No. 000-26727), which is incorporated herein by reference. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment. Omitted portions have been filed separately with the SEC.

3.1		Restated Certificate of Incorporation of BioMarin Pharmaceutical Inc., previously filed with the SEC on June 12, 2017 as Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated herein by reference.

3.2* 3.2		Amended and Restated Bylaws of BioMarin Pharmaceutical Inc., ~~as amended.~~

~~4.1~~	~~Base Indenture, dated August 11, 2017, between the Company and Wilmington Trust, National Association, as Trustee,~~ previously filed with the SEC on ~~August 11, 2017~~December 18, 2020 as Exhibit ~~4.1~~3.1 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated herein by reference.

~~4.2~~ 31.1*		First Supplemental Indenture, dated August 11, 2017, between the Company and Wilmington Trust, National Association, as Trustee (including the form of 0.599% Senior Subordinated Convertible Note due 2024), previously filed with the SEC on August 11, 2017 as Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 000-26727), which is incorporated herein by reference.

10.1*	~~BioMarin Pharmaceutical Inc. Summary of Independent Director Compensation.~~

31.1*	Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2*		Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1*+		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended.

101.INS* 101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH* 101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL* 101.CAL		Inline XBRL Taxonomy Extension Calculation Document

~~Exhibit Number~~	~~Description~~
101.DEF
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB* 101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE* 101.PRE		Inline XBRL Taxonomy Extension Presentation Link Document