-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EzSpxx2D0EhawjBCRcNXmI9LmUV9hYDZHfe+AfPhNWIhMQshUbrV7Az8fQMnkVs7 4tNdMlS8hyJp3P099A5zUg== 0001048477-01-000004.txt : 20010123 0001048477-01-000004.hdr.sgml : 20010123 ACCESSION NUMBER: 0001048477-01-000004 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOMARIN PHARMACEUTICAL INC CENTRAL INDEX KEY: 0001048477 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 680397820 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-48800 FILM NUMBER: 1507104 BUSINESS ADDRESS: STREET 1: 11 PIMENTEL COURT CITY: NOVATO STATE: CA ZIP: 94949 MAIL ADDRESS: STREET 1: 11 PIMENTEL COURT STREET 2: 11 PIMENTEL COURT CITY: NOVATO STATE: CA ZIP: 94949 S-3/A 1 0001.txt BIOMARIN PHARMACEUTICAL INC. FORM S-3/A As filed with the Securities and Exchange Commission on January 11, 2001 Registration No. 333-48800 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- Amendment No. 1 to FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BioMarin Pharmaceutical Inc. (Exact name of registrant as specified in its charter) Delaware 68-0397820 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 371 Bel Marin Keys Boulevard, Suite 210 Novato, California 94949 (415) 884-6700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------------------------------- Raymond W. Anderson Chief Financial Officer BioMarin Pharmaceutical Inc. 371 Bel Marin Keys Boulevard, Suite 210 Novato, California 94949 (415) 884-6700 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------------------------- Copy to: Siobhan McBreen Burke Paul, Hastings, Janofsky & Walker LLP 555 South Flower Street, 23rd Floor Los Angeles, California 90071-2371 (213) 683-6000 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_| If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check thefollowing box. |X| If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ SUBJECT TO COMPLETION DATED January 11, 2001 PROSPECTUS 4,000,000 Shares BioMarin Pharmaceutical Inc. Common Stock --------------------- This prospectus will allow us to issue up to 4,000,000 shares of our common stock over time. This means: o we will provide a prospectus supplement each time we issue shares of our common stock; o the prospectus supplement will inform you about the specific terms of the offering and also may add, update or change information contained in this document; and o you should read this document and any prospectus supplement carefully before you invest. Our common stock currently trades on the Nasdaq National Market and the Swiss SWX New Market under the symbol "BMRN." See "Risk Factors" beginning on page 3 to read about risks that you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is January 11, 2001 TABLE OF CONTENTS Summary........................................................................1 The Offering...................................................................2 Risk Factors...................................................................3 Forward Looking Statements....................................................13 Material Changes to Our Company...............................................13 Use of Proceeds...............................................................14 Plan of Distribution..........................................................15 Legal Matters.................................................................15 Experts .....................................................................15 WHERE YOU CAN FIND MORE INFORMATION We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy these reports, proxy statements and other information at the SEC's public reference rooms in Washington, D.C., New York, NY and Chicago, IL. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference rooms. Our SEC filings are also available at the SEC's Web site at "http://www.sec.gov." In addition, you can read and copy our SEC filings at the office of the National Association of Securities Dealers, Inc. at 1735 K Street, Washington, D.C. 20006. The SEC allows us to "incorporate by reference" information that we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. Further, all filings we make under the Securities Exchange Act of 1934 after the date of the initial registration statement and prior to effectiveness of the registration statement shall be deemed to be incorporated by reference into this prospectus. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: 1. Our Annual Report on Form 10-K for the year ended December 31, 1999; 2. Our Definitive Proxy Statement dated April 20, 2000 filed in connection with our 2000 Annual Meeting of Stockholders; 3. Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000; 4. Our current report on Form 8-K as filed on November 7, 2000; and 5. The description of our common stock set forth in our Amendment No. 4 Registration Statement on Form S-1, filed with the SEC on July 22, 1999 We will provide to you at no cost a copy of any and all of the information incorporated by reference into the registration statement of which this prospectus is a part. You may make a request for copies of this information in writing or by telephone. Requests should be directed to: BioMarin Pharmaceutical Inc. Attention: Investor Relations 371 Bel Marin Keys Boulevard, Suite 210 Novato, CA 94949 (415) 884-6700 SUMMARY This prospectus contains forward looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors appearing under "Risk Factors" and elsewhere in this prospectus. The following summary does not contain all the information that may be important to you. You should read the entire Prospectus, including the financial statements and other information incorporated by reference in this prospectus, before making an investment decision. BioMarin Pharmaceutical Inc. (BioMarin) 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, Aldurazyme(TM), for the treatment of mucopolysaccharidosis-I or MPS-I, a serious genetic disorder. The results were presented at the American Society for Human Genetics in October 1999. We continue to collect data from the ongoing treatment of these original patients. In September 1998, we established a joint venture with Genzyme for the worldwide development and commercialization of Aldurazyme. Aldurazyme has received fast track designation for the treatment of the more severe forms of MPS-I. The U.S. Food and Drug Administration (FDA) has granted Aldurazyme an orphan drug designation giving us exclusive rights to market Aldurazyme to treat MPS-I for seven years from the date of FDA approval if Aldurazyme is the first product 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. Aldurazyme 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, Aldurazyme met the primary endpoints set forth in the investigational new drug application. In addition, Aldurazyme demonstrated efficacy according to various secondary endpoints in each of the patients. In collaboration with Genzyme, we plan to initiate a Phase III Confirmatory Clinical Trial of Aldurazyme in the fourth quarter of 2000 with the intention to file a Biologics License Application (BLA) with the FDA late in 2001, pending the successful outcome of the Phase III Confirmatory Trial. In August 2000, our Galli Drive manufacturing facility and a smaller clinical manufacturing laboratory in our Bel Marin Keys Boulevard facility were both subjected to an extensive inspection by the State of California Food and Drug Branch and were granted licenses to produce clinical product. We have submitted an Investigational New Drug Application for recombinant human N-acetylgalactosamine-4-sulfatase also known as arylsulfatase B or rhASB (formerly referred to as BM102) and received FDA acceptance to begin a Phase I/II clinical trial in enzyme replacement therapy for MPS-VI, which was initiated on October 11, 2000. MPS-VI, also known as Maroteaux-Lamy syndrome, is similar in its clinical symptoms to MPS-I. However, MPS-VI does not appear to have the central nervous system involvement and mental retardation characteristics of the most severe form of MPS-I. We are manufacturing clinical bulk rhASB in the Bel Marin Keys Boulevard facility. RhASB has received fast track and orphan drug designations by the FDA. We have successfully conducted preclinical studies of our burn enzyme, Vibriolysin (formerly referred to as BM202), for use in burn debridement and grafting in pigs and mice. We expect to submit an application to the FDA or a foreign equivalent to begin a clinical trial for Vibriolysin by mid-year 2001. Our principal executive offices are located at 371 Bel Marin Keys Boulevard, Suite 210, Novato, CA 94949 and our telephone number is (415) 884-6700. 1 THE OFFERING Common stock offered in this prospectus...... 4,000,000 shares Common stock outstanding after the offering.. 40,921,966 shares Use of proceeds.............................. For operating costs, capital expenditures and working capital needs, including costs associated with the regulatory approval, manufacturing, and potential commercialization of Aldurazyme; for our research and development activities related to our pipeline products including recombinant human arylsulfatase B (rhASB) and Vibriolysin; and other general corporate purposes. See "Use of Proceeds." Nasdaq National Market and SWX New Market symbol....................... BMRN The number of shares of common stock outstanding after this offering is based on the number of shares outstanding as of December 31, 2000 and assumes that we have issued all of the shares of our common stock offered in this prospectus, but excludes: o 5,103,073 shares subject to options outstanding as of December 31, 2000, at a weighted average exercise price of $10.70 per share; o 1,649,846 additional shares that we could issue under our stock option plans; and o 421,569 additional shares that we could issue under our employee stock purchase plan. 2 RISK FACTORS An investment in our common stock involves a high degree of risk. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. Before purchasing these securities, you should carefully consider the following risk factors, as well as other information contained in this prospectus or incorporated by reference into this prospectus, in evaluating an investment in the securities offered by this prospectus. The risks and uncertainties described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business, financial condition, operating results or cash flows could be materially adversely affected. This could cause the trading price of our common stock to decline, and you may lose all or part of your investment. If we continue to incur operating losses for a period longer than anticipated, we may be unable to continue our operations at planned levels and be forced to reduce or discontinue 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 September 30, 2000, we had an accumulated deficit of approximately $70.1 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 continuing 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 its products and services 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 some or all of 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 Process development, including quality systems for product manufacture o Regulatory processes in the United States and international jurisdictions o Commercial scale manufacturing capabilities o Expansion of sales and marketing activities The amount of capital we will 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 develop commercial processes, including quality systems 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 3 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 contracts for product manufacturing We believe that the cash, cash equivalents and short-term investment securities balances at September 30, 2000 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 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 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 will 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 in the laboratory on animals, and clinical trials on humans for 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 significantly different. After we have conducted preclinical studies in animals, we must demonstrate that our drug products are safe and efficacious 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 o Regulatory requests for additional clinical trials 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 can range from six months to three years or more. 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, fewer clinical trials may be sufficient to prove safety and efficacy under the FDA's Modernization Act of 1997. In April 1999, we completed a twelve-month patient evaluation for the initial clinical trial of our lead drug product, Aldurazyme, for the treatment of MPS-I. The results were presented at the American Society for Human Genetics in October 1999. We continue to collect data from the ongoing treatment of these 4 original patients. The initial clinical trial treated ten patients with MPS-I at five medical centers in the United States. Two of the original ten patients enrolled in the first clinical trial of Aldurazyme died in 2000. Based on medical data collected from clinical investigative sites, neither case directly implicated treatment with Aldurazyme as the cause of death. The data suggest that one patient died due to a combination of systemic viral illness, residual MPS I coronary disease, and external factors. This patient had received 103 weeks of Aldurazyme administration. For the other patient, the data suggest that the patient died due to complications following posterior spinal fusion for scoliosis. This patient had received 127 weeks of Aldurazyme administration. The fast track designation for Aldurazyme may not actually lead to a faster review process. Although Aldurazyme 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 commercial manufacture of 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. Our Galli Drive and our Bel Marin Keys Boulevard manufacturing facilities have been inspected and licensed by the State of California for clinical pharmaceutical manufacture. We cannot guarantee that these facilities will pass federal or international regulatory inspection. We cannot guarantee that we, or any potential third-party manufacturer of our drug products, will be able to comply with cGMP regulations. We must pass Federal, state and European regulatory inspections, and we must manufacture three process qualification batches (five process qualification batches for Europe) to final specifications under cGMP controls before the Aldurazyme BLA can be approved. We cannot ensure that we will manufacture the process qualification batches or 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 in the United States. 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. Similar regulations are available in the European Union with a ten-year period of market exclusivity. 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 our drug products which do not have patent protection, our competitors may then sell the same drug to treat the same condition. We received orphan drug designation from the FDA for Aldurazyme in September 1997. In February 1999, we received orphan drug designation from the FDA for rhASB for the treatment of MPS-VI. 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 neither shortens the development time or FDA review time of a drug so designated nor gives 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 per patient prices must be high enough to recover our development costs and achieve profitability. For example, two of our initial drug products in genetic disorders, Aldurazyme and rhASB, 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 burn wounds, 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. 5 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 Aldurazyme is expected to be expensive. We expect patients to need treatment throughout their lifetimes. We expect that most families of patients will not be capable of paying for this treatment themselves. There will be no commercially viable market for Aldurazyme 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 or to justify our product development expenses. We currently have no expertise obtaining reimbursement. We expect to rely on the expertise of our joint venture partner Genzyme to obtain reimbursement for the costs of Aldurazyme. 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 Aldurazyme and rhASB. If we must spend significant time and money protecting our patents, designing around patents held by others or licensing, for large fees, patents or other proprietary rights held by others, our business and financial prospects may be harmed. The patent positions of biotechnology products are 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 Aldurazyme and rhASB, have been published and are believed to be 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 to provide us a competitive advantage. 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, was not novel or was obvious. As a Company, we have no meaningful experience with competitors interfering with our patents or patent applications. o Enforcing patents is expensive and may absorb significant time of 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. 6 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. 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 or 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. The United States Patent and Trademark Office recently issued a patent which related to (alpha)-L-iduronidase. If Aldurazyme infringes on this patent and we are not able to successfully challenge it, we may be prevented from producing Aldurazyme unless and until we obtain a license. The United States Patent and Trademark Office recently issued a patent which includes claims related to (alpha)-L-iduronidase. Our lead drug product, Aldurazyme, may infringe on this patent. We believe that this patent is invalid and intend to challenge it on a number of grounds. Our challenges may be unsuccessful. Even if we are successful, challenging the patent may be expensive, require our management to devote significant time to this effort and may delay commercialization of our product in the United States. The patent holder has granted an exclusive license for products relating to this patent to one of our competitors. If we are unable to successfully challenge the patent, we may be unable to produce Aldurazyme in the United States unless we can obtain a sub-license from the current licensee. The current licensee is not required to grant us a license and even if a license is available, we may have to pay substantial license fees which could adversely affect our business and operating results. If our joint venture with Genzyme were terminated, we could be barred from commercializing Aldurazyme or our ability to commercialize Aldurazyme would be delayed or diminished. 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, Aldurazyme. Because it is our initial product, our operations are substantially dependent upon the development of Aldurazyme. 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 Aldurazyme. 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. 7 Furthermore, we may terminate the joint venture if Genzyme fails to fulfill its contractual obligation to pay us $12.1 million in cash upon the approval of the BLA for Aldurazyme. 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 Aldurazyme and any related intellectual property and regulatory approvals. If the joint venture is terminated by Genzyme for a breach on our part, Genzyme would be granted, exclusively, all of the rights to Aldurazyme 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 Aldurazyme. 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 Aldurazyme exclusively. While we could then continue to develop Aldurazyme, that development would be slowed because we would have to divert substantial capital to buy out Genzyme's interest in the joint venture. We would then either have to search for a new partner to commercialize the product and to obtain foreign regulatory approvals or have 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 Aldurazyme 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 Aldurazyme 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 BLA for Aldurazyme, we would be obligated to buy Genzyme's interest in the joint venture and would obtain all rights to Aldurazyme 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 Aldurazyme 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 Aldurazyme. If we were obligated, or given the option, to buy out Genzyme's interest in the joint venture, and gain exclusive rights to Aldurazyme, we may not have sufficient funds to do so and we may not 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 Aldurazyme 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 in which we retain the rights to Aldurazyme 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 or have reduced margins. As an organization, we have no experience manufacturing drug products in volumes that will be necessary to support commercial sales. Our 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 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 8 o Production yields o Purity o Quality control and assurance systems o Shortages of qualified personnel o Compliance with regulatory requirements We have constructed and built-out a total of 41,200 square feet at our Novato facilities for manufacturing capability for Aldurazyme and rhASB. We expect to expand the Galli Drive facility in stages over time, which creates additional operational complexity and challenges. We expect that the manufacturing process of all of our new products, including rhASB, will require lengthy significant time and resources before we can begin to manufacture them (or have them manufactured by third parties) in commercial quantity. Even if we can establish the necessary capacity, we cannot be certain that manufacturing costs will be commercially reasonable, especially if third-party 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 product yield from our current cell lines, colonies of cells which have a common genetic make-up, o Improving the processes licensed from others, or o Developing more efficient, lower cost recombinant cell lines 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 result in adequate yields. In addition, the development of protein purification processes is difficult and may not produce the high purity required with acceptable yield and costs or may not result in adequate shelf-lives of the final products. 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 larger 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. Under our joint venture with Genzyme, Genzyme is responsible for marketing and distributing Aldurazyme. We cannot guarantee that we will be able to establish sales and distribution capabilities or that the joint venture, any future collaborators or we 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 those products with 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. If our competitor gets orphan drug exclusivity, we could be precluded from marketing our version for seven years. However, different drugs can be approved for the same condition. These companies also compete with us to attract qualified personnel and organizations for acquisitions, joint ventures or other collaborations. They also compete with us to attract academic research institutions as partners and to license these 9 institutions' 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 or basic research 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'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 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 Aldurazyme, the joint venture will be required to devote additional resources to support the commercialization of Aldurazyme. 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 staff, financial resources, 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 and managerial 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 Fredric D. Price, our Chairman and Chief Executive Officer, or Christopher M. Starr, Ph.D., our Vice President for Research and Development, could be detrimental to us if we cannot recruit suitable replacements in a timely manner. While Mr. Price and Dr. Starr are parties to employment agreements with us, we cannot guarantee that they will remain employed with us in the future. 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 Aldurazyme. We have obtained insurance against product liability lawsuits for the clinical trials for rhASB. We may be subject to claims in connection with our current clinical trials for Aldurazyme and rhASB for which the joint venture's or our insurance coverages are not adequate. We cannot be certain that if Aldurazyme receives FDA approval, the product liability insurance the joint venture will need to obtain in connection with the commercial sales of Aldurazyme 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. 10 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 beginning of trading after our initial public offering have had no meaningful relationship to current or historical earnings, asset values, book value or many other criteria based on conventional measures of stock value. The market price of our common stock will fluctuate due to factors including: o Progress of Aldurazyme and our other lead drug products through the regulatory process, especially Aldurazyme 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 in the United States or in Europe may cause the market price of our common stock to fluctuate o Changes in company assessments or 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. 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 market conditions in different capital markets 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. Substantial resales of the common stock which may be issued pursuant to this prospectus could adversely affect the price of our common stock. The maximum shares which may be issued pursuant to this prospectus represents a significant portion of our outstanding common stock. If the persons acquiring these shares sell all or a substantial portion of these shares on the public market in a short period of time, the common stock available for sale may exceed the demand and the stock price may be adversely affected. In addition, the mere perception that such sales could occur may depress the price of our common stock. 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 46% of the outstanding shares of our common stock. Glyko Biomedical, Ltd. owns 31% of the outstanding shares of our capital stock. The president and chief executive officer of Glyko Biomedical and a significant shareholder of Glyko Biomedical serve as two of our directors. As a result, due to their concentration of stock ownership, directors and officers, if they act together, may be able to 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; and o The defeat of any non-negotiated takeover attempt that might otherwise benefit the public stockholders. 11 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 our company 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 has 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 our outstanding voting stock. 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. Our 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. 12 FORWARD LOOKING STATEMENTS This prospectus contains forward looking statements. These statements relate to future events or our future financial performance. We have identified forward looking statements in this prospectus using words such as "anticipates", "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should," or "will" or the negative of such terms or other comparable terminology. These statements are based on our beliefs as well as assumptions we made using information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. These risks, uncertainties, assumptions and other factors, including the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from future results, levels of actual activity, performance or achievements expressed or implied by such forward looking statements. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. We are under no duty to update any of the forward looking statements after the date of this prospectus to conform such statements to actual results, unless required by law. MATERIAL CHANGES TO OUR COMPANY Effective November 1, 2000, Mr. Fredric D. Price was elected as a member of our board of directors and appointed as our Chairman and Chief Executive Officer. Immediately prior to such appointment, Mr. Grant W. Denison resigned as Chairman and Chief Executive Officer. Mr. Denison continues to serve as one of our directors. From September 1994 until September 2000, Mr. Price was President, Chief Executive Officer and a member of the board of directors of AMBI, Inc., a biotechnology and nutrition company. From July 1991 to September 1994, Mr. Price served as Vice President Finance and Administration and Chief Financial Officer of Regeneron Pharmaceuticals, Inc., a biotechnology company. He is also currently a member of the advisory board of Equity4Life AG, a healthcare investment company based in Zurich, Switzerland. Mr. Price, 55, received his B.A. from Dartmouth College and a M.B.A. from the Wharton School of the University of Pennsylvania. In connection with Mr. Price's employment, we entered into an employment agreement with him which provides for an initial payment to Mr. Price of $357,624, an annual base salary of $400,000 in the first year, $450,000 in the second year, and $500,000 in the third year, and a bonus of $200,000 in the first year and a performance bonus of between 25% and 100% of his respective annual base salary for each of the second and third years. In addition, we granted Mr. Price 25,000 restricted shares of our common stock (which vest in 3 equal annual installments commencing on January 1, 2001), we granted Mr. Price an option to purchase 500,000 shares of our common stock, at a purchase price of $12.50 per share (which vests monthly over 36 months, commencing October 30, 2000) and we further agreed to grant Mr. Price additional options on each anniversary of the agreement, in an amount to be determined by the board. We also agreed to reimburse Mr. Price for all expenses incurred in relocating to the area and to extend him a $1,500,000 interest-deferred loan for the purchase of a house. The agreement has a three-year term which will automatically renew for an additional three year period unless either Mr. Price or we give the other notice of our intent not to renew the agreement. If we decide not to renew the agreement, we must pay Mr. Price an amount such that our net payment after deduction of all payroll taxes and all income taxes at the highest marginal rates applicable to him will equal the base salary and bonus we paid him in the third year of the agreement. Additionally, the exercise for any vested options will be one year from the termination of the agreement and all unvested options will remain unvested and unexercisable. Either party can terminate the agreement on sixty days' notice. However, in the event there is a change in control which results in Mr. Price's actual or constructive termination, he is entitled to a severance payment equal to twice the aggregate of his annual base salary and bonus payable in the year in which termination occurs, forgiveness of all outstanding principal and interest on the interest-deferred loan, acceleration of the full unvested portion of his 25,000 share stock grant and all stock options and an additional payment equal to Mr. Price's maximum total income tax liability applicable to the total severance package. If Mr. Price is terminated other than for cause, he is entitled to receive a severance payment equal to twice his applicable annual base salary and bonus if he is terminated in the first year of the agreement and equal to his applicable annual base salary and bonus of he is terminated in a subsequent year, forgiveness of all outstanding principal and interest on the interest deferred-loan and acceleration of the full unvested portion of his 25,000 share stock grant. Additionally, if he is terminated other than for cause prior to the second anniversary of the agreement, he is entitled to an additional payment equal the maximum income tax liability associated with forgiveness of the loan and such additional payment. 13 USE OF PROCEEDS We cannot guarantee that we will receive any proceeds in connection with this offering. We intend to use any proceeds of this offering, together with other available funds, for the following purposes: o To fund our share of costs associated with our joint venture with Genzyme for the development and commercialization of Aldurazyme; o To fund research and development including clinical trials, regulatory processes, process development and scale-up and start-up of manufacturing activities for our other pharmaceutical product programs, including rhASB and Vibriolysin; o To fund research, development, clinical and commercial manufacturing facilities, including related equipment; and o To fund general corporate purposes, including working capital. A portion of the proceeds may also be used to acquire or invest in complementary businesses or products or to obtain rights to use complementary technologies. We may require additional funds in the 12-month period following this offering to accelerate product programs or to undertake new initiatives or enter into collaborative arrangements. We have not identified precisely the amounts we plan to spend on each of these areas or the timing of such expenditures. Accordingly, our management will have significant flexibility in applying such proceeds. The amounts actually expended for each purpose may vary significantly depending upon numerous factors, including the amount and timing of the proceeds from this offering, progress with the regulatory approval, manufacturing and commercialization of Aldurazyme and rhASB and progress with our other development programs. In addition, expenditures will also depend upon the establishment of additional collaborative arrangements with other companies, the availability of other financing and other factors. Pending use for these or other purposes, we intend to invest the net proceeds of this offering in short-term, investment-grade, interest-bearing securities. We anticipate that we will be required to raise substantial additional capital to continue to accelerate product programs or to undertake new initiatives or enter into collaborative arrangements. Additional capital may be raised through additional public or private financing, as well as collaborative relationships, borrowings and other available sources. See "Risk Factors - if we fail to obtain the capital necessary to fund our operations we will be unable to complete our product development programs." 14 PLAN OF DISTRIBUTION We may offer the shares of common stock: o directly to purchasers; o to or through underwriters; o through dealers, agents or institutional investors; or o through a combination of such methods. Regardless of the method used to sell the common stock, we will provide a prospectus supplement that will disclose: o the identity of any underwriters, dealers, agents or investors who purchase the securities; o the material terms of the distribution, including the amount sold and the consideration paid; o the amount of any compensation, discounts or commissions to be received by the underwriters, dealers or agents; o the terms of any indemnification provisions, including indemnification from liabilities under the federal securities laws; and o the nature of any transaction by an underwriter, dealer or agent during the offering that is intended to stabilize or maintain the market price of the securities. LEGAL MATTERS For the purpose of this offering, Paul, Hastings, Janofsky & Walker LLP, Los Angeles, California is giving an opinion of the validity of the issuance of the securities offered in this prospectus. EXPERTS The financial statements included in our Annual report on form 10-K for the year ended December 31, 1999, incorporated by reference in this prospectus and elsewhere in the registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report(s) with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. 15 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Securities and Exchange Commission registration fee.............. $ 14,457 Legal fees and expenses.......................................... 30,000 Accountants' fees and expenses................................... 3,000 Miscellaneous.................................................... _______ Total............................................................ $ 47,457 The foregoing items, except for the Securities and Exchange Commission registration fee, are estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Reference is made to the Amended and Restated Certificate of Incorporation with the Registrant; the Bylaws of the Registrant; Section 145 of the Delaware General Corporation Law; which, among other things, and subject to certain conditions, authorize the Registrant to indemnify, or indemnify by their terms, as the case may be, the directors and officers of the Registrant against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer. Pursuant to this authority, the Registrant has entered into an indemnification agreement with each director and executive officer, whereby the Registrant has agreed to cover the indemnification obligations. The Registrant maintains director's and officer's insurance providing indemnification against certain liabilities for certain of the Registrant's directors, officers, affiliates, partners or employees. The indemnification provisions in the Registrant's Bylaws, and the indemnification agreements entered into between the Registrant and its directors and executive officers, may be sufficiently broad to permit indemnification of the Registrant's officers and directors for liabilities arising under the Act. Reference is made to the following documents incorporated by reference into this Registration Statement regarding relevant indemnification provisions described above and elsewhere herein: (1) the Amended and Restated Certificate of Incorporation, filed as Exhibit 3.1B to Registrant's Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 6, 1999; (2) the Bylaws of the Registrant filed as Exhibit 3.2 to Registrant's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on May 4, 1999 and (3) the form of Indemnification Agreement entered into by the Registrant with each of its directors and executive officers filed as Exhibit 10.1 to Registrant's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on May 4, 1999, each incorporated by reference into this Registration Statement. ITEM 16. EXHIBITS EXHIBIT NO. DESCRIPTION OF DOCUMENT - -------------------- ----------------------------------------------------------- 5.1 Opinion of Paul, Hastings, Janofsky & Walker, LLP 10.1 Employment Agreement with Fredric D. Price dated December 22, 2000 23.1 Consent of Paul, Hastings, Janofsky & Walker LLP. (consent included in Exhibit 5.1) 23.2 Consent of Arthur Andersen LLP 24.1 Power of Attorney (filed previously) II-1 ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933, may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the provisions described in Item 15 or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made pursuant to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrant undertakes that: (1) for purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of the registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective; and (2) for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Novato, State of California, this 11th day of January, 2001. BIOMARIN PHARMACEUTICAL INC. By: /s/ Fredric D. Price ---------------------------------------------- Fredric D. Price Chairman, Chief Executive Officer and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-3 has been signed by the following persons in the capacities and on the dates indicated: Signature Title Date /s/ Fredric D. Price Chairman, Chief Executive Officer January 11, 2001 - ------------------------ and Director (Principal Fredric D. Price Executive Officer) /s/ Raymond W. Anderson Chief Financial Officer, Chief January 11, 2001 - ------------------------ Operating Officer, Secretary, and Raymond W. Anderson Vice President Finance and Administration (Principal Financial and Accounting Officer) /s/ * Director January 11, 2001 - ------------------------ Grant W. Denison, Jr. /s/ * Director January 11, 2001 - ------------------------ Ansbert S. Gadicke, M.D. /s/ * Director January 11, 2001 - ------------------------ Erich Sager /s/ * Director January 11, 2001 - ------------------------ Gwynn R. Williams *By: /s/ Raymond W. Anderson --------------------------- Raymond W. Anderson as Attorney-In-Fact II-3 INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION OF DOCUMENT - ------------------ ------------------------------------------------------------ 5.1 Opinion of Paul, Hastings, Janofsky & Walker, LLP 10.1 Employment Agreement with Fredric D. Price dated December 22, 2000 23.1 Consent of Paul, Hastings, Janofsky & Walker LLP. (consent included in Exhibit 5.1) 23.2 Consent of Arthur Andersen LLP 24.1 Power of Attorney (filed previously) EX-5 2 0002.txt BIOMARIN PHARMACEUTICAL INC. Exhibit 5.1 January 11, 2001 BioMarin Pharmaceutical Inc. 371 Bel Marin Keys Boulevard, Suite 210 Novato, CA 94949 Re: Registration Statement on Form S-3 Ladies and Gentlemen You have requested our opinion with respect to certain matters in connection with the filing by BioMarin Pharmaceutical Inc., a Delaware corporation (the "Company") of a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission, including a prospectus (the "Prospectus") covering the offering of a maximum of 4,000,000 shares of the Company's Common Stock, $0.001 par value ( the "Shares") as described in the Registration Statement. In connection with this opinion, we have examined and relied upon the Registration Statement and related Prospectus, the Company's Amended and Restated Certificate of Incorporation, the Company's Restated Bylaws, and the originals or copies certified to our satisfaction of such documents, records, certificates, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We have assumed the genuineness and authenticity of all documents submitted to us as copies thereof, and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof, and that at the time the Shares are issued, the Company will have sufficient authorized and unissued shares of Common Stock, that the terms of the offer and sale of the Shares will have been properly authorized by resolutions of the Company's Board of Directors and that such resolutions shall require, among other things, the payment of valid consideration for the Shares. On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when issued and paid for in accordance with the Registration Statement and authorizing resolutions of the Company's Board of Directors, will be legally issued, fully paid, and nonassessable. We hereby consent to being named as counsel to the Company in the Registration Statement, to the references therein to our firm under the caption "Legal Matters" and to the inclusion of this opinion as an exhibit to the Registration Statement. This opinion is rendered to you in connection with the Registration Statement and is solely for your benefit. This opinion may not be relied upon by you for any other purpose, or relied upon by any other person, firm or other entity for any purpose, without our prior written consent. Very truly yours, /s/ Paul, Hastings, Janofsky & Walker LLP PAUL, HASTINGS, JANOFSKY & WALKER LLP EX-10 3 0003.txt BIOMARIN PHARMACEUTICAL INC. Exhibit 10.1 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement"), made as of October 31, 2000 (the "Effective Date") by and between BioMarin Pharmaceutical Inc., a Delaware corporation with its principal executive offices located at 371 Bel Marin Keys Boulevard, Suite 210, Novato, California 94949 (the "Company") and FREDRIC D. PRICE, residing at 64 Quarry Lane, Bedford, New York 10506 (the "Executive"). W I T N E S S E T H : WHEREAS, the Company is a developer of carbohydrate enzyme therapies for the treatment of debilitating, life-threatening, chronic genetic disorders and other diseases and conditions (the "Business"); and WHEREAS, the Company recognizes that Executive possesses unique skills and abilities which are essential to the Company's Business, the Company desires to employ Executive and Executive desires to be so employed by the Company. NOW THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto hereby agree as follows: 1. EMPLOYMENT. The Company hereby employs Executive as Chairman and Chief Executive Officer ("CEO") of the Company. Executive hereby agrees to be employed by the Company in such capacity and to discharge and perform faithfully and to the best of his ability such duties and services of an executive, administrative and managerial nature consistent with the positions of Chairman and CEO as shall be specified and determined from time to time by the Board of Directors of the Company (the "Board") in connection with the Business. 2. DUTIES. During the term of this Agreement, Executive, as the Company's Chairman and CEO, shall devote substantially all of his business time, skill, labor and attention to the affairs of the Company in furtherance of the Business. Without limiting the foregoing, Executive shall report directly to the Board and shall be subject to the general direction and control of the Board. 3. WORKING FACILITIES. Executive shall be furnished with working facilities, including office space, secretarial services and other services suitable to his position and adequate for the performance of his duties, as reasonably determined by the Company. 4. TERM. (a) Executive's employment under this Agreement shall commence on the Effective Date and shall continue for an initial period of three (3) years (the "Initial Employment Period"), unless earlier terminated by Executive or by the Company pursuant to the provisions hereof. (b) This Agreement shall automatically be renewed at the end of the Initial Employment Period for one additional (3) year period in accordance with the terms and conditions set forth herein (the "Renewal Period") unless either party gives written notice to the other not later than nine (9) months prior to the expiration of the Initial Employment Period. 5. COMPENSATION AND RELATED MATTERS. (a) Base Salary - The Company shall pay Executive a base salary (the "Base Salary") for his services hereunder in accordance with the provisions set forth below: (i) for the first year of employment, commencing on the Effective Date and ending on October 30, 2001, (the "First Year") the amount of Four Hundred Thousand Dollars ($400,000) per annum; (ii) for the second year of employment, commencing on October 31, 2001, and ending on October 30, 2002, (the "Second Year") the amount of Four Hundred Fifty Thousand Dollars ($450,000) per annum; (iii) for the third year of employment, commencing on October 31, 2002, and ending on October 30, 2003 (the "Third Year"), the amount of Five Hundred Thousand Dollars ($500,000) per annum. The Base Salary shall be subject to withholding for appropriate taxes as required by applicable law, and shall be payable in approximately equal installments in accordance with the Company's customary payroll practices but not less frequently than semi-monthly. (b) Bonus - (i) During the Initial Employment Period, Executive shall be entitled to a yearly bonus (the "Bonus") payable in cash in accordance with the provisions set forth below: (1) for the First Year the amount of Two Hundred Thousand Dollars ($200,000) (the "First Year Bonus"); and (2) for each of the Second and Third Years, the amount of the Bonus (each such bonus, the "Second Year Bonus" or the "Third Year Bonus") shall be based on the Company's achievement of goals mutually agreed upon by Executive and the Board; provided, however, that: (A) the amount of each of the Second Year Bonus and the Third Year Bonus shall not be less than twenty-five percent (25%) of the Base Salary for the applicable year of employment; (B) the target amount of each of the Second Year Bonus and the Third Year Bonus shall be fifty percent (50%) of the Base Salary for the applicable year of employment; and (C) the maximum amount of each of the Second Year Bonus and the Third Year Bonus shall not exceed one hundred percent (100%) of the Base Salary of the applicable year of employment. (ii) In addition to the amounts set forth in Paragraphs 5(a) and (b)(i) above, Executive shall be entitled to a one-time `sign-on' bonus (the "Sign-On Bonus") in the amount of One Hundred Thousand Dollars ($100,000) payable on the Effective Date. (c) Benefits - During the Initial Employment Period and Renewal Period, Executive shall be entitled to participate in all employee benefit plans and programs, to the same extent generally available to other similarly situated Company executives, in accordance with the terms of those plans and programs. The Company shall have the right to terminate or change any such plan or program at any time. (d) Expenses - The Company shall reimburse Executive for all reasonable and customary travel, business and entertainment expenses incurred in connection with Executive's title and the performance of his services hereunder in accordance with the policies and procedures established by the Company. (e) Vacation - Executive shall be entitled to annual paid vacation time of four (4) weeks, accruing ratably over the course of each year of employment, to be taken at such time or times as Executive may select, consistent with his obligations hereunder. Any vacation days not taken during an applicable fiscal year may be carried over to the following fiscal year pursuant to the Company's existing plan. (f) Stock Grant - On the Effective Date, Executive shall be granted (the "Stock Grant") twenty five thousand (25,000) restricted shares of the Company's common stock (the "Restricted Shares"). The Restricted Shares shall vest as follows: (i) one-third (1/3) of the Restricted Shares on January 1, 2001; (ii) one-third (1/3) of the Restricted Shares on January 1, 2002; and (iii) one-third (1/3) of the Restricted Shares on January 1, 2003. The Restricted Shares shall be subject to the terms and conditions set forth on Exhibit A hereto. In addition to the foregoing, the Company shall pay Executive, promptly, a payment in an amount equal to Executive's "Grossed-Up Tax Liability." The term "Grossed-Up Tax Liability" means an amount which, after Executive's payment of federal, state and local income tax liabilities arising upon his receipt of the Grossed-Up Tax Liability payment, shall equal the amount of the "Stock Grant Tax Liability." The term "Stock Grant Tax Liability" shall mean the sum of federal, state and local income tax liability which is payable by Executive due to his receipt of the Stock Grant at the time the liability arises. (g) Stock Option - On the Effective Date (the "Grant Date"), Executive shall be granted an option or options (the "Initial Option") to purchase: (i) five hundred thousand (500,000) shares of the Company's common stock (the "Initial Common Stock") at an exercise price of $12.50 per share, the closing price as reported by Nasdaq on October 30, 2000; and (ii) upon the Company's achievement of goals mutually agreed to by the Board and Executive, during the Term of this Agreement, Executive shall be granted an option or options (the "Subsequent Options," together with the Initial Option, the "Stock Options") to purchase a minimum of an additional one hundred twenty five thousand (125,000) shares of the Company's common stock (the "Subsequent Common Stock") per year of employment beginning on the first anniversary of the Effective Date (each such anniversary, a "Subsequent Grant Date"), at an exercise price equal to the closing price as reported by Nasdaq on each such Subsequent Grant Date. The Initial Option and each Subsequent Option shall vest in equal amounts on a monthly basis over a three (3) year period from the Grant Date and each Subsequent Grant Date, respectively, and shall remain exercisable for a period of ten (10) years from the Grant Date and each Subsequent Grant Date, respectively. The Stock Options shall be granted in accordance with the Company's 1997 Employee Stock Option Plan (or a successor plan thereto) (the "Plan"), and except as specifically set forth in this Agreement, in the case if a conflict between this Agreement and the terms of the Plan, the terms of the Plan shall govern. (h) Relocation - (i) The Company shall reimburse Executive for any expenses incurred in connection with the purchase of a residence within commuting distance of the Company including, but not limited to: (1) costs (other than the purchase price) associated with the sale and purchase of Executive's house including, but not limited to, realtor expenses; (2) the moving of household goods; (3) the moving trip; (4) trips to the new location for, among other purposes, purchasing a residence; and (5) lodging and car expenses incurred during trips to the new location. If any such reimbursement shall be subject to income tax, the Company shall make such additional payment to Executive so that the net after tax payment to him under this Paragraph 5(h) shall not be less than the expenses to be reimbursed. (ii) The Company shall provide Executive with a loan of up to $1.5 million (with interest deferred) for the purpose of purchasing a residence (the "Loan") in connection with the relocation described in Paragraph 5(h)(i) above. The Loan shall be secured by the residence purchased by Executive with the Loan (the "Residence"). The maximum amount of the Loan will be reduced by any temporary lodging and related expenses incurred by Executive and paid by the Company. Upon the sale of Initial Common Stock or Subsequent Common Stock, pursuant to the exercise of any vested Stock Option, fifty percent (50%) of the net after tax proceeds therefrom shall be used to repay the Loan, unless circumstances described in Paragraphs 6 or 8(b) below occur. Upon the sale, encumbrance or other transfer of the Residence, whether voluntary, involuntary or by operation of law, Executive will pay the Company the remaining principal amount due on the Loan, together with any interest deferred and accrued thereon. Any remaining principal amount due on the Loan, together with any interest deferred and accrued thereon, shall become due and payable in full to the Company on October 31, 2004; provide, however, that if this Agreement is renewed pursuant to Paragraph 4(b) above, such amounts shall become due and payable in full on October 31, 2006. 6. CHANGE IN CONTROL. (a) For the purposes of this Agreement, the term "Change in Control" shall mean the occurrence of any of the following events with respect to the Company: (i) All or substantially all of the assets of the Company are sold or transferred to another corporation or entity, with the result that upon conclusion of the transaction less than a majority of the outstanding securities entitled to vote generally in the election of directors or other capital interests of the acquiring corporation or entity are owned, directly or indirectly, by the shareholders of the Company immediately prior to the sale, transfer, merger, consolidation, venture or reorganization; (ii) The Company is sold, transferred, merged, consolidated, ventured or reorganized into or with another corporation or entity, with the result that upon the conclusion of the transaction less than a majority of the outstanding securities entitled to vote generally in the election of directors or other capital interests of the acquiring corporation or entity are owned, directly or indirectly, by the shareholders of the Company immediately prior to the sale, transfer, merger, consolidation, venture or reorganization: (iii)There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term "beneficial owner") is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the Company; or (iv) The Company shall file a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Item 1 of Form 8-K thereunder or Item 14 of Schedule 14A thereunder (or any successor schedule, form or report or item therein) that a change in control of the Company has or may have occurred. (b) The "Change Date" shall be the date on which a Change in Control of the Company, as described in Paragraph 6(a) above, occurs. (c) The term "Discharge" shall mean the termination by the Company of Executive's employment following the Change in Control or the resignation of Executive upon a reasonable determination by Executive that, as a result of the Change in Control and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Paragraph 2 herein. (d) In the event of a Discharge: (i) the Company shall pay Executive an amount such that the net payment to Executive after deduction of all payroll taxes and all income taxes at the highest marginal rates applicable to Executive shall be equal to twice the Base Salary and twice the Bonus payable to Executive in the year in which the Change Date occurs. (ii) The Restricted Shares shall vest and Executive shall be entitled to a Registration Right (as such term is defined in Paragraph 8(d) below) with respect thereto, and the Stock Options shall vest on the Change Date; provided, however, that the exercise period for the Stock Options shall be subject to the greater of that provided for by the Plan or that provided for by the acquiring company in the Change in Control. (iii)Executive shall continue to be entitled to the benefits under any employee benefit plans to which he was entitled during the Initial Employment Period or Renewal Period for the remainder of the Initial Employment Period or Renewal Period hereunder, respectively. (iv) Any principal or interest amounts due under the Loan provided for in Paragraph 5(h)(ii) above, if any, shall be forgiven in full. The Company shall pay Executive an amount such that the net payment to Executive after deduction of all income taxes at the highest marginal rates applicable to Executive shall be equal to the amount of the Loan. 7. TERMINATION. Executive's employment hereunder may be terminated during the Initial Employment Period or Renewal Period under the following circumstances in accordance with the provisions of this Paragraph: (a) Executive's employment will immediately terminate upon the death of Executive. Executive's legal representatives shall be entitled to receive the salary due Executive through the last day of the month during which his death shall have occurred and any annual Bonus earned for the year through the date on which his death shall have occurred. (b) (i) The Company may terminate Executive's employment pursuant to a written notice (a "Notice of Termination") at least sixty (60) days prior to the date of termination (the "Date of Termination") as a result of Executive's inability to perform his duties hereunder, due to physical or mental illness, injury or condition, as determined by a physician certified by the Company, for a period exceeding one hundred and eighty (180) days, in a three hundred sixty-five (365) day period. (ii) This Agreement shall remain valid and in full force and effect until the Date of Termination in the event that circumstances under Paragraph 7(b)(i) above occur. (c) The Company may terminate Executive's employment for "Cause" pursuant to a Notice of Termination delivered to Executive at least sixty (60) days prior to the Date of Termination. For the purposes of this Agreement, "Cause" shall mean: (i) Executive's willful failure or refusal to perform specific material directives of the Board, when such material directives are consistent with the scope and nature of Executive's duties and responsibilities as set forth in Paragraph 2 above, after notice thereof, stating with specificity the nature of such failure or refusal, and Executive shall have failed to correct such failure or to cease such refusal prior to the Date of Termination provided for in the Notice of Termination; provided, however that no failure to act by Executive shall be considered "willful" if such failure to act is due to Executive's good faith belief that such action would be materially harmful to the Company; (ii) Executive's material failure to comply with policies of the Company, after notice thereof, stating with specificity the nature of such failure, and Executive shall have failed to correct such failure or to cease such refusal prior to the Date of Termination provided for in the Notice of Termination; (iii)drunkenness or use of drugs which interferes with the performance of Executive's duties and responsibilities hereunder, continuing after warning; (iv) Executive's conviction of a felony or of any crime involving moral turpitude, fraud or misrepresentation; or (v) Executive's material breach of his obligations provided for in Paragraph 11 below. (d) Executive may terminate his employment hereunder by providing the Company with a Notice of Termination delivered sixty (60) days prior to the Date of Termination upon the occurrence of an event or circumstance constituting Good Reason. For the purposes of this Agreement "Good Reason" shall mean the occurrence of any of the following without the written consent of Executive or his approval in his capacity as Chairman of the Board and/or Chief Executive Officer: (i) the assignment to Executive of duties inconsistent with this Agreement or a material and substantial diminution of his duties hereunder; (ii) any material failure by the Company to comply with Paragraph 5 herein; (iii)the requirement of Executive to relocate to a location not agreed to by Executive and which is unreasonable considering Executive's personal circumstances; and (iv) any material breach of this Agreement by the Company; provided however, that an event that is or would constitute Good Reason shall cease to be Good Reason if: (1) Executive does not send a Notice of Termination to the Company within forty-five (45) days after the event occurs; (2) the Company reverses the action or cures the default that constitutes Good Reason within forty-five (45) days after the delivery of the Notice of Termination; or (3) Executive was a primary instigator of the Good Reason event and the circumstances make it inappropriate for him to receive Good Reason resignation benefits under this Agreement. 8. COMPENSATION UPON TERMINATION. (a) Termination for Cause or Resignation without Good Reason - If Executive's employment shall be terminated for Cause, or without Good Reason: (i) the Company shall pay Executive his Base Salary up to the date on which a Notice of Termination is delivered; (ii) the unvested portion of the Stock Grant and any unvested Stock Options shall remain unvested and shall no longer be exercisable by Executive; and (iii) neither Executive nor the Company shall have any further obligation hereunder other than Executive's obligations under Paragraph 11 below. (b) Termination without Cause or Resignation with Good Reason - In the event that this Agreement is terminated by the Company without Cause or by Executive with Good Reason: (i) Executive shall be entitled to an amount such that the net payment to Executive after deduction of all payroll taxes and all income taxes at the highest marginal rates applicable to Executive shall be equal to either: (A) twice the Base Salary for the First Year and twice the First Year Bonus, if said termination of employment occurs during the First Year; or (B) the Base Salary and the Bonus payable in any year subsequent to the First Year, if the termination of employment occurs during any such subsequent year; (ii) One hundred percent (100%) of the Stock Grant shall vest, and Executive shall be entitled to a Registration Right (as such term is defined in Paragraph 8(d) below) with respect thereto; (iii)Any principal or interest amounts due under the Loan provided for in Paragraph 5(h)(ii) above, if any, shall be forgiven in full; provided further that if, and only if, Executive's employment is terminated by the Company without Cause or by Executive with Good Reason prior to the second anniversary of this Agreement, the Company shall additionally pay Executive an amount such that the net payment to Executive after deduction of all income taxes at the highest marginal rates applicable to Executive shall be equal to the amount of the Loan; (iv) the exercise period for all vested Stock Options shall be one (1) year from the Date of Termination; (v) any unvested Stock Options remaining unvested in the month after the Date of Termination shall remain unvested and shall no longer be exercisable by Executive; and (vi) Executive shall continue to be entitled to the benefits under any employee benefit plans to which he was entitled during the Initial Employment Period or Renewal Period for the remainder of the Initial Employment Period or Renewal Period, respectively, hereunder. (c) The Non-Renewal of this Agreement - In the event that this Agreement shall not be renewed at the end of the Initial Employment Period as specified in Paragraph 4(b) herein: (i) Executive shall be entitled to receive an amount such that the net payment to Executive after deduction of all payroll taxes and all income taxes at the highest marginal rates applicable to Executive shall be equal to the Base Salary in the Third Year and Third Year Bonus; (ii) the exercise period for any vested Stock Options shall be one (1) year from the Date of Termination; (iii) any unvested Stock Options shall remain unvested and shall no longer be exercisable by Executive; and (iv) upon the sale of Initial Common Stock or Subsequent Common Stock, pursuant to the exercise of any vested Stock Option, fifty percent (50%) of the net after tax proceeds therefrom shall be used to repay any remaining principal and interest due under the Loan provided for in Paragraph 5(h)(ii) herein. (d) Registration Right - The "Registration Right" shall consist of: (i) one demand registration on Form S-3 (or a successor form thereto) covering any of Executive's unregistered securities which shall remain effective for not more than thirty (30) days; (ii) payment of customary registration expenses, by the Company; (iii) customary indemnification and contribution; and (iv) other usual and customary terms then being included in agreements of that type; provided, however, that Executive shall not be entitled to any Registration Right if he may otherwise sell his unregistered securities pursuant to an exemption under Rule 144. 9. RENEWAL PERIOD. Prior to the Renewal Period, the Base Salary, Bonus, Stock Grant, and Stock Options will be determined by the Company and Executive in good faith negotiation no later than nine (9) months prior to the expiration of the Initial Employment Period but in no event will the Base Salary, Bonus, Stock Grant, and Stock Options during the Renewal Period be less than the Third Year Salary and Bonus and the first year Stock Grant and Stock Option as provided herein for the Initial Employment Period. 10. LIFE INSURANCE. The Company may, in its discretion, at any time after the Effective Date, apply for and procure as owner and for its own benefit, insurance on the life of Executive, in such amounts and in such form or forms as the Company may choose. Executive shall have no interest whatsoever in any such policy or policies. At the request of the Company, Executive shall submit to such medical examinations, supply such information, and execute such documents as may be required by the insurance company or companies to which the Company has applied for such insurance. 11. CONFIDENTIALITY. (a) Non-disclosure - Executive shall not at any time during the term of this Agreement or thereafter, either directly or indirectly, disclose or divulge to any other person, firm or corporation the names, addresses, preferences, prices being charged or any other confidential information concerning or relating to any of the former or existing suppliers, contractors, employees or customers of the Company, or any parent, affiliate or subsidiary of the Company (collectively, the "Customers") with respect to the past, present or future business of the Company, or any parent, affiliate or subsidiary of the Company, or any secret, proprietary or confidential information concerning or relating to the past, present or future business of the Company, or any parent, affiliate or subsidiary of the Company (collectively, "Confidential Information"), and he will not divert or attempt to divert any of the Customers or do any act to impair, prejudice or destroy the goodwill of the Company with the Customers; provided, however, Confidential Information shall not include information which was known to the public prior to the date of communication thereof by the Company to Executive or which subsequently became known to the public other than through communication by Executive; provided, further, such Confidential Information shall include, but shall not be limited to: (i) information regarding the Company's proprietary research, technology, trade secrets, patented processes, market studies and forecasts, competitive analyses, pricing policies, the substance of agreements with customers, suppliers and others, marketing arrangements, training programs and arrangements, and other information, written and oral, relating to the Company's technology, systems and products not generally available to the public; (ii) information regarding the Company's trademarks, trade names, service marks, or patents; (iii)the Company's equipment, management, internal policies, and other activities relating to the conduct of the Company's Business; and (iv) other data, developments, research, trade secrets, methods or techniques used by the Company in the conduct of its Business. (b) Ownership of Intellectual Property - Executive acknowledges and agrees that all intellectual property (including without limitation all ideas, concepts, inventions, plans, developments, software, data, configurations, materials (whether written or machine-readable), designs, drawings, illustrations and photographs, which may be protectable, in whole or in part, under any patent, copyright, trademark, trade secret or other intellectual property law), developed, created, conceived, made or reduced to practice during his employment with the Company or the Parent which: (a) relate to the current, future or potential business of the Company or the Parent; (b) result from the duties or work performed by Executive hereunder; or (c) are developed during working time or using the Company's equipment, supplies, facilities, resources, materials or information, shall be the sole and exclusive property of the Company, and Executive shall and hereby does assign all right, title and interest in and to such intellectual property to the Company. (c) Nonsolicitation - Because Executive's solicitation of the Customers of the Company, or any parent, affiliate or subsidiary of the Company, under certain circumstances would necessarily involve the use or disclosure of Confidential Information, Executive shall not, either directly or indirectly, at any time during the term of this Agreement and for a period of one (1) year from the Date of Termination or the date of expiration of this Agreement: (a) call on, solicit or take away, or attempt to call on, solicit or take away, any past or present Customers of the Company, or any parent, affiliate or subsidiary of the Company; (b) employ, hire or solicit the employment of any person employed by the Company, or any parent, affiliate or subsidiary of the Company; (c) do any act to impair, prejudice or destroy the goodwill of the Company, or any parent, affiliate or subsidiary of the Company, or to prejudice or impair the relationship or dealing between the Company, or any parent, affiliate or subsidiary of the Company, and the Customers; or (d) assist any other person, firm or corporation in any such acts. (d) Other Employment - Executive agrees that, while this Agreement is in effect and for twelve (12) months after its termination, he will not accept any employment or engage in any activity, without the written consent of the Board, if the loyal and complete fulfillment of his duties would inevitably require him to reveal or utilize Confidential Information that Executive has promised not to disclose, as reasonably determined by the Board. (e) Return of Confidential Information - Promptly after the Date of Termination or expiration of this Agreement, Executive will deliver to the Company or, at its written instruction, destroy all documents, data, drawings, manuals, letters, notes, reports, electronic mail, recordings, and copies thereof, in his possession or control. (f) Promise to Discuss Proposed Actions in Advance- To prevent the inevitable use or disclosure of trade secrets or Confidential Information, Executive promises that, before Executive discloses or uses information and before Executive commences employment, solicitations, or any other activity that could possibly violate the terms of this Paragraph, Executive will discuss his proposed actions with the Board, which will advise Executive whether his proposed actions would violate this Paragraph. (g) Survival and Enforcement - The provisions of this Paragraph 11 shall survive the termination of this Agreement, irrespective of the reason therefor. Executive acknowledges that: (i) his services are of a special, unique, and extraordinary character and it would be very difficult or impossible to replace his services; (ii) this Paragraph's terms are reasonable and necessary to protect the Company's legitimate interests (iii) this Paragraph's restrictions will not prevent Executive from earning or seeking a livelihood; (iv) this Paragraph's restrictions shall apply wherever permitted by law; and (v) Executive's violation of any of this Paragraph's terms would irreparably harm the Company. Accordingly, Executive agrees that, notwithstanding any other Paragraph of this Agreement, if he violates any of the provisions of this Paragraph, the Company shall be entitled to, in addition to other remedies available to it, an injunction to be issued by any court of competent jurisdiction restraining Executive from committing or continuing any such violation, without the need to post any bond or for any other undertaking or prove the inadequacy of money damages. 12. MISCELLANEOUS. (a) Notices to be given in writing shall be transmitted by Facsimile, by personal delivery or by certified mail, return receipt requested, addressed as set forth below or to another address given through written notice under the provisions of this Paragraph: If to the Company: BioMarin Pharmaceutical Inc. Attention: Board of Directors 371 Bel Marin Keys, Suite 210 Novato, California 94949 If to Executive: Fredric D. Price 64 Quarry Lane Bedford, New York 10506 Notice shall be deemed to have been given when delivered or, if earlier (1) when mailed by United States certified or registered mail, return receipt requested, postage prepaid, or (2) faxed with confirmation of delivery, in either case, addressed as required in this Paragraph. (b) This Agreement shall be governed by and construed in accordance with the internal, substantive laws of the State of California. Venue of any proceeding shall be exclusively in the County of Marin in the foregoing state, and both parties hereby consent and agree to such exclusive venue. (c) Except as explicitly set forth in this Agreement, all disputes between Executive and the Company arising under this Agreement or relating to Executive's employment or termination thereof are to be resolved by final and binding arbitration in accordance with the commercial rules of the American Arbitration Association in the County of Marin in California. The parties agree that the awarding of any costs and expenses, including attorney's fees, incurred in such arbitration, shall be determined by the arbitrators. This Paragraph shall remain in effect after the termination of this Agreement. (d) This Agreement may be executed simultaneously in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one (1) and the same instrument. Furthermore, facsimiles of signatures may be taken as the actual signatures, and each party agrees to furnish the other with documents bearing the original signatures within ten (10) days of the facsimile transmission. (e) This Agreement, including the exhibits hereto, contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior agreements and understandings relating thereto. This Agreement may not be waived, changed, modified, extended or discharged orally, but only by a written instrument signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. (f) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. (g) Executive represents that he is not subject to any employment, confidentiality, or other agreement or restriction that would prevent him from fully satisfying his duties under this Agreement or that would be violated if he did so. Without the Company's prior written approval, Executive agrees not to: (i) disclose proprietary information belonging to a former employer or other entity without its written permission; (ii) contact any former employer's customers or employees to solicit their business or employment on behalf of the Company; or (iii)distribute announcements about or otherwise publicize his employment with the Company. Executive agrees to indemnify and hold the Company harmless from any liabilities, including defense costs, it may incur because he is alleged to have broken any of these promises or improperly revealed or used such proprietary information or to have threatened to do so, or if a former employer challenges his entering into this Agreement or rendering services pursuant to it. (h) Executive agrees that any payments and benefits under this Agreement and all other contracts, arrangements, or programs shall not, in the aggregate, exceed the maximum amount that may be paid to him without triggering golden parachute penalties under Section 280G and related provisions of the Internal Revenue Code, as determined in good faith by the Company's independent auditors. If any benefits must be cut back to avoid triggering such penalties, the benefits shall be cut back in the priority order designated by the Company. If an amount in excess of the limit set forth in this Paragraph is paid to Executive, Executive agrees to repay the excess amount to the Company upon demand, with interest at the rate provided for in Internal Revenue Code Section 1274(b)(2)(B). The Company and Executive agree to cooperate with each other in connection with any administrative or judicial proceedings concerning the existence or amount of golden parachute penalties with respect to payments or benefits received by Executive. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. BIOMARIN PHARMACEUTICAL INC. EXECUTIVE: By:_________________________ ___________________________ Company Title:______________ Fredric D. Price EXHIBIT A TERMS AND CONDITIONS OF RESTRICTED SHARES 1. SECURITIES LAW COMPLIANCE (a) Restricted Securities. The Restricted Shares have not been registered under the Securities Act of 1933, as amended (the "1933 Act"). By his signature on the Employment Agreement, Executive hereby confirms that Executive has been informed that the Restricted Shares are restricted securities under the 1933 Act and may not be sold or transferred unless the Restricted Shares are first registered under the federal securities laws or unless an exemption from such registration is available. (b) Restrictions on Disposition of Restricted Shares. Executive shall not make transfer or sell the Restricted Shares or any interest therein unless and until the Restricted Shares have vested. The Company shall not be required (i) to transfer on its books any Restricted Shares which have been sold or transferred in violation of the provisions of this Agreement (and the Company may issue appropriate "stop transfer" instructions to its transfer agent accordingly) or (ii) to treat as the owner of the Restricted Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Restricted Shares have been transferred in contravention of this Agreement. 2. TRANSFER RESTRICTIONS (a) Restriction on Transfer. Executive shall not sell, transfer, assign, pledge, encumber or otherwise dispose of any of the Restricted Shares that are subject to the Repurchase Right (as defined below). 3. REPURCHASE RIGHT (a) Repurchase Option. If the events described in Paragraph 8(a) above occur and the Employment Agreement shall be terminated for Cause, or without Good Reason, before all of the Shares are released from the Company's Repurchase Right (as defined below), the Company shall, upon the date of such termination, have the right to repurchase up to that number of unvested shares at the original par value per share of $0.001 (the "Repurchase Right"). The Repurchase Right shall be exercised by the Company by delivering written notice to the Executive. Upon delivery of such notice, the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company. (b) Termination of the Repurchase Right. (i) The Repurchase Right shall terminate and cease to be exercisable with respect to any and all Restricted Shares which have vested in accordance with the vesting schedule set forth in Paragraph 5(f) of the Agreement; (ii) The Repurchase Right shall terminate and cease to be exercisable with respect to all Restricted Shares if Executive becomes entitled to compensation under Paragraphs 6(d)(ii) or 8(b)(ii) of the Agreement. 4. LEGENDS (a) Legends. The share certificate evidencing the Restricted Shares, issued hereunder shall be endorsed with the following legends, or legends substantially equivalent thereto (in addition to any legend required under applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IF IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND A RIGHT OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. (b) Investment Intent. Executive represents to the Company the following: (i) Executive is acquiring these Securities for investment for Executive's own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the 1933 Act. (ii) Executive acknowledges and understands that the Securities constitute "restricted securities" under the Act and have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Executive's investment intent as expressed herein. Executive further understands that the Securities must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. Executive further acknowledges and understands that the Company is under no obligation to register the Securities, except as set forth in the Agreement. (iii) Executive hereby agrees that if so requested by the Company or any representative of the underwriters in connection with any registration of the offering of any securities of the Company under the Act, Executive shall not sell or otherwise transfer any Shares or other securities of the Company during a period of up to 180 days following the effective date of a registration statement of the Company filed under the Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. EX-23 4 0004.txt BIOMARIN PHARMACEUTICAL INC. Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 18, 2000 included in the Company's Form 10-K for the year ended December 31, 1999, and to all references to our firm included in this Registration Statement. San Francisco, California January 8, 2001 /s/Arthur Andersen LLP -----END PRIVACY-ENHANCED MESSAGE-----