10-K

                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                    Form 10-K

(Mark One)

[X] Annual  Report Under Section 13 or 15(d) of the  Securities  Exchange Act of
       1934 For the fiscal year ended December 31, 1999 Or

[ ] 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 small business issuer as specified in its charter)

   Delaware                                              68-039782
(State of other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

371 Bel Marin Keys Blvd., #210, Novato, California                94949
(Address of principal executive offices)                        (Zip Code)

                  Registrant's telephone number: (415) 884-6700


                    Securities registered pursuant to Section
                        12(b) of the Act: None Securities
                      registered under Section 12(g) of the
                                      Act:

                          Common Stock, $.001 par value
                                (Title of Class)

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange Act during the past
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   X    No

Indicate by check mark if disclosure  of  delinquent  filers in response to Item
405 of Regulation  S-K is not contained in this form, and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III to the  Form  10-K or any
amendment to this Form 10-K. __


The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant  as of February  16, 2000 was  $225,377,169.  The number of shares of
common stock, $0.001 par value, outstanding on February 16, 2000 was 34,951,086.


Transitional small business disclosure format (check one)
Yes__  ;  No X



The documents incorporated by reference are as follows:

(1)   Proxy Statement of the Annual Meeting of Stockholders to be held on
      June 16, 2000 incorporated into Part III, Items 10 - 13.
(2)   Registration Statements on Form S-1 (Registration No. 333-77701) filed
      on May 4, June 14, July 6 and July 21, 1999 incorporated into
      Part V, Item 1.







                          BIOMARIN PHARMACEUTICAL INC.

                                     Part I


                           FORWARD LOOKING STATEMENTS

This Form 10-K 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,"  "anticipates,"  "plans," "may," "will,"  "projects,"
"continues,"   "estimates,"   "potential,"   "opportunity"   and  so  on.  These
forward-looking  statements may be found in the "Risk Factors,"  "Description of
Business,"  and other  sections of this Annual  Report on Form 10-K.  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  "Additional  Factors That Might Affect Future  Results," as
well as those  discussed  elsewhere  in this Form  10-K.  You  should  carefully
consider that information before you make an investment decision.

You should not place undue reliance on these statements,  which speak only as of
the date that they were made. These cautionary  statements  should be considered
in connection  with any written or oral  forward-looking  statements that we may
issue in the future.  We do not undertake any obligation to release publicly any
revisions to these forward-looking  statements after completion of the filing of
this Form 10-K to  reflect  later  events or  circumstances  or to  reflect  the
occurrence of unanticipated events.


Item 1.   Description of Business

Overview


BioMarin  Pharmaceutical  Inc. or  BioMarin  or the  Company is a  developer  of
carbohydrate  enzyme  therapies  for  debilitating,   life-threatening,  chronic
genetic disorders and other diseases and conditions. In April 1999, we completed
a twelve-month  patient  evaluation  for the initial  clinical trial of our lead
drug  product,  AldurazymeTM,  for the treatment of  mucopolysaccharidosis-I  or
MPS-I,  a serious  genetic  disorder and  presented  the results at the American
Society for Human  Genetics in October 1999. We are  currently  collecting  data
during an  additional  twelve-month  follow-up  period for the initial  clinical
trial.  In September  1998, we  established a joint venture with Genzyme for the
worldwide  development and  commercialization of AldurazymeTM.  AldurazymeTM has
received  fast track  designation  for the treatment of the more severe forms of
MPS-I. The U.S. Food and Drug Administration or FDA has granted  AldurazymeTM an
orphan drug  designation  giving us exclusive  rights to market  AldurazymeTM to
treat MPS-I for seven years from the date of FDA approval if AldurazymeTM is the
first enzyme ((alpha)-L-iduronidase) to be approved by the FDA for the treatment
of MPS-I.

MPS-I is a life-threatening  genetic disorder caused by the lack of a sufficient
quantity of the enzyme (alpha)-L-iduronidase, which affects about 3,400 patients
in developed countries,  including  approximately 1,000 in the United States and
Canada.  Patients with MPS-I have multiple  debilitating symptoms resulting from
the buildup of carbohydrate  residues in all tissues in the body. These symptoms
include  delayed  physical  and mental  growth,  enlarged  livers  and  spleens,
skeletal and joint  deformities,  airway  obstruction,  heart  disease,  reduced
endurance and pulmonary function, and impaired hearing and vision. Most children
with  MPS-I  will die from  complications  associated  with the  disease  before
adulthood.

AldurazymeTM is a specific form of recombinant human  (alpha)-L-iduronidase that
replaces a genetic deficiency of  (alpha)-L-iduronidase  in MPS-I patients.  The
initial  clinical trial treated ten patients with MPS-I at five medical  centers
in the United States.  Based on data collected  during the initial  twelve-month
evaluation  period,  AldurazymeTM  met the  primary  endpoints  set forth in the
investigational  new drug application.  In addition,  AldurazymeTM  demonstrated
efficacy  according to various secondary  endpoints in each of the patients.  In
collaboration  with  Genzyme,  we intend to  initiate  a Phase III  Confirmatory
Clinical Trial of  AldurazymeTM in mid-year 2000 and to complete the filing of a
biologics license application or BLA with the FDA in mid-year 2001.


Carbohydrate-active Enzyme Therapeutics

Carbohydrates are a fundamental class of biological  molecules that play diverse
and critical  roles in maintaining  the health and  functional  integrity of all
cells and  tissues.  Enzymes are proteins  that act as catalysts  for many vital
biological    reactions.    Enzymes   that   act   on   carbohydrates,    called
carbohydrate-active enzymes, cleave, construct or otherwise modify carbohydrates
to   regulate   their   production,    maintenance   and   degradation.    These
carbohydrate-active enzymes are critical to a wide range of functions within the
body, including cell proliferation,  digestion, blood clotting, immune response,
wound healing,  conception and control of infection and inflammation.  The body,
when    functioning    normally,     produces    appropriate    quantities    of
carbohydrate-active  enzymes to  perform  these  functions.  Carbohydrate-active
enzymes  have the  potential to play an  important  therapeutic  role in certain
diseases or disorders by either replacing deficient enzymes or supplementing the
enzymes that are naturally present in the body.



Role of Carbohydrate-active Enzymes in Genetic Diseases

We believe  that there are more than 70  genetic  diseases  that are known to be
caused by the deficiency of a single enzyme.  In these genetic diseases the body
fails to produce sufficient or functional quantities of certain enzymes. Most of
these genetic diseases are rare,  affecting only a few hundred to a few thousand
people in the United  States.  Examples  of  genetic  diseases  include  Gaucher
disease,  hemophilia and MPS disorders.  Since there is not extensive literature
regarding these rare genetic diseases we hired a consultant,  the Frankel Group,
to conduct research  regarding this potential  market.  The figures cited in the
following paragraph were developed by the Frankel Group.

Currently,  only eight genetic diseases have effective  treatments,  and five of
these  eight  are  treated  through  enzyme  replacement.  Historically,  enzyme
replacement  therapy  has been  limited by the  inability  of  manufacturers  to
produce the correct form of enzymes in  sufficient  quantities.  Manufacture  of
sufficient  quantities to support a therapeutic  program has now become possible
with  advancements  in  recombinant  DNA  production  methods.  In these  cases,
recombinant  production  methods  apply  human  DNA to host  mammalian  cells to
produce  human  enzymes  the cells would not  naturally  produce.  In 1998,  the
worldwide  sales of  pharmaceuticals  used to treat  genetic  diseases by enzyme
replacement were approximately $2.7 billion.


Genzyme's  treatment  for  Gaucher  disease is an example of a  treatment  using
enzyme replacement therapy.  Gaucher disease, which afflicts approximately 5,000
people  in the  developed  world,  is  caused  by a  deficiency  in  the  enzyme
glucocerebrosidase.  In April 1991,  following a single clinical trial involving
13 patients,  Genzyme's treatment for Gaucher disease was approved for marketing
by the FDA. Approximately 2,500 patients worldwide are using Genzyme's treatment
for  Gaucher  disease.  Sales  of  Genzyme's  treatments  for  Gaucher  disease,
Cerezyme(R)   enzyme  and  Ceredase(R)   enzyme,   generated  total  revenue  of
approximately $479 million in 1999.


Other Therapeutic Roles for Carbohydrate-active Enzymes

Carbohydrate-active enzymes can also treat conditions other than those caused by
genetic  diseases,  such as burn  debridement  and systemic  fungal  infections.
Supplementing  the amount of enzymes  naturally  present in a patient's  body or
adding a new  enzyme can  enable or  enhance  the  body's  ability to respond to
certain  conditions  and accelerate the healing  process.  For example,  using a
topical  enzymatic  formulation to supplement  naturally  occurring  enzymes may
speed skin grafting for severe burns by removing dead or damaged tissue.  Adding
or increasing the concentration of an enzyme that selectively  targets and kills
microbes may help the body fight infection.


Business Strategy

Our business strategy is to develop  therapeutic  products to treat a variety of
diseases  and  conditions  involving  carbohydrates.   We  use  our  proprietary
carbohydrate-active  enzyme technology to develop these products.  The principal
elements of this strategy are:

         o    Focus on Drug  Candidates  with Known  Biology  and Low  Technical
              Risk. We identify  potential  products that treat serious diseases
              or conditions  where the  biological  role of  carbohydrate-active
              enzymes  is  well  understood  and  the  method  of  treatment  is
              straightforward.  As  part  of  this  strategy,  we are  initially
              focusing on treating  genetic  diseases  such as MPS-I and MPS-VI,
              which are caused by the deficiency of a single enzyme.





         o    Select  Products  that  We  Believe  May Be  Developed  Relatively
              Quickly.  We are  initially  developing  therapeutic  products for
              serious  diseases  or  conditions  that we  believe  will  require
              relatively limited time and capital to conduct preclinical studies
              and small numbers of patients for clinical trials. Because many of
              our   potential   drug   products  are  intended  for  serious  or
              life-threatening  conditions  and may address  unmet medical needs
              for these  conditions,  we believe that they will qualify for fast
              track  designation by the FDA. In September 1998, we received from
              the FDA fast track  designation for AldurazymeTM for the treatment
              of Hurler and Hurler-Scheie  syndromes,  which are the more severe
              syndromes within MPS-I.

         o    Pursue  Well-defined,  Niche  Markets.  We develop  potential drug
              products to treat small patient populations for diseases for which
              there are  currently no effective  therapies.  Often these markets
              are for life threatening  diseases which offer the potential for a
              clear reimbursement  rationale and life extension. We believe that
              such products will be reimbursed at favorable rates. We believe we
              will receive orphan drug  designation from the FDA for many of our
              products,  providing  us with  market  exclusivity  for  our  drug
              formulation  for  seven  years  if we are  first  to gain  product
              approval to treat the specific disease.

         o    Develop  Direct  Sales  and  Marketing   Organization  for  Select
              Markets.  We will be able to directly market some of our potential
              drug products because the conditions they treat have small patient
              populations,  for which the treatments are often  concentrated  in
              specialized institutions,  and because of the existence of patient
              support  groups for many of our initial  disease  targets.  We may
              develop a small sales and marketing organization to target markets
              where we believe we can effectively reach the targeted patient and
              physician   groups.   Alternatively,   we  may  pursue   strategic
              collaborations  with   biopharmaceutical  or  other  companies  to
              develop   products   targeted  at  markets  with  larger   patient
              populations.

         o    Enhance  Enzymatic   Expertise  through  Glyko,  Inc.  Our
              wholly-owned subsidiary,  Glyko,  Inc.  contributes its technical
              knowledge and expertise in cloning enzymes to our technology base.
              Glyko,  Inc. provides access to cloning assets,  including cell
              lines, which are colonies of cells with a common genetic make-up.
              In addition,  Glyko,  Inc.'s research and development in
              glycobiology, the study of  carbohydrates  in living  organisms,
              provides us with a strategic opportunity  to keep current with new
              developments  and  opportunities  in that field.

Products Under Development

Mucopolysaccharidosis Disorders

MPS  disorders  are  a  group  of  seriously   debilitating   genetic  disorders
characterized by the accumulation in the body of mucopolysaccharides,  which are
also  known as  glycosaminoglycans  or  GAGs.  GAGs  are  complex  carbohydrates
synthesized  by all cells in the body. At least ten enzymes are required for the
complete  breakdown  of GAGs.  The normal  breakdown  of GAGs is  incomplete  or
blocked if any one of these enzymes is not present in sufficient quantity.

Ten possible single enzyme deficiencies cause ten distinct  disorders.  Patients
with MPS are usually  diagnosed  by six to 24 months of age. MPS  disorders  are
progressive  diseases that frequently lead to early death.  During the course of
the  disease,  the  build-up of GAGs in all cells of the body  results in one or
more of the following symptoms:

         o     Inhibited growth

         o     Delayed mental or physical development

         o     Enlarged liver and spleen


         o     Skeletal deformities

         o     Coarse facial features

         o     Upper airway obstruction and reduced pulmonary function

         o     Joint deformities and reduced range of motion

         o     Heart disease

         o     Impaired vision and hearing

         o     Sleep disorders

         o     Malaise and reduced endurance


MPS-I.  MPS-I is a genetic  disorder  caused  by the  deficiency  of the  enzyme
(alpha)-L-iduronidase.  About 3,400 patients in developed  countries have MPS-I,
including about 1,000 in the United States and Canada. If untreated,  almost all
children  diagnosed with the more severe forms of MPS-I will die before reaching
adulthood.  Patients  with  milder  forms of  MPS-I  still  exhibit  many of the
symptoms described above. Currently, the only available treatment for MPS-I is a
bone marrow  transplant.  However,  few patients find an appropriate bone marrow
donor. Of the patients that find appropriate  donors, many choose not to receive
the therapy because of its serious side effects.

AldurazymeTM.   We  are  developing  a  specific  form  of  recombinant,   human
(alpha)-L-iduronidase,  designated  AldurazymeTM,  for the  treatment  of MPS-I.
AldurazymeTM treats MPS-I by replacing a deficiency in (alpha)-L-iduronidase. In
September  1998,  we  established a joint venture with Genzyme for the worldwide
development and commercialization of AldurazymeTM. Until now, enzyme replacement
therapy  for  MPS-I  has  been  impractical  because  no one  has  been  able to
manufacture  adequate  supplies  of  (alpha)   -L-iduronidase  with  the  proper
structure and purity.  The proper structure is essential to ensure a therapeutic
effect at relatively  low doses.  Using  production and  purification  processes
licensed  by us and  subsequently  improved,  we are able to produce  sufficient
quantities of AldurazymeTM with the proper structure and purity.

In 1994,  preclinical  studies of  AldurazymeTM  were conducted  using dogs with
canine MPS-I. Dogs with canine MPS-I have symptoms similar to those exhibited by
humans with MPS-I.  AldurazymeTM  diminished  canine MPS-I symptoms in the dogs.
Stored  carbohydrate  material  was cleared  from the dogs' major  organs.  This
scientific  research,  which we have  licensed,  was  performed  at  Harbor-UCLA
Research and Education Institute.

In April 1999,  we completed a  twelve-month  evaluation  period for our initial
clinical trial of AldurazymeTM.  Initiated in December 1997, this clinical trial
treated ten patients with MPS-I at five medical centers in the United States. We
are treating and monitoring these patients for an additional  12-month follow-up
period.  Patients were treated with a slow intravenous  infusion of AldurazymeTM
once a week at a dose of 125,000 units per kilogram of patient weight.

The primary endpoints set forth in the  investigational new drug application for
AldurazymeTM were a reduction in liver or spleen size and a reduction in urinary
GAG levels.  Eight of the ten patients  achieved the primary  endpoint goal of a
20% reduction of liver size within the six-month  evaluation  period. Of the two
patients who did not achieve the targeted liver reduction,  one patient achieved
a liver size in the normal range and the second  patient,  who had  hepatitis at
the end of the six-month period,  achieved the 20% reduction after the six-month
period. Five of the ten patients achieved a 20% reduction in spleen size. All of
the ten patients  achieved the primary endpoint goal of at least a 50% reduction
in urinary GAG levels.

Each patient with MPS-I  presents us with a different mix of clinical  symptoms.
We tested each patient at intervals  throughout the six-month  evaluation period
measuring a variety of  secondary  endpoints  to  determine  whether the primary
endpoints  are  reasonably  likely to predict  clinical  benefit.  The secondary
endpoints we used  included  joint  disease,  eye disease and cardiac  function.
Additional  measures of efficacy  included  sleep apnea and airway  evaluations,
endurance and fatigue,  and  evaluations of bone.  Except for the evaluations of
the patient's bones, where no improvement was expected due to the short duration
of the trial,  most  patients  who  exhibited  physical  symptoms of the disease
achieved  improvement  in those  symptoms  during the  course of the  evaluation
period for the secondary endpoints and additional clinical measures of efficacy.

During the twelve-month  evaluation period, four of the ten patients experienced
immune  responses  specific to the enzyme.  No long term effects of these immune
responses  have been  observed at this time.  A few  patients  experienced  side
effects,  primarily  hives in five  patients,  which  probably  were  related to
AldurazymeTM. The hives became recurrent with each infusion in four patients but
eventually decreased and resolved with increased pre-medication. No patients had
life-threatening allergic reactions. Of the events that probably were related to
AldurazymeTM,  the symptoms  occurred during the infusions only, were manageable
with  medications,  and did not impact the health or  well-being  of the patient
outside the administration setting.  Neither clinical nor laboratory evaluations
showed any harmful effect of AldurazymeTM therapy.


In collaboration with our joint venture partner,  Genzyme, we plan to initiate a
Phase III confirmatory clinical trial in mid-year 2000 and we intend to complete
the filing of our biologics license application by mid-year 2001.

The joint venture plans to continue assessment of the efficacy of treatment with
AldurazymeTM in its  confirmatory  trial. The parameters for this clinical study
are expected to include:

        o     A 6-minute walk test (a test of endurance)

        o     Pulmonary function (Force Vital Capacity (FVC-1), a measure of
              lung capacity)


Secondary parameters will include:

        o     Joint range of motion

        o     Functional ability assessment questionnaire

        o     Hepatomegaly (enlargement of the liver)


Tertiary parameters will include:

         o     Urinary GAGs

         o     Patient's quality of life

         o     Growth velocity

         o     Visual acuity

         o     Electrocardiogram and echocardiogram  (cardiac function)

         o     Sleep study

         o     Pulmonary function testing

         o     Investigator global assessment

         o     Parents' quality of life

We received orphan drug designation for  AldurazymeTM  from the FDA. This orphan
drug   designation   gives  us  exclusive  rights  to  market  a  product  using
(alpha)-L-iduronidase  to treat MPS-I in the United States for seven years if we
receive FDA approval of AldurazymeTM  before any other company receives approval
of  (alpha)-L-iduronidase  to treat MPS-I. In addition,  we received notice from
the FDA  that  AldurazymeTM  for  the  treatment  of  Hurler  and  Hurler-Scheie
syndromes,  which are the two more severe MPS-I  disorders,  received fast track
designation.  Drugs that show a potential to address an unmet medical need for a
serious or life  threatening  disease  may be  eligible  to  receive  fast track
designation.  Fast track  designation does not guarantee a faster approval.  The
FDA may still require  additional  studies or data regarding  AldurazymeTM which
may delay approval and subsequent  commercial  sales.  See "Risk  Factors--If we
fail to obtain  regulatory  approval to commercially  manufacture or sell any of
our future  drug  products,  or if  approval  is  delayed,  we will be unable to
generate  revenue  from the sale of our  products--If  our  joint  venture  with
Genzyme were  terminated,  our ability to  commercialize  AldurazymeTM  would be
delayed."

At the request of the FDA, the joint venture intends to conduct a clinical trial
to investigate the effect of AldurazymeTM on the prevention or  stabilization of
the progressive mental dysfunction experienced by patients with Hurler Syndrome,
the most  severe form of MPS-I.  The trial,  which will enroll up to 20 patients
and will last two years,  is  expected to begin in  mid-year  2001.  This Hurler
trial for mental  dysfunction is independent of the two clinical trials intended
to support the biologics license application submission for AldurazymeTM.


MPS-VI.  MPS-VI,  also known as Maroteaux-Lamy  syndrome,  is a genetic disorder
caused by a deficiency  of the enzyme  N-acetylgalactosamine  4-sulfatase  (also
known as arylsulfatase B), which is designated  BM102.  Estimates from frequency
studies  estimate that there are  approximately  1,100  patients  suffering with
MPS-VI in the developed world and 340 in the United States and Canada.  Patients
with MPS-VI have symptoms similar to those for MPS-I.  However,  MPS-VI patients
do not have impairment of mental function.  If untreated,  the average life span
of MPS-VI  patients is  estimated  to be between ten years in the severe form to
over 30  years  in the  mild  form.  MPS-VI  has  been  treated  by bone  marrow
transplants. However, few patients find an appropriate bone marrow donor. Of the
patients who find an appropriate donor, many choose not to receive a bone marrow
transplant because of its serious side effects.

BM102.  We  are  developing  BM102,  recombinant,   human  N-acetylgalactosamine
4-sulfatase, for the treatment of MPS-VI. We believe that BM102 may treat MPS-VI
by replacing a deficiency in the enzyme N-acetylgalactosamine 4-sulfatase.

During 1994 through 1999,  preclinical  studies of BM102 were  conducted on cats
with  naturally  occurring  feline MPS-VI.  Cats with MPS-VI have  physiological
characteristics  and clinical symptoms similar to those exhibited by humans with
MPS-VI. We are conducting  additional  studies in cats using alternative  dosing
regimens to better  determine  the likely dosing  regimen in humans.  We believe
that  preclinical  studies  conducted  on over 40  afflicted  cats  treated with
recombinant enzyme will provide a sufficient basis to support an investigational
new drug application for BM102. We must receive approval of our  investigational
new drug application before beginning clinical trials.

In August 1998, we licensed  rights to use data on feline MPS-VI and a cell line
for BM102 from Women's and Children's  Hospital in Adelaide,  Australia.  We are
developing  improved  production and purification  processes for BM102, first in
clinical  and then in  commercial  processes.  We received  in February  1999 an
orphan  drug  designation  for  BM102  to treat  MPS-VI.  We  intend  to file an
investigational  new drug  application and initiate a clinical trial for the use
of BM102 to treat  MPS-VI in mid-year  2000.  . The FDA may  require  additional
preclinical  testing,  clinical trials or additional  patients or trial duration
before approving BM102 if it is ever approved.


Enzyme Replacement Therapy in Other Genetic Diseases

We intend to develop additional enzyme  replacement  therapies for other genetic
diseases.  We have identified genetic diseases that we believe will respond well
to enzyme replacement  therapy.  We are developing enzyme replacement  therapies
that we believe  qualify for orphan drug  designation.  We are in the process of
cloning and producing enzymes for additional potential genetic diseases.  Due to
the small patient  populations  for these other  genetic  diseases and the known
biologic mechanism of proposed enzyme replacement therapies, we believe that the
size and scope of our human clinical  trials for future genetic  diseases may be
similar in size and scope to those for MPS-I.

Other Diseases And Conditions

Burns

In 1997,  approximately  65,000  patients in the United  States were admitted to
hospitals with burns.  Approximately 20% of these patients had very severe burns
that  destroyed  all  layers  of the  skin,  referred  to as  full-thickness  or
third-degree  burns.  Full-thickness  burns  require  major  skin  grafts.  This
typically  requires  admission to one of approximately 150 major burn centers in
the United States.  Full-thickness  burns are treated by removing  unhealthy and
dead tissue, a process called  debridement,  to prevent infection and to prepare
the burned site for skin grafting or other  therapy.  Currently,  full-thickness
burns are debrided by multiple surgical  procedures that are complicated by loss
of blood,  loss of healthy tissue,  continued  trauma and pain and scarring.  In
many  instances,  surgery  must be delayed  in  severely  compromised  patients.
Additionally,  certain  parts of the  body,  such as the  hands  and  face,  are
difficult to treat by this method.

A limited number of topical debridement products are available as an alternative
to surgery.  Topical enzymatic products,  however, have not been widely accepted
by physicians  because they are ineffective and often cause the patient pain and
cause the patient to bleed.


A significant  part of human skin is made up of carbohydrates  and proteins.  We
believe  that there is an  opportunity  for more  selective  enzyme  debridement
products that have greater specificity at digesting carbohydrates or proteins in
dead tissue. We currently have one product under preclinical development for the
treatment of full-thickness burns. We intend to file an investigational new drug
application and initiate a clinical trial for this product in mid-year 2000.


Based on  discussions  with general  wound  specialists,  we believe that if the
products  successfully  debride  full-thickness  burns,  they  will  effectively
debride other types of wounds as well.

BM201. BM201 is a carbohydrate-specific enzyme therapeutic which we developed in
mice in a model developed at the University of California at San Diego, or UCSD.
BM201  accelerated  the rate of  debridement  of burn  wounds  without  signs of
topical or systemic toxicity. In addition, BM201 significantly reduced the total
time in which grafts were  successfully  made and wounds closed when compared to
phosphate buffered saline,  which was used as a control, and to selected topical
enzymatic products. The total time required for the debridement using BM 201 and
graft  take was  significantly  less than the total time for  debridement  using
standard  surgical  debridement  techniques.  This product failed to debride pig
burns at Vanderbilt.  We are not currently planning any more burn injury-related
studies with this product.

BM202.  BM202 is an enzyme that acts on proteins  discovered by W.R. Grace & Co.
Upon review of the data from  preclinical  studies  that were  conducted by W.R.
Grace,  we obtained a  three-year  option in May of 1998 to obtain an  exclusive
license to BM202.  In preclinical  studies  supported by W.R.  Grace,  BM202 was
shown to safely  debride  full-thickness  burns in pigs,  and  accelerate  wound
healing in less severe  lesions.  In studies  sponsored  by us and  conducted at
UCSD,   BM202  debrided  wounds  and  allowed  graft  acceptance  in  mice  with
full-thickness burns. BM202 is now being assessed for its compatibility to allow
for graft acceptance in a pig burn model.

Anti-fungal Enzymes

We are  developing  two  naturally  occurring  enzymes  to combat  infection  by
Aspergillus spp. Aspergillus is one of the most common fungi in the environment.
Although  aspergillus  is not  usually  harmful to people  with  healthy  immune
systems,  it can pose a  life-threatening  risk to those with compromised immune
systems, such as cancer patients undergoing chemotherapy,  organ and bone marrow
transplant recipients and people with late-stage AIDS.  Aspergillosis,  a fungal
infection  caused by  aspergillus,  begins as an upper airway  infection and can
become  a  systemic  fungal  infection  in  immuno-compromised  patients.  It is
difficult  to diagnose,  currently  has no adequate  treatment  and often proves
fatal.


We believe that an effective  drug for systemic  aspergillosis  may be used as a
preventative measure for  immuno-compromised  patients. In the year 2000 experts
estimate  that over  85,000  patients  in the  United  States may be at risk for
contracting systemic aspergillosis. We believe that a carbohydrate-active enzyme
that breaks down the  carbohydrates  in the cell walls of aspergillus  will kill
the fungi and treat the infection.


BM301 and BM302. We have conducted  preclinical research on the use of BM301 and
BM302,   recombinant  forms  of  two  naturally   occurring  enzymes,  to  treat
aspergillosis.  BioMarin-sponsored  preclinical  studies  on mice  conducted  at
Boston  University  Medical  Center  or BU  demonstrated  that  BM301  and BM302
effectively  treated  aspergillosis.  Approximately 20% of the mice treated with
BM301 or BM302 died. For comparison,  all of the untreated,  infected mice died.
Additional  studies at BU suggested that there was toxicity  associated with the
most  highly  purified  forms of both  enzymes,  but we don't know the basis for
this. Our studies are now focused on establishing that the products are safe and
defining the upper limit of dosing in animals that provides therapeutic benefit.
We  intend to apply  for FDA  orphan  drug  designation  for  these  anti-fungal
enzymes.

Other Research and Development


We  are  also   focusing  a  portion  of  our   research  and   development   on
carbohydrate-active  enzymes  that we  believe  can treat  certain  inflammatory
conditions.    We   have   initiated   a   research   program   to   develop   a
carbohydrate-active  enzyme to treat psoriasis,  an inflammatory  skin condition
and have  identified and produced  sufficient  amounts of a candidate  enzyme to
conduct preclinical  studies. We initiated these studies in the third quarter of
1998 at Brigham  and  Women's  Hospital in Boston.  We have since  expanded  our
preclinical studies to include other inflammatory conditions.


Carbohydrate Analysis, Products and Services

Glyko, Inc., our wholly-owned  subsidiary,  sells carbohydrate analysis products
and services.  These products and services  provide  sophisticated  carbohydrate
analysis  to  research  institutions  and  commercial  laboratories.  Commercial
laboratories  use  carbohydrate  analysis to determine  carbohydrate  structure,
sequence  and  quantity.  Glyko,  Inc.'s  key  technology,  Fluorphore  Assisted
Carbohydrate  Electrophoresis,  also known as FACE(R), is a rapid and relatively
inexpensive method of analyzing complex carbohydrates. In a typical application,
FACE(R)  will  rapidly  process a sample of  unknown  composition.  It will then
identify the  carbohydrate  structures  present,  quantify  their  abundance and
prepare a detailed report.

Glyko,  Inc.'s primary product is the FACE(R) Imaging System, an electrophoretic
system that includes an imager and software  designed to separate,  identify and
quantify carbohydrates.  Glyko, Inc. also sells the consumable products required
for the system's  operation,  including four specialized  gels, 13 types of kits
and the consumable reagents necessary for carbohydrate analysis.

In addition, Glyko, Inc. provides:

        o     Reagents used in carbohydrate chemistry, including
              carbohydrate-active enzymes

        o     Custom analytical services for profiling and sequencing complex
              carbohydrates

        o     Research services on carbohydrate related problems

        o     Diagnostic  methods and services for lysosomal  storage  diseases,
              diseases  in which  residues  build  up in  lysosomes  because  of
              deficiencies in enzymes.

Glyko, Inc. also markets the only urinary screening test cleared by the FDA
for lysosomal  storage  diseases.  Glyko, Inc. also provides a lysosomal storage
diseases  screening  service using its test and related  diagnostic  technology.
Glyko,  Inc.'s diagnostics line includes software for the automated diagnosis of
oligosaccharidoses,  a subclass of lysosomal  storage  diseases.  Glyko, Inc. is
developing  similar  software for MPS  disorders.  Glyko,  Inc. is expanding its
ability to measure  GAGs in urine.  In  addition  to MPS-I,  elevated or reduced
levels of GAGs in urine may serve as early, non-invasive indicators for a number
of  diseases,  including  osteoporosis,   degenerative  joint  diseases,  kidney
diseases  as well as  lysosomal  storage  diseases.  In  addition,  Glyko,  Inc.
provides  analysis  of  plasma  heparin,  a type of GAG,  and is  developing  an
automated  analyzer for heparin in whole blood.  The direct  analysis of heparin
concentration  in blood or plasma  allows for close  monitoring  of  patients on
heparin-based  anti-coagulation  therapy.  Over-or  under-dosing  of heparin can
result in serious adverse side effects.

Glyko, Inc.  purchased the reagent business of Oxford  GlycoSciences May of
1999.  This  business  adds a  product  line  of  chromatography  equipment  and
disposables as well as additional reagents and enzymes to the current technology
offered by Glyko, Inc.

Corporate Collaborations

Joint Venture with Genzyme Corporation

In September 1998, we established a joint venture with Genzyme for the worldwide
development and  commercialization  of AldurazymeTM  for the treatment of MPS-I.
Our lead responsibilities within the joint venture include:


         o    Conducting  certain clinical trials including the initial clinical
              trial, a Hurler syndrome trial and potentially a compassionate use
              trial intended to provide enzyme replacement  therapy for those in
              dire need

        o     Obtaining the necessary U.S. regulatory approvals

        o     Manufacturing bulk AldurazymeTM for clinical and commercial
              purposes




Genzyme has lead responsibility for:

        o     Conducting the Phase III confirmatory clinical trial

        o     Obtaining the necessary international regulatory approvals

        o     Providing pricing and reimbursement requirements

        o     Providing overall sales and marketing

        o     Providing fill and finish manufacturing services and physical
              distribution of the final product

Under the  agreement,  BioMarin  and Genzyme are each  required to make  capital
contributions to the joint venture equal to 50% of the direct costs and expenses
associated with the development and commercialization of Aldurazyme TM. BioMarin
and Genzyme will share equally in any profits generated from sales of Aldurazyme
TM. Genzyme purchased $8.0 million of our common stock in a private placement in
September 1998 and purchased an additional  $10.0 million of our common stock at
the initial public offering (IPO) price in a private  placement  concurrent with
the  IPO.  Genzyme  has also  committed  to pay us $12.1  million  in cash  upon
approval of the BLA for Aldurazyme TM. We have sub-licensed to the joint venture
certain of our intellectual property rights related to Aldurazyme TM.

If either  party  fails to fund its 50% share of costs  and  expenses,  then the
other party may buy out the party that  breaches on the terms  described  below,
otherwise,  the profit sharing  interests and the future funding  obligations of
the parties will be adjusted to correspond to the  cumulative  amount of capital
contributions  made by each party.  From the start of the joint venture  through
December 31, 1999, Genzyme and BioMarin have each contributed approximately $8.3
million to the joint venture.

The  collaboration  agreement  is the  document,  which  contains the rights and
responsibilities  of  each  of  Genzyme  and  us  in  the  joint  venture.  Upon
termination  of the  collaboration  agreement,  one party must buy out the other
party's  interest in the joint venture,  as described below. The acquiring party
will  then  obtain  all  rights to  AldurazymeTM  and any  related  intellectual
property  and  regulatory  approvals,  and the other  party would be barred from
developing and commercializing AldurazymeTM.

Upon a breach  of the  collaboration  agreement,  the  non-breaching  party  may
terminate the agreement.  In this event, the terminating party will be obligated
to buy out the  breaching  party's  interest in the joint venture for 90% of its
"fair  value." The purchase  price would be payable  over four years.  Under the
agreement,  the "fair  value"  of a party's  interest  in the joint  venture  is
defined as the price a willing and well  informed  buyer,  under no  compulsion,
would be willing to pay and that a willing and well  informed  seller,  under no
compulsion,  would be willing  to  accept,  as  determined  by mutual  agreement
between Genzyme and us. Should Genzyme and we be unable to agree, the fair value
is to be determined  by an  investment  banking firm selected by Genzyme and us.
Our management currently believes that the value of the joint venture represents
a majority of our value as a public company.


The collaboration agreement may be terminated without cause by either Genzyme or
us upon one year's  prior  written  notice at any time after the  earlier of the
approval of the biologics  license  application  for  AldurazymeTM by the FDA or
December 31, 2000.  If the  agreement  is  terminated  by us without a breach by
Genzyme, Genzyme would have the option, exercisable for one year, to buy out our
interest in the joint  venture  for 100% of its "fair  value," as defined in the
preceding paragraph.  If the agreement is terminated by Genzyme without a breach
by us, we would immediately have the option to buy out Genzyme's interest in the
joint venture. Under the collaboration agreement, the amount we would pay to buy
out Genzyme is calculated  differently depending upon whether Genzyme terminated
the agreement  prior to or after  December 31, 2000. If Genzyme  terminated  the
agreement  without a breach by us prior to December 31, 2000,  we would have the
right to purchase Genzyme's interest for an amount equal to the aggregate amount
of  Genzyme's  capital  contributions  to  the  joint  venture  to the  date  of
termination  minus two million dollars.  Since as of December 31, 1999,  Genzyme
had contributed  approximately  $8.3 million to the joint venture,  this buy out
amount as of December 31, 1999 would be approximately  $6.3 million.  If Genzyme
terminated  the  agreement  without a breach by us after  December 31, 2000,  we
would  have the  right to  purchase  Genzyme's  interest  for 100% of its  "fair
value." In the event of termination  of the buy out option  without  exercise by
the   non-terminating   party  as  described  above,  all  right  and  title  to
AldurazymeTM is to be sold to the highest bidder,  with the proceeds to be split
equally between Genzyme and us.


If the  agreement  were  terminated by us because  Genzyme  failed to pay us the
agreed upon $12.1  million in cash upon the approval by the FDA of the biologics
license application for AldurazymeTM, we would be obligated to buy out Genzyme's
interest in the joint  venture for an amount  equal to the  aggregate  amount of
Genzyme's  capital  contributions  to the joint  venture  to that date minus two
million dollars.  We estimate that as of February 29, 2000, that amount would be
approximately $8.7 million.

If the  agreement  is  terminated  by either  party  because the other  declares
bankruptcy and is in breach of the  agreement,  the  terminating  party would be
obligated to immediately buy out the other party's interest in the joint venture
for 100% of its "fair  value." If the agreement is terminated by a party because
the other party  experienced a change of control,  the  terminating  party shall
notify the other  party,  the  offeree,  of its intent to buy out the  offeree's
interest in the joint venture for a stated amount,  set by the terminating party
at its  discretion.  The offeree must then either  accept this offer or agree to
buy the terminating party's interest in the joint venture on those same terms.

If we were  required to buy out  Genzyme's  interest in the joint  venture other
than for their failure to make the $12.1 million payment,  we may be required to
seek additional financing to pay Genzyme. If we obtain this financing by selling
our stock,  existing  investors would suffer a dilution of their investment.  We
cannot assure you that this financing, if necessary, will be available at all or
at a commercially  reasonable cost. We would then be unable to buy out Genzyme's
interest in the joint venture and would be in breach of the agreement.

See "Additional  Factors That Might Affect Future  Results--If our joint venture
with Genzyme were terminated, our ability to commercialize AldurazymeTM would be
delayed."

Grant Agreements and Licenses

We have entered into  research and  development  collaboration  agreements  with
various  academic and research  institutions.  Under these  agreements,  we fund
research and  development by these  institutions.  Some of the  agreements  also
provide for the grant to us of exclusive,  royalty-bearing licenses or rights of
first negotiation  regarding licenses to intellectual property and other subject
matter  developed  by  these  institutions  in  the  course  of  this  research.
Typically,  these  agreements  are  terminable  for cause by either  party  upon
90-days written notice.

In April 1997,  we entered into the Grant Terms and  Conditions  Agreement  with
Harbor-UCLA. Under this agreement, we funded a two-year research program related
to (alpha)-L-iduronidase and obtained an exclusive, worldwide license to certain
cell lines and methods related to the production and  purification of the enzyme
and intellectual  property and materials developed by Harbor-UCLA.  This license
is perpetual, subject to our obligation to pay ongoing license fees. In exchange
for the license,  we pay  Harbor-UCLA an annual  licensing fee and,  separately,
royalties  for 10 years or for the duration of any patents based on the licensed
technology,  if longer.  This  agreement  may be  terminated by either party for
breach upon 90 days prior written  notice.  In connection with Dr. Kakkis' prior
employment with Harbor-UCLA,  he will receive a portion of the royalties paid to
Harbor-UCLA  by  BioMarin.  Under this  agreement  we are required to pursue the
development  of enzyme  therapy with due diligence  acceptable to Harbor-UCLA in
order to maintain the license.  Our joint venture with  Genzyme,  which has been
sublicensed  the  technology  originally  licensed  to  us  by  Harbor-UCLA,  is
currently   using  this  technology  in  part  to  develop  our  initial  enzyme
replacement  therapy product,  AldurazymeTM.  We are required to fund 50% of the
costs and expenses associated with the development of AldurazymeTM.

In May 1998, we entered into an agreement with W.R. Grace  regarding  BM202,  an
enzyme that  breaks  down  proteins,  which may be used for the  debridement  of
burns.  Under this  agreement,  we have  obtained an option to acquire from W.R.
Grace an exclusive  license,  with the right to grant and authorize  sublicenses
for certain  patents  related to BM202.  We may  exercise our option at any time
until May 2001 so long as we have made certain payments to W.R. Grace. Under the
terms of the agreement,  we would pay W.R. Grace certain milestone  payments and
annual  licensing  fees.  We must pay  W.R.  Grace  the  greater  of (1)  annual
royalties  based on net annual sales of BM202,  or (2) a minimum  annual royalty
stipulated in the agreement. If we cannot reach agreement with W.R. Grace on the
additional terms and conditions of the license within six months of the exercise
of our option, then we may initiate binding arbitration proceedings to establish
the other terms of the license.  The agreement  also requires us to use our best
efforts to produce material toxicology studies on BM202 between May 1, 1999, and
May 1, 2000, and to begin clinical  testing of products based on BM202.  We will
bear the cost of both toxicology studies and the clinical testing.




In August 1998, we entered into a license  agreement with Women's and Children's
Hospital of Adelaide,  Australia under which Women's and Children's  Hospital of
Adelaide  granted  us a  worldwide,  exclusive,  perpetual  license  to  certain
technology and products for use in enzyme  replacement  therapy for MPS-VI.  The
licensed  technology includes the feline MPS-VI preclinical data and a host cell
line that  expresses  this enzyme.  We paid Women's and  Children's  Hospital of
Adelaide an initial  license fee and will continue to pay royalties based on net
sales with a minimum  annual  royalty.  The royalty rate is reduced if a product
competitive  with MPS-VI enters the market.  The terms of the license  agreement
require that both parties reach  agreement on the design of the MPS-VI  clinical
trials within a specified  period.  The license agreement further requires us to
file  an  investigational  new  drug  application  with  the  FDA or  equivalent
regulatory  authority in another  country and to begin  clinical  trials  within
specified  time  periods.  The term of the agreement is ten years and we have an
option to renew the agreement for two one-year periods.

Manufacturing

Pharmaceutical  Manufacturing.  The drug candidates we are currently  developing
require  the  manufacture  of  recombinant  enzymes.  For  our  genetic  disease
programs,  we  eventually  expect to  manufacture  the bulk  carbohydrate-active
enzymes. We believe that we will be able to manufacture sufficient quantities of
our genetic  disease drug products for clinical  trials and commercial  sales in
part because  relatively  low doses are required for  treatment  and because the
targeted patient  populations are small. In general,  we expect to contract with
outside service providers for certain  manufacturing  services,  including final
product fill and finish  operations and bulk enzyme  production for clinical and
early  commercial  production  where  the  production  requirements  exceed  our
manufacturing capacity.

In the first  quarter of 2000,  we began  production  of bulk  AldurazymeTM  for
clinical  requirements  including the Confirmatory  Phase III clinical trial and
eventually the other clinical requirements. This production is being done in the
first phase of our Galli Drive (Novato California) manufacturing facility. Galli
phase I is a 32,800  square foot  Current Good  Manufacturing  Processes or cGMP
production facility including support areas housing utilities,  laboratories and
administrative  functions.  We expect to support  the United  States  commercial
launch of Aldurazyme(TM)  from the facility's first phase.  Genzyme will package
the  bulk   AldurazymeTM  into  its  final  dosage  form  at  its  Massachusetts
facilities.

We  developed  an 11,000  square  foot  facility on Carson  Street in  Torrance,
California, originally designed and dedicated to the production of AldurazymeTM.
As a result of changes in the production  process for improved purity and of FDA
guidance on  production  process,  we will not use the facility for its original
purpose.  We  plan  to  suspend  production  operations  at  Carson  Street  for
AldurazymeTM  production in May 2000 after  manufacture of clinical  product for
the  continuation  of our  initial  trial of  AldurazymeTM.  At the time of this
report,  we do not have a future use planned for this facility.  We have offered
transfers  to the Novato  facility to fill open  positions  to a majority of the
Carson Street staff.

We have a 1,400  square  foot cGMP  complex  of  laboratory  and  support  areas
designed  for  clinical  production  of enzymes  for our other  genetic  disease
programs.  This  laboratory  has the  capability  for cell  culture  production,
purification  and  filling  of  small-scale  production  lots.  Initially,  this
facility  will be used to produce  BM102 in  sufficient  quantity  to support an
initial clinical trial of MPS-VI.

We  have  also  developed  a  1,000  square  foot  bacterial   fermentation  and
purification  facility for  preclinical  studies for burn and  anti-fungal  drug
candidates.  We use third-party contract manufacturers to produce clinical trial
material made in bacterial or fungal cells.

We are  developing the  manufacturing  capacity to support  commercial  sales of
AldurazymeTM and eventually BM102 and other genetic diseases enzymes.  We cannot
assure  you  that  we will be able  to do so in a  timely  manner  or that  this
capacity  will be  sufficient  to  supply  the  market  demand  if sales  exceed
projections.  As a company, we have no experience manufacturing  AldurazymeTM or
other  enzymes in  commercial  quantity,  although  we have hired and are in the
process of hiring  additional  personnel  who do have  experience  manufacturing
commercial quantities of drug products including therapeutic proteins.

Because our initial  manufacturing  facilities are in the process of validation,
and process  qualification  before filing of a BLA, we have yet to be subject to
governmental  inspection for compliance  with cGMP. We will have to register our
manufacturing facilities with the FDA, the State of California and other foreign
regulatory   agencies.   These   facilities,   and  those  of  any   third-party
manufacturers,  will be subject to periodic  inspections  confirming  compliance
with  applicable  law.  Our  facilities  must be cGMP  certified  before  we can
manufacture  our drugs for  commercial  sales.  Failure  to  comply  with  these
requirements  could  result in the  shutdown of our  facilities,  fines or other
penalties.  A  shutdown  or fine  could  have a serious  effect on our  business
financial  condition and results of  operations.  See "Risk  Factors--If  we are
unable  to  manufacture  our  drug  products  in  sufficient  quantities  and at
acceptable  cost,  we may be unable to meet  demand  for our  products  and lose
potential  revenues--If  we fail to obtain  regulatory  approval to commercially
manufacture or sell any of our future drug products,  or if approval is delayed,
we will be unable to generate revenue from the sale of our products."




Carbohydrate Analysis Products Manufacturing.  Glyko, Inc. assembles its FACE(R)
Imaging System and kits from standard components readily available from multiple
commercial  sources.  A key  component  of  the  FACE(R)Imaging  System  is  the
operating  and  interpretative  software,  which  Glyko,  Inc.  writes and tests
itself.  Glyko,  Inc.  mixes and casts its gels using  proprietary  and patented
formulations  best  suited  for  carbohydrate  applications.  Glyko,  Inc.  also
manufactures its  carbohydrate-active  enzymes. Glyko, Inc. believes that it has
adequate  manufacturing  capacity  to  produce  much  larger  quantities  of its
products than are currently required.

Sales and Marketing


Pharmaceutical  Sales and Marketing.  We have no experience marketing or selling
pharmaceutical  products. To commercially market our products once the necessary
regulatory  approvals  are  obtained,  we must either  develop our own sales and
marketing force or enter into arrangements with third parties.  We established a
joint venture with Genzyme for the worldwide  development and  commercialization
of  AldurazymeTM  for the treatment of MPS-I.  Under the joint venture,  Genzyme
will  be   responsible   for  marketing,   distribution,   sales  and  insurance
reimbursement of AldurazymeTM worldwide.

In the  future,  we may  develop  the  capability  to  market  and sell our drug
products  that are targeted at small or  concentrated  patient  populations.  We
believe  that  these  patient   populations  are  typically   well-informed  and
well-connected to the medical community.  Often family/patient  groups suffering
from niche diseases are capable users of the internet to share  experiences  and
gather  information.  We believe  that  direct  marketing  to these  families or
patients  would  be  effective.   We  may  also  market  our  products   through
distributors or other collaborators, particularly for those products targeted at
larger patient populations.

We cannot  guarantee  that  Genzyme  will  devote  the  resources  necessary  to
successfully  market  AldurazymeTM or that the methods that provided  success in
Gaucher disease will provide equal success in MPS-I.  In addition,  either party
may terminate the joint venture for any reason. If Genzyme were to terminate the
joint  venture,  we would be required to  undertake  Genzyme's  responsibilities
ourselves.   We  have  no  experience   in   marketing,   selling  or  obtaining
reimbursement for pharmaceutical  products. In addition, we would be required to
pursue  foreign  regulatory  approvals.  As a result,  termination  of the joint
venture by Genzyme may delay the launch of AldurazymeTM.


Sales and Marketing of Carbohydrate  Analysis Products and Services.  Glyko, Inc
sells its products and services  primarily to distributors of research products,
quality control laboratories and research laboratories.  Glyko, Inc. has a sales
staff of three,  who cover the United  States,  Canada and Europe.  Direct sales
efforts  accounted  for  approximately  59% of Glyko,  Inc.'s  revenues in 1999.
Glyko,  Inc. has established a network of distributors to expand its coverage in
the analytical products market.  Glyko, Inc.  hasrelationships  with three major
research  products  distributors  worldwide and with one  distributor  for North
America. These distribution agreements allow these companies to sell Glyko, Inc.
manufactured  products under the  distributor's  own name.  Glyko, Inc. also has
distribution agreements with third parties covering Asia, Australia,  Europe and
Mexico.  Sales by distributors  accounted for approximately 24% of Glyko, Inc.'s
revenues in 1999. The remaining 17% of Glyko,  Inc.'s revenues are from sales of
contract  services,  including  services  sold  to us,  and  government  grants.
Services provided to us accounted for approximately 5% of Glyko,  Inc.'s overall
revenue in 1999.


See "Risk  Factors--If  our joint  venture  with Genzyme  were  terminated,  our
ability to  commercialize  AldurazymeTM  would be  delayed--If  we are unable to
effectively sell and market our products,  our ability to generate revenues will
be  diminished--If we fail to compete  successfully,  our revenues and operating
results will be adversely affected."






Patents and Proprietary Rights

Our success depends in part on our ability to:

        o     Obtain patents

        o     Protect trade secrets

        o     Operate without infringing the proprietary rights of others

        o     Prevent others from infringing on our proprietary rights

We may obtain licenses to patents and patent applications from others.

We have eight patent applications  presently pending in the United States Patent
and Trademark  Office. We have filed four foreign  counterpart  applications and
expect to file a foreign  counterpart  to one of the other  pending U.S.  patent
applications at the proper time.

Glyko,  Inc.  owns eleven  issued U.S.  patents.  In addition,  Glyko,  Inc. has
licensed eight U.S.  patents and their foreign  counterparts  from AstroMed Ltd.
and its  successor  Astroscan  Ltd. on an  exclusive,  worldwide,  perpetual and
royalty-free basis. Glyko, Inc. has also licensed six U.S. patents from Glycomed
Incorporated on an exclusive, worldwide, perpetual and royalty-free basis. These
patents are all related to Glyko, Inc.'s products and services.

We  primarily  protect our  proprietary  information  by filing U.S. and foreign
patent  applications  related  to our  proprietary  technology,  inventions  and
improvements.  Proprietary rights relating to our technologies will be protected
from  unauthorized use by third parties only to the extent that they are covered
by valid and enforceable patents or are effectively maintained as trade secrets.
The patent  positions  of  biotechnology  companies  are  extremely  complex and
uncertain.  The  scope  and  extent of our  patent  protections  for some of our
products,  including  AldurazymeTM and BM102, are particularly uncertain because
some of the enzymes we are developing have existed in the public domain for many
years. Other parties have published the structure of the enzyme, the methods for
purifying  or  producing  the enzyme and the methods of  treatment  or use.  The
publication of this information  limits the scope of our patents and may prevent
us from obtaining any meaningful  patent  protection.  We cannot assure you that
any  patents  owned  by,  or  licensed  to, us will  afford  protection  against
competitors.  Nor can we assure you that any patent  applications will result in
patents being issued.

In  addition,  the  laws  of  certain  foreign  countries  do  not  protect  our
intellectual  property  rights to the same  extent as do the laws of the  United
States.  The patent position of  biopharmaceutical  companies  involves  complex
legal and factual questions. We cannot predict whether the intellectual property
laws of foreign countries will be enforceable.  We cannot assure you that any of
our  patents  or  patent  applications,  if  issued,  will  not  be  challenged,
invalidated  or designed  around.  Nor can we assure you that the  patents  will
provide proprietary protection or competitive advantages to us. Furthermore,  we
cannot  assure  you  that  others  will  not   independently   develop   similar
technologies or duplicate any technology developed by us.

Our commercial  success depends  significantly on our ability to operate without
infringing the patents and other proprietary rights of third parties.  We cannot
assure you that our  technologies  do not and will not  infringe  the patents or
violate  other  proprietary  rights  of third  parties.  In the event any of our
technologies are found to infringe or violate the  intellectual  property rights
of  others,  we and  our  corporate  partners  may be  prevented  from  pursuing
research, development or commercialization of our products.

There has been extensive  litigation  regarding  patents and other  intellectual
property rights in the biotechnology and pharmaceutical  industries. The defense
and   prosecution  of   intellectual   property  suits  and  related  legal  and
administrative proceedings in the United States and abroad involve complex legal
and factual questions. These proceedings are costly and time-consuming to pursue
and their outcome is uncertain.  Litigation may be necessary to enforce  patents
issued to or  licensed  by us, to protect  trade  secrets or  know-how  owned or
licensed by us and to determine  the  enforceability,  scope and validity of the
proprietary rights of others.



We will incur substantial expense and be forced to divert significant effort and
resources  of our  technical  and  management  personnel  in the  event  we must
prosecute or defend any  litigation or other  administrative  proceeding.  If an
adverse determination were made, we could incur significant liabilities to third
parties or be required to seek  licenses  which may not be available  from third
parties or may be prevented from selling our products in certain markets,  if at
all.  Although  patent and  intellectual  property  disputes  are often  settled
through  licensing  or  similar   arrangements,   costs  associated  with  these
arrangements   may  be  substantial   and  could  include   ongoing   royalties.
Furthermore, we cannot assure you that the necessary licenses would be available
to us on satisfactory terms, if at all.

In addition to patents, we rely on trade secrets and proprietary know-how, which
we seek to  protect,  in  part,  through  confidentiality  agreements  with  our
employees.  We cannot  assure  you that  these  confidentiality  or  proprietary
information  agreements will  meaningfully  protect our technology or provide us
with adequate  remedies in the event of  unauthorized  use or disclosure of this
information. Nor can we assure you that the parties to these agreements will not
breach these  agreements  or that our trade  secrets will not  otherwise  become
known to or be independently developed by competitors.  See "Risk Factors--If we
are unable to protect our  proprietary  technology we may not be able to compete
as effectively--If we fail to compete  successfully,  our revenues and operating
results will be adversely affected."

Government Regulation

Our pharmaceutical  products are subject to extensive  government  regulation in
the United  States.  If we distribute our products  abroad,  these products will
also be  subject  to  extensive  foreign  government  regulation.  In the United
States,  pharmaceutical  and  biological  products are regulated by the FDA. FDA
regulations govern the testing, manufacturing, advertising, promotion, labeling,
sale and distribution of our products.  Currently,  we believe that AldurazymeTM
and other enzyme drug  products that we may develop will be regulated by the FDA
as biologics  rather than as drugs because they are  manufactured  by biological
processes.

The FDA approval process for a biologic includes:

        o    Preclinical studies

        o    Submission of an investigational new drug application for clinical
             trials

        o    Adequate and well-controlled human clinical trials to establish
             the safety and effectiveness of the product

        o    Submission of a biologics license application

        o    Review of the biologics license application

        o    Inspection  of the  facilities  used in the  manufacturing  of the
             biologic to assess compliance with the Current Good  Manufacturing
             Processes, or cGMP regulations

The biologics license application includes comprehensive,  complete descriptions
of the pre-clinical  testing,  clinical trials, and the chemical,  manufacturing
and control  requirements of a drug which enable the FDA to determine the drug's
safety and  efficacy.  A biologics  license  application  must be filed and then
approved by the FDA before a biologic can be marketed commercially.

The FDA testing and  approval  process  requires  substantial  time,  effort and
money. We cannot assure you that any approval will ever be granted.

Preclinical  studies include  laboratory  evaluation of the product,  as well as
animal studies to assess the potential safety and  effectiveness of the product.
These  studies must be performed  according to good  laboratory  practices.  The
results of the preclinical studies,  together with manufacturing information and
analytical  data,  are submitted to the FDA as part of the  investigational  new
drug  application.  Clinical trials may begin 30 days after the  investigational
new drug  application is received,  unless the FDA raises  concerns or questions
about the conduct of the clinical  trials.  If concerns or questions are raised,
the  investigational  new drug application  sponsor and the FDA must resolve any
outstanding  concerns before  clinical trials can proceed.  We cannot assure you
that  submission  of an  investigational  new drug  application  will  result in
authorization  to  commence  clinical  trials.  Nor can we  assure  you  that if
clinical trials are approved, that data will result in marketing approval.




Clinical trials involve the administration of the product that is the subject of
the trial to  volunteers  or  patients  under  the  supervision  of a  qualified
principal  investigator.  Furthermore,  each clinical trial must be reviewed and
approved by an  independent  institutional  review board at each  institution at
which the study will be conducted. The institutional review board will consider,
among  other  things,  ethical  factors,  the safety of human  subjects  and the
possible liability of the institution.  Also,  clinical trials must be performed
according to good clinical practices.  Good clinical practices are enumerated in
FDA regulations and guidance documents.

Clinical trials typically are conducted in three sequential phases, Phases I, II
and III, with Phase IV studies  conducted after approval and generally  required
for fast track designated drugs.  These phases may overlap.  In Phase I clinical
trials, the drug is usually tested on healthy volunteers to determine:

         o     Safety

         o     Any adverse effects

         o     Dosage tolerance

         o     Absorption

         o     Metabolism

         o     Distribution

         o     Excretion

         o     Other drug effects

In Phase II clinical  trials,  the drug is usually tested on a limited number of
afflicted patients to:

        o     Evaluate the efficacy of the drug for specific, targeted
              indications

        o     Determine dosage tolerance and optimal dosage

        o     Identify possible adverse effects and safety risks

In Phase III clinical  trials,  the drug is usually tested on a larger number of
afflicted  patients,  an expanded  patient  population and at multiple  clinical
sites.  The FDA may  require  that we  suspend  clinical  trials  at any time on
various  grounds,  including a finding that the subjects are being exposed to an
unacceptable health risk. In addition, FDA approval may be conditioned and limit
the indicated uses for our products.

Phase IV  clinical  trials are  defined as  studies  performed  after a drug has
received FDA approval. These additional studies are conducted to gain experience
from the treatment of afflicted patients in the intended therapeutic  indication
and are required if a drug is approved based on surrogate endpoints. In clinical
trials,  surrogate  endpoints are alternative  measurements of the symptoms of a
disease or condition,  often by biochemical or other tests, that are substituted
for measurements of observable  clinical  symptoms.  Failure to promptly conduct
Phase IV clinical  trials could result in expedited  withdrawal  of approval for
products approved under fast track designation.

We will also be subject to a variety of foreign  regulations  governing clinical
trials,  manufacture and sales of our products.  Whether or not FDA approval has
been obtained, approval of a product by the comparable regulatory authorities of
foreign  countries must still be obtained prior to marketing in those countries.
The  approval  process  varies  from  country to country  and the time needed to
secure approval may be longer or shorter than that required for FDA approval.

Food  and  Drug  Administration  Modernization  Act of  1997.  The Food and Drug
Administration  Modernization  Act of 1997 was enacted,  in part,  to ensure the
availability  of safe and  effective  drugs,  biologics  and medical  devices by
expediting  the FDA review  process  for new  products.  The  Modernization  Act
establishes  a  statutory  program  for the  approval  of fast  track  products,
including  biologics.  The fast track  provisions  essentially  codify the FDA's
accelerated approval  regulations for drugs and biologics.  A fast track product
is defined as a new drug or biologic  intended for the treatment of a serious or
life-threatening  condition  that  demonstrates  the  potential to address unmet
medical needs for this condition.  Under the new fast track program, the sponsor
of a new drug or biologic may request the FDA  designate the drug or biologic as
a fast track product at any time during the clinical development of the product.
The  Modernization  Act  specifies  that the FDA must  determine  if the product
qualifies for fast track designation  within 60 days of receipt of the sponsor's
request.




Approval of a license  application  for a fast track  product can be based on an
effect on a clinical  endpoint or on a  surrogate  endpoint  that is  reasonably
likely to predict clinical benefit. Approval of a license application for a fast
track product based on a surrogate endpoint may be subject to:

        o     Post-approval studies to validate the surrogate endpoint or
              confirm the effect on the clinical endpoint

        o     Prior review of all promotional materials

If a  preliminary  review of the  clinical  data  suggests  that the  product is
effective,  the FDA may initiate review of sections of a license application for
a fast track product before the application is complete.  This rolling review is
available  if the  applicant  provides a schedule  for  submission  of remaining
information and pays applicable user fees. However, the time period specified in
the Prescription Drug User Fees Act, which governs the time period goals the FDA
has  committed  to  reviewing  a license  application,  does not begin until the
complete application is submitted.

In September 1998, the FDA designated  AldurazymeTM a fast track product for the
more severe forms of MPS-I.  We cannot predict the ultimate  impact,  if any, of
the  fast  track  process  on  the  timing  or  likelihood  of FDA  approval  of
AldurazymeTM or any of our other potential products.

Orphan Drug Designation.  In September 1997,  AldurazymeTM  received orphan drug
designation  from  the  FDA.  In  February  1999,  BM102  received  orphan  drug
designation from the FDA. Orphan drug designation is granted by the FDA to drugs
intended to treat a rare  disease or  condition.  A rare disease or condition is
one which generally affects fewer than 200,000 individuals in the United States.
Orphan drug designation must be requested before  submitting a biologics license
application.  After the FDA grants orphan drug designation, the generic identity
of the therapeutic agent and its potential orphan use are disclosed  publicly by
the FDA.

Orphan drug designation does not shorten the FDA regulatory  review and approval
process for an orphan drug,  nor does it give that drug any advantage in the FDA
regulatory  review and approval  process.  If an orphan drug later  receives FDA
approval  for the  indication  for  which  it has  designation,  the FDA may not
approve any other  applications to market the same drug for the same indication,
except in very limited  circumstances,  for seven years.  Although obtaining FDA
approval to market a product with orphan drug  exclusivity may be  advantageous,
we cannot be certain  that we will be the first to obtain FDA  approval  for any
drug for which we obtain  orphan drug  designation.  Nor can we be certain  that
orphan  drug  designation  will  result in any  commercial  advantage  or reduce
competition.  Nor  can  we be  certain  that  the  limited  exceptions  to  this
exclusivity will not be invoked by the FDA.

Regulation of Glyko, Inc.'s Diagnostic Tests as Medical Devices. Our subsidiary,
Glyko,  Inc.,  develops  diagnostic  tests  that  screen  for  diseases  such as
lysosomal  storage  diseases.  The FDA regulates these tests as medical devices.
The FDA requires  companies that desire to market new medical  devices to obtain
either 510(k)  clearance or approval of a Pre-market  Approval  Application,  or
PMA,  before they are sold.  Regulation  under a PMA can be  significantly  more
costly and time  consuming than clearance  under a 510(k)  notification.  Glyko,
Inc.  has  received  510(k)  clearance  from the FDA for a urinary  carbohydrate
analysis test and is developing other diagnostic tests, which we believe qualify
for 510(k) clearance.

Glyko, Inc.'s diagnostic tests may be regulated as medical devices by the FDA as
Class I, Class II or Class III devices. The degree of regulation, as well as the
cost and time required to obtain regulatory  approvals or clearances,  generally
increases  from Class I to Class III.  Most  diagnostic  tests are  regulated as
Class  I or  Class  II  devices.  Glyko,  Inc.'s  diagnostic  test  for  urinary
carbohydrate  analysis has been  classified as a Class I device.  Under the Food
and Drug  Administration  Modernization  Act of 1997,  most Class I devices  are
exempt  from  the  510(k)  clearance  requirement.  Based on the  advice  of our
regulatory  consultants  and the experience  with our first test, we expect that
all of our currently planned diagnostic tests will require a 510(k) notification
and clearance process.




A  510(k)  notification  is  sufficient  for a  device  that  is  "substantially
equivalent"  to a legally  marketed  Class I or Class II device,  or a Class III
"predicate"  device for which the FDA has not yet required  submission  of PMAs.
Following  submission  of a 510(k)  notification,  a company  may not market the
device  for  clinical  use until the FDA finds  that  product  is  substantially
equivalent to a legally marketed predicate device. It generally takes four to 12
months  from  the  date  of   submission   of  a  510(k)  to  obtain  the  FDA's
determination,  but it may take longer. The FDA may determine that the device is
not  substantially  equivalent  and require  submission  and  approval of a PMA.
Alternatively,   the  FDA  may  require  further  information  before  making  a
determination regarding substantial  equivalence.  The FDA requires a new 510(k)
submission and a separate FDA  determination of substantial  equivalence for any
devices  cleared  through  the 510(k)  process  that have had  modifications  or
enhancements that could significantly  affect their safety or effectiveness,  or
that change their intended use.

If a device does not qualify for the 510(k) premarket notification  procedure, a
company must file a PMA application.  The PMA review and approval process can be
expensive,  uncertain  and  lengthy.  A PMA  application  must be  supported  by
extensive data,  including  laboratory and clinical trial data  establishing the
safety and  effectiveness  of the  device,  as well as  extensive  manufacturing
information.  After a preliminary review, the FDA makes an initial determination
about whether a PMA application is sufficiently complete to permit a substantive
review.  If the FDA finds the PMA  application  sufficiently  complete,  the FDA
accepts the  application  for filing.  Once the PMA  application is accepted for
filing, the FDA begins a more in-depth review, which likely includes review by a
scientific advisory panel.  During the PMA review process,  the FDA will conduct
an inspection of the  manufacturer's  facilities to ensure  compliance  with the
applicable Quality System Regulation or QSR requirements.  The FDA may determine
that additional  clinical data is necessary or request other information,  which
may delay the regulatory review process.

Modifications  to a device that is the subject of an approved PMA, its labeling,
manufacturing or clinical use may require approval by the FDA of PMA supplements
or new  PMAs.  PMA  supplements  often  require  submission  of the same type of
information required for the initial PMA except that the supplement generally is
limited  to that  data  needed  to  support  the  proposed  changes.  Regulatory
approval,  if granted,  may limit the uses for which the device may be marketed.
Approvals,  once  granted,  may be  withdrawn  if problems  occur after  initial
marketing.

Sales of medical  devices outside of the United States are subject to regulatory
requirements  that vary from  country to  country.  The time  required to obtain
international  regulatory  clearance or approval for international  sales may be
longer  or  shorter  than  that  required  for  FDA  clearance   approval.   The
requirements  may differ as well.  We cannot  assure you that we will be able to
obtain the required regulatory approval in a timely manner, if at all.

Regulation of Glyko,  Inc.'s  Manufacturing.  Glyko,  Inc. is required to comply
with the FDA's quality system  regulation  requirements  when  manufacturing its
diagnostic  tests. The quality system  regulation  requirements  incorporate the
FDA's  former  current  Good   Manufacturing   Processes  into  medical  devices
regulations.   Quality  system  regulation   requirements  address  the  design,
controls,   methods,   facilities  and  quality   assurance   controls  used  in
manufacturing,  packing,  storing and installing  medical devices.  In addition,
certain   international   markets  have  quality   assurance  and  manufacturing
requirements  that may be more or less rigorous than those in the United States.
A failure by us to comply with quality system  regulation  requirements or other
requirements could have a serious impact on our business and services.

Regulation of Clinical Laboratories. Laboratories using Glyko, Inc.'s diagnostic
tests for  clinical  use in the  United  States  are  regulated  under  Clinical
Laboratory   Improvement   Amendments  of  1998,  or  CLIA.   CLIA   establishes
requirements for laboratories and laboratory personnel governing:

         o     Administration of laboratories

         o     Participation and proficiency testing

         o     Patient test management

         o     Quality control

         o     Personnel

         o     Quality assurance

         o     Inspection




The  complexity of the tests being  performed by the  laboratory  will determine
which  CLIA  requirements  apply.  Under  CLIA  regulations,   all  laboratories
performing moderately complex or highly complex tests will be required to obtain
either a  registration  certificate or  certificate  of  accreditation  from the
Health Care Financing Administration. A laboratory using our diagnostic tests is
required to be qualified to perform  moderately or highly complex tests.  All of
the laboratories known to us that are performing the diagnostic procedures which
might use our test are qualified at the appropriate levels. If, in the future, a
competitor  develops a simpler  diagnostic  test that can be  performed  in less
qualified  laboratories  and if  medical  institutions  begin to use these  less
qualified  laboratories to perform the competitive  test, then CLIA requirements
will prevent the less qualified  laboratories from performing the current Glyko,
Inc.  test.  The  development  of a  simpler  competitive  diagnostic  test by a
competitor may have a negative  financial  impact on our revenues and results of
operations. Glyko, Inc. has CLIA certification and a California state laboratory
license  to  perform  urinary   carbohydrate   analysis  tests.  The  California
laboratory  license only allows  testing for patients in  California.  We may be
required to obtain other  licenses to perform our  laboratory  services in other
states or to provide  services  to patients  or health  care  professionals  who
reside or practice medicine in other states.

See "Risk  Factors--If  we fail to obtain  regulatory  approval to  commercially
manufacture or sell any of our future drug products,  or if approval is delayed,
we will be unable to generate revenue from the sale of our products."

Competition

Pharmaceutical Products. The biopharmaceutical  industry is rapidly evolving and
highly  competitive.  We face  significant  competition from  biotechnology  and
pharmaceutical  companies.  Many of these companies have  significantly  greater
financial,  manufacturing,   marketing  and  product  research  and  development
resources  and  experience  than we  have.  Large  pharmaceutical  companies  in
particular  have  extensive  experience  in clinical  testing  and in  obtaining
regulatory   approvals,   including  orphan  drug   designations.   Accordingly,
competitors may obtain regulatory approvals for and commercialize their products
faster than we will.  In  addition,  these  companies  will  compete  with us to
attract  qualified  personnel,  and to attract parties for  acquisitions,  joint
ventures  or other  collaborations.  Several  pharmaceutical  and  biotechnology
companies  have  established  themselves  in the field of  enzyme  therapeutics,
including Genzyme, our joint venture partner.

Universities and public and private research  institutions are also competitors.
While  these  organizations  primarily  have  educational  objectives,  they may
develop  proprietary  technology  and acquire  patents  that we may need for the
commercial  development  of our drug  products.  We will attempt to license this
proprietary technology, if available.  These licenses may not be available to us
on acceptable  terms, if at all. We also directly compete with a number of these
organizations to recruit personnel, especially scientists and technicians.

We believe  that the primary  competitive  factors in the market for  biological
drug products are:

         o     Product safety

         o     Effectiveness of these products

         o     Ability to obtain orphan drug exclusivity

         o     Distribution channels

         o     Price

         o     Patents and proprietary know-how

         o     Time required to develop new products

         o     Time required to obtain regulatory and reimbursement approval

         o     Ability to respond quickly to medical and technological changes

         o     Ability to develop new products




We believe, based on our progress developing  AldurazymeTM,  that we can compete
successfully  with  regard  to  those   competitive   factors  requiring  timely
execution.  With regard to other  competitive  factors including those regarding
distribution channels and low prices, we are at a competitive  disadvantage.  We
do not yet have established distribution channels and because our target patient
populations  are  small we  expect  that our drug  products  will be  relatively
expensive.  We do not intend to compete with others who have already established
successful  treatments for specific genetic  disorders,  which should ameliorate
some of our competitive disadvantages.

Carbohydrate Analysis Products and Services.   The FACE(R)Imaging System's
primary competitors are alternative carbohydrate analytical technologies
including:

         o     Capillary electrophoresis

         o     High-pressure liquid chromatography

         o     Mass spectrometry

         o     Nuclear magnetic resonance spectrometry

The major advantages of FACE(R) are:

        o     Low cost

        o     Quantification of carbohydrates present

        o     Easy application to samples of unknown composition

        o     User friendly procedures and software

        o     Provides versatility for other non-carbohydrate applications

The major disadvantages of FACE(R) are:

        o    FACE(R)  requires  single-use  specialized gels which give FACE(R)
             systems a higher  disposable cost than some  competitive  products
             which have reusable components.

        o    Some competitive  products may provide a more precise  measurement
             ofthe molecular weight of a sample.

        o    One competitive  technology  can provide  more  complete structural
             information about the sample.

The  competition  in  the  carbohydrate-active  enzymes  business  is  comprised
primarily of  distributors  of broad lines of research  products  and  supplies,
particularly  fine chemicals and reagents.  Glyko, Inc. competes on the basis of
the catalog of products it offers and the number of carbohydrate-active  enzymes
it offers  and their  proprietary  nature.  Glyko,  Inc.  believes  that it also
provides  superior service because it provides  customers with sales information
and assistance based on scientific  understanding of carbohydrate  chemistry and
function.  However,  it  does  not  offer  as  many  products  as  some  of  its
competitors.  Glyko,  Inc. plans to expand its enzyme product offerings over the
next several  years to compete with the broadest  product lines offered today by
competitors. However, neither we nor Glyko, Inc. can assure you that Glyko, Inc.
will  successfully  broaden  its product  offerings  or will  otherwise  compete
successfully.

Glyko,  Inc.'s  diagnostic  product line  competes  primarily  with  alternative
technologies and laboratory  services.  Glyko, Inc. believes that its diagnostic
approaches are novel. Glyko, Inc. has the only urinary screening test cleared by
the FDA for certain lysosomal  storage  diseases.  Glyko, Inc. believes that the
test  may be used as a  screening  tool  for  early  detection  of a  number  of
lysosomal  storage  diseases  and that  success of the  product  will  depend on
whether it becomes  widely  adopted.  See "Risk  Factors--If  we fail to compete
successfully, our revenues and operating results will be adversely affected."


Employees

As of February  16,  2000,  we had 149  full-time  employees,  78 of whom are in
manufacturing,  48 of whom are in  research  and  development,  5 of whom are in
sales and marketing and 18 of whom are in administration.

We consider our employee  relations to be good. Our employees are not covered by
a collective  bargaining agreement.  We have not experienced  employment related
work stoppages. We cannot assure you that we will be able to continue attracting
qualified personnel in sufficient numbers to meet our needs.






                                  RISK FACTORS

If we continue to incur operating  losses for a period longer than  anticipated,
we may be unable to continue our operations.

We are in an early stage of development and have operated at a net loss since we
were  formed.  Since we began  operations  in March 1997,  we have been  engaged
primarily in research and development. We have no sales revenues from any of our
drug  products.  As of  December  31,  1999,  we had an  accumulated  deficit of
approximately  $43.1 million.  We expect to continue to operate at a net loss at
least through 2002. Our future profitability depends on our receiving regulatory
approval of our drug candidates and our ability to successfully  manufacture and
market any approved  drugs,  either by  ourselves  or jointly  with others.  The
extent  of our  future  losses  and  the  timing  of  profitability  are  highly
uncertain.   If  we  fail  to  become   profitable  or  are  unable  to  sustain
profitability on a quarterly or annual basis,  then we may be unable to continue
our operations.

Because of the  relative  small size and scale of our  wholly-owned  subsidiary,
Glyko,  Inc.,  profits  from  products  and  services  offered  by  it  will  be
insufficient to offset the expenses associated with our pharmaceutical business.
As a result,  we expect that operating losses will continue and increase for the
foreseeable future.

If we fail to obtain the capital  necessary  to fund our  operations  we will be
unable to complete our product development programs.

In the  future,  we may need to raise  substantial  additional  capital  to fund
operations.  We cannot be certain  that any  financing  will be  available  when
needed. If we fail to raise additional  financing as we need it, we will have to
delay or terminate our product development programs.

We expect to continue to spend substantial amounts of capital for our operations
for  the  foreseeable   future.   Activities   which  will  require   additional
expenditures include:

        o     Research and development programs

        o     Preclinical studies and clinical trials

        o     Regulatory processes

        o     Establishment of commercial scale manufacturing capabilities and

        o     Expansion of sales and marketing activities.

The amount of capital we may need depends on many factors, including:

        o     The progress, timing and scope of our research and development
              programs

        o     The progress, timing and scope of our preclinical studies and
              clinical trials

        o     The time and cost necessary to obtain regulatory approvals

         o    The time and cost necessary to build our manufacturing  facilities
              and obtain the necessary regulatory approvals for those facilities

        o     The time and cost necessary to respond to technological and market
              developments

        o     Any changes made or new developments in our existing collaborative
              licensing and other commercial relationships

        o     Any new collaborative, licensing and other commercial
              relationships that we may establish




Moreover,   our  fixed  expenses  such  as  rent,  license  payments  and  other
contractual  commitments are substantial and will increase in the future.  These
fixed expenses will increase because we may enter into:

        o     Additional leases for new facilities and capital equipment

        o     Additional licenses and collaborative agreements

        o     Additional contracts for consulting, maintenance and
              administrative services

        o     Additional expenses associated with being a public company.

We believe that the cash, cash  equivalents,  short-term  investment  securities
balances  at December  31, 1999 will be  sufficient  to meet our  operating  and
capital   requirements   through  mid-year  2001.  This  estimate  is  based  on
assumptions and estimates, which may prove to be wrong. As a result, we may need
or choose to obtain additional financing during that time.

If we fail to obtain regulatory approval to commercially manufacture or sell any
of our future drug  products,  or if  approval is delayed,  we will be unable to
generate revenue from the sale of our products.

We must obtain regulatory approval to market our products in the U.S. and
foreign jurisdictions.

We must obtain  regulatory  approval before marketing or selling our future drug
products.  In the United States,  we must obtain FDA approval for each drug that
we intend to  commercialize.  The FDA approval process is typically  lengthy and
expensive,  and approval is never certain.  Products distributed abroad are also
subject to foreign government regulation. None of our drug products has received
regulatory  approval to be commercially  marketed and sold. If we fail to obtain
regulatory  approval  we will be  unable  to  market  and sell our  future  drug
products.   Because  of  the  risks  and   uncertainties  in   biopharmaceutical
development,  our drug candidates could take a significantly longer time to gain
regulatory  approval  than we expect or may never gain  approval.  If regulatory
approval is delayed our management's  credibility,  the value of our company and
our operating results may be adversely affected.

To obtain regulatory  approval to market our products,  preclinical  studies and
costly and  lengthy  clinical  trials  may be  required  and the  results of the
studies and trials are highly uncertain.

As part of the FDA  approval  process,  we  must  conduct,  at our own  expense,
preclinical  studies  on  animals  and  clinical  trials  on humans on each drug
candidate.  We expect the number of preclinical studies and clinical trials that
the FDA will require will vary  depending  on the drug  product,  the disease or
condition the drug is being developed to address and  regulations  applicable to
the particular drug. We may need to perform multiple  preclinical  studies using
various doses and formulations before we can begin clinical trials,  which could
result in delays in our ability to market any of our drug products. Furthermore,
even if we obtain  favorable  results in  preclinical  studies on  animals,  the
results in humans may be different.

After we have conducted  preclinical studies in animals we must demonstrate that
our drug products are safe and effective for use on the target human patients in
order  to  receive   regulatory   approval  for  commercial  sale.   Adverse  or
inconclusive  clinical results would stop us from filing for regulatory approval
of our products.  Additional  factors that can cause delay or termination of our
clinical trials include:

        o     Slow patient enrollment

        o     Longer treatment time required to demonstrate efficacy

        o     Lack of sufficient supplies of the drug candidate

        o     Adverse medical events or side effects in treated patients

        o     Lack of effectiveness of the drug candidate being tested

Typically,  if a drug product is intended to treat a chronic  disease safety and
efficacy data must be gathered over an extended period of time which ranges from
six months to three years. In addition,  clinical trials on humans are typically
conducted in three  phases.  The FDA  generally  requires  two pivotal  clinical
trials  that  demonstrate  substantial  evidence  of  safety  and  efficacy  and
appropriate dosing in a broad patient population at multiple sites to support an
application for regulatory approval.  If a drug is intended for the treatment of
a serious or life-threatening  condition and the drug demonstrates the potential
to  address  unmet  medical  needs  for this  condition,  a single  trial may be
sufficient  to prove safety and efficacy  under the FDA's  Modernization  Act of
1997.




The fast track  designation for  AldurazymeTM  may not actually lead to a faster
review process.

Although AldurazymeTM has obtained a fast track designation, we cannot guarantee
a  faster  review  process  or  faster  approval  compared  to  the  normal  FDA
procedures.

We will not be able to sell our products if we fail to comply with manufacturing
regulations.

Before we can begin  commercially  manufacturing  our  products  we must  obtain
regulatory  approval of our  manufacturing  facility and  process.  In addition,
manufacture  of our drug  products  must  comply  with the  FDA's  current  Good
Manufacturing   Practices   regulations,   commonly  known  as  cGMP.  The  cGMP
regulations  govern quality control and  documentation  policies and procedures.
Our manufacturing  facilities are continuously subject to inspection by the FDA,
the State of California  and foreign  regulatory  authorities,  before and after
product  approval.  Because we are  currently in the process of  developing  the
manufacturing site and process for commercial  manufacture of AldurazymeTM,  our
facility  has not yet been  inspected  by any  governmental  entity.  We  cannot
guarantee that BioMarin, or any potential  third-party  manufacturer of our drug
products, will be able to comply with cGMP regulations.  Material changes to the
manufacturing  processes  after  approvals have been granted are also subject to
review and approval by the FDA or other regulatory agencies.

We  must  pass  FDA  and  state   inspections  and  manufacture   three  process
qualification  batches to final  specifications  under cGMP controls  before the
AldurazymeTM  BLA can be  approved.  We cannot  assure you that we will pass the
inspections in a timely manner, if at all.

If we fail to obtain orphan drug  exclusivity for our products,  our competitors
may sell products to treat the same conditions and our revenues may be reduced.

As part of our  business  strategy,  we  intend  to  develop  drugs  that may be
eligible for FDA orphan drug designation. Under the Orphan Drug Act, the FDA may
designate a product as an orphan  drug if it is a drug  intended to treat a rare
disease or condition,  defined as a patient population of less than 200,000. The
company that  obtains the first 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.  However,  different drugs can be
approved for the same condition.

Because  the  extent and scope of patent  protection  for our drug  products  is
limited, orphan drug designation is particularly important for our products that
are eligible  for orphan drug  designation.  We plan to rely on the  exclusivity
period under the orphan drug designation to maintain a competitive  position. If
we do not obtain orphan drug  exclusivity for any one of our drug products,  our
competitors may then sell the same drug to treat the same condition.

We received orphan drug  designation  from the FDA for AldurazymeTM in September
1997. In February  1999, we received  orphan drug  designation  from the FDA for
BM102.  Even though we have obtained orphan drug designation for these drugs and
even if we obtain  orphan drug  designation  for other  products we develop,  we
cannot guarantee that we will be the first to obtain marketing  approval for any
orphan indication or that exclusivity would effectively protect the product from
competition.  Orphan drug  designation  does not shorten the  development or FDA
review time of a drug so  designated  nor give the drug any advantage in the FDA
review or approval process.

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

Our initial drug candidates target disorders with small patient populations.  As
a result,  our prices must be high enough to recover our  development  costs and
achieve profitability.  For example, two of our initial drug products in genetic
disorders,  AldurazymeTM  and BM102,  target  patients  with  MPS-I and  MPS-VI,
respectively. We estimate that there are approximately 3,400 patients with MPS-I
and 1,100 patients with MPS-VI in the developed  world.  We believe that we will
need to market worldwide to achieve  significant  market share. In addition,  we
are developing other drug candidates to treat conditions,  such as other genetic
diseases and serious burns, with small patient populations. We cannot be certain
that we will be able to obtain  sufficient market share for our drug products at
a price high enough to justify our product development efforts.




If we fail to obtain an adequate level of reimbursement for our drug products by
third-party  payors  there  would  be no  commercially  viable  markets  for our
products.

The course of treatment for patients with MPS-I using  AldurazymeTM  is expected
to  be  expensive.  We  expect  patients  to  need  treatment  throughout  their
lifetimes. We expect that families of patients will not be capable of paying for
this  treatment  themselves.  There will be no  commercially  viable  market for
AldurazymeTM without reimbursement from third-party payors.

Third-party  payors,  such  as  government  or  private  health  care  insurers,
carefully  review  and  increasingly  challenge  the price  charged  for  drugs.
Reimbursement  rates from private  companies vary  depending on the  third-party
payor,  the  insurance  plan  and  other  factors.   Reimbursement   systems  in
international   markets  vary  significantly  by  country  and  by  region,  and
reimbursement  approvals  must be obtained  on a  country-by-country  basis.  We
cannot be certain  that  third-party  payors will pay for the costs of our drugs
and the courses of treatment.  Even if we are able to obtain  reimbursement from
third-party payors, we cannot be certain that reimbursement rates will be enough
to allow us to profit from sales of our drugs.

We currently have no expertise obtaining reimbursement. We expect to rely on the
expertise of our partner Genzyme to obtain  reimbursement for  AldurazymeTM.  We
cannot predict what the reimbursement  rates will be. In addition,  we will need
to develop our own reimbursement  expertise for future drug candidates unless we
enter into collaborations with other companies with the necessary expertise.

We expect that in the future reimbursement will be increasingly  restricted both
in the United States and internationally. The escalating cost of health care has
led  to  increased  pressure  on the  health  care  industry  to  reduce  costs.
Governmental  and private  third-party  payors have proposed health care reforms
and cost reductions. A number of federal and state proposals to control the cost
of health  care,  including  the cost of drug  treatments  have been made in the
United States.  In some foreign  markets,  the  government  controls the pricing
which would affect the profitability of drugs.  Current  government  regulations
and  possible  future  legislation  regarding  health care may affect our future
revenues  from  sales of our drugs and may  adversely  affect our  business  and
prospects.

If we are unable to protect  our  proprietary  technology  we may not be able to
compete as effectively.

Where  appropriate,  we  seek  patent  protection  for  certain  aspects  of our
technology.  Meaningful  patent  protection may not be available for some of the
enzymes we are developing,  including  AldurazymeTM  and BM102. If we must spend
significant time and money protecting our patents, designing around patents held
by others or licensing, for excessively large fees, patents or other proprietary
rights held by others, our business and prospects may be harmed.

The patent  positions  of  biotechnology  companies  are  extremely  complex and
uncertain.  The scope and extent of patent  protection  for some of our products
are particularly uncertain because key information on some of the enzymes we are
developing  has existed in the public domain for many years.  Other parties have
published the  structure of the enzymes,  the methods for purifying or producing
the enzymes or the methods of treatment.  The composition and genetic  sequences
of animal  and/or  human  versions of many of our enzymes,  including  those for
AldurazymeTM  and BM102,  have been published and are in the public domain.  The
composition  and  genetic  sequences  of other  MPS  enzymes  which we intend to
develop as products have also been  published.  Publication of this  information
may prevent us from obtaining composition of matter patents, which are generally
believed to offer the strongest patent protection.  For enzymes with no prospect
of composition of matter patents, we will depend on orphan drug status.

In  addition,  our owned and  licensed  patents and patent  applications  do not
ensure  the  protection  of our  intellectual  property  for a  number  of other
reasons:

         o    We do not know  whether  our patent  applications  will  result in
              actual  patents.  For example,  we may not have developed a method
              for treating a disease before others developed similar methods.




         o    Competitors  may interfere with our patent process in a variety of
              ways.  Competitors  may  claim  that  they  invented  the  claimed
              invention  prior to us.  Competitors  may also  claim  that we are
              infringing  on their  patents and  therefore  cannot  practice our
              technology  as  claimed  under our  patent.  Competitors  may also
              contest  our  patents by  showing  the  patent  examiner  that the
              invention was not original, novel or was obvious. As a Company, we
              have no meaningful  experience with  competitors  interfering with
              our patents or patent applications.

         o    Even if we receive a patent,  it may not  provide  much  practical
              protection.  If we receive a patent with a narrow  scope,  then it
              will be easier  for  competitors  to design  products  that do not
              infringe on our patent.

         o    Enforcing patents is expensive and may absorb  significant time by
              our management.  In litigation,  a competitor could claim that our
              issued patents are not valid for a number of reasons. If the court
              agrees, we would lose that patent.

In addition, competitors also seek patent protection for their technology. There
are many patents in our field of technology,  and we cannot guarantee that we do
not infringe on those patents or that we will not infringe on patents granted in
the future.  If a patent holder believes our product  infringes on their patent,
the patent holder may sue us even if we have received patent  protection for our
technology.  If someone  else claims we infringe on their  technology,  we would
face a number of issues, including:

         o    Defending a lawsuit takes significant time and can be very
              expensive.

         o    If  the  court   decides   that  our  product   infringes  on  the
              competitor's  patent,  we may have to pay substantial  damages for
              past infringement.

         o    The court may prohibit us from  selling or  licensing  the product
              unless the  patent  holder  licenses  the patent to us. The patent
              holder is not  required  to grant us a  license.  If a license  is
              available,  we may  have to pay  substantial  royalties  or  grant
              cross-licenses to our patents.

         o    Redesigning  our product so it does not infringe may not be
              possible and could require substantial funds and time.

It is also unclear  whether our trade  secrets will provide  useful  protection.
While we use reasonable  efforts to protect our trade secrets,  our employees or
consultants  may  unintentionally  or  willfully  disclose  our  information  to
competitors. Enforcing a claim that someone else illegally obtained and is using
our trade secrets, like patent litigation,  is expensive and time consuming, and
the outcome is unpredictable.  In addition, courts outside the United States are
sometimes  less  willing  to  protect  trade  secrets.   Our   competitors   may
independently develop equivalent knowledge, methods and know-how.

We may  also  support  and  collaborate  in  research  conducted  by  government
organizations  or by  universities.  We cannot guarantee that we will be able to
acquire  any  exclusive  rights to  technology  or products  derived  from these
collaborations.  If we do not  obtain  required  licenses  or  rights,  we could
encounter delays in product  development while we attempt to design around other
patents or even be prohibited from developing, manufacturing or selling products
requiring these licenses. There is also a risk that disputes may arise as to the
rights to technology or products developed in collaboration with other parties.

If our joint  venture  with  Genzyme  were  terminated,  we could be barred from
commercializing  AldurazymeTM or our ability to commercialize AldurazymeTM would
be delayed.

We are relying on Genzyme to apply the  expertise it has  developed  through the
launch and sale of Ceredase(R) and Cerezyme(R)  enzymes for Gaucher  disease,  a
rare  genetic   disorder,   to  the  marketing  of  our  initial  drug  product,
AldurazymeTM.   Because  it  is  our  initial   product,   our   operations  are
substantially  dependent  upon  the  development  of  AldurazymeTM.  We  have no
experience  selling,  marketing or obtaining  reimbursement  for  pharmaceutical
products.  In addition,  without  Genzyme we would be required to pursue foreign
regulatory  approvals.  We have no  experience  in  seeking  foreign  regulatory
approvals.




We cannot  guarantee  that  Genzyme  will  devote  the  resources  necessary  to
successfully market  AldurazymeTM.  In addition,  either party may terminate the
joint venture for specified reasons, including if the other party is in material
breach of the  agreement or has  experienced a change of control or has declared
bankruptcy  and  also is in  breach  of the  agreement.  Either  party  may also
terminate the agreement  upon one year prior written notice for any reason after
the earlier of December  31, 2000 or after the joint  venture has  received  the
FDA's  approval  of  the  biologics   license   application  for   AldurazymeTM.
Furthermore,  we may terminate the joint venture if Genzyme fails to fulfill its
contractual  obligation to pay us  $12.1million in cash upon the approval of the
biologics license application for AldurazymeTM.

Upon  termination  of the joint venture one party must buy out the other party's
interest in the joint  venture.  The party who buys out the other will then also
obtain,  exclusively,  all rights to AldurazymeTM  and any related  intellectual
property and regulatory approvals. For a more detailed analysis of the economics
of  this  buy  out  obligation  see  "Business--Corporate  Collaborations--Joint
Venture with Genzyme Corporation."

If the joint venture is terminated by Genzyme for a breach on our part,  Genzyme
would be granted, exclusively, all of the rights to AldurazymeTM and any related
intellectual property and regulatory approvals and would be obligated to buy out
our  interest  in the joint  venture.  We would  then  effectively  be unable to
develop and commercialize AldurazymeTM. If we terminated the joint venture for a
breach by Genzyme,  we would be obligated to buy out  Genzyme's  interest in the
joint venture and, we would then be granted all of these rights to  AldurazymeTM
exclusively.  While  we  could  then  continue  to  develop  AldurazymeTM,  that
development would be slowed because we would have to divert substantial  capital
to buy out Genzyme's interest in the joint venture and would then have to search
for a new partner to commercialize the product and to obtain foreign  regulatory
approvals or to develop these capabilities ourselves.

If the joint venture is terminated by us without  cause,  Genzyme would have the
option,  exercisable  for one year, to  immediately  buy out our interest in the
joint  venture  and  obtain  all  rights  to  AldurazymeTM  exclusively.  If the
agreement is  terminated  by Genzyme  without  cause,  we would have the option,
exercisable for one year, to immediately buy out Genzyme's interest in the joint
venture and obtain these  exclusive  rights.  In event of termination of the buy
out option without exercise by the non-terminating party as described above, all
right and title to AldurazymeTM  is to be sold to the highest  bidder,  with the
proceeds to be split equally between Genzyme and us.

If the joint venture is terminated by us because Genzyme fails to make the $12.1
million payment to us upon FDA approval of the biologics license application for
AldurazymeTM,  we would be  obligated  to buy  Genzyme's  interest  in the joint
venture and would obtain all rights to  AldurazymeTM  exclusively.  If the joint
venture is terminated by either party because the other declared  bankruptcy and
is also in breach of the agreement,  the terminating party would be obligated to
buy out the other and would obtain all rights to  AldurazymeTM  exclusively.  If
the joint venture is terminated by a party because the other party experienced a
change of control,  the  terminating  party shall  notify the other  party,  the
offeree,  of its intent to buy out the  offeree's  interest in the joint venture
for a stated amount set by the terminating party at its discretion.  The offeree
must then  either  accept  this  offer or agree to buy the  terminating  party's
interest in the joint  venture on those same  terms.  The party who buys out the
other would then have exclusive rights to AldurazymeTM.

We cannot  assure you that if the joint venture were  terminated  and if we were
obligated,  or given the  option,  to buy out  Genzyme's  interest  in the joint
venture, and gain exclusive rights to AldurazymeTM, that we will have sufficient
funds to do so or that we will be able to obtain the  financing  to do so. If we
fail to buy out Genzyme's interest we may be held in breach of the agreement and
may lose any claim to the rights to  AldurazymeTM  and the related  intellectual
property and regulatory approvals.  We would then effectively be prohibited from
developing and commercializing the product.

Termination  of the joint  venture  where we retain the  rights to  AldurazymeTM
could  cause us  significant  delays in  product  launch in the  United  States,
difficulties  in obtaining  third-party  reimbursement  and delays or failure to
obtain  foreign  regulatory  approval,  any of which could hurt our business and
results of operations.  Since Genzyme funds 50% of the joint venture's operating
expenses, the termination of the joint venture would double our financial burden
and reduce the funds available to us for other product programs.

If we are unable to manufacture  our drug products in sufficient  quantities and
at  acceptable  cost,  we may be unable to meet demand for our products and lose
potential revenues.

We have no  experience  manufacturing  drug  products  in  volumes  that will be
necessary to support  commercial sales. Our unproven  manufacturing  process may
not meet initial expectations as to schedule,  reproducibility,  yields, purity,
costs,   quality,  and  other  measurements  of  performance.   Improvements  in
manufacturing  processes  typically are very  difficult to achieve and are often
very expensive. We cannot know with any certainty how long it might take to make
improvements if it became  necessary to do so. If we contract for  manufacturing
services  with an  unproven  process,  our  contractor  is  subject  to the same
uncertainties, high standards and regulatory controls.




If we are unable to establish and maintain commercial scale manufacturing within
our planned time and cost  parameters,  sales of our products and our  financial
performance will be adversely affected.

We may  encounter  problems  with any of the following if we attempt to increase
the scale or size of manufacturing:

        o     Design, construction and qualification of manufacturing facilities
              that meet regulatory requirements

        o     Production yields

        o     Purity

        o     Quality control and assurance

        o     Shortages of qualified personnel

        o     Compliance with FDA regulations

We are  developing a total of 31,000 square feet at our Novato  facility for the
manufacture of AldurazymeTM. The construction and qualification of this facility
may  take  longer  than  planned  and the  actual  construction  costs  of these
facilities may be higher than those which we have  budgeted.  We expect that the
manufacturing  process of all of our new products,  including  BM102,  will also
require  lengthy  development  time  before we can begin  manufacturing  them in
commercial  quantity.  Even if we can  establish  this  capacity,  we  cannot be
certain that manufacturing costs will be commercially reasonable,  especially if
reimbursement is substantially lower than expected.

In  order  to  achieve  our  product  cost  targets  we must  develop  efficient
manufacturing processes either by

        o     Improving the colonies of cells which have a common genetic
              make-up, or cell lines,

        o     Improving the processes licensed from others, or

        o     Developing a recombinant cell line and production processes.

A recombinant  cell line is a cell line with foreign DNA inserted  which is used
to produce a protein that it would not have otherwise produced.  The development
of a stable, high production cell line for any given enzyme is risky,  expensive
and  unpredictable  and  may  not  yield  adequate  results.  In  addition,  the
development of protein  purification  processes is difficult and may not produce
the high purity required with acceptable  yield and costs. If we are not able to
develop  efficient  manufacturing  processes,  the  investment in  manufacturing
capacity sufficient to satisfy market demand will be much greater and will place
heavy  financial  demands upon us. If we do not achieve our  manufacturing  cost
targets,  we will have lower  margins and reduced  profitability  in  commercial
production and greater losses in manufacturing start-up phases.

If we are unable to increase our marketing and  distribution  capabilities or to
enter into  agreements  with third  parties  to do so, our  ability to  generate
revenues will be diminished.

If we cannot increase our marketing  capabilities either by developing our sales
and marketing organization or by entering into agreements with others, we may be
unable to successfully  sell our products.  If we are unable to effectively sell
our drug products, our ability to generate revenues will be diminished.

To increase our  distribution and marketing for both our drug candidates and our
Glyko,  Inc.  products,  we will have to increase our current sales force and/or
enter  into  third-party  marketing  and  distribution  agreements.   We  cannot
guarantee that we will be able to hire in a timely manner,  the qualified  sales
and marketing  personnel we need if at all. Nor can we guarantee that we will be
able to enter into any marketing or distribution agreements on acceptable terms,
if at all. If we cannot increase our marketing capabilities as we intend, either
by increasing  our sales force or entering into  agreements  with third parties,
sales of our products may be adversely affected.




We  have  entered  into a joint  venture  with  Genzyme  where  Genzyme  will be
responsible for marketing and distributing  Aldurazyme(TM).  We cannot guarantee
that we will be able to establish  sales and  distribution  capabilities or that
BioMarin,  the joint venture or any future  collaborators will successfully sell
any of our drug candidates.

If we fail to compete  successfully,  our revenues and operating results will 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  orphan  drug
designation,  or  commercialize  their products before we do. If our competitors
successfully  commercialize  a product which treats a given rare genetic disease
before we do, we will  effectively  be  precluded  from  developing a product to
treat that disease because the patient  populations of the rare genetic diseases
are so  small.  These  companies  also  compete  with  us to  attract  qualified
personnel and parties for acquisitions,  joint ventures or other collaborations.
They also compete with us to attract academic research  institutions as partners
and to license these institution's  proprietary  technology.  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.  Since 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  enzyme  therapeutics,
including Genzyme, our joint venture partner. 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 are also competitors.
While  these  organizations  primarily  have  educational  objectives,  they may
develop  proprietary  technology  and acquire  patents  that we may need for the
development  of our drug products.  We will attempt to license this  proprietary
technology,  if  available.  These  licenses  may  not  be  available  to  us on
acceptable  terms,  if at all. We also  directly  compete with a number of these
organizations to recruit personnel, especially scientists and technicians.

We believe that established  technologies  provided by other companies,  such as
laboratory  and testing  services  firms compete with Glyko Inc.'s  products and
services.  For example,  Glyko,  Inc.'s  FACE(R)  Imaging  System  competes with
alternative   carbohydrate   analytical   technologies,    including   capillary
electrophoresis,  high-pressure  liquid  chromatography,  mass  spectrometry and
nuclear magnetic  resonance  spectrometry.  These competitive  technologies have
established  customer  bases and are more widely used and accepted by scientific
and  technical   personnel  because  they  can  be  used  for   non-carbohydrate
applications.  Companies  competing with Glyko, Inc. may have greater financial,
manufacturing and marketing resources and experience.

If we fail to manage  our growth or fail to recruit  and retain  personnel,  our
product development programs may be delayed.

Our rapid growth has strained our managerial,  operational,  financial and other
resources.  We expect  this growth to  continue.  We have  entered  into a joint
venture with  Genzyme.  If we receive FDA approval to market  AldurazymeTM,  the
joint  venture  will be required to devote  additional  resources to support the
commercialization of AldurazymeTM.

To manage expansion effectively,  we need to continue to develop and improve our
research and development  capabilities,  manufacturing  and quality  capacities,
sales and marketing  capabilities and financial and administrative  systems.  We
cannot  guarantee  that our systems,  procedures or controls will be adequate to
support  our  operations  or  that  our  management   will  be  able  to  manage
successfully future market opportunities or our relationships with customers and
other third parties.

Our future growth and success depend on our ability to recruit,  retain,  manage
and motivate our employees. The loss of key scientific, technical and managerial
personnel may delay or otherwise harm our product development programs. Any harm
to our research and development programs would harm our business and prospects.




Because of the specialized scientific nature of our business, we rely heavily on
our ability to attract and retain qualified scientific, technical and managerial
personnel. In particular,  the loss of Grant W. Denison, Jr., Chairman and Chief
Executive Officer,  John C. Klock, M.D.,  President and Secretary or Christopher
M.  Starr,   Ph.D.,  Vice  President  for  Research  and  Development  would  be
detrimental  to us. While each of these  individuals  is party to an  employment
agreement  with us,  which  includes  financial  incentives  for each of them to
remain  employed with us, these  agreements  each  terminate in June 2000 and we
cannot guarantee that any of them will remain employed with us beyond that time.
In addition,  these  agreements do not restrict their ability to compete with us
after their employment is terminated. The competition for qualified personnel in
the  biopharmaceutical  field is  intense.  We  cannot be  certain  that we will
continue to attract and retain qualified personnel necessary for the development
of our business.

If product liability lawsuits are successfully  brought against us, we may incur
substantial liabilities.

We are exposed to the potential product liability risks inherent in the testing,
manufacturing and marketing of human  pharmaceuticals.  The BioMarin/Genzyme LLC
maintains product  liability  insurance for our clinical trials of AldurazymeTM.
Although  we intend to  obtain  insurance  against  product  liability  lawsuits
shortly before initiating  clinical trials for BM102 and for our other products,
we cannot be certain that we will be able to obtain adequate  insurance coverage
at reasonable cost. In addition,  we may be subject to claims in connection with
our  current  clinical  trials for  AldurazymeTM  for which the joint  venture's
insurance  coverage is not adequate.  We cannot be certain that if  AldurazymeTM
receives FDA approval,  the product  liability  insurance the joint venture will
need to obtain in connection with the commercial  sales of AldurazymeTM  will be
available in meaningful amounts or at a reasonable cost. In addition,  we cannot
be certain that we can successfully defend any product liability lawsuit brought
against us. If we are the subject of a successful  product liability claim which
exceeds  the  limits  of any  insurance  coverage  we may  obtain,  we may incur
substantial  liabilities which would adversely affect our earnings and financial
condition.

Our stock price may be volatile  and an  investment  in our stock could suffer a
decline in value.

Our valuation and stock price since the IPO have had no meaningful  relationship
to  current  or  historical  earnings,  asset  values,  book value or many other
criteria  based on historical  value.  The market price of the common stock will
fluctuate due to factors including:

         o    Progress of AldurazymeTM  and our other lead drug products through
              the regulatory process, especially AldurazymeTM regulatory actions
              in the United States

        o     Results of clinical trials, announcements of technological
              innovations or new products by us or our competitors

        o     Government  regulatory action affecting our drug candidates or our
              competitors' drug candidates in both the United States and foreign
              countries

        o     Developments or disputes concerning patent or proprietary rights

        o     General market conditions for emerging growth and
              biopharmaceutical companies

        o     Economic conditions in the United States or abroad

        o     Actual or anticipated fluctuations in our operating results

        o     Broad market fluctuations may cause the market price of our common
              stock to fluctuate

        o     Changes in financial estimates by securities analysts

In addition, the value of our common stock may fluctuate because it is listed on
both the Nasdaq National Market and the Swiss Exchange's SWX New Market. Because
we have  accumulated  relatively  limited  experience  since July 23,  1999,  in
observing the trading of our stock on the two markets, we cannot be certain what
effect,  if any,  the dual listing will have on the future price of our stock in
either market. Listing on both exchanges may increase stock price volatility due
to:

        o     Trading in different time zones

        o     Different ability to buy or sell our stock

        o     Different trading volume




In the past,  following  periods of large price  declines  in the public  market
price of a company's  securities,  securities class action  litigation has often
been  initiated  against that  company.  Litigation of this type could result in
substantial costs and diversion of management's  attention and resources,  which
would hurt our business.  Any adverse  determination  in  litigation  could also
subject us to significant liabilities.

If our officers,  directors and largest  stockholder  elect to act together they
may be able to  control  our  management  and  operations,  acting in their best
interests and not necessarily those of other stockholders.

Our directors and officers control approximately 13.4% of the outstanding shares
of our common stock.  Glyko Biomedical Ltd. or GBL owns 32.6% of the outstanding
shares of capital stock. Three of six GBL directors are officers or directors of
BioMarin. As a result, due to their concentration of stock ownership,  directors
and officers,  together with GBL if they act together,  may be able to otherwise
control our management and operations, and may be able to prevail on all matters
requiring a stockholder vote including:

        o     The election of all directors

        o     The amendment of charter documents or the approval of a merger,
              sale of assets or other major corporate transactions

        o     The  defeat  of  any  non-negotiated  takeover  attempt  that
              might otherwise benefit the public stockholders

Anti-takeover  provisions in our charter  documents  and under  Delaware law may
make an  acquisition  of us, which may be beneficial to our  stockholders,  more
difficult.

BioMarin is  incorporated  in  Delaware.  Certain  anti-takeover  provisions  of
Delaware law and our charter  documents as currently in effect may make a change
in control of  BioMarin  more  difficult,  even if a change in control  would be
beneficial to the stockholders.  Our anti-takeover provisions include provisions
in the certificate of incorporation  providing that  stockholders'  meetings may
only be called by the board of directors and a provision in the bylaws providing
that the stockholders may not take action by written consent.  Additionally, our
board of directors  have the  authority to issue  1,000,000  shares of preferred
stock and to determine  the terms of those  shares of stock  without any further
action by the  stockholders.  The  rights of  holders  of our  common  stock are
subject to the rights of the holders of any preferred  stock that may be issued.
The issuance of preferred stock,  could make it more difficult for a third party
to acquire a majority of the outstanding voting stock of BioMarin.  Delaware law
also prohibits  corporations  from engaging in a business  combination  with any
holders  of 15% or more of their  capital  stock  until the  holder has held the
stock for three years unless, among other possibilities,  the board of directors
approves the  transaction.  The board of directors  may use these  provisions to
prevent  changes in the  management  and  control of our  company.  Also,  under
applicable   Delaware  law,  our  board  of  directors   may  adopt   additional
anti-takeover measures in the future.

Item 2.   Properties

We are currently  leasing a total of seven buildings.  Five of our buildings are
located  in  Novato,  California,  each  within  a  half-mile  radius.  The five
buildings, each named for the streets on which they are located, are:

         o     Bel Marin Keys facility

         o     Galli Drive facility

         o     Pimentel Court facility

         o     Digital Drive facility

         o     Digital Drive sublease facility




The sixth and seventh  buildings,  collectively the Carson Street facility,  are
located in Torrance, California.

The  Bel  Marin  Keys  facility  houses  administrative  staff  and  a  clinical
production  laboratory.  It consists of  approximately  15,100 square feet.  The
lease  expires in May 2001.  We have an option to extend the lease for up to two
additional three-year periods.

The Galli Drive facility  consists of a total of  approximately  31,000 rentable
square feet and currently  houses 6,700 square feet of modular  laboratory space
used for research and  development.  We have developed  32,800 square feet for a
manufacturing  facility,  including  support  functions  and  core  utility  and
mechanical  systems.  Our  development  expanded  the useable  space by adding a
second floor and an external  utility yard. The lease expires in August 2003. We
have an option to extend the lease for one additional five-year period. BioMarin
is currently in  negotiations  to lease the remaining north portion of the Galli
Drive  building  which  is   approximately   38,800  square  feet  in  size.  If
successfully leased, the additional space will be used for manufacturing support
functions,  future manufacturing  capacity development,  additional office space
and  storage/warehouse  functions.  The  proposed  lease  (including  the entire
building) will expire in July, 2010. As part of this negotiation, we are seeking
an option to extend the lease for two additional five-year periods.

The Pimentel Court facility,  with approximately  11,000 square feet, houses the
manufacturing,  research and administrative  operations of Glyko, Inc. The lease
expires  in April  2003  and has  options  for two  2-year  extensions.  We have
subleased part of this facility to a third party.

The Digital Drive  facility,  34,000  rentable  square feet, is planned to house
research  and  process  development  functions.  The  building  shell  has  been
completed.  Development of internal  laboratory  space is on hold until at least
the second half of 2000. When fully developed,  it will consist of approximately
42,000 square feet. The lease expires in November, 2009.

The Digital Drive sublease facility houses a chemistry  laboratory.  It consists
of approximately 1,200 square feet. The facility has been subleased from a third
party and is now on a month-to-month basis.

The Carson Street facility housed our initial commercial manufacturing operation
for  AldurazymeTM.  The manufacturing  building consists of approximately  8,000
square feet. The nearby  administrative  and materials control facility consists
of  approximately  3,000 square feet. The lease for the  manufacturing  facility
expires in June 2001. The leases for the smaller  support  facilities  expire in
August and November 2002. We have an option to extend the manufacturing facility
lease until April 2003. As a result of a decision  made by the  BioMarin/Genzyme
LLC based on guidance from the FDA, we are  suspending  operations in the Carson
Street  complex  in  May  2000.   Aldurazyme(TM)  production  for  clinical  and
commercial  requirements  using an  improved  process  will be done in our Galli
Drive facility in Novato,  California.  We are seeking sub-lease tenants for the
facility.

Our administrative office space is expected to be adequate until mid-2001.  When
developed, we should have adequate space for research and development activities
in our Digital Drive  facility into at least 2002. Our  AldurazymeTM  production
facilities' capacity may have to be supplemented  beginning in 2003 if the MPS-I
market penetration rates are as currently  expected.  Based on the timelines for
other  genetic  disorders  such as  MPS-VI,  manufacturing  capacity  for  these
products will have to be developed for larger scale commercial  production which
may  begin  as  early  as  2003.  We plan  to use  contract  manufacturing  when
appropriate  to provide  product for both clinical and  commercial  requirements
until such time as we believe  it  prudent  to  develop  in-house  manufacturing
capability.

Item 3.  Legal Proceedings

We have no material legal proceedings pending.

Item 4.  Submission of Matters to a Vote of Security-Holders

None.




                                     Part II

Item 5.  Market For Common Equity and Related Stockholder Matters

As of July 1999,  the  Company's  stock has been  listed on the Nasdaq  National
Market and the Swiss New Market SWX under the symbol "BMRN". The following table
sets forth the closing sales prices for the Common Shares for the periods noted,
as reported by Nasdaq National Market.


                                                               Prices
Year                        Period                     High             Low

1999           Third Quarter (beginning July 22)      $18.75          $11.625
1999                    Fourth Quarter                $17.00          $11.625

On March 22, 2000,  the last reported sale price on the Nasdaq  National  Market
for the common stock was $32.00.

Holders

As of  February  16,  2000,  there  were 70  holders  of  record  of  34,951,086
outstanding Common Shares of the Company.  Additionally, on such date options to
acquire 5,734,372 of Common Shares and warrants to acquire 801,500 Common Shares
were outstanding.

Unregistered Securities

Since March 21, 1997  (inception),  we have  issued the  following  unregistered
securities:

On April 19, 1997, we sold to Glyko Biomedical Ltd. or GBL 1.5 million shares of
BioMarin's  common  stock  for  aggregate  consideration  of  $1.5  million.  On
September 24, 1997,  the Company  issued 7 million shares of our common stock to
GBL as  consideration  for the  license  granted  to it  under  the GBL  license
agreement.

On October 1, 1997, the Company sold 1.3 million,  800,000 and 400,000 shares of
common stock to Mr. Denison, Dr. Klock and Dr. Starr, respectively,  in exchange
for a full recourse,  three-year  promissory  note secured by such shares in the
principal amounts of $1.3 million, $800,000 and $400,000, respectively.

Between October 1, 1997 and December 30, 1997, as part of an approximately  $8.8
million private  placement  financing,  the Company issued  9,566,500  shares of
common stock plus warrants to purchase  801,500  shares of the Company's  common
stock at an exercise price of $1.00 and a three-year term.

Between  June 30, 1998 and August 3, 1998,  the Company  raised net  proceeds of
$11.4 million from private placements of 2,015,335 shares of common stock.

On  September  4, 1998,  the  Company  received  $8 million  from  Genzyme  upon
execution of a joint venture  agreement in which we issued  1,333,333  shares of
common stock to Genzyme.

On October 7, 1998, the Company purchased Glyko, Inc., a wholly-owned subsidiary
of GBL,  from  GBL,  for an  aggregate  purchase  price of $14.5  million.  Such
purchase price was paid for with  2,259,039  shares of common stock of BioMarin,
valued at $6.00 per share,  that assumption by BioMarin of certain stock options
held by Glyko,  Inc.  employees which were exercisable into a maximum of 255,540
shares of common  stock of  BioMarin at an average  exercise  price of $2.30 per
share, and $500 cash.

On July 22, 1999,  Genzyme  invested in the Company $10 million at $13 per share
(769,230 shares of common stock) in reliance on the exemption from  registration
requirements  provided by Regulation D promulgated  under the Securities Act. In
addition,  the $26 million of convertible notes sold by the Company on April 13,
1999,  plus accrued  interest,  were converted  into 2,672,020  shares of common
stock at $10 per share.


                                       22


Item 6.  Selected consolidated financial data (in thousands, except per
         share data)


The selected consolidated balance sheet data of BioMarin  Pharmaceutical Inc. (a
development-stage  company)  as of  December  31,  1997,  1998  and 1999 and the
statements of operations data for the periods from March 21, 1997 (inception) to
December 31, 1997 and to December 31, 1999 and the years ended December 31, 1998
and 1999 presented below are derived from the consolidated  financial statements
of BioMarin  Pharmaceutical  Inc. and  subsidiaries,  including Glyko, Inc. from
October  7,  1998,  the  date  on  which  it was  acquired  by  BioMarin.  These
consolidated financial statements of BioMarin and subsidiaries have been audited
by Arthur Andersen LLP, independent public accountants. The consolidated balance
sheets as of December 31, 1998, and 1999 and the related consolidated statements
of operations  for the periods from March 21, 1997  (inception)  to December 31,
1997 and to December 31, 1999,  and the years ended  December 31, 1998 and 1999,
and the related reports, are included elsewhere herein.

The selected consolidated  financial data set forth below contain only a portion
of BioMarin's financial statement  information and should be read in conjunction
with the Consolidated  Financial Statements of BioMarin  Pharmaceutical Inc. and
related Notes and "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" included elsewhere herein.


                                           Period from                                                 Period from
                                          March 21, 1997                                              March 21, 1997
                                          (inception) to                                              (inception) to
                                           December 31,              Year Ended December 31,           December 31,
                                       -----------------------------------------------------------------------------
                                               1997                1998             1999                 1999
                                       -----------------   ------------------  -----------------   -----------------
BioMarin's Consolidated                                     (in thousands, except per share data)
    Statements of Operations
                                                                                          
Revenues.................................  $       -         $     1,190           $    6,976         $      8,166
Operating costs and expenses:
      Cost of products and services......          -                 108                  464                  572
      Research and development.........         1,914             10,502               27,206               39,622
      Selling, general and administrative         914              3,532                6,805               11,251
                                          -----------------   ----------------   ----------------   -----------------
      Total costs and expenses............      2,828             14,142               34,475               51,445

Loss from operations......................     (2,828)           (12,952)             (27,499)             (43,279)

Interest income...........................         65                685                1,832                2,582
Interest expense..........................          -                  -                 (732)                (732)
Equity in loss of joint venture...........          -                (47)              (1,673)              (1,720)
                                          -----------------   ----------------   ----------------   -----------------
Net loss.................................   $  (2,763)         $ (12,314)         $   (28,072)       $     (43,149)
                                          =================   ================   ================   =================
Net loss per common share, basic
    and diluted..............               $   (0.34)         $   (0.55)         $     (0.94)       $       (2.04)
                                          =================   ================   ================   =================
Weighted average common
     shares outstanding.............            8,136             22,488               29,944               21,163
                                          =================   ================   ================   =================



                                                                                  As of December 31,
                                                                      --------------------------------------
                     BioMarin's Consolidated Balance Sheet Data:             1997       1998         1999
                                                                         --------------------------------------
                Cash, cash equivalents and                                                   
                  short-term investments ...........................      $   6,888   $ 11,389     $ 62,986
                Total current assets................................          7,507     12,819       66,422
                Total assets........................................          7,653     31,510      103,549
                Long-term liabilities...............................              -        110           84
                Total stockholders' equity..........................          7,380     29,394       98,377





Item 7.  Management's  Discussion  and Analysis of Financial
Condition and Results of Operations

                           FORWARD-LOOKING STATEMENTS

       The following  discussion and analysis of financial condition and results
       of  operations  contains  "forward-looking  statements"  as defined under
       securities  laws.  These statements can often be identified by the use of
       terminology such as "believes," "expects," "anticipates," "plans," "may,"
       "will," "projects," "continues," "estimates," "potential,"  "opportunity"
       and so on.  These  forward-looking  statements  may be found in the "Risk
       Factors,"  and other  sections of this  document.  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," as well as those  discussed
       elsewhere in this document.

Overview

We  are  a  developer  of  carbohydrate   enzyme  therapies  for   debilitating,
life-threatening,  chronic  genetic  disorders and other diseases or conditions.
Since our  inception  on March 21,  1997,  we have been  engaged in research and
development  activities,  including  preclinical  studies,  clinical  trials and
clinical  manufacturing,  the  establishment  of  laboratory  and  manufacturing
facilities, and administrative activities.  BioMarin was incorporated in October
1996 as a wholly-owned  subsidiary of Glyko  Biomedical Ltd. or GBL (TSE:  GBL).
BioMarin was initially funded by GBL and began operations on March 21, 1997, the
date of inception.

We have  incurred  net losses since  inception  and had an  accumulated  deficit
through December 31, 1999 of $43.1 million.  Our losses have resulted  primarily
from research and development  activities and related  administrative  expenses.
Based on current plans, we expect to continue to incur operating losses at least
through 2002.

To date,  we have not generated  revenues from the sale of our drug  candidates.
Our lead product is AldurazymeTM,  alronidase for injection,  (recombinant human
(alpha)-L-iduronidase),  which  is  under  clinical  trials  for  use in  enzyme
replacement therapy for Mucopolysaccharidosis-I or MPS-I. In previous documents,
AldurazymeTM was identified as BM101.  Our financial  results may vary depending
on many factors, including:

     .   The   progress   of   AldurazymeTM   in   the regulatory processes
         and initial sales activities

    .    The investment in  manufacturing  process  development and in
         manufacturing capacity for AldurazymeTM and other product candidates

     .   The  acceleration  of our other  pharmaceutical candidates  into
         preclinical   studies  and  clinical trials

     .   The  progress of our  additional  research  and development efforts

In September 1998, we established a joint venture with Genzyme for the worldwide
development and  commercialization  of AldurazymeTM  for the treatment of MPS-I.
Under the  agreement,  our company and Genzyme are each required to make capital
contributions to the joint venture equal to 50% of the expenses  associated with
the development and commercialization of AldurazymeTM.  We will share equally in
any profits generated from the sales of AldurazymeTM.

In October 1998, we acquired Glyko, Inc., a wholly-owned  subsidiary of GBL in a
transaction valued at $14.5 million.  Glyko, Inc. provides products and services
that  perform   carbohydrate   analysis   and  medical   diagnosis  to  research
institutions and commercial laboratories.

In July 1999,  we completed  our initial  public  offering or IPO of 4.5 million
shares  of  our  common  stock  at  $13  per  share   raising  net  proceeds  of
approximately  $51.9 million.  In a private  placement  concurrent with the IPO,
Genzyme  purchased $10 million of our common stock  (769,230  shares) at the IPO
price of $13.  In  addition,  the $26 million of  convertible  notes sold by the
Company on April 13, 1999, plus accrued interest,  were converted into 2,672,020
shares of common stock at $10 per share.

In August 1999,  the  underwriters  exercised  their  over-allotment  option for
675,000  shares  at the IPO  price  of $13 per  share,  raising  additional  net
proceeds of $8.1 million.


Results of Operations

Years Ended December 31, 1998 and 1999

For the years ended  December 31, 1998 and 1999,  revenues were $1.2 million and
$7 million, respectively. Included in 1999 revenues is $5.3 million for services
provided to the joint venture for  Aldurazyme(TM)  compared to $837,000 for 1998
as a  consequence  of  Aldurazyme(TM)  being in more  complex,  later  stages of
development  and the  effect of a full year of  operation  in 1999  compared  to
approximately  three months of operation in 1998. The joint venture with Genzyme
General   (Nasdaq:   GENZ)  for  the   development  and   commercialization   of
Aldurazyme(TM),     alronidase     for     injection,     (recombinant     human
(alpha)-L-iduronidase) for the treatment of Mucopolysaccharidosis-I  (MPS-I) was
formed on September 4, 1998.  MPS-I is a chronic,  debilitating  genetic disease
which  afflicts  children and leads to death  before  adulthood in a majority of
patients.  Revenues also included $1.5 million generated by Glyko, Inc. compared
to $250,000 for 1998. Glyko, Inc., a BioMarin  subsidiary engaged in the sale of
analytical  and  diagnostic  products and services,  was acquired by BioMarin on
October 7, 1998. External revenues for products and services for 1999 were up in
comparison  to 1998 as a  result  of  revenues  from  the  biochemical  reagents
business of Oxford  GlycoSciences  Plc.  (LSE:  OGS),  which was acquired in May
1999.

Cost of products and cost of services  related to Glyko,  Inc.  operations  were
$464,000 for 1999 compared to $108,000 for 1998.  Glyko's external  products and
services  costs as a percent of the sales of products and services  were 32% for
1999 and 44% for 1998. The improvement was due to a favorable  revenue mix, with
a greater percentage of higher margin product sales.

Research and development expenses increased from $10.5 million for 1998 to $27.2
million  for 1999.  Increased  expenses in support of the  Aldurazyme(TM)  joint
venture with Genzyme and the MPS-VI and burn debridement programs were the major
factors in the growth of research and development expenses.

Selling,  general and  administrative  expenses  increased from $3.5 million for
1998 to $6.8 million for 1999. This increase  resulted from the consolidation of
Glyko, Inc. selling and administrative expenses in 1999 expenses, an increase in
staffing  in BioMarin  administration  in 1999  compared to 1998,  and a related
increase in facilities  expense charged to  administration in 1999. The increase
in  administrative  staff and related expense was necessary to support  expanded
operations.

BioMarin's  equity in the loss of its joint venture with Genzyme  increased from
$47,000 for 1998 to $1.7  million for 1999  primarily  as a result of  increased
process development and clinical manufacturing expenses. The joint venture began
in September 1998 and operated for only  approximately  one quarter of that year
as compared to a full year of operation in 1999.

Interest income increased by $1.1 million from $685,000 for 1998 to $1.8 million
for 1999 primarily due to increased  cash reserves  resulting from a convertible
note  financing in April 1999,  the initial  public  offering in July and August
1999, and the private placement with Genzyme in July 1999.

Interest expense related  primarily to interest on the convertible notes accrued
prior to their conversion in the initial public offering.

The net loss was $12.3  million  ($0.55 per share)  and $28  million  ($0.94 per
share) for 1998 and 1999, respectively.

The Period From March 21,  1997  (Inception)  to December  31, 1997 and the Year
Ended December 31, 1998

In October 1998, we acquired Glyko, Inc. from GBL. The acquisition was accounted
for as a purchase.  As a result, our consolidated  statements of operations data
include the  operations  of Glyko,  Inc.  from October 7, 1998,  the date of the
acquisition, through December 31, 1998.



BioMarin  generated  revenues of $1.2  million in 1998  consisting  primarily of
$837,000 of revenue from the  BioMarin/Genzyme  LLC joint  venture  representing
services performed by BioMarin for the joint venture,  $250,000 from the sale of
Glyko,  Inc. products and services since its acquisition on October 8, 1998, and
$103,000  of other  revenues  representing  grants  received  from  the  federal
government  to fund various  research  projects.  Glyko,  Inc. sold products and
services to BioMarin at a 27%  distributor  discount.  There were no revenues in
the 1997 period.

In 1998,  BioMarin had cost of goods sold of $108,000 as a result of the sale of
Glyko,  Inc  products.   In  the  1997  period,   BioMarin  had  no  sales  and,
consequently, no cost of goods.

Research and development  expenses were $10.5 million in 1998,  compared to $1.9
million in the 1997 period.  The  increase  was due  primarily to a full year of
Aldurazyme(TM) expenses including 12 months of clinical trials in 1998, compared
with only one month of  clinical  trials in the 1997  period.  In  addition,  we
expanded  significantly  our product  programs,  staff and facilities in 1998 in
contrast to limited  start-up  research and  development  activities in the 1997
period.

General  and  administrative  expenses  were $3.5  million in 1998  compared  to
$914,000 in the 1997 period.  General and  administrative  expenses increased in
1998 to support the significantly  expanded scale of operations in 1998 compared
to the smaller administrative requirements in the shorter, start-up 1997 period.
These  increased  administrative  expenses  included  significant  increases  in
salaries and benefits for administrative  staff, an increase in facilities costs
and an increase in professional service fees.

Interest  income in 1998 was $685,000 while interest  income totaled  $65,000 in
the 1997 period.  The higher  interest  income in 1998 resulted from higher cash
balances  available  for  investment  in 1998 as a result of the  first  private
placement  late in 1997, a second  private  placement  in mid-year  1998 and the
Genzyme investment in the third quarter of 1998.

The net loss was $2.8  million  ($0.34 per share) and $12.3  million  ($0.55 per
share) for 1997 and 1998, respectively.

Liquidity and Capital Resources

We have  financed our  operations  since our inception by the issuance of common
stock and  convertible  notes and the  related  interest  income  earned on cash
balances  available for short-term  investment.  We were initially funded by GBL
with a $1.5 million investment. We have since raised additional capital from the
sale of  common  stock  in  private  placements,  the sale of  promissory  notes
convertible  into common stock, an investment of $8.0 million by Genzyme as part
of our joint  venture  with  them,  an initial  public  offering  including  the
underwriters'  over-allotment  exercise and the concurrent  $10 million  Genzyme
investment  in our  Company.  Since  inception,  we have  raised  aggregate  net
proceeds of $124.9 million.

Our combined cash,  cash  equivalents and short-term  investments  totaled $63.0
million on December 31,  1999,  an increase of $51.6  million from  December 31,
1998.  The primary  source of increased cash balances was the issuance of common
stock at our  IPO,  generating  $60.0  million  of net  proceeds  including  the
underwriters  over-allotment.  The  primary  use of cash  during  the year ended
December  31,  1999  was  to  finance   operations  and  to  purchase  leasehold
improvements  and equipment.  Operations used $13.1 million,  we purchased $22.9
million of leasehold  improvements  and equipment,  invested $6.7 million in the
joint  venture  (which was consumed in joint venture  operations)  and purchased
$1.5 million of assets from Oxford GlycoSciences.

From our inception  through  December 31, 1999, we have purchased  approximately
$29.5  million of  leasehold  improvements  and  equipment.  We expect  that our
investment in leasehold  improvements and equipment will increase  significantly
during the next two years because we will provide facilities and equipment for a
larger staff and increase manufacturing capacity.

We have  made and plan to make  substantial  commitments  to  capital  projects,
including  AldurazymeTM and other enzyme manufacturing capacity and new research
and development facilities in Novato.

On October 7, 1998, we purchased Glyko, Inc. from GBL for an aggregate  purchase
price of $14.5 million.  The purchase price was paid by 2,259,039  shares of our
common  stock,  our  assumption  of certain  stock  options held by Glyko,  Inc.
employees, which were exercisable into a maximum of 255,540 shares of our common
stock and $500 in cash.

As part of the acquisition of Glyko, Inc., we acquired  in-process  research and
development  projects,  the value of which  was  expensed  as a  portion  of the
purchase price at the time of the acquisition. The 11 projects acquired are each
relatively small and can be grouped into two categories,  analytic  projects and
diagnostic projects.




The analytic projects are intended to expand the analytic product line by adding
new enzymes for  reagent  sales,  new kits for  agricultural  applications,  new
instrument  capabilities  for protein  analysis and a major  upgrade of software
capabilities. At the time of the acquisition of Glyko, Inc., all of the analytic
projects  had  completed  feasibility  work and the software  projects  were 75%
complete and have since been completed. The development of specialized materials
supporting instrument  capabilities is deemed to be the most difficult technical
hurdle for the completion and  commercialization  of the analytic projects.  The
fair  value  of the  analytic  projects  was  $1.7  million  at the  time of the
acquisition.

The  diagnostic  projects  are  intended to expand a product  line based on very
precise measurements of the level of complex carbohydrates in blood and urine as
indicators of serious disease conditions including heart disease, kidney disease
and  mucopolysaccharidoses  or carbohydrate storage diseases. At the time of the
Glyko, Inc. acquisition,  preliminary  feasibility work had been done for all of
the projects and a software  project was well advanced as to programming,  which
has since been  completed.  The  development of new more sensitive  carbohydrate
chemistry techniques is deemed to be the most difficult technical hurdle for the
completion and  commercialization of the diagnostic products.  The fair value of
the diagnostic projects was $924,000 at the time of the acquisition.

As of December 31, 1999, we had expended to date  approximately  $720,000 on the
in-process  research and  development  projects  and $775,000 on the  diagnostic
projects.  If all acquired in-process research and development  projects proceed
to completion,  we expect to spend approximately  $390,000 in incremental direct
expense to  complete  the  analytic  projects in phases  over  approximately  15
months.  We expect to spend  approximately  $950,000 to complete the  diagnostic
projects in phases  completed  from 3 to 15 months in the future.  None of these
projects have been terminated to date.

Since the  acquisition of these  in-process  research and  development  projects
fifteen  months ago, there have been no subsequent  developments  which indicate
that the  completion  and  commercialization  of either of the projects are less
likely to be completed on the original  planned  schedule or less likely to be a
commercial success.

In September 1998, we established a joint venture with Genzyme for the worldwide
development and commercialization of AldurazymeTM for the treatment of MPS-I. We
will share  expenses and profits from the joint  venture  equally with  Genzyme.
Genzyme  purchased  $8.0 million in common stock upon signing the  agreement and
$10.0  million  of  common  stock at the IPO price of $13 per share in a private
placement concurrent with the IPO. Genzyme has committed to pay us an additional
$12.1  million  upon  approval  of  the  biologics   license   application   for
AldurazymeTM.

In July 1999, we completed our initial public  offering of 4.5 million shares of
our common stock at $13 per share  raising net proceeds of $51.2  million.  In a
private placement  concurrent with the IPO, Genzyme purchased $10 million of our
common stock (769,230 shares) at the IPO price of $13.

In August 1999,  the  underwriters  exercised  their  over-allotment  option for
675,000  shares at the IPO price of $13 raising  additional net proceeds of $8.1
million.

We believe that the cash, cash  equivalents,  short-term  investment  securities
balances  at December  31, 1999 will be  sufficient  to meet our  operating  and
capital  requirements  through at least  mid-year  2001.  Until we can  generate
sufficient levels of cash from our operations,  we expect to continue to finance
future cash needs through:

    .  The sale of equity securities

    .  Equipment-based financing

    .  Collaborative agreements with corporate partners




We do not expect to generate  positive  internal cash flow at least through 2002
because we expect to increase operational expenses and manufacturing  investment
for the joint  venture  and to increase  research  and  development  activities,
including:

    .  Preclinical studies, clinical trials and regulatory review

    .  Commercialization of our drug candidates

    .  Development of manufacturing operations

    .  Process development

    .  Scale-up of manufacturing facilities

    .  Sales and marketing activities

We anticipate a need for additional  financing to fund the future  operations of
our business,  including the  commercialization of our drug candidates currently
under  development.  We cannot  assure  you that  additional  financing  will be
obtained or, if obtained, will be available on reasonable terms.

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

    .  The progress of our research and development programs

    .  The progress of preclinical studies and clinical trials

    .  The time and cost involved in obtaining regulatory approvals

    .  Scaling up, installing and validating manufacturing capacity

    .  Competing technological and market developments

    .  Changes and developments in collaborative, licensing and other
       relationships

    .  The development of commercialization activities and arrangements

    .  The leasing and build-out of additional facilities

    .  The purchase of additional capital equipment

We plan to  continue  our  policy of  investing  available  funds in  government
securities and investment  grade,  interest-bearing  securities,  primarily with
maturities  of one  year or  less.  We do not  invest  in  derivative  financial
instruments, as defined by Statement of Financial Accounting Standards No. 119.

Item 8.  Financial Statements and Supplementary Data

The information  required to be filed in this item appears on pages 44 to 66 and
is incorporated herein by reference.

Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure.

Not applicable.




                                    Part III

Item 10. Directors, Executive Officers, Promoters and Control Persons

   The  information  required by this item is incorporated by reference from the
   discussion in the Proxy Statement captioned "Election of Directors"
   and "Executive Officers."

Item 11.  Executive Compensation

   The  information  required by this item is incorporated by reference from the
   discussion in the Proxy Statement captioned "Executive Compensation."

Item 12.  Security  Ownership  of Certain  Beneficial Owners and Management

   The  information  required by this item is incorporated by reference from the
   discussion in the Proxy Statement captioned "Security Ownership of Certain
   Beneficial Owners."

Item 13.  Certain Relationships and Related Transactions

   The  information  required by this item is incorporated by reference from the
   discussion in the Proxy Statement captioned "Interest of Insiders in Material
   Transactions."




                                     Part IV

Item 14.  Exhibits, List and Reports on Form 8-K

(a)      Documents  are filed as exhibits to this  report as  enumerated  in the
         Index to Exhibits hereto, Part V Item I.

(b)      Reports on Form 8-K

         No reports  were filed on Form 8-K during the quarter ended
         December 31, 1999.



                                     Part V

Item 1.           Index to Exhibits

Exhibit                  Description of
Number                   Document
- - ----------               --------------------------------

2.1     Share Exchange Agreement with Glyko Biomedical, Ltd. (1)
3.1A    Amended and Restated Certificate of Incorporation of BioMarin
        Pharmaceutical  Inc.,  a Delaware  Corporation,  as filed on March 22,
        1999. (1)
3.1B    Form of Amended  and  Restated  Certificate  of  Incorporation  of
        BioMarin Pharmaceutical Inc., a Delaware Corporation. (2)
3.2     Amended and  Restated  Bylaws of BioMarin  Pharmaceutical  Inc., a
        Delaware Corporation. (2)
4.1     Form of Amended and Restated Registration Rights Agreement, by and
        among the Company and the  investors named therein. (1)
10.1    Form of Indemnification Agreement for directors and officers 1997
        Stock Plan, as amended on December 22, 1998, and forms of agreements.(1)
10.3    1998 Director Option Plan and forms of agreements thereunder.(1)
10.4    1998 Employee Stock Purchase Plan and forms of agreements thereunder.(1)
10.5    Amended and Restated  Founder's  Stock Purchase  Agreement with Dr.
        John C. Klock dated as of October 1, 1997 with exhibits. (1)
10.6    Amended and  Restated  Founder's  Stock  Purchase  Agreement  with
        Grant W. Denison, Jr. dated as of October 1, 1997 with exhibits. (1)
10.7    Amended  and  Restated   Founder's   Stock  Purchase   Agreement  with
        Dr. Christopher M. Starr dated as of October 1, 1997 with exhibits. (1)
10.8    Employment Agreement with Dr. John C. Klock dated June 26, 1997, as
        amended. (3)
10.9    Employment Agreement with Grant W. Denison, Jr. dated June 26, 1997,
        as amended. (1)
10.10   Employment Agreement with Dr. Christopher M. Starr dated June 26, 1997,
        as amended. (1)
10.11   Employment Agreement with Raymond W. Anderson dated June 22, 1998, as
        amended. (1)
10.12   Employment Agreement with Stuart J. Swiedler, M.D., Ph.D., dated May 29,
        1998, as amended. (1)
10.13   Employment Agreement with Emil Kakkis, M.D., Ph.D., dated June 30, 1998,
        as amended. (1)
10.14   Employment Agreement between Brian K. Brandley, Ph.D and Glyko, Inc.
        dated February 22, 1998, as amended. (1)
10.15   License Agreement with Glyko Biomedical, Ltd. dated June 26, 1997 with
        exhibits attached. (1)
10.16   Option Agreement with W.R. Grace & Co. dated as of May 1, 1998. (3) (*)
10.17   Grant Terms and Conditions Agreement with Harbor-UCLA Research and
        Education Institute dated April 1, 1997, as amended. (3) (*)
10.18   License Agreement with Women's and Children's Hospital,  Adelaide,
        Australia dated August 14, 1998. (4) (*)
10.19   Lease Agreement dated May 18, 1998 for 371 Bel Marin Keys  Boulevard,
        as amended. (1)
10.20   Standard NNN Lease dated June 25, 1998 for 46 Galli Drive. (1)
10.21   Standard Industrial Commercial Single-Tenant Lease dated May 29, 1998
        for 110 Digital Drive, as amended. (1)
10.22   Sublease dated June 24, 1998 for 1123 West Carson Street. (1)
10.23   Commercial Lease and Deposit Receipt with Glyko, Inc. for 11 Pimentel
        Court and 13 Pimentel Court, dated December 23, 1996. (1)
10.24   Collaboration Agreement with Genzyme Corporation dated  September 4,
        1998. (4)
10.25   Purchase Agreement with Genzyme Corporation dated September 4, 1998. (1)
10.26   Subscription Agreement with Genzyme dated September 4, 1998. (1)
10.27   Form of Convertible Note Purchase Agreement dated as of April 12, 1999
        with form of convertible promissory note. (1)
10.28   Astro License Agreement dated December 18, 1990 among Glyko, Inc.,
        Astromed, Ltd., and Astroscan, Ltd. (3)
10.29   Glycomed License Agreement dated December 18, 1990 between Glyko, Inc.,
        and Glycomed, Inc. (3)



Exhibit                  Description of
Number                   Document
- - ----------               --------------------------------


10.30   Operating Agreement with Genzyme Corporation. (2)
21.1    List of Subsidiaries. (1)
23.1    Consent of Independent Public Accountants.
27.1    Financial Data Schedule (available in EDGAR format only).






































(1)     Incorporated by reference to the Company's Registration Statement on
        Form S-1 (Registration No. 333-77701) filed on May 4, 1999.
(2)     Incorporated by reference to the Company's Registration Statement on
        Form S-1 (Registration No. 333-77701) filed on July 6, 1999.
(3)     Incorporated by reference to the Company's Registration Statement on
        Form S-1 (Registration No. 333-77701) filed on June 14, 1999.
(4)     Incorporated by reference to the Company's Registration Statement on
        Form S-1 (Registration No. 333-77701) filed on July 21, 1999.
(*)     This exhibit has been granted confidential treatment.





                          BioMarin Pharmaceutical Inc.
                                   SIGNATURES

Pursuant to the  requirements  of Section 13 or 15(d) of the  Exchange  Act, the
registrant  caused  this  Report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

Dated:  March 29, 2000               By:  \s\ Raymond W. Anderson
- - ------------------------            -------------------------------------------
                                     Raymond W. Anderson.
                                     Chief Financial Officer
                                     and Vice President, Finance and Admin.

                                POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes and appoints  Raymond W. Anderson,  his  attorney-in-fact,  with the
power of substitution, for him in any and all capacities, to sign any amendments
to the Report on Form 10-K and to file the same, with exhibits thereto and other
documents in connection therewith,  with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in  fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.

Signature                                Title                          Date

\s\ Grant W. Denison, Jr.                                         March 29, 2000
- - ---------------------------                                  -------------------
Grant W. Denison, Jr.       Chief Executive Officer, Director

\s\ John C. Klock, M.D.                                           March 29, 2000
- - ---------------------------                                  -------------------
John C. Klock, M.D.         President, Secretary and Director

\s\ Ansbert S. Gadicke, M.D.                                      March 29, 2000
- - ---------------------------                                  -------------------
Ansbert S. Gadicke           Director

\s\ Erich Sager                                                   March 29, 2000
- - ----------------------------                                 -------------------
Erich Sager                  Director

\s\ Gwynn R. Williams                                             March 29, 2000
- - ----------------------------                                -------------------
Gwynn R. Williams             Director









                          INDEX TO FINANCIAL STATEMENTS

    BioMarin Pharmaceutical Inc. Financial Statements
Report of Independent Public Accountants....................     45
Consolidated Balance Sheets.................................     46
Consolidated Statements of Operations.......................     47
Consolidated Statements of Changes in Stockholders' Equity.    48-50
Consolidated Statements of Cash Flows.......................     51
Notes to Consolidated Financial Statements..................   52-66


















                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
BioMarin Pharmaceutical Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of  BioMarin
Pharmaceutical  Inc.  (a  Delaware  corporation  in the  development  stage) and
subsidiaries  as  of  December  31,  1997,   1998,  and  1999  and  the  related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the period from March 21, 1997  (inception)  to December 31, 1997, the
years  ended  December  31,  1998 and 1999 and the period  from  March 21,  1997
(inception) to December 31, 1999. These  consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
BioMarin Pharmaceutical Inc. and subsidiaries as of December 31, 1997, 1998, and
1999 and the  results of its  operations  and its cash flows for the period from
March 21, 1997  (inception)  to December 31, 1997,  the years ended December 31,
1998 and 1999 and the period from March 21,  1997  (inception)  to December  31,
1999, in conformity with accounting  principles generally accepted in the United
States.

                                            /s/ ARTHUR ANDERSEN LLP


San Francisco, California,
February 18, 2000







                                             BioMarin Pharmaceutical Inc. and Subsidiaries
                                                     (a development-stage company)

                                     Consolidated Balance Sheets as of December 31, 1998 and 1999

                                          (In thousands, except for share and per share data)

                                                                    -----------------------------------
                                                                    -----------------------------------
                                                                         1998                1999
                                                                    ----------------    ---------------
                                                                 ----------------    ---------------
Assets                                                                                     
Curret assets:
      Cash and cash equivalents                                             $ 9,413           $ 23,413
      Short-term investments                                                  1,976             39,573
      Accounts receivable, net                                                  148              1,047
      Due from Glyko Biomedical Ltd.                                            114                139
      Due from BioMarin/Genzyme LLC                                             419              1,280
      Inventories                                                                72                676
      Prepaid expenses                                                          677                294
                                                                    ----------------    ---------------
            Total current assets                                             12,819             66,422
Property and equipment, net                                                   6,223             25,093
Goodwill and other intangible assets                                         11,704             11,462
Investment inBioMarin/Genzyme LLC                                               685                421
Deposits                                                                         79                151
                                                                    ----------------    ---------------
            Total assets                                                   $ 31,510          $ 103,549
                                                                    ================    ===============

Liabilities and Stockholders' Equity
Current liabilities:
      Accounts payable                                                      $ 1,341            $ 3,095
      Accrued liabilities                                                       640              1,966
      Notes payable short-term                                                   24                 26
                                                                    ----------------    ---------------
             Total current liabilities                                        2,005              5,087
Long-term liabilities:
      Long term portion of notes                                                111                 85
                                                                    ----------------    ---------------
             Total liabilities                                                2,116              5,172
                                                                    ----------------    ---------------
Stockholders' equity:
      Common stock, $0.001 par value: 75,000,000 shares
         authorized,  26,176,180 and 34,832,578
         shares issued and outstanding at December 31,
         1998 and 1999, respectively                                             26                 35
      Additional paid-in capital                                             50,058            146,592
      Warrants                                                                  128                128
      Deferred compensation                                                  (3,253)            (2,591)
      Notes receivable from stockholders                                     (2,488)            (2,638)
      Deficit accumulated during the development stage                      (15,077)           (43,149)
                                                                    ----------------    ---------------
              Total stockholders' equity                                     29,394             98,377

                                                                    ----------------    ---------------
             Total liabilities and stockholders' equity                    $ 31,510          $ 103,549
                                                                    ================    ===============

                                         The  accompanying  notes are an integral part of these statements.




                                             BioMarin Pharmaceutical Inc. and Subsidiaries
                                                     (a development-stage company)

                                            Consolidated Statements of Operations for
                                  the Period from March 21, 1997 (inception) to December 31,
                                        1997, the Years Ended December 31, 1998 and 1999
                                and for the Period from March 21, 1997 (inception) to December 31, 1999

                                               (In thousands, except for per share data)



                                                             Period from                                               Period from
                                                            March 21, 1997                                            March 21, 1997
                                                            (inception) to                                           (inception) to
                                                             December 31,               Year Ended December 31,        December 31,
                                                                1997               1998               1999                   1999
                                                          -------------    -------------      -------------         -------------
Revenues                                                                                                      
     Product sales                                           $          -    $         138      $       1,401         $       1,539
     Service revenue                                                    -              112                 85                   197
     BioMarin/Genzyme LLC                                               -              837              5,300                 6,137
     Other revenues                                                     -              103                190                   293
                                                             -------------    -------------      -------------         -------------
           Total revenues                                               -            1,190              6,976                 8,166

Operating costs and expenses:
     Cost of products                                                   -               49                362                   411
     Cost of services                                                   -               59                102                   161
     Research and development                                       1,914           10,502             27,206                39,622
     Selling, general and administrative                              914            3,532              6,805                11,251
                                                             -------------    -------------      -------------         -------------
           Total operating costs and expenses                       2,828           14,142             34,475                51,445
                                                             -------------    -------------      -------------         -------------
           Loss from operations                                    (2,828)         (12,952)           (27,499)              (43,279)

Interest income                                                        65              685              1,832                 2,582
Interest expense                                                        -                -               (732)                 (732)
Equity in loss of BioMarin/Genzyme LLC                                  -              (47)            (1,673)               (1,720)
                                                             -------------    -------------      -------------         -------------
           Net loss                                              $ (2,763)       $ (12,314)         $ (28,072)            $ (43,149)
                                                             =============    =============      =============         =============
Net loss per share, basic and diluted                             $ (0.34)         $ (0.55)           $ (0.94)              $ (2.04)
                                                             =============    =============      =============         =============
Weighted average common shares
     outstanding                                                    8,136           22,488             29,944                21,163
                                                             =============    =============      =============         =============


                                    The accompanying notes are an integral part of these statements.







                                             BioMarin Pharmaceutical Inc. and Subsidiaries

                                                     (a development stage company)

                                        Consolidated  Statements of Changes in Stockholders'
                                Equity  for the  Period  from March 21,  1997  (inception)  to
                             December 31, 1997,  and for the Years ended  December 31, 1998 and 1999

                                                 (In thousands, except per share data)



                                                                                                            Deficit
                                                   Additional                                  Notes      Accumulated
                                   Common Stock     Paid-in      Warrants                    Receivable    During        Total
                                  --------------    Capital   ---------------   Deferred       from       Development  Stockholders'
                                 Shares    Amount    Shares   Shares  Amount  Compensation   Stockholders   Stage        Equity
                                 -------  -------  --------  -------  ------- -----------   -------------  ----------  ------------
                                                                                             
Balance, March 21, 1997....           --  $    --   $    --       --  $   --   $     --       $     --       $    --    $       --

Issuance of common stock to
Glyko Biomedical, Ltd.
on March 21, 1997, for cash,
$1.00 per share..............      1,500        1      1,499      --      --         --             --             --         1,500

Issuance of common stocktock
Glyko Biomedical, Ltd. in
June 1997 in exchange for
technology, $1.00 per share ..     7,000        7        (7)       --      --        --             --             --           --

Issuance of common stock to
Glyko  Issuance of common stock
in October 1997, $1.00 per share
(net of issuance costs of
$439,720, including the issu-
ance of 299,000 shares of common
stock, $1.00 per share and warrants
to purchase an additional 299,000
share of common stock for
brokerage services...............   4,039        4     3,595       299      48      --              --              --         3,647

Issuance of common stock to
employees in exchange for
notes in October 1997, $1.00
per share........................   2,500        3     2,497        --      --    (200)          (2,300)             --           --

Issuance of common stock and
warrants on December 31, 1997,
$1.00 per share (net of issuance
costs of $592,309, including the
issuance of 502,500 shares of common
stock, $1.00 per share, and
warrants to purchase an additional
502,500 shares of common stock
for brokerage services)...........  5,528       6     4,930       503      80       --             --               --        5,016

Common stock options granted in
exchange for services.............     --      --        35        --      --      (17)            --               --           18

Interest on notes receivable......     --      --        --        --      --       --            (38)              --         (38)

Net loss for the period from
March 21, 1997(inception), to
December 31, 1997.................     --      --        --        --      --       --             --            (2,763)    (2,763)

Balance, December  31, 1997.......  20,567    $ 21  $ 12,549       802   $ 128   $ (217)       $(2,338)          $(2,763)   $(7,380)
                                   =======    ====  ========    ======   ======  =======       ========          ========   ========

                                   The  accompanying  notes are an integral part of these statements.






                                             BioMarin Pharmaceutical Inc. and Subsidiaries

                                                     (a development stage company)

                                           Consolidated Statements of Changes in Stockholders'
                                         Equity for the Period from March 21, 1997 (inception) to
                                   December 31, 1997, and for the Years ended December 31, 1998 and 1999

                                                 (In thousands, except per share data)



                                                                                                           Deficit
                                                   Additional                                  Notes      Accumulated
                                   Common Stock     Paid-in      Warrants                    Receivable    During        Total
                                  --------------    Capital   ---------------   Deferred       from       Development  Stockholders'
                                 Shares    Amount    Shares   Shares  Amount  Compensation   Stockholders   Stage        Equity
                                 -------  -------  --------  -------  ------- -----------   -------------  ----------  ------------
                                                                                                  
Balance, January 1, 1998......... 20,567     $ 21    $ 12,549    802   $ 128      $ (217)     $ (2,338)      $ (2,763)       $ 7,380

Issuance of common stock on
June 30, 1998, for cash,
$6.00 per share (net of
issuance costs of $263,208,
including the issuance of
31,368 shares of common stock,
$6.00 per share, for
brokerage services)...............  599          1      3,327     --      --          --           --             --           3,328

Issuance of common  stock
on July 14, 1998, for cash,
$6.00 per share (net of
issuance costs of $387,474,
including the issuance of
64,579 shares of common stock,
$6.00 per share, for brokerage
services)......................... 1,385         1      7,924     --      --          --           --             --           7,925

Issuance  of common  stock on
August 3, 1998, for cash, $6.00
per share (net of issuance costs
of $12,318, including the issuance
of 2,053 shares of common stock,
$6.00 per share for brokerage
services).........................    31        --        176     --      --          --           --             --             176

Issuance of common stock to
Genzyme Corporation on
September 4, 1998,for cash,
$6.00 per share.................... 1,333        1      7,999     --      --          --           --             --           8,000

Issuance of common stock to Glyko
Biomedical, Ltd. for the purchase
of Glyko, Inc. on October 7, 1998,
for common shares $6.00 per share
and the assumption of options of
Glyko, Inc. employees (see Note 1)..2,259       2     14,859      --      --          --           --             --          14,861

Exercise of common stock options...     2      --          2      --      --          --           --             --               2

Interest on notes receivable.......    --      --        --       --      --          --         (150)            --           (150)

Deferred compensation on stock
options............................    --      --     3,222       --      --      (3,222)          --             --              --

Amortization of deferred
compensation.......................    --      --       --        --      --          186          --             --             186

Net loss...........................    --      --       --        --      --           --          --        (12,314)       (12,314)
                                    ------------------------------------------------------------------------------------------------
Balance, December 31, 1998......... 26,176   $ 26   $50,058      802      128    $(3,253)     $(2,488)      $(15,077)       $ 29,394



                                   The  accompanying  notes are an integral part of these statements.






                                             BioMarin Pharmaceutical Inc. and Subsidiaries

                                                     (a development stage company)

                                      Consolidated  Statements of Changes in Stockholders'
                                  Equity  for the  Period  from March 21,  1997  (inception)  to
                           December 31, 1997,  and for the Years ended  December 31, 1998 and 1999

                                                 (In thousands, except per share data)



                                                                                                            Deficit
                                                   Additional                                  Notes      Accumulated
                                   Common Stock     Paid-in      Warrants                    Receivable    During        Total
                                  --------------    Capital   ---------------   Deferred       from       Development  Stockholders'
                                 Shares    Amount    Shares   Shares  Amount  Compensation   Stockholders   Stage        Equity
                                 -------  -------  --------  -------  ------- -----------   -------------  ----------  ------------
                                                                                                
Balance, January 1, 1999..      26,176     $ 26   $ 50,058     802    $ 128    $ (3,253)       $ (2,488)   $ (15,077)      $ 29,394

Issuance of common  stock on
July 23,  1999,  in an initial
public  offering (IPO) for cash
at $13.00 per share (net of
issuance costs of $6,690) .....   4,500         4    51,805      --       --          --              --            --        51,809

Issuance of common stock on
July 23, 1999 to Genzyme
Corporation in a private
placement concurrent with
the IPO for cash at $13.00
per share .....................     769        1     9,999      --        --         --              --            --        10,000

Issuance  of  common  stock
on July  23,  1999  concurrent
with the IPO upon conversion
of promissory  notes plus
accrued interest of $720,200
at $10.00 per share (net
of issuance costs of $1,150).      2,672        3    25,612      --        --        --                --            --       25,615

Issuance of common  stock on
August  3,  1999 and  August
25, 1999 from the over-allotment
exercise by underwriters at
$13.00 per share (net of issuance
costs of $633)..................     675        1     8,141      --        --        --                --            --        8,142

Exercise of common stock options...   40       --       148      --        --        --                --            --          148

Interest on notes receivable from
stockholders                          --       --       195      --        --        --              (195)           --           --

Deferred compensation related to
stock option .....................    --       --       634      --        --       (634)              --            --           --

Amortization of deferred compensation --       --        --      --        --      1,341               --            --        1,341

Net loss...........................   --       --        --      --        --        --                --       (28,072)    (28,072)
                                             ---------------------------------------------------------------------------------------
Balance, December 31, 1999....... 34,832     $ 35  $146,592     802      $ 128   $(2,546)          $(2,683)    $(43,149)    $ 98,377

                                   The  accompanying  notes are an integral part of these statements.








                                             BioMarin Pharmaceutical Inc. and Subsidiaries
                                                     (a development-stage company)

                                                 Consolidated  Statement of Cash
                                          Flows  For  the  Period  from  March  21,  1997
                              (inception) to December 31, 1997, the Years ended  December 31, 1998 and 1999
                                and for the Period  from March 21, 1997 (inception) to December 31, 1999

                                                                (In thousands)


                                                             Period from                                               Period from
                                                            March 21, 1997                                            March 21, 1997
                                                            (inception) to                                           (inception) to
                                                             December 31,            Year Ended December 31,           December 31,
                                                                  1997              1998               1999                 1999
                                                             -------------    -------------      -------------         -------------
                                                                                                                
Cash flows from operating activities:
      Net loss                                                   $ (2,763)         $ (12,314)       $ (28,072)           $ (43,149)
      Adjustments to reconcile net loss to net
         cash used in operating activities:
         Depreciation                                                   5                308            4,074                 4,387
         Amortization of deferred compensation                          -                185            1,341                 1,526
         Amortization of goodwill                                       -                271            1,143                 1,414
         Compensation in the form of common stock
            and common stock options                                   18                  -                -                    18
         Loss from BioMarin/Genzyme LLC                                 -                 47            6,973                 7,020
         Write-off of in-process technology                             -              2,625                -                 2,625
      Changes in operating assets and liabilities:
         Accounts receivable                                            -               (148)            (899)              (1,047)
         Due from Glyko Biomedical, Ltd.                              (79)               (34)             (25)                (138)
         Due from BioMarin/Genzyme LLC                                  -               (419)            (861)              (1,280)
         Inventories                                                    -                (72)              (5)                 (77)
         Prepaid expenses                                            (539)              (137)             383                 (293)
         Deposits                                                       -                (79)             (72)                (151)
         Accounts payable                                             168              1,172            1,754                 3,094
         Accrued liabilities                                           43                597            1,326                 1,966
         Due to Glyko, Inc.                                            61                (61)               -                     -
                                                          -------------------      -------------     ------------       ------------
            Net cash used in operating activities                  (3,086)            (8,059)         (12,940)             (24,085)
                                                          -------------------      -------------     ------------       ------------
Cash flows from investing activities:
      Purchase of property and equipment                             (150)            (6,385)         (22,944)             (29,479)
      Purchase of Biochemical Research Reagent
         Division of Oxford Glycosciences                               -                  -           (1,500)              (1,500)
      Investment in BioMarin/Genzyme LLC                                -               (732)          (6,709)              (7,441)
      Purchase of short-term investments                             (901)            (1,075)         (37,597)             (39,573)
                                                          -------------------      -------------     ------------       ------------
            Net cash used in investing activities                  (1,051)            (8,192)         (68,750)             (77,993)
                                                          -------------------      -------------     ------------       ------------
Cash flows from financing activities:
      Proceeds from note payable                                        -                134                -                   134
      Bridge loan                                                     880                  -                -                   880
      Proceeds from issuance of convertible notes
         payable                                                        -                  -           25,615                25,615
      Accrued interest on notes receivable from
         stockholders                                                 (38)              (150)               -                 (188)
      Proceeds from exercise of common
         stock options                                                  -                  -              148                   148
      Repayment of equipment loan                                       -                  -              (24)                 (24)
      Proceeds from sale of common stock, net of                                                                                   -
          issuance costs                                            9,283             19,692           69,951                98,926
                                                          -------------------      -------------     ------------        -----------
            Net cash provided by financing activities              10,125             19,676           95,690               125,491
                                                          -------------------      -------------     ------------        -----------
            Net increase equivalents                                5,988              3,425           14,000                 3,413

Cash and cash equivalents:
      Beginning of period                                               -              5,988            9,413                     -
                                                          -------------------      -------------     ------------       ------------
      End of period                                               $ 5,988            $ 9,413         $ 23,413              $ 23,413
                                                          ===================      =============     ============       ============

      The accompanying notes are an integral part of these statements.






                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

                   Notes to Consolidated Financial Statements

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:


Nature of Operations and Business Risks--BioMarin  Pharmaceutical Inc. (BioMarin
or the Company) is a biopharmaceutical  company  specializing in the development
of  carbohydrate  enzyme  therapies for  debilitating  life-threatening  chronic
genetic  disorders  and other  diseases and  conditions.  Since  inception,  the
Company has devoted substantially all of its efforts to research and development
activities, including preclinical studies and clinical trials, the establishment
of   laboratory   and  clinical   scale   manufacturing   facilities,   clinical
manufacturing,  and related administrative  activities.  With its acquisition of
Glyko, Inc.,  BioMarin added analytical and diagnostic  products and services in
the area of carbohydrate biology. BioMarin was incorporated on October 25, 1996,
in the state of  Delaware.  BioMarin  first  began  business  on March 21,  1997
(inception),  and issued 1.5 million shares of common stock to Glyko  Biomedical
Ltd. (GBL) for $1.5 million. Beginning in October 1997, BioMarin issued stock to
outside  investors in a series of transactions,  resulting in GBL's ownership of
BioMarin's  outstanding  common stock being  reduced to 32.6 percent at December
31, 1999.

On  September  4, 1998,  the Company  entered  into an  agreement  with  Genzyme
Corporation  (Genzyme)  to  establish  a joint  venture  (BioMarin/Genzyme  LLC)
dedicated to the development and commercialization of Aldurazyme(TM), alronidase
for   injection    (recombinant    human    (alpha)-L-iduronidase)    to   treat
mucopolysaccharidosis-I (MPS-I) (Note 8).

On October 7, 1998, the Company acquired Glyko, Inc., a wholly-owned  subsidiary
of GBL, in a transaction valued at $14.5 million.  The transaction was accounted
for as a purchase and resulted in Glyko, Inc. becoming a wholly owned subsidiary
of the  Company.  Glyko,  Inc.  provides  products  and  services  that  perform
sophisticated  carbohydrate  analysis for research  institutions  and commercial
laboratories.  As  consideration  for the  acquisition of all of the outstanding
shares of Glyko, Inc.,  BioMarin issued 2,259,039 shares of common stock to GBL,
assumed Glyko,  Inc.'s employee stock options  exercisable for 255,540 shares of
BioMarin common stock, and paid $500 in cash (see Note 11).

On April 13,  1999,  the  Company  entered  into a  convertible  note  financing
agreement  in the amount of $26  million.  Of this  amount,  GBL  invested  $4.3
million.

In May 1999, Glyko, Inc. acquired key assets of the Biochemical Research Reagent
Division of Oxford  GlycoSciences  Plc. (OGS). The acquisition  increased Glyko,
Inc.'s  product  offerings  and was valued  from $1.5  million to $2.1  million,
depending on the future sales of the acquired products.

The Company completed its initial public offering (IPO) of 4.5 million shares of
common  stock  at $13 per  share on July  23,  1999,  raising  net  proceeds  of
approximately  $51.8 million.  In a private  placement  concurrent with the IPO,
Genzyme  invested in the Company $10 million at the IPO price (769,230 shares of
common stock).  In addition,  the $26 million of  convertible  notes sold by the
Company on April 13, 1999, plus accrued interest,  were converted into 2,672,020
shares of common  stock at $10 per  share.  The  exercise  of the  underwriters'
over-allotment  option in August 1999  raised  additional  net  proceeds of $8.1
(675,000  shares of common  stock).  Through  December  31, 1999 the Company had
accumulated losses during its development stage of approximately  $43.1 million.
Based on current  plans,  management  expects to incur  further  losses at least
through  mid-year  2002.  Management  believes that the Company's  cash and cash
equivalents  and short-term  investment  balances at December  31,1999,  will be
sufficient to meet the Company's obligations through mid-year 2001.

The Company's lead product candidate,  Aldurazyme(TM), has completed its initial
clinical trials. The Company expects the BioMarin/Genzyme LLC to conduct a Phase
III  confirmatory  clinical  trial  of  Aldurazyme(TM)  beginning  approximately
mid-year  2000.  There  can be no  assurance  that the  Company's  research  and
development efforts will be successfully  completed or that its products will be
shown to be safe and effective. There can be no assurance that its products will
be approved for marketing by the





                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

U.S. Food and Drug  Administration  (FDA) or any equivalent  foreign  government
agency or that its products will be successfully  commercialized  or achieve any
significant degree of market acceptance.

BioMarin's  core   technology  is  based  on  the  biological   applications  of
carbohydrate-active  enzymes in therapeutic indications. In June 1997, rights to
certain related technology were transferred to BioMarin by GBL in exchange for 7
million  shares of BioMarin  common stock (see Note 3). Certain of the Company's
products  rely  on   proprietary   technology   and  patents  owned  by  certain
universities and other institutions and licensed to BioMarin. These universities
also provide research and development services.  Cessation of relationships with
these universities could significantly affect the Company's future operations.

In order to grow  significantly,  the Company must expand its efforts to develop
new  products in  pharmaceutical  applications.  The  Company  will also need to
establish  manufacturing  capabilities  and to  develop  marketing  capabilities
and/or  enter into  collaborative  arrangements  with third  parties  having the
capacity for such manufacturing or marketing.

BioMarin's  product   candidates  require  regulatory   approval  by  government
agencies.  This includes preclinical and clinical testing and approval processes
in the United States and other  countries.  Approvals can take several years and
can  require   substantial   expenditures.   There  can  be  no  assurance  that
difficulties  or excessive  costs will not be encountered by the Company in this
process,  which could delay or preclude the Company's marketing of its products.
There can be no  assurance  that any of  BioMarin's  current  or future  product
candidates  will be  successfully  developed,  prove to be effective in clinical
trials,  receive required regulatory approvals,  be capable of being produced in
commercial quantities at reasonable costs, gain reasonable reimbursement levels,
or be successfully marketed.

In addition, the Company is subject to a number of risks, including the need for
additional  financing,  dependence on key personnel,  small patient  population,
patent protection, significant competition from larger organizations, dependence
on corporate partners and collaborators,  and expected increased restrictions on
reimbursement, as well as other changes in the healthcare industry.

Basis of  Presentation--These  consolidated  financial  statements  include  the
accounts of BioMarin,  Glyko, Inc., a wholly-owned subsidiary of BioMarin (since
October 7, 1998),  and BioMarin  Genetics,  Inc., a  wholly-owned  subsidiary of
BioMarin  formed for the purpose of the joint  venture  discussed in Note 8. All
significant intercompany transactions have been eliminated.

Concentration of Credit Risk--Financial instruments that may potentially subject
the Company to  concentration  of credit risk consist  principally of cash, cash
equivalents,  and  short-term  investments.  All  cash,  cash  equivalents,  and
short-term  investments are placed in financial  institutions with strong credit
ratings, which minimizes the risk of loss due to nonpayment. The Company has not
experienced any losses due to credit  impairment or other factors related to its
financial instruments.

Use of  Estimates--The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles  requires  management to make certain
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosure of contingent  assets and liabilities at the dates of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  Actual results could differ from those estimates.
Significant  estimates made by management  include  determination of progress to
date of research and development projects in-process and the amortization period
of goodwill and other intangibles.

Cash and Cash  Equivalents--For the statements of cash flows, the Company treats
liquid  investments  with original  maturities of less than three months as cash
and cash equivalents.

Short  Term  Investments--The  Company  records  its  investment  securities  as
available-for-sale  because the sale of such securities may be required prior to
maturity.  These  securities  are  recorded at cost at  December  31, 1999 which
approximates fair market value. These securities are comprised mainly of Federal
Home Loan bank discount notes and certificates of deposit.





                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

Inventories--Inventories  consist of analytic kits and instrument-based  systems
held for sale. Inventories are stated at the lower of cost (first-in,  first-out
method) or estimated market value. All inventories at December 31, 1998 and 1999
belonged to Glyko, Inc.

Investment in BioMarin/Genzyme  LLC and Related  Revenue--Under the terms of the
Company's  joint venture  agreement with Genzyme (Note 7 and 8), the Company and
Genzyme  have each  agreed to provide 50  percent of the  funding  for the joint
venture. All research and development, sales and marketing, and other activities
performed  by Genzyme and the Company on behalf of the joint  venture are billed
to the joint venture at cost. Any profits or losses of the joint venture will be
shared equally by the two parties. Losses of the joint venture ($1.8 million and
$14 million for the years ended  December 31, 1998 and 1999,  respectively)  are
allocated in proportion to the funding  provided by each joint venture  partner.
Through  December 31, 1999, each joint venture partner had provided $8.3 million
of funding to the joint venture.

During the years  ended  December  31, 1998 and 1999,  the  Company  billed $1.7
million and $10.6 million, respectively,  under the agreement, of which $837,457
and $5.3  million  respectively,  or 50 percent,  was  recognized  as revenue in
accordance with the Company's  policy of recognizing  revenue to the extent that
research and development  costs billed have been funded by Genzyme.  At December
31, 1998 and 1999 the  Company had  receivables  of $418,712  and $1.3  million,
respectively, related to these billings.

The  Company  accounts  for its  investment  in the joint  venture on the equity
method.  Accordingly,  the Company recorded a reduction in its investment in the
joint  venture of $884,628 and $7 million,  during the years ended  December 31,
1998 and 1999,  respectively,  representing  its 50 percent share of the loss of
the joint venture.  The percentage of the research and development  costs billed
to the joint venture that was funded by the Company (50 percent, or $837,457 and
$5.3 million for the years ended December 31, 1998 and 1999,  respectively)  was
recorded as a credit to the Company's equity in the loss of the joint venture.

At December 31, 1999 the summarized  assets and liabilities of the joint venture
and its results of operations from inception to December 31, 1999 are as follows
(in thousands):


          Assets                           $2,729
                                           ======
         Liabilities                        1,886
         Net Equity                           843
         -----------                       ------
                                           $2,729

        Cumulative Net loss               $15,714
                                          =======

Research and Development--Research and development expenses include the expenses
associated  with contract  research and  development  provided by third parties,
research and development provided in connection with the joint venture including
clinical and regulatory costs, and internal research and development  costs. All
research and development costs discussed above are expensed as incurred.

Property and  Equipment--Property and equipment are stated at cost. Depreciation
is computed using the straight-line method. Leasehold improvements are amortized
over the  life of the  asset or the term of the  lease,  whichever  is  shorter.
Significant  additions  and  improvements  are  capitalized,  while  repairs and
maintenance are charged to expense as incurred.

Property and equipment consisted of the following (in thousands):

                              December 31,
                   -------------------------------
Category                  1998           1999          Estimated Useful Lives
- - ---------------    -------------------------------  ----------------------------
Computer hardware
   and software       $   162        $     426              3 years
Office furniture
   and equipment          372            1,017              5 years
Laboratory equipment    3,469            4,083              5 years
Manufacturing
   equipment              --             4,171              5 years

Leasehold improvements  2,532           19,768        Shorter of life of assets
                                                          or lease term
                    -------------------------------
                        6,535           29,465
Less:
Accumulated
depreciation             (312)          (4,372)
                    -------------------------------
Total, net             $ 6,223         $25,093
                    ===============================

                                       26



                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

            Notes to Consolidated Financial Statements--(Continued)

Depreciation  expense for the period March 21, 1997  (inception) to December 31,
1997,  for the years ended  December 31, 1998, and 1999 and for the period March
21, 1997 (inception) to December 31, 1999, was $4,790, $307,645,  $4,074,000 and
$4,386,435, respectively.

Goodwill and Other  Intangible  Assets--In  connection  with the  acquisition of
Glyko, Inc., the Company acquired certain intangible assets including  developed
technology, customer relationships and goodwill.

The  purchase  price of $14.5  million was  allocated  to the net  tangible  and
intangible assets acquired, based on the relative fair value of these assets. In
connection  with this  allocation  $2.6 million was expensed as a charge for the
purchase of in-process research and

development.  Of the $11.7 million  designated  as intangible  assets (after the
write-off of in-process research and development), $1.2 million was allocated to
developed  technology  and  amortized  over six years,  $73,000 was allocated to
assembled  work force and  amortized  over seven  years,  and $10.4  million was
allocated  to  goodwill  (customer  relationships,  trade  name,  pure  business
goodwill) and amortized over twelve years.  In performing this  allocation,  the
Company considered,  among other factors,  Glyko, Inc.'s technology research and
development  projects in-process at the date of acquisition.  With regard to the
in-process  research and development  projects,  the Company  considered factors
such as the stage of development  of the technology at the time of  acquisition,
the  importance  of each project to the overall  development  plan,  alternative
future use of the technology and the projected  incremental  cash flows from the
projects when completed and any associated risks.

The Income Approach was the primary technique  utilized in valuing the purchased
research and development.  The assumptions  underlying the cash flow projections
used were derived primarily from investment banking reports, historical results,
company records and estimates of management.

Revenue  estimates for each in-process  project were developed by management and
based on an assessment of the industry.  Cost of goods sold for each project are
expected to be in line with historical results.

The  Capital  Asset  Pricing  Model was used to  determine  the cost of  capital
(discount rate) for Glyko, Inc.'s

in-process  projects.  Due to the  conservative  nature of the  forecast and the
risks associated with the projected growth and  profitability of the development
projects, a discount rate of 16 percent was used to discount cash flows from the
in-process products.

The Company  believes that the foregoing  assumptions used in the forecasts were
reasonable at the time of the acquisition.  No assurance can be given,  however,
that the underlying  assumptions  used to estimate sales,  development  costs or
profitability,  or the events  associated with such projects,  will transpire as
estimated. For these reasons, actual results may vary from projected results.
The most  significant  and  uncertain  assumptions  relating  to the  in-process
projects relate to the projected timing of completion and revenues  attributable
to each project.

Amortization  expense related to the acquisition of Glyko, Inc. was $271,274 and
$1.1  million  for the  period  October 7, 1998  (date of acquisition)  to
December 31, 1998, and the year ended December 31, 1999, respectively.

In connection  with the purchase of the key assets of the  biochemical  research
reagent  division of Oxford Glyko Sciences or OGS, the Company  acquired certain
intangible assets including  customer  relationships  and goodwill.  The initial
purchase  price of $1.5 million was allocated to the net tangible and intangible
assets acquired, based on the relative fair value of these assets. In connection
with this  allocation,  $608,549 was  allocated  to  inventory  and $891,451 was
allocated to goodwill and is being amortized over seven years.


Amortization expense related to the acquisition of OGS assets for the year ended
December 31, 1999, was $50,818.

Impairment of Long-Lived Assets--The Company regularly reviews long-lived assets
and identifiable intangibles. Whenever events or circumstances indicate that the
carrying  amount  of such  assets  may not be  fully  recoverable.  The  Company
evaluates  the  recoverability  of long lived assets by  measuring  the carrying
amount of the  assets  against  the  estimated  undiscounted  future  cash flows
associated  with them.  At the time such  evaluations  indicate  that the future
undiscounted  cash flows of certain  long-lived  assets  are not  sufficient  to
recover its carrying value of such assets, the assets are adjusted to their fair
values (based on discounted  cash s flows).  No such  adjustment  have been made
during any period presented.

The  Company's  long-lived  tangible  assets  consist  primarily of property and
equipment and its enzyme  investment in the BioMarin/G  LLC joint  venture.  The
Company  reviewed  all of these assets  together  for purposes of assessing  any
potential  impairment due to the fact that these assets will be used together to
generate joint cash flows.


                 BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)


All of the  Company's  goodwill and other  intangible  assets were recorded as a
result n of the Company's  acquisitio of Glyko, Inc. and Glyko,  Inc.'s purchase
of the key l assets of the  biochemica  research  reagent  division of OGS.  The
Company  assessed  any  possible  impairment  taking into regard all future cash
flows to be generated from the intangible assets acquired,  including  developed
technology assembled work force, customer lists and goodwill.

Accrued  Liabilities:   accrued  liabilities  consisted  of  the  following  (in
thousands)

                                                 December 31,
                                        -----------------------------
                                            1998              1999
                                        -------------   -------------
          Vacation                         $     123        $    386
          Construction in progress                --             882
          Other                                  517             798
                                         -------------   ------------

                      Total                $     640        $  1,966
                                         =============   ============

Revenue  Recognition--The  Company recognizes Glyko, Inc.'s product revenues and
related cost of sales upon shipment of products.  Glyko, Inc.'s service revenues
are recognized upon  completion of services as evidenced by the  transmission of
reports  to  customers.  Other  Glyko,  Inc.  revenues,  principally  licensing,
distribution  and development  fees, are recognized upon our satisfaction of our
contractual obligations such as 1) execution of contract; 2) certain milestones;
and 3) certain anniversary dates from the effective date of the contract.

Revenue from the joint  venture is  recognized  to the extent that  research and
development costs billed by the Company have been funded by Genzyme.

Net Income (Loss) per  Share--Basic net income (loss) per share is calculated by
dividing net income (loss) by the weighted  average  common  shares  outstanding
during the period.  Diluted net income per share is  calculated  by dividing net
income by the weighted average of common stock  outstanding and potential common
shares  during the period.  Potential  common  shares  include  dilutive  shares
issuable upon the exercise of outstanding  common stock options,  warrants,  and
contingent  issuances  of common  stock.  For  periods in which the  Company has
losses,  such  potential  common  shares are excluded  from the  computation  of
diluted net loss per share, as their effect is antidilutive.

Potentially dilutive securities (in thousands):

                                                   December 31,
                                      ------------------------------------
                                          1997         1998         1999
                                      ------------ ------------ ----------
Options to purchase common stock
                                             297        2,801       5,450
Warrants to purchase common stock            802          802         802
                                      ------------ ------------ ----------
              Total                        1,099        3,603       6,252
                                      ============ ============ ==========

Segment Reporting--For the year ended December 31, 1998, the Company adopted the
provisions of SFAS No. 131,  "Disclosures  about  Segments of an Enterprise  and
Related  Information".  The Company  operates  two  segments.  The  Analytic and
Diagnostic  segment  represents the operations of Glyko,  Inc. which involve the
manufacture  and sale of analytic and diagnostic  products.  The  Pharmaceutical
segment  represents  the  research  and  development  activities  related to the
development  and   commercialization   of  carbohydrate   enzyme   therapeutics.
Management of the Company has concluded  that the operations of the Analytic and
Diagnostic  segment are, and will continue to be, immaterial with respect to the
Company's overall activities and, thus, disclosure of segment information is not
required.

New  Accounting   Standards--In  June  1998,  the  FASB  issued  SFAS  No.  133,
"Accounting for Derivative  Instruments and Hedging Activities." SFAS No. 133 is
not expected to have a material  impact on the Company's  financial  position or
results of operations.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB
101 provides guidance on applying  generally accepted  accounting  principles to
revenue recognition issues in financial  statements.  The Company will adopt SAB
101 as required in the first  quarter of 2000 and such  adoption is not expected
to have a material effect on the Company's consolidate results of operations and
financial position.


                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)


2.   BRIDGE LOANS:

In the third  quarter of 1997,  the Company drew upon a bridge loan from certain
stockholders  in the amount of  $880,000.  This bridge loan was  converted  into
880,000 shares of common stock in the fourth quarter of 1997.

3.   STOCKHOLDERS' EQUITY:

Common Stock and Warrants--On  March 21, 1997,  BioMarin's parent company,  GBL,
provided initial equity funding by purchasing 1.5 million shares of common stock
for $1.5 million.

BioMarin  and GBL have  entered  into a License  Agreement  dated June 26, 1997,
pursuant  to which GBL  granted  BioMarin an  exclusive,  worldwide,  perpetual,
irrevocable, royalty-free right and license to certain of its worldwide patents,
trade  secrets,  copyrights,  and  other  proprietary  rights  to all  know-how,
processes,  formulae,  concepts,  data,  and other such  intellectual  property,
whether patented or not, owned or licensed by GBL and its subsidiaries as of the
date of the license  agreement for  application in therapeutic  uses,  including
without  limitation,  drug  discovery and genomics.  As  consideration  for this
license,  BioMarin  issued to GBL 7.0 million  shares of BioMarin  common stock.
Under the same License Agreement, BioMarin granted GBL an exclusive,  worldwide,
perpetual, irrevocable,  royalty-free cross-license to all improvements BioMarin
may make  upon the  licensed  intellectual  property.  As this  transaction  was
between  the Company and its  parent,  the Company  recorded  the license at its
historical cost on GBL's financial statements, which was zero.

In the fourth  quarter of 1997,  880,000  shares of common  stock were issued to
stockholders to retire an $880,000 bridge loan.

As disclosed in the accompanying statements of stockholders' equity, the Company
closed a number of private placements in 1997 and 1998. In connection with these
placements, an entity with which the chief executive officer and chairman of the
board is affiliated (see Note 7) was issued a total of 899,500 shares (valued at
$1,389,500) and warrants (valued at $128,240) to purchase an additional  801,500
shares of common  stock at an exercise  price of $1 per share.  These  issuances
were made for brokerage  services  rendered in connection with these  placements
and were  accounted  for as a cost of raising  capital.  The warrants  expire on
various dates in 2001.

The Company completed its initial public offering (IPO) of 4.5 million shares of
common  stock  at $13 per  share on July  23,  1999,  raising  net  proceeds  of
approximately  $51.8 million.  In a private  placement  concurrent with the IPO,
Genzyme  invested in the Company $10 million at the IPO price (769,230 shares of
common stock).  In addition,  the $26 million of  convertible  notes sold by the
Company on April 13, 1999, plus accrued interest,  were converted into 2,672,020
shares of common  stock at $10 per  share.  The  underwriters'  exercise  of its
over-allotment  option in August 1999  raised  additional  net  proceeds of $8.1
million (675,000 shares of common stock).

Notes Receivable from Stockholders--Notes receivable from stockholders relate to
2.5 million  shares of common stock  issued in October  1997 to three  executive
officers  under  the  terms  of the  Founder's  Stock  Purchase  Agreement  (the
Agreement).  These notes bear  interest  at 6 percent per annum,  and are due on
September 30, 2000, or on the date of the employee's  termination,  whichever is
earlier.  The  notes  are  secured  by the  underlying  stock  and are with full
recourse.  Interest  was  imputed  at nine  percent,  resulting  in an  interest
discount and related deferred compensation of $200,000, which is being amortized
over the life of the notes.  Amortization  expense for the period from March 21,
1997  (inception)  to December 31, 1997,  the years ended  December 31, 1998 and
1999, and for the period from March 21, 1997 (inception),  to December 31, 1999,
was $0, $66,667, $150,000, and $216,667,  respectively.  In the event that their
employment  is  terminated by the Company,  the Company has the  obligation,  if
requested by the officer,  to  repurchase  any or all of the shares issued under
the Agreement at the lower of the original  purchase price or the current market
value  of the  shares.  In the  event  one of  these  officers  ceases  to be an
employee,  the Company has the right, but not the obligation,  to repurchase the
unvested portion of the shares at their original purchase price. Pursuant to the
terms of the  Agreement,  50% of the shares vest after one year from the date of
employment, with the remainder vesting at a rate of 1/24th month thereafter.

Deferred Compensation--In connection with certain stock option grants during the
years  ended  December  31,  1998 and  1999,  the  Company  recognized  deferred
compensation  totaling  $3,222,816  and $633,944,  respectively,  which is being
amortized  over  the  four-year  estimated  service  periods  of  the  grantees.
Amortization  expense  recognized  during the years ended  December 31, 1998 and
1999, was $185,405 and $1,297,565, respectively.





                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

4.   INCOME TAXES:

The Company  utilizes the asset and liability  method of  accounting  for income
taxes. Under the asset and liability method, deferred taxes are determined based
on the  difference  between the financial  statement and tax bases of assets and
liabilities  using  enacted  tax  rates in  effect  in the  years  in which  the
differences are expected to reverse.

The  Company's  primary  temporary  differences  relate  to items  expensed  for
financial  reporting  purposes  but not  currently  deductible  for  income  tax
purposes consisting primarily of depreciable lives for property and equipment.

As of December 31, 1999,  net operating  loss  carryforwards  are  approximately
$49.6 million and $39.3 million for federal and California  income tax purposes,
respectively.  These net operating loss  carryforwards,  including net operating
losses of $12.5  million and $5.8 million for federal and  California  purposes,
respectively,  related to Glyko,  Inc.  These  federal  and state  carryforwards
expire beginning in the year 2011 and 2004, respectively.

The Company also has research and development credits available to reduce future
federal and California  income taxes, if any, of approximately  $2.2 million and
$1.3 million,  respectively, at December 31, 1999. These credits include credits
related to Glyko,  Inc. of  approximately  $548,000 and $266,000 for federal and
California purposes,  respectively. These federal and state carryforwards expire
beginning in 2012 and 2013, respectively.

The net  operating  loss  carryforwards  and  research and  development  credits
related to Glyko,  Inc.  as of October 7, 1998,  can only be  utilized to offset
future taxable income and tax, respectively, if any, of Glyko, Inc. In addition,
the Tax Reform Act of 1986 contains  provisions that may limit the net operating
loss carryforwards and research and development  credits available to be used in
any given year should certain events occur,  including sale of equity securities
and other changes in ownership.  The acquisition of Glyko,  Inc. and the related
issuance of stock  represented  a change of  ownership  under these  provisions.
There can be no assurance that the Company will be able to utilize net operating
loss carryforwards and credits before expiration.

Deferred  income  taxes are recorded to reflect the tax  consequences  on future
years of differences  between the tax basis of assets and  liabilities and their
financial reporting amounts at each period-end. The Company has a cumulative net
operating  loss  carryforward  since  inception,  resulting  in net deferred tax
assets. A valuation allowance is placed on the net deferred tax assets to reduce
them to an assumed net realizable value of zero.

5.   STOCK OPTION PLANS:

The  Company's  1997  Stock  Option  Plan (the Plan)  provides  for the grant of
incentive  common  stock  options  and  nonstatutory  common  stock  options  to
employees,  directors,  and  consultants of the Company.  The maximum  aggregate
number of  shares  that may be  optioned  and sold  under the Plan is  6,392,617
shares as of December 31, 1999.  Options  currently  outstanding  generally have
vesting  schedules of up to four years and options  terminate  after five to ten
years or 90 days after termination of employment or contract.

Had compensation cost for the Plan been determined  consistent with SFAS No. 123
for option grants to employees,  the effect on the Company's net loss would have
been as follwos (in thousands, except for per share data):


                                     Period from                                               Period from
                                     March 21, 1997                                            March 21, 1997
                                    (inception) to                                           (inception) to
                                     December 31,               Year Ended December 31,        December 31,
                                         1997                  1998               1999              1999
                                   -----------------    ------------------ ------------------  ---------------
                                                                                    
Net loss as reported                     $ (2,763)           $ (12,314)         $ (28,072)      $   (43,149)

Pro forma effect of SFAS No. 123               (1)                (468)            (1,734)           (2,203)
                                   -----------------   ------------------- ------------------ ----------------
Pro forma net loss                       $ (2,764)           $ (12,782)         $ (29,806)      $   (45,352)

                                   =================   =================== ================== ================
                                         $  (0.34)           $   (0.55)         $   (0.94)      $     (2.04)
Net loss per common share
   as reported                     =================   =================== ================== ================

Pro forma loss per common share          $   (0.34)          $   (0.57)         $  (1.00)       $     (2.14)
                                   =================   =================== ================== ================






                                             BioMarin Pharmaceutical Inc. and Subsidiaries
                                                     (a development-stage company)

                                        Notes to Consolidated Financial Statements--(Continued)


A summary of the status of the Company's stock option plan is as follows:

                                                                  Weighted
                                                                  Average         Exercisable  Weighted Average Fair
                                                                  Exercise         at End of      Value of Options
                                              Option Shares        Price            Year             Granted
                                           -------------------- -------------    ------------- ------------------------
                                                                                        
       Outstanding at March 21, 1997             --               $      --
               Granted                          297,000                 1.00                        $0.22
               Canceled                          --                      --
                                           --------------------
       Outstanding at December 31, 1997         297,000                   1.00        232,000
                                                                                 =============
               Granted                        2,507,660                   4.18                      $2.40
               Exercised                         (1,973)                  1.00
               Canceled                          (1,447)                  1.00
                                           --------------------
       Outstanding at December 31, 1998       2,801,240                   3.85        761,609
                                                                                 =============
               Granted                       2,877,430                    11.35                     $8.80
               Exercised                       (40,148)                    3.69
               Canceled                       (188,536)                    9.28
                                          --------------------    -------------
       Outstanding at December 31, 1999      5,449,986             $       7.59    1,922,041
                                                                                 =============



There were 2,198,760 and 900,510  options  available for grant under the Plan at
December 31, 1998 and 1999, respectively.

As of December 31, 1999,  the  5,449,986  options  outstanding  consisted of the
following:

                                                                       Number of
         Number of Options       Exercise        Weighted Average       Options
            Outstanding           Price          Contractual Life    Exercisable
       ----------------------- ------------- -----------------------------------
          415,850                   1.00                    2.88         368,683
          237,313                   2.30                    2.25         188,094
        1,523,000                   4.00                    8.10         854,167
          587,555                   6.00                    3.75         194,115
          849,780                   7.00                    4.34         270,211
           36,750                   8.50                    4.16           7,500
          688,242                  12.75                    5.00             --
           30,500                  12.88                    4.93             --
          422,500                  13.00                    4.52          36,979
           15,000                  13.06                    4.92             --
           15,000                  13.38                    4.95             --
           78,000                  13.50                    4.94             --
           18,000                  13.56                    5.01             --
           12,500                  14.06                    4.86             --
           22,500                  14.78                    4.85             --
           12,500                  15.19                    4.84             --
          474,996                  15.38                    4.71           2,292
           10,000                  16.06                    4.80             --
       ----------                                                     ----------
       5,449,986                                                       1,922,041
       ==========                                                     ==========






                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  option  pricing  model with the  following  assumptions  used for
grants in 1997,  1998,  and through  July 22,  1999:  risk-free  interest  rates
ranging from 5.2 to 6.2 percent;  expected dividend yield of 0 percent; expected
life of four  years  for the  Plan's  options;  and  expected  volatility  of 38
percent.

6.   COMMITMENTS AND CONTINGENCIES:


Lease  Commitments--The  Company  leases  office  space and research and testing
laboratory space in various  facilities under operating  agreements  expiring at
various dates through 2009.  Future  minimum lease  payments for the years ended
December 31 are as follows (in thousands):


            2000.................               $1,307
            2001..................               1,151
            2002..................               1,037
            2003.................                  857
            2004..................                 485
            Thereafter...........                1,853
                                               -------
                      Total.....               $6,690
                                               =======

Rent  expense  for the period from March 21, 1997  (inception)  to December  31,
1997,  the years ended December 31, 1998 and 1999, and for the period from March
21, 1997 (inception),  to December 31, 1999, was $34,613,  $380,187,  $1,069,595
and $1,484,395, respectively.

Research  and  Development  Funding and  Technology  Licenses--The  Company uses
experts and  laboratories  at  universities  and other  institutions  to perform
research and development  activities.  Funding commitments to these institutions
for the year ended December 31 are as follows (in thousands):

            2000..................               $ 615
            2001..................                 100
            2002..................                 100
            2003..................                 100
            2004..................                 100
                                              ---------
                       Total.....              $ 1,015
                                              =========

The Company has also licensed technology from certain institutions, for which it
is  required  to pay a royalty  upon  future  sales,  subject to certain  annual
minimums.

Consulting  Agreements--BioMarin had agreements with two consultants whereby the
consultants  were paid cash and granted  common  stock  options in exchange  for
services.   Options  for  206,000   shares  of  common  stock  were  granted  in
satisfaction  for these services.  These options were valued at $35,020 and were
expensed during the period from March 21, 1997 (inception), through December 31,
1997.

Product Liability and Lack of  Insurance--The  Company is subject to the risk of
exposure to product liability claims in the event that the use of its technology
results  in  adverse   effects   during   testing  or   commercial   sale.   The
BioMarin/Genzyme  LLC does  carry  product  liability  insurance  to  cover  the
clinical trials of Aldurazyme(TM).  At December 31, 1999,  BioMarin had no other
product  candidate in human clinical trials.  There can be no assurance that the
Company  will  be  able  to  obtain  product  liability  insurance  coverage  at
economically  reasonable  rates or that such  insurance  will  provide  adequate
coverage against all possible claims.



                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

7.   RELATED-PARTY TRANSACTIONS:

BioMarin had contractual agreements for office space and certain administrative,
research,  and development  functions with Glyko,  Inc. prior to the acquisition
date of October 7, 1998.  BioMarin reimbursed Glyko, Inc. for rent, salaries and
related benefits,  and other  administrative  costs. Glyko, Inc. also reimbursed
BioMarin for salaries and related benefits.

Reimbursement of expenses (in thousands):




                                                              Paid from         Paid from
                                                             Glyko, Inc. to    BioMarin to
                                                                BioMarin       Glyko, Inc.     Net, to Glyko, Inc.
                                                           ----------------  -------------  ---------------------
                                                                                        
March 21, 1997 (inception) to December 31, 1997                  $    133        $    374        $           241
Year ended December 31, 1998                                           75             298                    223
Year ended December 31, 1999                                           68             335                    267
                                                            ----------------  -------------   -------------------
March 21, 1997 (inception) to December 31, 1999                       276           1,007                    731
                                                            ================  =============   ===================


BioMarin also  purchased  products and services  from Glyko,  Inc. at a changing
discount,  which approximated market conditions.  This is the same discount that
Glyko grants to any other company that it treats as a distributor.  Purchases of
products  and  services  from Glyko,  Inc.  from March 21, 1997  (inception)  to
October 8, 1998 (Glyko, Inc. acquisition), were $160,455.

In the fourth quarter of 1998 and during 1999,  BioMarin  loaned to Glyko,  Inc.
$200,000 and $401,493,  respectively, to fund its operations. As of December 31,
1999,  Glyko,  Inc.  owed  $2,855,434  to BioMarin and BioMarin  owed $52,528 to
Glyko, Inc. These amounts have been eliminated upon consolidation.

As discussed in Note 3, during August 1997,  the Company  entered into an agency
agreement with an entity with which the chief executive  officer/chairman of the
board is affiliated.  During June 1998, the Company entered into a second agency
agreement.  The  Company  issued a total of 899,500  shares of common  stock and
warrants to purchase  another  801,500 shares of common stock to this entity and
its affiliates for brokerage services pursuant to the terms of these agreements,
also discussed in Note 3.

On April 13,  1999,  the  Company  entered  into a  convertible  note  financing
agreement  in the amount of $26.0  million.  Of this amount GBL  purchased  $4.3
million worth of such notes and LaMont Asset  Management SA (LAM) purchased $9.7
million. A director of the Company is also the chairman of LAM. The Company also
entered into an agency  agreement  with LAM pursuant to which the Company agreed
to pay LAM a five percent cash  commission on sales to certain note  purchasers.
On July 23, 1999,  concurrent  with the Company's  IPO,  BioMarin's  convertible
notes payable  (including accrued interest) were converted into 2,672,020 shares
of BioMarin's common stock at $10 per share. GBL's $4.3 million convertible note
plus interest was converted to 441,911 shares and LAM's $9.7 million convertible
note plus interest was converted to 996,869 shares.

Since October 8, 1998,  GBL has agreed to pay BioMarin a monthly  management fee
for its services to GBL primarily  relating to management,  accounting,  finance
and government  reporting.  BioMarin had accrued  receivables  relating to these
services  for GBL of $27,152 and $37,500 for the years ended  December  31, 1998
and 1999, respectively.

At December 31, 1997,  1998 and 1999, the Company had recorded  amounts due from
GBL of $79,607,  $114,005  and  $139,571,  respectively  (including  the amounts
discussed above.)

Due to the terms of the collaborative agreement with Genzyme outlined in Note 8,
Genzyme  is  considered  a related  party.  See also  Notes 1 and 8 for  Genzyme
related party transactions.

8.   COLLABORATIVE AGREEMENTS:

Genzyme--Effective September 4, 1998, the Company entered into an agreement (the
Collaboration   Agreement)   with   Genzyme  to   establish   a  joint   venture
(BioMarin/Genzyme  LLC) for the worldwide  development and  commercialization of
Aldurazyme(TM)  to treat MPS-I.  In conjunction  with the formation of the joint
venture,  the Company established a wholly owned subsidiary,  BioMarin Genetics,
Inc.  The  Company  has a 49 percent  interest  in the joint  venture,  BioMarin
Genetics,  Inc.  has a 1 percent  interest,  and  Genzyme has the  remaining  50
percent interest.



                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

Under the  Collaboration  Agreement,  BioMarin and Genzyme are each  required to
make capital contributions to the joint venture in an amount equal to 50 percent
of costs and expenses associated with the development and  commercialization  of
Aldurazyme(TM).  The parties  also agree to share the profits  equally from such
commercialization.  In addition,  Genzyme purchased 1,333,333 shares of BioMarin
common stock at $6 per share in a private placement for proceeds of $8.0 million
and, concurrent with the IPO, purchased an additional 769,230 shares of BioMarin
common stock at the IPO price for an additional $10.0 million.  Genzyme has also
agreed to pay BioMarin  $12.1 million in cash upon FDA approval of the biologics
license application (BLA) for Aldurazyme(TM).

Other   Agreements--The   Company  is  engaged  in  research   and   development
collaborations with various academic  institutions,  commercial research groups,
and other  entities.  The  agreements  provide for  sponsorship  of research and
development  by the Company and may also provide for  exclusive  royalty-bearing
intellectual property licenses or rights of first negotiation regarding licenses
to intellectual property development under the collaborations.  Typically, these
agreements  are  terminable  for cause by  either  party  upon 90 days'  written
notice.

9.   COMPENSATION PLANS:

Employment  Agreements--The  Company has entered into employment agreements with
seven officers of the Company.  All of these  agreements are terminable  without
cause by the Company upon six months' prior notice, or by the officer upon three
months' prior written notice to the Company,  with the Company  obligated to pay
salary and  benefits  hereunder  until  such  termination.  The annual  salaries
committed  to under  these  agreements  total  approximately  $1.6  million.  In
addition,  three of the  agreements  provide  for the  payment of an annual cash
bonus of up to 100 percent of the base annual salary of the three officers based
upon the Company's market capitalization.

401(k) Plan--The Company  participates in the Glyko Retirement Savings Plan (the
401(k) Plan).  At January 1, 2000, the plan was renamed the BioMarin  Retirement
Savings  Plan.  Most  employees   (Participants)  are  eligible  to  participate
following the start of their  employment,  on the earlier of the next  occurring
January 1, April 1, July 1 or October 1.  Participants  may  contribute up to 15
percent of their  current  compensation  to the 401(k) Plan or an amount up to a
statutorily prescribed annual limit. The Company pays the direct expenses of the
401(k)  Plan but does not  currently  match or make  contributions  to  employee
accounts.

1997 Stock Plan--In  November  1997,  the Board adopted,  and in April 1998, the
stockholders  approved,  the 1997 Stock Plan (the 1997 Plan), which provided for
the  reservation  of a total of  3,000,000  shares of common  stock for issuance
under the 1997 Plan. In December 1998,  the Board adopted,  and in January 1999,
the stockholders  approved, an amendment to the 1997 Plan to increase the number
of shares reserved for issuance under it to an aggregate of 5,000,000 and to add
an  "evergreen  provision"  providing  for an annual  increase  in the number of
shares  which may be  optioned  or sold  under the 1997  Plan  without  need for
additional Board or stockholder  action to approve such increase (which increase
shall  be the  lesser  of 4  percent  of  the  then-outstanding  capital  stock,
2,000,000  shares, or a lower amount set by the Board). As of December 31, 1999,
the number of shares  reserved for issuance was an aggregate of 6,392,617  under
the 1997 Plan.  The 1997 Plan  provides  for the grant of stock  options and the
issuance of common stock by the Company to its employees,  officers,  directors,
and consultants.

During the year ended  December  31, 1999,  the Board  granted  2,877,430  stock
options  under the 1997 Plan to  employees  and  directors  of the Company at an
average exercise price of $11.35 per share. The Company's  management  estimates
that these stock option prices  reflected  current fair value at the time of the
grant.

1998 Employee Stock Purchase  Plan--In  December 1998 the Board adopted,  and in
January 1999 the  stockholders  approved,  the 1998 Employee Stock Purchase Plan
(the 1998 Purchase  Plan). A total of 250,000 shares of Company common stock has
been reserved for issuance under the 1998 Purchase Plan,  plus annual  increases
equal to the lesser of 0.5 percent of the  outstanding  capital  stock,  200,000
shares,  or a lesser amount set by the Board.  As of December 31, 1999,  $87,337
has been withheld from employees'  salaries and no shares have been issued under
the 1998 Purchase Plan.



                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)


1998 Director Option Plan--The 1998 Director Option Plan (the Director Plan) was
adopted  by the  Board  of  Directors  in  December  1998  and  approved  by the
stockholders  in January  1999.  The  Director  Plan  provides  for the grant of
nonstatutory stock options to non-employee  directors. A total of 200,000 shares
of Company common stock,  plus an annual  increase equal to the number of shares
needed to restore  the maximum  aggregate  number of shares  available  for sale
under the Director Plan or the lesser of 0.5 percent of the outstanding  capital
stock,  200,000 shares,  or a lesser amount set by the Board, have been reserved
for issuance under the Director  Plan. As of December 1999,  options to purchase
90,000 shares were granted under the Director Plan.

10.   SUPPLEMENTAL CASH FLOW INFORMATION:

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


                                                   Period from March                                        Period from March
                                                       21, 1997                                                 21, 1997
                                                    (Inception) to                                           (Inception) to
                                                     December 31,           Year Ended December 31,           December 31,
                                                                        --------------------------------
                                                         1997                1998             1999                1999
                                                  --------------------  ---------------   --------------   --------------------
                                                                                                 
Common stock issued in exchange for notes          $          20,500      $           -     $        -       $       20,500
Compensation in the form of common stock
  and common stock options                                        18                  -              -                   18
Common stock and common stock warrants
  issued in exchange for brokerage services                      930                588              -                1,518
Bridge loan converted to common stock                            880                  -              -                  880
Common stock issued upon conversion of                             -
  convertible notes plus interest                                  -                  -         25,615               25,615



11.   GLYKO, INC.:

On October 7, 1998, the Company  entered into an agreement to acquire all of the
outstanding   stock  of  its  affiliate,   Glyko,   Inc.  from  GBL.  The  total
consideration  for the  acquisition  was $14.5 million , comprising of 2,259,039
shares of common stock of the Company, valued at $6.00 per share, the assumption
of options held by certain  Glyko,  Inc.  employees to purchase  shares of GBL's
common stock,  which would require 255,540 shares of the Company's  common stock
to be issued if fully exercised, and $500 in cash. The acquisition was accounted
for as a purchase.

The unaudited pro forma results of operation for the periods presented below are
presented as if this  acquisition of Glyko,  Inc. had occurred on March 21, 1997
and January 1, 1998, respectively (in thousands):



                                          Period from
                                          March 21, 1997
                                          (Inception) to       Year ended
                                        December 31, 1997     December 31, 1998
                                       -------------------   -------------------
Revenues                                  $       1,996                $  2,530
Loss from operations                             (6,028)                (13,044)
Net loss                                         (5,954)                (12,380)
Net loss per share, basic and diluted             (0.57)                  (0.51)
Weighed average number of common
  shares outstandingn                            10,464                  24,214


In May 1999, Glyko, Inc. acquired key assets of the Biochemical Research Reagent
Division of Oxford  GlycoSciences  Plc. (OGS). The acquisition  increased Glyko,
Inc.'s  product  offerings  and was valued  from $1.5  million to $2.1  million,
depending  on the future sales of the acquired  products.  Had this  acquisition
been  made on  January  1,  1999,  the  impact on the  consolidated  net loss as
reported would have been insignificant.


                  BioMarin Pharmaceutical Inc. and Subsidiaries
                          (a development-stage company)

             Notes to Consolidated Financial Statements--(Continued)

12. SUBSEQUENT EVENT

In the first quarter of 2000,  BioMarin made a provision of  approximately  $4.7
million  for the  suspension  of  production  operations  at its  Carson  Street
clinical  manufacturing   facility.  The  facility  was  not  required  for  the
production of Aldurazyme(TM), the initial purpose of the plant, after a decision
by the  BioMarin/Genzyme  LLC (joint  venture)  to use  BioMarin's  Galli  Drive
facility for the  manufacture  of clinical  material  both for the  confirmatory
Phase III trial and for the commercial launch of  Aldurazyme(TM).  This decision
was based in part on FDA guidance to use an improved production  process,  which
was installed in the Galli  facility,  for the clinical trial and BLA submission
and for  commercial  production.  The Carson  Street  facility  is  expected  to
complete  its final  production  lots in May. No  alternative  requirements  for
production in Carson Street have been identified for the near term. BioMarin has
made offers to a majority of the staff at the Carson Street  facility,  which is
in  Torrance,   California,  to  transfer  to  the  Galli  facility  in  Novato,
California, which has significantly greater manufacturing capacity.

EX-27

 


<ARTICLE>                     5

<CIK>                         0001048477
<NAME>                        BioMarin Pharmaceutical Inc.
<MULTIPLIER>                  1000
<CURRENCY>                    US Dollars

                            
<PERIOD-TYPE>                  12-MOS
<FISCAL-YEAR-END>              DEC-31-1999
<PERIOD-START>                 JAN-01-1999
<PERIOD-END>                   DEC-31-1999
<EXCHANGE-RATE>                1
<CASH>                         23413
<SECURITIES>                   39573
<RECEIVABLES>                  2496
<ALLOWANCES>                   (30)
<INVENTORY>                    676
<CURRENT-ASSETS>               66422
<PP&E>                         29465
<DEPRECIATION>                 (4372)
<TOTAL-ASSETS>                 103549
<CURRENT-LIABILITIES>          5087
<BONDS>                        0
<PREFERRED-MANDATORY>          0
<PREFERRED>                    0
<COMMON>                       35
<OTHER-SE>                     98342
<TOTAL-LIABILITY-AND-EQUITY>   103549
<SALES>                        1486
<TOTAL-REVENUES>               8808
<CGS>                          464
<TOTAL-COSTS>                  34011
<OTHER-EXPENSES>               1673
<LOSS-PROVISION>               0
<INTEREST-EXPENSE>             732
<INCOME-PRETAX>                (28072)
<INCOME-TAX>                   (28072)
<INCOME-CONTINUING>            (28072)
<DISCONTINUED>                 0
<EXTRAORDINARY>                0
<CHANGES>                      0
<NET-INCOME>                   (28072)
<EPS-BASIC>                    (2.04)
<EPS-DILUTED>                  (2.04)