10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

Or

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

For the transition period from                      to                     .

Commission file number: 000-26727

BIOMARIN PHARMACEUTICAL INC.

(Exact name of registrant issuer as specified in its charter)

Delaware	68-0397820
(State of other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)
105 Digital Drive, Novato, California	94949
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number: (415) 506-6700

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ¨                Accelerated filer    x                Non-accelerated filer    ¨

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

Applicable only to issuers involved in bankruptcy proceedings during the proceeding five years:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  x    No  ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 85,358,743 shares common stock, par value $0.001, outstanding as of May 1, 2006.

1

BIOMARIN PHARMACEUTICAL INC.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	35
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
SIGNATURE		38

2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

	December 31, 2005 (1)			March 31, 2006
				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	38,092		$	341,689
Short-term investments		9,700			6,000
Accounts receivable, net		5,860			7,493
Advances to BioMarin/Genzyme LLC		1,071			653
Inventory		10,898			18,137
Other current assets		3,320			4,787
Total current assets		68,941			378,759
Cash balances related to long-term debt		17,049			—
Investment in BioMarin/Genzyme LLC		31,983			27,783
Property and equipment, net		37,321			36,251
Acquired intangible assets, net		15,306			14,934
Goodwill		21,262			21,262
Other assets		3,441			9,240
Total assets	$	195,303		$	488,229
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities	$	20,934		$	19,946
Current portion of acquisition obligation, net of discount		7,477			7,104
Current portion of deferred revenue		8,096			9,893
Current portion of equipment and facility loans		3,860			19,944
Total current liabilities		40,367			56,887
Convertible debt		125,000			297,500
Long-term portion of acquisition obligation, net of discount		70,873			70,336
Deferred revenue, net of current portion		11,825			9,908
Equipment and facility loan, net of current portion		17,049			—
Other long-term liabilities		7,651			7,593
Total liabilities		272,765			442,224
Stockholders’ equity (deficit):
Common stock, $0.001 par value: 150,000,000 shares authorized; 74,301,610 and 85,171,044 shares issued and outstanding at December 31, 2005 and March 31, 2006, respectively		75			85
Additional paid-in capital		485,570			618,806
Accumulated other comprehensive loss		(16	)		(15	)
Accumulated deficit		(563,091	)		(572,871	)
Total stockholders’ equity (deficit)		(77,462	)		46,005
Total liabilities and stockholders’ equity (deficit)	$	195,303		$	488,229

(1) December 31, 2005 balances were derived from the audited consolidated financial statements.

See accompanying notes to consolidated financial statements.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended, March 31, 2005 and 2006

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

	Three Months Ended March 31,
	2005			2006
Net product sales	$	4,989		$	8,979
Collaborative agreement revenues		—			4,514
Royalty and license revenues		—			319
Total revenues		4,989			13,812
Operating expenses:
Cost of sales (excludes amortization of developed product technology)		660			1,722
Research and development		14,992			12,279
Selling, general and administrative		10,567			10,896
Amortization of acquired intangible assets		286			373
Total operating expenses		26,505			25,270
Equity in the income of BioMarin/Genzyme LLC		2,076			3,800
Loss from operations		(19,440	)		(7,658	)
Interest income		241			699
Interest expense		(3,259	)		(2,821	)
Net loss	$	(22,458	)	$	(9,780	)
Net loss per share, basic and diluted	$	(0.35	)	$	(0.13	)
Weighted average common shares outstanding, basic and diluted		64,511			74,963

See accompanying notes to consolidated financial statements.

4

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2005, and 2006

(In thousands, unaudited)

	Three Months Ended March 31,
	2005			2006
Cash flows from operating activities
Net loss	$	(22,458	)	$	(9,780	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,466			2,535
Imputed interest on acquisition obligation		1,661			1,190
Equity in the income of BioMarin/Genzyme LLC		(2,076	)		(3,800	)
Stock based compensation		—			2,104
Changes in operating assets and liabilities:
Accounts receivable		2,216			(1,633	)
Advances to BioMarin/Genzyme LLC		1,556			418
Inventory		(123	)		(7,240	)
Other current assets		605			(1,467	)
Other assets		21			(536	)
Accounts payable and accrued liabilities		(2,479	)		(988	)
Other liabilities		208			(58	)
Deferred revenue		—			(120	)
Net cash used in operating activities		(18,403	)		(19,375	)
Cash flows from investing activities
Purchase of property and equipment		(582	)		(869	)
Decrease in restricted cash		12,368			—
Sale of short-term investments		17,283			3,700
Distributions from BioMarin/Genzyme LLC		—			8,000
Settlement of dispute with Medicis		2,000			—
Net cash provided by investing activities		31,069			10,831
Cash flows from financing activities
Proceeds from equipment and facility loans		17,148			—
Proceeds from exercise of stock options		73			3,647
(Increase) decrease in cash balances related to long-term debt		(3,197	)		17,049
Repayment of equipment and facility loans		(13,524	)		(965	)
Repayment of acquisition obligation		(15,000	)		(2,100	)
Proceeds from public offering of common stock, net		—			127,495
Proceeds from convertible debt offering, net		—			167,014
Net cash provided by (used in) financing activities		(14,500	)		312,140
Effect of foreign currency translation on cash		(1	)		1
Net increase (decrease) in cash		(1,835	)		303,597
Cash and cash equivalents:
Beginning of period		13,081			38,092
End of period	$	11,246		$	341,689

See accompanying notes to consolidated financial statements.

5

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

(1) NATURE OF OPERATIONS AND BUSINESS RISKS

BioMarin Pharmaceutical Inc. (the Company or BioMarin) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. The Company and its joint venture partner, Genzyme Corporation (Genzyme), received marketing approval for Aldurazyme^® (laronidase) in the United States (U.S.) in April 2003 and in the European Union (E.U.) in June 2003. BioMarin received marketing approval for Naglazyme^TM (galsulfase) in the U.S. in May 2005, and in the E.U. in January 2006. In May 2004, BioMarin completed the transaction to acquire the Ascent Pediatrics business, for which the North American rights were sublicensed to a third party by BioMarin in March 2006. The May 2004 transaction included: the exclusive marketing and development rights to Orapred^® (prednisolone sodium phosphate oral solution), a drug primarily used to treat asthma exacerbations in children; two additional proprietary formulations of Orapred in development; and a U.S.-based sales force. See Note 4 for further discussion of the acquisition transaction in 2004 and Note 5 for further discussion of the sublicense in 2006. The Company is incorporated in the state of Delaware.

Through March 31, 2006, the Company had accumulated losses of approximately $572.9 million. Management expects to incur further losses for the foreseeable future. Management believes that the Company’s cash, cash equivalents and short-term investments at March 31, 2006, plus funds contractually committed to the Company, will be sufficient to meet the Company’s obligations for the foreseeable future based on management’s current long-term business plans. Until the Company can generate sufficient levels of cash from its operations, the Company expects to continue to finance future cash needs primarily through proceeds from equity or debt financings, loans and collaborative agreements with corporate partners.

The Company is subject to a number of risks, including: the need for additional financings; the financial performance of Naglazyme, the Aldurazyme joint venture and the Orapred sublicense; significant competition from larger organizations; its ability to successfully commercialize its product candidates, if approved; the uncertainty of the Company’s research and development efforts resulting in successful commercial products; obtaining regulatory approval for such products; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; dependence on corporate partners and collaborators; and possible restrictions on reimbursement, as well as other changes in the health care industry.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

These unaudited consolidated financial statements include the accounts of BioMarin and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and the Securities and Exchange Commission (SEC) requirements for interim reporting. However, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. (U.S. GAAP) for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto for the year ended December 31, 2005, included in the Company’s Annual Report on Form 10-K.

(b) Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(c) Inventory

The Company values inventories at the lower of cost or fair market value. The Company determines the cost of inventory using the average cost method. The Company analyzes its inventory levels quarterly and writes down inventory that has become

6

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected requirements. Expired inventory is disposed of and the related costs are written off. See Note 8 for further information on inventory balances.

Regulatory approval for Naglazyme was received in May 2005, and costs related to the manufacturing of Naglazyme prior to this date were expensed as research and development expenses. The Company considers regulatory approval of product candidates to be uncertain, and product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for Naglazyme prior to regulatory approval were not capitalized as inventory. When regulatory approval was obtained in May 2005, the Company began capitalizing inventory at the lower of cost or fair value. Naglazyme inventory as of March 31, 2006 also includes a portion of the zero cost basis quantities. Until the Company begins to sell the inventory produced after regulatory approval was obtained, the cost of goods sold or used in clinical trials for the previously expensed inventory will be insignificant. The Company expects that the majority of the previously expensed inventory will be sold or used in clinical trials by the first quarter of 2007. Stock based compensation of $0.4 million was capitalized into Naglazyme inventory for the three months ended March 31, 2006.

(d) Cash Balances Related to Long-term Debt

Cash balances related to long-term debt represent an amount that the Company was required to keep on deposit with Comerica Bank pursuant to the terms of the equipment and facility loan that the Company executed in May 2004. In April 2006, the outstanding balance on this loan was repaid in full. As a result of the subsequent payment, the debt was classified as a current liability and the cash related to long-term debt was classified as cash and cash equivalents as of March 31, 2006.

(e) Goodwill, Acquired Intangible Assets and Impairment of Long-Lived Assets

The Company records goodwill in a business combination when the total consideration exceeds the fair value of the net tangible and identifiable intangible assets acquired. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets with indefinite lives are not amortized. Intangible assets with definite lives are amortized over their useful lives on a straight-line basis.

The Company reviews long-lived assets for impairment annually and whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that the full carrying amount of an asset is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset exceeds its fair value. See Note 6 for further discussion of the Company’s intangible asset and goodwill impairment analyses.

The Company currently operates in one business segment, the biopharmaceutical development and commercialization segment. When reviewing goodwill for impairment, SFAS No. 142 requires that the Company assess whether goodwill should be allocated to operating levels lower than its single operating segment for which discrete financial information is available and reviewed for decision-making purposes. These lower levels are referred to as reporting units. As of March 31, 2006, the Company has identified one separate reporting unit, following the sublicense of North American rights of Orapred in March 2006, which eliminated the previous Orapred reporting unit. The Company performs an annual impairment test in the fourth quarter of each fiscal year by assessing the fair value and recoverability of its goodwill, unless facts and circumstances warrant a review of goodwill for impairment before that time. The sublicense of North American rights of Orapred was deemed to be a triggering event and an impairment analysis of goodwill was performed in March 2006. The Company determines the fair value of its reporting units using a combination of discounted cash flow models, quoted market prices when available and independent appraisals. See Note 6 for further discussion of the Company’s goodwill impairment analysis.

The recoverability of the carrying value of leasehold improvements for the Company’s administrative facilities will depend on the successful execution of the Company’s business initiatives and the Company’s ability to earn sufficient returns on its approved products and product candidates. Based on management’s current estimates, the Company expects to recover the carrying value of such assets.

(f) Revenue Recognition

The Company recognizes revenue in accordance with the provisions of SEC Staff Accounting Bulletin No. 104, Revenue Recognition, and Emerging Issues Task Force Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.

7

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

The Company’s revenues consist of Naglazyme and Orapred product sales, revenues from its collaborative agreement with Serono and revenues from its sublicense agreement with a third party for North American Orapred rights (see Note 5). All Aldurazyme sales are reported by BioMarin/Genzyme LLC and are included in the results of the joint venture (see Note 7).

Naglazyme product sales—The Company recognizes revenue from Naglazyme product sales when persuasive evidence of an arrangement exists, the product has been delivered to the customer, title and risk of loss have passed to the customer, the price to the buyer is fixed or determinable and collection from the customer is reasonably assured. Naglazyme product sales transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents.

In the U.S., Naglazyme is generally sold to specialty pharmacies or end-users, such as hospitals, which act as retailers. In the E.U., Naglazyme is generally sold to the Company’s authorized European distributor or directly to hospitals, which act as the end users. Because of the pricing of Naglazyme, the limited number of patients and the customers’ limited return rights, Naglazyme customers and retailers generally carry a very limited inventory. Accordingly, the Company expects that sales related to Naglazyme will be closely tied to end-user demand.

The Company records reserves for rebates payable under Medicaid and other government programs as a reduction of revenue at the time product sales are recorded. The Company’s reserve calculations require estimates, including estimates of customer mix, to determine which sales will be subject to rebates and the amount of such rebates. The Company updates its estimates and assumptions each period, and records any necessary adjustments to its reserves.

The Company records allowances for product returns, if appropriate, as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns of Naglazyme is required, including its patient population, the customers’ limited return rights and the Company’s joint venture’s experience of returns for Aldurazyme, which is a similar product. Based on these factors, management has concluded that product returns will be minimal. In the future, if any of these factors and/or the history of product returns changes, an allowance for product returns may be required. The Company maintains a policy to record allowances for doubtful accounts for estimated losses resulting from the inability of its Naglazyme customers to make required payments. The Company first recorded sales of Naglazyme during the second quarter of 2005 and as of March 31, 2006, the Company had experienced no bad debts and had no allowance for doubtful accounts.

Orapred product sales—The Company does not expect to report Orapred product sales in future periods following sublicensing the North American rights to the product to a third party in March 2006. The Company recognized revenue from Orapred product sales when persuasive evidence of an arrangement existed, the product had been shipped, title and risk of loss passed to the customer, the price to the buyer was fixed or determinable and collection from the customer was reasonably assured. Orapred product sales transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents.

The Company established and maintains rebate reserves for amounts payable to managed care organizations and state Medicaid programs for the reimbursement of a portion of the retail price of prescriptions filled that are covered by the respective plans. The amounts estimated to be paid relating to products sold are recognized as revenue reductions and as additions to accrued expenses at the time of the original sale. The rebate reserves are based on the Company’s best estimate of the expected prescription fill rate to these managed care organizations and state Medicaid patients. The estimates were developed using the product’s rebate history adjusted to reflect known and forecasted changes in the factors that impact such reserves. During the first three months of 2006, the Company reduced its Orapred rebate reserves by $1.1 million, which increased net revenues by $0.9 million for rebates related to product sold by the Company and decreased operating expenses by $0.2 million for rebates related to product sold by the previous seller of Orapred. The reduction was due to the sublicense of North American Orapred rights to a third party, which reduced the Company’s liability for certain rebates.

Provisions for sales discounts and estimates for chargebacks and product returns were established as a reduction of product sales at the time such revenues were recognized. These revenue reductions were established by the Company’s management as its best estimate at the time of the original sale based on the product’s historical experience adjusted to reflect known and forecasted changes in the factors that impact such reserves. These revenue reductions are generally reflected either as a direct reduction to gross sales and accounts receivable through an allowance or as an addition to accrued expenses. The Company generally permits product returns only if the product is damaged or if it is returned near or after expiration.

8

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

A reconciliation of the Company’s gross and net product sales for the three months ended March 31, 2005 and 2006 is as follows (in thousands):

	2005					2006
	Dollars			Percentage		Dollars			Percentage
Gross product sales	$	6,520		100	%	$	9,361		100	%
(Allowances) Reversals for:
Returns		(214	)	(3	)%		(635	)	(7	)%
Rebates		(829	)	(13	)%		652		7	%
Discounts		(488	)	(7	)%		(399	)	(4	)%
Total allowances		(1,531	)	(23	)%		(382	)	(4	)%
Net product sales	$	4,989		77	%	$	8,979		96	%

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. As of December 31, 2005 and March 31, 2006, the Company’s allowance for doubtful accounts was insignificant.

Collaborative agreement revenues—Collaborative agreement revenues from Serono include both license revenue and contract research revenue. Nonrefundable up-front license fees where the Company has continuing involvement through research and development collaboration are initially deferred and recognized as collaborative agreement license revenue over the estimated period for which the Company continues to have a performance obligation. Nonrefundable amounts received for shared development costs are recognized as revenue in the period in which the related expenses are incurred. Contract research revenue included in collaborative agreement revenues represents Serono’s share of Phenoptin™ (sapropterin dihydrochloride) development costs under the agreement, which are recorded as research and development expenses. Collaborative agreement revenues include $1.9 million of the up-front license fee received from Serono recognized as revenue during the first three months of 2006, and $2.6 million of reimbursable Phenoptin development costs incurred during the first three months of 2006. The up-front license fee received from Serono is being amortized as revenue on a straight-line basis over approximately 3.25 years, which represents the best estimate of the time from inception of the agreement until European regulatory approval of Phenoptin for the treatment of phenylketonuria (PKU), at which point the Company’s performance obligations for developing Phenoptin for the treatment of PKU will end. There is no cost of sales associated with the amortization of the up-front license fee received from Serono.

Royalty and license revenues— Royalty revenue is recognized based on sublicensee sales of Orapred subsequent to the execution of the sublicense of Orapred North American rights in March 2006. Royalties are recognized as earned in accordance with the contract terms and when collectibility is reasonably assured.

The timing of customer purchases and the resulting product shipments have a significant impact on the amount of royalty revenue that the Company recognizes in a particular period. The majority of Orapred sales are made to wholesalers, which, in turn, resell the product to retail outlets. Inventory in the distribution channel consists of inventory held by wholesalers, who are the principal customers for Orapred, and inventory held by retailers. Royalty revenues from Orapred sales in a particular period will be impacted by increases or decreases in wholesaler inventory levels. If wholesaler inventories continue to substantially exceed the retail demand, the Company could experience reduced royalty revenue from sales in subsequent periods.

The up-front license fee of $2.5 million received from the third party has been deferred and is being recognized as revenue on a straight-line basis over approximately 5 months, which represents the best estimate of the time from inception of the agreement until commercial launch of Orapred ODT (Oral Disintegrating Tablets), at which point the Company’s performance obligations will end. Royalty and license revenue includes $0.3 million of the up-front license fee received from the third party recognized as revenue during the first three months of 2006. There is no cost of sales associated with the royalty and license revenues recorded during the period and no related costs are expected in future periods.

Milestone payments are recognized in full when the related milestone performance goal is achieved and the Company has no future performance obligations related to that payment.

(g) Net Loss Per Share

Net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average shares of common stock outstanding and potential shares of common stock during the period. Potential shares of common stock include dilutive shares issuable

9

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

upon the exercise of outstanding common stock options and contingent issuances of common stock related to convertible debt and acquisition payable. For all periods presented, such potential shares of common stock were excluded from the computation of diluted net loss per share, as their effect is antidilutive.

Potentially dilutive securities include (in thousands):

	March 31,
	2005	2006
Options to purchase common stock	11,988	8,107
Common stock issuable under convertible debt	8,920	19,324
Portion of acquisition payable in common stock	1,670	641
Total	22,578	28,072

(h) Stock Option Plans

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

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

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

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

(i) Other Significant Accounting Policies

For all other significant accounting policies, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

(j) Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement is effective for all financial instruments acquired or issued by the Company after January 1, 2007. Management does not expect the adoption of SFAS No. 155 to have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, which requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value. Adoption is required as of the beginning of the first fiscal year that begins after September 15, 2006. Management does not expect the adoption of SFAS No. 156 to have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

(k) Reclassifications

Certain items in the 2005 consolidated financial statements have been reclassified to conform to the 2006 presentation.

(3) STOCK-BASED COMPENSATION

Effective January 1, 2006, BioMarin began recording compensation expense associated with stock options and other forms of equity compensation in accordance with SFAS No. 123R as interpreted by SEC Staff Accounting Bulletin No. 107. Prior to January 1, 2006, the Company accounted for stock options according to the provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and therefore no related compensation expense was recorded for awards granted with no intrinsic value. BioMarin adopted the modified prospective transition method provided for under SFAS No. 123R, and consequently has not retroactively adjusted results from prior periods. Under this transition method, compensation cost associated with stock options now includes: (1) quarterly amortization related to the remaining unvested portion of all stock option awards granted prior to January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123; and (2) quarterly amortization related to all stock option awards granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R. In addition, BioMarin records expense over the offering period, in connection with shares issued under its employee stock purchase plan.

The compensation expense for stock based compensation awards includes an estimate for forfeitures and is recognized over the requisite service period of the options using the straight-line method. As a result of the adoption of SFAS No. 123R, BioMarin’s loss from operations and net loss for the three-month period ended March 31, 2006, was $1.7 million higher than under BioMarin’s previous accounting method for stock-based compensation. Basic and diluted net earnings per common share for the quarter ended March 31, 2006, were not impacted by the change in accounting method. Prior to adoption of SFAS No. 123R, benefits of tax deductions in excess of recognized compensation costs were required to be reported as operating cash flows. SFAS No. 123R requires that they be recorded as a financing cash inflow rather than as a reduction of taxes paid. For the quarter ended March 31, 2006, no net excess tax benefits were generated from option exercises. The Company evaluated the need to record a cumulative effect adjustment for estimated forfeitures upon the adoption of SFAS No. 123R and determined the amount to be immaterial. The company is in the process of computing the hypothetical excess tax benefits in additional paid-in capital as of the date of adoption of SFAS No. 123R. This analysis is not expected to result in a material change to BioMarin’s financial statements.

Stock compensation costs for the three months ended March 31, 2006 totaled $2.1 million, of which $0.4 million was capitalized into inventory, $0 was included in cost of sales, $0.8 million was included in selling, general and administrative expense and $0.9 million was included in research and development expense. No stock compensation costs were recognized for the three months ended March 31, 2005, prior to the Company’s adoption of SFAS No. 123R.

For stock options granted prior to the adoption of SFAS No. 123R, if compensation expense for the Company’s various stock option plans had been determined based upon estimated fair values at the grant dates in accordance with SFAS No. 123, the Company’s pro forma net loss, and basic and diluted loss per share would have been as follows:

	Three Months Ended
	March 31, 2005
	($ in thousands)
Net loss:
As reported	$	(22,458	)
Fair value-based expense, net of tax		(2,967	)
Pro forma	$	(25,425	)
Net loss per common share:
Basic and diluted
As reported	$	(0.35	)
Pro Forma	$	(0.39	)

11

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

Stock Options

BioMarin’s stock option plans provide for grants of options to employees to purchase common stock at the fair market value of such shares on the grant date. The options generally vest monthly over a four-year period beginning on the grant date. The term of the outstanding options is generally ten years. Options assumed under past business acquisitions generally vest over periods ranging from immediately upon grant to five years from the original grant date and have terms ranging from two to ten years.

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model and the assumptions noted in the table below. The expected life of options is based on observed historical exercise patterns. Groups of employees that have similar historical exercise patterns were considered separately for valuation purposes, but none were identified that had distinctly different exercise patterns as of March 31, 2006. The expected volatility of stock options is based upon proportionate weightings of the historical volatility of BioMarin stock and, for fiscal periods in which there is sufficient trading volume in options on the Company’s stock, the implied volatility of traded options on the Company’s stock. The risk free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield reflects that BioMarin has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future.

	Three Months Ended March 31,
Stock Options	2005	2006
Expected volatility	54.76%	57.87%
Dividend yield	zero	zero
Expected life	6.0 years	4.9 years
Risk-free interest rate	4.1%	4.35%

The Company has recorded $1.6 million of compensation expenses related to stock options for the three-month period ended March 31, 2006, in accordance with SFAS No. 123R. As of March 31, 2006, there was $19.5 million of total unrecognized compensation cost related to unvested stock options. These costs are expected to be recognized over a weighted average period of 3.30 years.

A summary of stock option activity under the plans for the three-months ended March 31, 2006 is presented as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
						(in thousands)
Balance, January 1, 2006	6,968,569		$	8.60
Granted	1,780,200		$	11.78
Exercised	(519,434	)	$	6.98		$	2,707
Cancelled	(122,201	)	$	8.07
Balance, March 31, 2006	8,107,134		$	9.43	7.5	$	32,636
Exercisable, March 31, 2006	3,883,813		$	9.63	5.7	$	14,727

The weighted-average fair value of stock options granted during the three months ended March 31, 2005 and 2006, were $5.05 and $6.26, respectively. The aggregate intrinsic value for outstanding options as of March 31, 2006 is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for the 8.1 million options that were in-the-money at March 31, 2006. During the three months ended March 31, 2005, the aggregate intrinsic value of options exercised under our stock option plans was insignificant. The aggregate intrinsic value of options exercised was determined as of the date of option exercise.

12

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

At March 31, 2006, an aggregate of 8,460,518 million of unissued shares were authorized for future issuance under the Company’s stock plans, which cover stock options and the Company’s Employee Stock Purchase Plan. Awards that expire or are cancelled without delivery of shares generally become available for issuance under the plans.

An initial option is granted to each new outside member of BioMarin’s Board of Directors to purchase 30,000 shares of common stock at the fair value on the date of the grant. On each anniversary date of becoming a director, each outside member is granted an additional option to purchase 30,000 shares of common stock at the fair market value on such date. These options vest over one year and have a term of ten years.

Employee Stock Purchase Plan

Under BioMarin’s Employee Stock Purchase Plan, employees meeting specific employment qualifications are eligible to participate and can purchase shares on established dates semi-annually through payroll deductions at the lower of 85% of the fair market value of the stock at the commencement or each purchase date of the offering period, which will span up to two (2) years. The Purchase Plan permits eligible employees to purchase common stock through payroll deductions for up to 10% of qualified compensation. The Employee Stock Purchase Plan has been treated as a compensatory plan. The Company has recorded compensation expense related to the Purchase Plan in the three-month period ended March 31, 2006 of $0.1 million.

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

	Three Months Ended March 31
Employee Stock Purchase Plan	2005	2006
Expected volatility	54-55%	44% to 52%
Dividend yield	zero	zero
Expected life	6-24 months	6-24 months
Risk-free interest rate	3.9-4.4%	4.4%

13

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

(4) ASCENT PEDIATRICS TRANSACTION

On May 18, 2004, the Company acquired the Ascent Pediatrics business from Medicis Pharmaceutical Corporation (Medicis). The transaction included: The exclusive marketing and development rights to Orapred, a patent-protected drug to treat asthma in children; two additional proprietary formulations of Orapred in development; and a U.S.-based sales force. In connection with the transaction, the Company also acquired certain tangible assets, including inventory and equipment. The transaction provided the Company with financial and strategic benefits, primarily the addition of a commercial product and a commercial infrastructure. In January 2005, the agreements related to the transaction were amended due to a settlement of a dispute with Medicis and the acquisition obligation was reduced. The effect of these amendments totaled $21.0 million and was recorded in the first quarter of 2005 as a reduction of the acquisition obligation and goodwill.

Medicis agreed to make available to the Company a convertible note of up to $25.0 million beginning July 1, 2005, based on certain terms and conditions, including a change of control provision. Advances under the convertible note are convertible into shares of the Company’s common stock at a conversion price equal to the average closing price of the stock for the 20 trading days prior to such advance. The convertible note, once drawn, matures in August 2009, but may be repaid by the Company, at the Company’s option, at any time prior to the maturity date. At the time of repayment, Medicis may elect to receive cash or convert the amount due into shares of the Company’s common stock. As of March 31, 2006, the Company has not made any draws on the note.

The amended transaction agreements provided for total acquisition payments of $169.0 million payable to Medicis in specified amounts through 2009, of which $92.7 million remains payable as of March 31, 2006. The remaining payments to Medicis include a payment due in 2009 of $73.6 million, of which $8.6 million can be paid in cash or the Company’s common stock, at the Company’s option. The number of shares issuable in 2009, if the Company elects to pay in common stock, will be based on the per share stock price at that time. The total acquisition cost as amended, including transaction costs totaling approximately $3.5 million, acquired tangible assets and operating liabilities, and the $6.0 million reimbursement for product returns discussed above, was $168.0 million. The remaining payments to Medicis are payable as follows (in thousands):

	As of March 31, 2006
2006		5,600
2007		7,000
2008		6,500
2009		73,600
Total	$	92,700

14

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

Pursuant to the acquisition, the Company was required to deposit $25.0 million of BioMarin common stock and $25.0 million of cash in escrow until the last of the first four quarterly payments to Medicis were made. The $25.0 million of BioMarin common stock was released in 2004 and the $25.0 million of cash was released in the first six months of 2005.

The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired and liabilities assumed are recorded at the date of acquisition, at their respective fair values. The Company’s consolidated financial statements for the period subsequent to the acquisition date reflect these values and the results of operations of the Ascent Pediatrics business. The total consideration has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed. A summary of the material revisions to the purchase price allocation, is as follows (in thousands):

The fair value of the transaction was allocated as follows (in thousands):

Product technology	$	88,689
In-process research and development		31,453
Imputed discount on purchase price		27,054
Inventory		2,301
Equipment		131
Goodwill		21,262
Liabilities assumed		(2,901	)
Total	$	167,989

The product technology is the only intangible asset subject to amortization and represents the rights to the proprietary knowledge associated with Orapred. These rights include the right to develop, use, and market Orapred. The product technology is being amortized over Orapred’s estimated economic life of 3.5 years using the straight-line method of amortization and includes no estimated residual value. See Note 6 for further discussion of the Company’s acquired intangible assets.

In-process research and development represents the fair value of the two additional proprietary formulations of Orapred that were currently under development but not yet completed.

The imputed discount on the purchase obligation represents the gross value of the future cash payments to Medicis, discounted to their present value at a rate of 6.1%. The discount is being amortized and recorded as interest expense over the life of the obligation using the effective interest rate method.

The allocation to inventory at the purchase date included an adjustment of $0.9 million in addition to the cost basis of the finished inventory to reflect the fair value of the finished inventory, less the cost of disposal and a reasonable profit for the selling effort.

The transaction resulted in a purchase price allocation of $21.3 million to goodwill, representing the financial, strategic and operational value of the transaction to BioMarin. Goodwill is attributed to the premium that the Company was willing to pay to obtain the value of the Orapred business and the synergies created with the integration of key components of a commercial infrastructure. The entire amount of goodwill is expected to be deductible for tax purposes. The purchase price allocation also included $2.9 million of estimated liabilities assumed for product returns and unclaimed rebates.

(5) SUBLICENSE OF NORTH AMERICAN ORAPRED RIGHTS

In March 2006, the Company entered into a license agreement with a third party for the continued sale and commercialization of Orapred and other Orapred formulations currently under development. Through the agreement, the third party acquired exclusive rights to market these products in North America, and BioMarin retained exclusive rights to market these products outside of North America. BioMarin and the third party are individually responsible for the costs of commercializing the products within their respective territories. The third party will also pay BioMarin royalties on its net sales of these products. BioMarin will also transfer the North American intellectual property to the third party in August 2009, following the purchase of the stock of Ascent Pediatrics from Medicis.

Pursuant to the agreement, the third party paid BioMarin $2.5 million as consideration for executing the agreement, and will make additional milestone payments of up to $15.5 million based on the approval and successful commercial launch of Orapred ODT.

15

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

As of March 31, 2006, $0.3 million of royalty and license revenue was recognized for amortization of the up-front license fee and deferred revenue included $2.2 million related to the remaining unamortized portion of the up-front payment. The Company also recognized $42,000 in royalty revenues from Orapred product sold by the third party subsequent to the sublicense of North American rights in March 2006.

(6) ACQUIRED INTANGIBLE ASSETS AND GOODWILL

(a) Acquired Intangible Assets

Acquired intangible assets relate to the Ascent Pediatrics transaction completed during May 2004 (Note 4) and consist of the Orapred product technology as of March 31, 2006. The gross and net carrying value of the Orapred product technology as of March 31, 2006 were as follows (in thousands):

Gross value	$	20,437
Accumulated amortization		(5,503	)
Net carrying value	$	14,934

The Company completed its 2005 annual impairment test during the fourth quarter of 2005 and determined that no impairment of the acquired intangible assets existed as of December 31, 2005. Upon execution of the sublicense of the North American rights of Orapred in March 2006, which was determined to be a triggering event according to SFAS No. 144, the Company performed an impairment test and determined that no impairment of intangible assets existed as of March 31, 2006.

The Orapred product technology is being amortized on a straight-line basis over its revised estimated useful life of 3.5 years. The estimated useful life was revised from 15 years following the execution of the sublicense for the North American rights to Orapred, which includes an asset transfer of the underlying intangible assets in August 2009, representing the revised useful life of the asset. The estimated amortization expense associated with the revised estimated useful life of the Orapred product technology for each of the succeeding five years is as follows (in thousands):

	As of March 31, 2006
2006	$	3,278
2007		4,371
2008		4,371
2009		2,914
Total	$	14,934

As a result of the change in estimate, annual amortization expense through 2009 increased by approximately $3.3 million, from $1.1 million prior to the sublicense, and amortization expense for the first quarter of 2006 increased by $0.1 million, to $0.4 million from $0.3 million for the first quarter of 2005.

(b) Goodwill

Goodwill as of March 31, 2006 relates to the Ascent Pediatrics transaction completed during May 2004 (Note 4). The aggregate amount of goodwill acquired in the transaction was approximately $21.3 million, which reflects the reduction for the settlement of the dispute with Medicis during the first quarter of 2005. Using the reporting unit basis required by SFAS No. 142, Goodwill and Other Intangible Assets, the Company completed an impairment test during March 2006, upon execution of the sublicense of North American rights, which was determined to be a triggering event according to SFAS No. 142. The Company determined that no impairment of goodwill existed as of March 2006. The Company also completed its annual impairment analysis using the same methodology and determined that no impairment existed as of December 31, 2005. As of March 31, 2006, the Company has identified no separate reporting units, following the sublicense of North American rights of Orapred in March 2006, which eliminated the previous Orapred reporting unit. Whether or not goodwill will be impaired in the future is dependent upon the future fair value of the Company.

16

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

(7) JOINT VENTURE

(a) Joint Venture Financial Data

The results of the joint venture’s operations for the three months ended March 31, 2005 and 2006, are presented in the table below (in thousands). Equity in the Income of BioMarin/Genzyme LLC represents the Company’s 50% share of the joint venture’s income. The joint venture’s results and summarized assets and liabilities as presented below give effect to the difference in inventory cost basis between the Company and the joint venture. The difference in basis primarily represents the difference in inventory capitalization policies between the joint venture and the Company. The Company began capitalizing Aldurazyme inventory costs in May 2003 after regulatory approval was obtained. The joint venture began capitalizing Aldurazyme inventory costs in January 2002 when inventory production for commercial sale began. The difference in inventory capitalization policies resulted in greater operating expense recognized by the Company prior to regulatory approval compared to the joint venture. Correspondingly, this results in less cost of goods sold recognized by the Company when the previously expensed product is sold by the joint venture and less operating expenses when this previously expensed product is used in clinical trials. The adjustment will be eliminated when all of the product produced prior to obtaining regulatory approval has been sold or used in clinical trials. The majority of the difference has been eliminated as of March 31, 2006.

	Three months ended March 31,
	2005		2006
Revenue	$	15,874	$	21,332
Cost of goods sold		2,665		5,623
Gross profit		13,209		15,709
Operating expenses		9,117		8,267
Income from operations		4,092		7,442
Other income		60		158
Net income	$	4,152	$	7,600
Equity in the income of BioMarin/Genzyme LLC	$	2,076	$	3,800

At December 31, 2005 and March 31, 2006, the summarized assets and liabilities of the joint venture and the components of the Company’s investment in the joint venture are as follows (in thousands):

	December 31, 2005			March 31, 2006
Assets	$	70,436		$	60,442
Liabilities		(6,470	)		(4,876	)
Net equity	$	63,966		$	55,566
Investment in BioMarin/Genzyme LLC (50% share of net equity)	$	31,983		$	27,783

(b) Joint Venture Critical Accounting Policies

Revenue recognition—BioMarin/Genzyme LLC recognizes revenue from product sales when persuasive evidence of an arrangement exists, the product has been delivered to the customer, title and risk of loss have passed to the customer, the price to the buyer is fixed or determinable and collection from the customer is reasonably assured. Revenue transactions are evidenced by customer purchase orders, customer contracts in certain instances, invoices and the related shipping documents.

The timing of product shipment and receipts can have a significant impact on the amount of revenue that BioMarin/Genzyme LLC recognizes in a particular period. Also, Aldurazyme is sold in part through distributors. Inventory in the distribution channel consists of inventory held by distributors, who are BioMarin/Genzyme LLC’s customers, and inventory held by retailers, such as

17

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

pharmacies and hospitals. BioMarin/Genzyme LLC’s revenue in a particular period can be impacted by increases or decreases in distributor inventories. If distributor inventories increased to excessive levels, BioMarin/Genzyme LLC could experience reduced purchases in subsequent periods. To determine the amount of Aldurazyme inventory in the joint venture’s U.S. distribution channel, BioMarin/Genzyme LLC receives data on sales and inventory levels directly from its primary distributors for the product.

BioMarin/Genzyme LLC records reserves for rebates payable under Medicaid and third-party payer contracts, such as managed care organizations, as a reduction of revenue at the time product sales are recorded.

Certain components of the BioMarin/Genzyme LLC rebate reserves are calculated based on the amount of inventory in the distribution channel, and are impacted by BioMarin/Genzyme LLC’s assessment of distribution channel inventory. BioMarin/Genzyme LLC’s calculation also requires other estimates, including estimates of sales mix, to determine which sales will be subject to rebates and the amount of such rebates. BioMarin/Genzyme LLC updates its estimates and assumptions each period, and records any necessary adjustments to its reserves.

BioMarin/Genzyme LLC records allowances for product returns, if appropriate, as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including the nature of Aldurazyme and its patient population, the customers’ limited return rights, Genzyme’s experience of returns for similar products and BioMarin/Genzyme LLC’s estimate of distribution channel inventory, based on sales and inventory level information provided by the primary distributors for Aldurazyme, as described above. Based on these factors, BioMarin/Genzyme LLC has concluded that product returns will be minimal. In the future, if any of these factors and/or the history of product returns changes, an allowance for product returns may be required.

Inventory—BioMarin/Genzyme LLC values inventories at the lower of cost or fair value. BioMarin/Genzyme LLC determines the cost of raw materials using the average cost method and the cost of work in process and finished goods using the specific identification method. BioMarin/Genzyme LLC analyzes its inventory levels quarterly and writes down to its net realizable value inventory that has expired, become obsolete, has a cost basis in excess of its expected net realizable value, or is in excess of expected requirements. If actual market conditions are less favorable than those projected by the joint venture, additional inventory write-offs may be required.

BioMarin/Genzyme LLC capitalizes inventory produced for commercial sale. Refer to Note 7(a) above for discussion of the difference in inventory cost basis between the Company and BioMarin/Genzyme LLC.

(8) SUPPLEMENTAL BALANCE SHEET INFORMATION

As of December 31, 2005 and March 31, 2006, accounts payable and accrued liabilities consisted of the following (in thousands):

	December 31, 2005		March 31, 2006
Accounts payable	$	484	$	440
Accrued accounts payable		10,018		9,093
Accrued vacation		1,581		1,696
Accrued compensation		4,219		2,536
Accrued interest and taxes		372		1,773
Accrued other		335		515
Accrued rebates		1,751		817
Acquired rebate reserve		1,546		1,325
Short-term returns reserves		430		1,460
Current portion of deferred rent		198		291
	$	20,934	$	19,946

18

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

As of December 31, 2005 and March 31, 2006, other long-term liabilities consisted of the following (in thousands):

	December 31, 2005		March 31, 2006
Long-term portion of returns reserve	$	5,684	$	5,252
Long-term portion of deferred rent		1,967		1,936
Deferred compensation liability		—		405
Total other long-term liabilities	$	7,651	$	7,593

As of December 31, 2005 and March 31, 2006, inventory consisted of the following (in thousands):

	December 31, 2005		March 31, 2006
Orapred raw materials	$	821	$	855
Naglazyme raw materials		1,717		2,174
Naglazyme work in process		8,032		11,763
Naglazyme finished goods		328		3,345
Total inventory	$	10,898	$	18,137

Orapred raw materials relates to inventory that has not yet been sold to the third party as part of the sublicense.

(9) PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2005 and March 31, 2006, consisted of (in thousands):

	Property & Equipment						Estimated useful lives
Category	December 31, 2005			March 31, 2006
Leasehold improvements	$	57,809		$	58,343		Shorter of life of asset or lease term
Manufacturing and laboratory equipment		13,938			14,336		5 years
Computer hardware and software		5,055			5,412		3 years
Office furniture and equipment		3,269			3,336		5 years
Construction-in-progress		759			272
		80,830			81,699
Less: Accumulated depreciation		(43,509	)		(45,448	)
Total property and equipment, net	$	37,321		$	36,251

Depreciation expense for each of the three-month periods ended March 31, 2005 and 2006 was $1.9 million.

In April 2006, as a subsequent event, the Company purchased its previously leased Galli manufacturing facility and will retain ownership of all leasehold improvements made to the property. The purchase price of the facility was approximately $17.0 million, which was paid in cash in April 2006. As a result of the purchase, the Company expects to reverse deferred rent liabilities of approximately $0.9 million.

(10) CONVERTIBLE DEBT

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

19

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

In connection with the placement of the 2006 debt, the Company paid approximately $5.5 million in offering costs, which have been deferred and are included in other assets. They are being amortized as interest expense over the life of the debt, and the Company recognized an insignificant amount of amortization expense during the three months ended March 31, 2006.

In June 2003, the Company sold $125 million of convertible debt due on June 15, 2008. The debt was issued at face value and bears interest at the rate of 3.5% per annum, payable semi-annually in cash. The debt is convertible, at the option of the holder, at any time prior to maturity or redemption, into shares of Company common stock at a conversion price of approximately $14.01 per share, subject to adjustment in certain circumstances. On or after June 20, 2006, the Company may, at its option, redeem the notes, in whole or in part, at predetermined prices, plus any accrued and unpaid interest to the redemption date. The Company also must repay the debt if there is a qualifying change in control or termination of trading of its common stock.

In connection with the placement of the 2003 debt, the Company paid approximately $4.1 million in offering costs, which have been deferred and are included in other assets. They are being amortized as interest expense over the life of the debt, and the Company recognized $0.2 million of amortization expense during the three months ended March 31, 2005 and 2006.

(11) COMMON STOCK OFFERING

In March 2006, the Company completed a public offering of its common stock concurrent with its public offering of senior subordinated convertible debt (see Note 10). In the common stock offering, the Company sold 10,350,000 shares at a price to the public of $13.00 per share, or a total offering price of $134.6 million. The net proceeds were approximately $127.5 million.

(12) EQUIPMENT AND FACILITY LOANS

In May 2004, the Company executed a $25 million credit facility to finance the Company’s equipment purchases and facility improvements. As of March 31, 2006, $19.9 million was outstanding on the facility. Payments of principal and interest of LIBOR plus 1.25% (6.08% as of March 31, 2006) were due through maturity in 2011. The facility required an all-asset first priority lien, excluding certain assets such as intellectual property and assets related to the Ascent Pediatrics transaction. The lender required that the Company maintain a total unrestricted cash balance, including short-term investments, of at least $25 million and that the Company maintain a deposit with the lender equal to the outstanding balance, or $10.0 million, whichever is greater. As of March 31, 2006, $19.9 million of the total minimum unrestricted cash balance was required to be maintained in an account with the lender as an unrestricted compensating balance. The facility also contained additional customary non-financial covenants. Principal payments due on equipment and facility loans ranged from approximately $5,000 to $119,000 per month.

In April 2006, the outstanding balance on these loans was repaid in full. As a result of the subsequent payment, as of March 31, 2006, the debt balance has been classified as a current liability and the cash related to long-term debt has been classified as cash and cash equivalents.

(13) SUPPLEMENTAL CASH FLOW INFORMATION

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

	Three months ended March 31,
	2005		2006
Settlement of dispute with Medicis, net of discount	$	22,648	$	—

(14) FINANCIAL INSTRUMENTS—CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and accounts receivable. All cash, cash equivalents, and short-term investments are placed in financial institutions with strong credit ratings, which minimizes the risk of loss due to nonpayment. Accounts receivable as of March 31, 2006 relates to net product sales of both Naglazyme and Orapred. With respect to Naglazyme accounts receivable, a significant portion of net product sales are made to a limited number of financially viable specialty pharmacies. The Company’s two largest customers accounted for 36% and 10% of net revenues, respectively, or 46% of the Company’s total net product sales of Naglazyme in aggregate for the three months ended March 31, 2006. In the first quarter of 2006, net product sales of Naglazyme were $3.1 million from customers based in the U.S. and $3.9 million from customers based outside of the U.S.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

The Company does not require collateral from its customers, but performs periodic credit evaluations of its customers’ financial condition and requires immediate payment in certain circumstances. The Company has not experienced any significant losses related to its financial instruments and management does not believe a significant credit risk existed at March 31, 2006.

(15) DEFERRED COMPENSATION PLAN

On December 1, 2005, the Company adopted the BioMarin Pharmaceutical Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan allows eligible employees, including management and certain highly-compensated employees as designated by the Plan’s Administrative Committee, and members of the Board the opportunity to make voluntary deferrals of compensation to specified future dates, retirement or death. Participants are permitted to defer portions of their salary and annual cash bonus. The Company may not make additional direct contributions to the Deferred Compensation Plan on behalf of the participants, without further action by the Board. Deferred compensation is held in trust and generally invested to match the investment benchmarks selected by participants. The recorded cost of any investments will approximate fair value. Investments of $0.4 million and the related deferred compensation liability of $0.4 million were recorded as of March 31, 2006. The change in market value was insignificant for the three months ended March 31, 2006.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Form 10-Q contains “forward-looking statements” as defined under securities laws. Many of these statements can be identified by the use of terminology such as “believes,” “expects,” “anticipates,” “plans,” “may,” “will,” “projects,” “continues,” “estimates,” “potential,” “opportunity” and similar expressions. These forward-looking statements may be found in “Risk Factors,” and other sections of this Form 10-Q. Our actual results or experience could differ significantly from the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in “Risk Factors,” as well as those discussed elsewhere in this Form 10-Q. You should carefully consider that information before you make an investment decision.

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

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this quarterly report. In addition to the other information in this Form 10-Q, investors should carefully consider the following discussion and the information under “Risk Factors” when evaluating us and our business.

Overview

We develop and commercialize innovative biopharmaceuticals for serious diseases and medical conditions. We select product candidates for diseases and conditions that represent a significant medical need, have well-understood biology and provide an opportunity to be first-to-market. Our product portfolio is comprised of two approved products and multiple investigational product candidates. Approved products include Aldurazyme® (laronidase) and Naglazyme™ (galsulfase). Additionally, we have rights to receive payments and royalties related to Orapred® subsequent to the sublicense of North American rights in March 2006.

Our product portfolio is comprised of two approved products and multiple investigational product candidates. Approved products include Aldurazyme and Naglazyme. Aldurazyme has been approved for marketing in the United States (U.S.) by the U.S. Food and Drug Administration (FDA), in the European Union (E.U.) by the European Commission (EC) and in other countries for the treatment of mucopolysaccharidosis I (MPS I), for which no other Drug treatment currently exists. MPS I is a progressive and debilitating life-threatening genetic disease that frequently results in death during childhood or early adulthood. It is caused by the deficiency of alpha-L-iduronidase, an enzyme normally required for the breakdown of certain complex carbohydrates known as glycosaminoglycans (GAGs). Aldurazyme has been granted orphan drug status in the U.S. and the E.U., which gives Aldurazyme seven years of market exclusivity in the U.S. and 10 years of market exclusivity in the E.U. for the treatment of MPS I, expiring in 2010 and 2013, respectively. We have developed Aldurazyme through a 50/50 joint venture with Genzyme. Aldurazyme net revenue recorded by our joint venture for the first quarter of 2006 totaled $21.3 million, compared to $15.9 million for the first quarter of 2005.

In May 2005, the FDA granted marketing approval for Naglazyme for the treatment of mucopolysaccharidosis VI (MPS VI), a debilitating life-threatening genetic disease for which no other drug treatment currently exists. MPS VI is caused by the deficiency of N-acetylgalactosamine 4-sulfatase (arylsulfatase B), an enzyme normally required for the breakdown of GAGs. Naglazyme net product sales for the first quarter of 2006 totaled $7.0 million. In January 2006, the E.C. granted marketing approval for Naglazyme in the E.U. Naglazyme has been granted orphan drug status in the U.S. and the E.U., which confers seven years of market exclusivity in the U.S. and 10 years of market exclusivity in the E.U. for the treatment of MPS VI, expiring in 2012 and 2016, respectively. Product launch in the E.U. is underway on a country-by-country basis.

In May 2004, we completed the transaction to acquire the business of Ascent Pediatrics from Medicis. The Ascent Pediatrics business includes Orapred, a drug primarily used to treat asthma exacerbations in children and other inflammatory conditions and two additional proprietary formulations of Orapred in development. Orapred net product sales for the first quarter of 2006 prior to the sublicense described below, totaled $2.0 million, which included a $0.9 million benefit from the reversal of certain rebate reserves, compared to $5.0 million in the first quarter of 2005. In October 2005, we announced that the FDA had accepted for filing the New Drug Application for Orapred Oral Dissolving Tablets (ODT) for the treatment of inflammatory conditions. We expect to receive a response from the FDA by June 1, 2006.

In March 2006, we entered into an agreement with a third party for the continued sale and commercialization of the Orapred product line. Through the sublicense agreement, the third party acquired exclusive rights to market these products in North America, and we retained exclusive rights to market these products outside of North America. The third party and we are individually responsible for the costs of commercializing the products within our respective territories.

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Pursuant to the sublicense, we received $2.5 million as consideration for executing the agreement, and will receive additional milestone payments of up to $15.5 million based on the approval and successful commercial launch of Orapred ODT. In October 2005, we announced that the FDA had accepted for filing the New Drug Application for Orapred ODT for the treatment of inflammatory conditions. We expect to receive a response from the FDA by June 1, 2006. Additionally, we will receive royalties on net sales of these products. We will also transfer the North American intellectual property to the third party in August 2009, following the purchase of the stock of Ascent Pediatrics from Medicis.

We are developing several investigational product candidates for the treatment of genetic diseases including: Phenoptin^TM (sapropterin dihydrochloride), a proprietary oral form of tetrahydrobiopterin (6R-BH4 or BH4), for the treatment of PKU; and Phenylase^TM (phenylalanine ammonia lyase), an enzyme substitution therapy for the treatment of phenylketonurics who are not 6R-BH4 responsive. We are also evaluating the potential application of BH4 in treating multiple cardiovascular indications, beginning with a Phase 2 clinical trial in individuals with poorly controlled hypertension.

In December 2004, we announced that we initiated our Phase 2 clinical trial of Phenoptin for PKU. Patients enrolled in the Phase 2 clinical trial who met certain criteria were eligible to enroll in the Phase 3 clinical trial, which began in April 2005. The Phase 3 clinical trial of Phenoptin was a six-week, multi-center, international, double-blind, placebo-controlled study. On March 15, 2006, we announced positive results from the Phase 3 clinical trial. We also have initiated a supplemental diet study in children between 4 to 12 years of age. We have received orphan drug designation for Phenoptin for the treatment of PKU in both the U.S. and E.U. If Phenoptin is approved for marketing, it will have seven years of market exclusivity in the U.S. and ten years of market exclusivity in the E.U. In January 2006, the FDA designated Phenoptin as a fast-track product for the treatment of PKU.

PKU is an inherited metabolic disease that affects at least 50,000 diagnosed patients under the age of 40 in the developed world. We believe that 30% to 50% of those with PKU could benefit from treatment with Phenoptin, if approved. PKU is caused by a deficiency of an enzyme, phenylalanine hydroxylase (PAH), which is required for the metabolism of Phenylalanine (Phe). is an amino acid found in most protein-containing foods. Without sufficient quantity or activity of PAH, Phe accumulates to abnormally high levels in the blood resulting in a variety of serious neurological complications. Phenoptin, our lead product candidate for the treatment of PKU, is a proprietary synthetic oral form of 6R-BH4, a small-molecule therapeutic that is a co-factor for PAH. If approved, Phenoptin could become the first drug for the treatment of PKU.

In May 2005, the Company entered into an agreement with Serono for the further development and commercialization of Phenoptin and Phenylase for PKU, and 6R-BH4, the active ingredient in Phenoptin, for other diseases such as cardiovascular indications, including those associated with endothelial dysfunction. Through the agreement, Serono acquired exclusive rights to market these products in all territories outside the U.S. and Japan, and BioMarin retained exclusive rights to market these products in the U.S. BioMarin and Serono will generally share equally all development costs following successful completion of Phase 2 clinical trials for each product candidate in each indication. BioMarin and Serono are individually responsible for the costs of commercializing the products within their respective territories. Serono will also pay BioMarin royalties on its net sales of these products and milestone payments for the successful completion of certain development and approval milestones.

Endothelial dysfunction is a condition characterized by the inability of the endothelium (the single cell layer lining that forms the barrier between blood vessel walls and the blood) to respond to physiological changes correctly. In preclinical and investigator-sponsored studies, BH4 administration has improved vascular endothelial function in animal models and in patients with diabetes and other cardiovascular diseases. BH4 is a naturally occurring enzyme cofactor required for the production of nitric oxide, a molecule that is key to the regulation of dilation and constriction of blood vessels. We plan to conduct additional preclinical and clinical studies of BH4 for endothelial dysfunction in 2006.

Phenylase is an investigational enzyme substitution therapy currently in preclinical development. It is being developed as a subcutaneous injection and is intended for those who suffer from classic PKU and for those who are not 6R-BH4 responsive, and do not respond to Phenoptin.

We are evaluating other enzyme-based therapies for serious medical conditions including Vibrilase^™, a topical investigational enzyme therapy for use in the debridement of serious burns. In August 2004, we announced positive data from a Phase 1b clinical trial of Vibrilase. Data from the trial suggest that treatment with Vibrilase is generally safe and well-tolerated. Additionally, we are evaluating preclinical development of several other enzyme product candidates for genetic and other diseases as well as an immune tolerance platform technology to overcome limitations associated with the delivery of existing pharmaceuticals.

Key components of our results of operations for the three months ended March 31, 2005 and 2006, include the following:

	Three months ended March 31,
	2005			2006
Total net product sales	$	4,989		$	8,979
Research and development expense		14,992			12,279
Net loss		(22,458	)		(9,780	)
Orapred acquisition-related expenses		2,062			1,563

Our cash, cash equivalents and short-term investments and cash balances related to long-term debt totaled $347.7 million as of March 31, 2006 compared to $64.8 million as of December 31, 2005.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our net loss, as well as on the value of certain assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly. Unless otherwise noted below, there have not been any recent changes to our assumptions, judgments or estimates included in our critical accounting policies. We believe that the assumptions, judgments and estimates involved in the accounting for the impairment of long-lived assets, revenue recognition and related reserves, income taxes, inventory, research and development, and stock option plans have the greatest potential impact on our consolidated financial statements, so we consider these to be our critical accounting policies. Historically, our assumptions,

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judgments and estimates relative to our critical accounting policies have not differed materially from actual results. For further information on our critical and other accounting policies, see Note 2 to the accompanying consolidated financial statements.

Impairment of Long-Lived Assets

Our long-lived assets include our investment in BioMarin/Genzyme LLC, property, plant and equipment, and the acquired Orapred intangible assets and goodwill. We regularly review long-lived assets for impairment. The recoverability of long-lived assets, other than goodwill, is measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate. If the carrying amount of the asset is not recoverable, an impairment loss is recorded for the amount that the carrying value of the asset exceeds its fair value. No significant impairments were recognized for the year ended December 31, 2005 and the three months ended March 31, 2006.

We currently operate in one business segment, the biopharmaceutical development and commercialization segment. When reviewing goodwill for impairment, we assess whether goodwill should be allocated to operating levels lower than our single operating segment for which discrete financial information is available and reviewed for decision-making purposes. These lower levels are referred to as reporting units. Currently, we have identified no separate reporting units as per SFAS No. 142, following the sublicense of North American Rights for Orapred , which was previously our only separate reporting unit. Prior to the sublicense, which was considered a triggering event, we performed an impairment test at the Orapred reporting unit level and determined that there was no impairment at March 2006. We perform an annual impairment test in the fourth quarter of each fiscal year by assessing the fair value and recoverability of our goodwill by comparing the carrying value of the reporting unit to its fair value as determined by available market value, a discounted cash flow model or appraisals, unless facts and circumstances warrant a review of goodwill for impairment before that time.

Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use internal discounted cash flow estimates, quoted market prices when available and independent appraisals as appropriate to determine fair value. We derive the required cash flow estimates from our historical experience and our internal business plans and apply an appropriate discount rate.

We believe that our investment in the joint venture will be recovered because we project that the joint venture will maintain sustained positive earnings and cash flows in the future. The joint venture recorded net income of $3.8 million during the first quarter of 2006. We and our joint venture partner maintain the ability and intent to fund the joint venture’s operations, as necessary.

The recoverability of the carrying value of leasehold improvements for our administrative facilities will depend on the successful execution of our business initiatives and our ability to earn sufficient returns on our approved products and product candidates. Based on management’s current estimates, we expect to recover the carrying value of such assets.

Revenue Recognition

We recognize revenue in accordance with the provisions of Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 104: Revenue Recognition, and Emerging Issues Task Force Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. Our revenues consist of Naglazyme and Orapred product sales, revenues from our collaborative agreement with Serono and revenues from our Orapred sublicense agreement.

Naglazyme product sales—We recognize revenue from Naglazyme product sales when persuasive evidence of an arrangement exists, the product has been delivered to the customer, title and risk of loss have passed to the customer, the price to the buyer is fixed or determinable and collection from the customer is reasonably assured. Naglazyme product sales transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents.

In the U.S., Naglazyme is generally sold to specialty pharmacies or end-users, such as hospitals, which act as retailers. In the E.U., Naglazyme is generally sold to our authorized European distributor and hospitals, which act as end users. Because of the pricing of Naglazyme, the limited number of patients and the customers’ limited return rights, Naglazyme customers and retailers generally carry a very limited inventory. We also sell Naglazyme to certain larger pharmaceutical wholesalers, which, with respect to Naglazyme, act as intermediaries between us and end-users and generally do not stock quantities of Naglazyme. Accordingly, we expect that sales related to Naglazyme will be closely tied to end-user demand.

We record reserves for rebates payable under Medicaid and other government programs as a reduction of revenue at the time product sales are recorded. Our reserve calculations require estimates, including estimates of sales mix, to determine which sales will be subject to rebates and the amount of such rebates. We update our estimates and assumptions each period, and record any necessary

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adjustments to our reserves. To the extent actual rebates differ from our estimates, additional reserves may be required or reserves may need to be reversed.

We record allowances for product returns, if appropriate, as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including market exclusivity of the product based on its orphan drug status, the patient population, the customers’ limited return rights and our joint venture’s experience of returns for Aldurazyme, which is a similar product. Based on these factors, management has concluded that Naglazyme product returns will be minimal. In the future, if any of these factors and/or the history of product returns changes, an allowance for product returns may be required.

As Naglazyme was approved for commercial sale in the U.S. during the second quarter of 2005, we have limited historical experience with rebates and returns specific to Naglazyme. Until adequate historical experience is obtained to serve as a reasonable basis for our estimates of rebates and returns, management will use, to the extent available, current estimated sales mix of which sales will be eligible for rebates, estimated rebate rates for state Medicaid programs and other government programs, as well as experience obtained through the commercialization of Aldurazyme by our joint venture with Genzyme, which is a similar product. The nature and amount of our current estimates of the applicable revenue dilution item that are applied to gross sales of Naglazyme to derive net sales are described in the table below.

Revenue Dilution Item	Percentage of Gross Sales		Description
Rebates	6-8	%	Rebates payable to state Medicaid and other government programs
Cash Discounts	1-2	%	Discounts offered to customers for prompt payment of accounts receivable
Total	7-10	%

We maintain a policy to record allowances for doubtful accounts for estimated losses resulting from the inability of its Naglazyme customers to make required payments. We first recorded sales of Naglazyme during the second quarter of 2005 and as of March 31, 2006, we had not experienced any bad debts and had no allowance for doubtful accounts. However, since we cannot predict changes in the financial stability of our customers, we cannot guarantee that allowances will not be required in the future. If we begin to experience credit losses, our operating expenses would increase.

Orapred product sales— Following our sublicense of North American rights to a third party in March 2006, we do not expect to record future net product sales related to the Orapred product line. Future revenue streams related to the Orapred product will be realized through recognition of revenue for the up-front and milestone payments as well as royalty revenue for future sales of Orapred products by the third party. Prior to the sublicense, we recognized revenue from Orapred product sales when persuasive evidence of an arrangement existed, the product had been shipped, title and risk of loss had passed to the customer, the price to the buyer was fixed or determinable and collection from the customer was reasonably assured. Orapred product sales transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents.

We established and maintained reserves for amounts payable to managed care organizations and state Medicaid programs for the reimbursement of a portion of the retail price of prescriptions filled that are covered by the respective plans. The amounts estimated to be paid relating to products sold were recognized as revenue reductions and as additions to accrued expenses at the time of the original sale. The rebate reserves were based on our best estimate of the expected prescription fill rate to these managed care organizations and state Medicaid patients, as well as the rebate rates associated with eligible prescriptions. The estimates were developed using the product’s rebate history adjusted to reflect known and forecasted changes in the factors that impact such reserves. These factors included changes in the mix of prescriptions that were eligible for rebates, changes in the contract rebate rates and the lag time related to the processing of rebate claims by our customers and managed care organizations. The length of time between the period of prescriptions and the processing of the related rebates was consistent historically at between three and six months, depending on the nature of the rebate. The length of time between the period of original sale by us and the processing of the related rebate is dependent upon both the length of time that the product is in the distribution channel and the lag time related to rebate processing by third parties. Additionally, we experienced longer than usual rebate processing lag times as a result of the transition of the product from Medicis after the acquisition and high levels of Orapred inventory held by wholesalers. In the first three months of 2006, we revised our estimates of future rebates payable due to the sublicense of North American rights for Orapred to a third party, which reduced our liability for certain rebates. The decrease in estimated future rebates resulted in reserve reversals and an increase in net revenue of approximately $0.9 million, which was recorded during the first three months of 2006. To the extent actual rebates differ from our estimates, additional reserves may be required or reserves may need to be reversed.

Provisions for sales discounts and estimates for chargebacks and product returns are established as a reduction of product sales at the time such revenues are recognized. These revenue reductions are established by our management as its best estimate at the time of the original sale based on the product’s historical experience adjusted to reflect known changes in the factors that impact such

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reserves. These revenue reductions are generally reflected either as a direct reduction to gross sales and accounts receivable through an allowance or as an addition to accrued expenses. We generally permit product returns only if the product is damaged or if it is returned near or after expiration.

Our estimates for future product returns are primarily based on the actual return history for the product and estimates of future demand related to estimated wholesaler inventory levels. Although we are unable to quantify wholesaler inventory levels of Orapred with any certainty, to the extent necessary based on the expiration date and our estimates of quantity of product in the distribution channel, we adjust our estimate for future returns as appropriate. We estimate wholesaler inventory levels, to the extent possible, based on limited information obtained from certain of our wholesale customers and through other internal analyses. Our internal analyses utilize information such as historical sales to wholesalers, product shelf-life based on expiration dating, estimates of the length of time product is in the distribution channel and historical prescription data, which are provided by a third-party vendor. We also evaluate the current and future commercial market for Orapred and consider factors such as Orapred’s performance compared to its existing competitors.

The amount of Orapred returns in the normal course of business compared to sales has been reasonably consistent historically. Our experience is that the length of time between the period of original sale and the product return is between one and two years. Because the product has been on the market for approximately four years and the product expiration dating is two to three years, we are continuing to obtain and analyze the returns history. Additionally, in the Ascent Pediatrics transaction we acquired liabilities for certain Orapred product returns and unclaimed rebates for the period prior to our acquisition of the product.

As discussed above, our estimates of revenue dilution items are based primarily on the historical experience for the product, as adjusted to reflect known and forecasted changes in the factors that impact the revenue dilutions. The nature and amount of our current estimates of the applicable effective rates for revenue dilution items that are applied to gross sales of Orapred to derive net sales are described in the table below. There are no additional material revenue dilution items other than those disclosed below and there have been no material revisions to our estimates of our revenue dilution items to date, except as discussed above.

Revenue Dilution Item	Estimated Rate		Description
Sales Returns	3-4	%	Provision for returns of product sales, mostly due to product expiration
Rebates	8-9	%	Rebates offered to managed care organizations and state Medicaid programs
Cash Discounts	2	%	Discounts offered to customers for prompt payment of accounts receivable
Total	13-15	%

We periodically evaluate the need to maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. When making this evaluation, we make judgments about the creditworthiness of customers based on ongoing credit evaluations and the aging profile of customer accounts receivable and assess current economic trends that might impact the level of credit losses in the future. Historically, the Orapred product has not experienced significant credit losses and our allowance for doubtful accounts as of March 31, 2006 is insignificant. This is due to a significant portion of Orapred sales that are made to a limited number of financially viable distributors, because we offer discounts that encourage the prompt payment of outstanding receivables and because we require immediate payment in certain circumstances. However, since we cannot predict changes in the financial stability of our customers, we cannot guarantee that allowances will not be required in the future. If we begin to experience credit losses, our operating expenses would increase.

Collaborative agreement revenues—Collaborative agreement revenues from Serono include both license revenue and contract research revenue. Nonrefundable up-front license fees where we have continuing involvement through research and development collaboration are initially deferred and recognized as license revenue over the estimated period for which we continue to have a performance obligation. License revenue includes the portion of the $25.0 million up-front license fee received from Serono recognized as revenue during the development period.

Our estimates of the period over which we have an ongoing performance obligation are based on the contractual terms of the underlying arrangement, the level of effort required for us to fulfill our obligation and the anticipated timing of the fulfillment of our obligation. Accordingly, we have deferred the up-front license fee received from Serono and will recognize it as revenue on a straight-line basis over approximately 3.25 years, which represents the estimated time from inception of the agreement until European regulatory approval of Phenoptin for the treatment of PKU, at which point the Company’s performance obligations for developing Phenoptin for the treatment of PKU will end. There are no cost of sales associated with the amortization of the up-front license fee received from Serono. Our estimate of the Phenoptin commercialization period is based on several underlying assumptions about uncertain events, including actions by European regulatory authorities, results of our ongoing clinical trials and successful commercial

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scale manufacturing of Phenoptin. As Phenoptin advances through the clinical development and regulatory process, our estimates of our performance obligation period may change. We regularly review our estimates of the period over which we have an ongoing performance obligation.

Nonrefundable reimbursements received for shared development costs are recognized as revenue in the period in which the related expenses are incurred. Contract research revenue included in collaborative agreement revenues represented Serono’s share of Phenoptin development costs under the agreement, which are recorded as research and development expenses.

Royalty and license revenues—We recognize royalty revenue and royalty receivables in the periods these royalties are earned, in advance of collection. Royalty revenue and receivables are based upon communication with the sublicensee.

The timing of customer purchases and the resulting product shipments have a significant impact on the amount of royalty revenue that we recognize in a particular period. The majority of Orapred sales are made to wholesalers, which, in turn, resell the product to retail outlets. Inventory in the distribution channel consists of inventory held by wholesalers, who are the principal customers for Orapred, and inventory held by retailers. Royalty revenues from Orapred sales in a particular period will be impacted by increases or decreases in wholesaler inventory levels. If wholesaler inventories continue to substantially exceed the retail demand, we could experience reduced royalty revenue from sales in subsequent periods.

We have deferred the up-front license fee of $2.5 million received from a third party for the North American Orapred rights, and will recognize it as revenue on a straight-line basis over a period of approximately 5 months, which represents the estimated time from inception of the agreement until commercial launch of Orapred ODT, at which point the Company’s performance obligations will end. Our estimate of the Orapred ODT commercial launch period is based on several underlying assumptions about uncertain events, including actions by U.S. regulatory authorities and successful commercialization efforts by the third party. As Orapred ODT advances through the regulatory process, our estimates of our performance obligation period may change. We regularly review our estimates of the period over which we have an ongoing performance obligation. There are no cost of sales associated with the royalties and license revenues recorded during the period and we do not expect to incur related cost of sales in future periods.

Milestone payments are recognized in full when the related milestone performance goal is achieved and the Company has no future performance obligations related to that payment.

Inventory

We value inventories at the lower of cost or fair value. We determine the cost of inventory using the average cost method. We analyze our inventory levels quarterly and write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected requirements. Expired inventory is disposed of and the related costs are written off. The determination of whether or not inventory costs will be realizable requires estimates by our management. A critical estimate in this determination is the estimate of the future expected inventory requirements, whereby we compare our internal sales forecasts to inventory on hand. Actual results may differ from those estimates and additional inventory write-offs may be required.

Regulatory approval for Naglazyme was received in May 2005, and costs related to the manufacturing of Naglazyme prior to this date were expensed as research and development expenses. We consider regulatory approval of product candidates to be uncertain, and product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained, as such, the related manufacturing costs for Naglazyme, prior to regulatory approval, were not capitalized as inventory. When regulatory approval was obtained in May 2005, we began capitalizing inventory at the lower of cost or fair value. Naglazyme inventory as of March 31, 2006 includes a portion of the zero cost basis quantities. Until we begin to sell the inventory produced after regulatory approval was obtained, the cost of goods sold or used in clinical trials for the previously expensed inventory will be insignificant or zero. We expect that the majority of the previously expensed inventory will be sold or used in clinical trials by the first quarter of 2007. Stock based compensation of $0.4 million was capitalized into Naglazyme inventory for the three months ended March 31, 2006.

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Research and Development

Research and development expenses include expenses associated with contract research and development provided by third parties, product manufacturing prior to regulatory approval, clinical and regulatory costs, and internal research and development costs. A critical accounting assumption by our management is that we believe that regulatory approval of our product candidates is uncertain, and do not assume that product manufactured prior to regulatory approval will be sold commercially. As a result, inventory costs for product candidates are expensed as research and development expenses until regulatory approval is obtained, at which time inventory is capitalized at the lower of cost or fair value. Historically, there have been no changes to this assumption.

Clinical Trial Accruals

We accrue costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the contract research organizations (CROs), clinical study sites, laboratories, consultants, or other clinical trial vendors that perform the activities. Related contracts vary significantly in length, and may be for a fixed amount, a variable amount based on actual costs incurred, capped at a certain limit, or for a combination of these elements. Activity levels are monitored through close communication with the CROs and other clinical trial vendors, including detailed invoice and task completion review, analysis of expenses against budgeted amounts, analysis of work performed against approved contract budgets and payment schedules, and recognition of any changes in scope of the services to be performed. Certain CRO and significant clinical trial vendors provide an estimate of costs incurred but not invoiced at the end of each quarter for each individual trial. The estimates are reviewed and discussed with the CRO or vendor as necessary, and are included in research and development expenses for the related period. For clinical study sites, which are paid periodically on a per-subject basis to the institutions performing the clinical study, we accrue an estimated amount based on subject screening and enrollment in each quarter. All estimates may differ significantly from the actual amount subsequently invoiced. No adjustments for material changes in estimates have been recognized in any period presented.

Stock Option Plans

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

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

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

If factors change and we employ different assumptions in the application of SFAS No. 123R, the compensation expense that we record in future periods may differ significantly from what we have recorded in the current period.

Recent Accounting Pronouncements

See Note 2(j) of our accompanying consolidated financial statements for a full description of recent accounting pronouncements and our expectation of their impact on our results of operations and financial condition.

Results of Operations

All of the activities related to the manufacture, distribution and sale of Aldurazyme are reported in the results of the joint venture. Because of this presentation and the significance of the joint venture’s operations compared to our total operations, we have divided our discussion of the results of operations into two sections, BioMarin in total and BioMarin/Genzyme LLC. The discussion of the joint venture’s operations includes the total amounts for the joint venture, not just our 50% interest in the operations.

BioMarin Results of Operations

Net Loss

Our net loss in the first quarter of 2006 was $9.8 million as compared to $22.5 million in the first quarter of 2005. Net loss for the first quarter of 2006 decreased primarily as a result of the following (in millions):

Net loss for the first quarter of 2005	$	(22.5	)
Increased Naglazyme gross profit		6.1
Decreased Naglazyme clinical trial and manufacturing expenses		6.1
Increased collaborative agreement revenues		4.5
Decreased Orapred sales and marketing expenses		3.8
Decreased Orapred gross profit		(2.8	)
Increased Phenoptin manufacturing and clinical trial costs		(1.9	)
Increased Naglazyme sales and marketing expenses		(1.7	)
Increased profits from BioMarin/Genzyme LLC		1.7
Stock-based compensation expense		(1.7	)
Increased 6R-BH4 development costs for endothelial disfunction		(0.6	)
Increase in corporate overhead and other		(0.8	)
Net loss for the first quarter of 2006	$	(9.8	)

See below for additional information related to the primary net loss fluctuations presented above.

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Net Product Sales and Gross Profit

Net product sales increased $4.0 million, to $9.0 million in the first quarter of 2006 from $5.0 million in the first quarter of 2005. Net product sales in the first quarter of 2006 of $9.0 million included $7.0 million of net product sales of Naglazyme and $2.0 million of net product sales of Orapred. Net product sales in the first quarter of 2005 were exclusively related to net product sales of Orapred.

In May 2005, we received marketing approval for Naglazyme in the U.S., and began shipping product in late June 2005. Net product sales for Naglazyme for the first quarter of 2006 were $7.0 million, of which $3.9 million was from customers based outside of the U.S., and gross profit was approximately $6.1 million, representing a gross margin of approximately 87%. Cost of sales in the first quarter of 2006 includes $0.5 million related to inventory write-offs. Excluding the inventory write-offs, gross margin would have been approximately 94%. In accordance with our inventory accounting policy, we began capitalizing Naglazyme inventory production costs after U.S. regulatory approval was obtained in May 2005. As a result, some of the product sold in the first quarter of 2006 had an insignificant basis. We expect to report lower cost of goods sold for Naglazyme until all of the inventory manufactured prior to marketing approval is sold or used in clinical trials. We estimate that the majority of the inventory with an insignificant cost basis will be sold or used in clinical trials by the first quarter of 2007.

Commencing with our acquisition of the Ascent Pediatrics business on May 18, 2004 through the sublicense in March 2006, our net product sales include sales of Orapred, a drug primarily used to treat asthma exacerbations in children. During the first quarter of 2006, we recognized $2.0 million of net product sales of Orapred prior to the sublicense, and approximately $1.2 million of gross profit, representing a gross margin of approximately 60%. Net product sales in the first quarter of 2006 include a $0.9 million benefit related to the reversal of certain rebate reserves. Excluding the rebate reserve reversal, gross margin would have been approximately 27%, reflecting sales related to the transfer of Orapred inventory to the sublicensee which were near our recorded cost. Cost of sales excludes the amortization of the developed product technology resulting from the acquisition of the Ascent Pediatrics business.

In March 2006, we sublicensed rights to sell and distribute Orapred in North America for up-front and milestone payments of up to $18.0 million and royalties on future sales of all Orapred products, including Orapred ODT, if approved. As a result of the sublicense, we do not expect to record future net product sales related to the Orapred product line. Future revenue streams related to the Orapred product will include license and royalty revenues for future sales of Orapred product by the sublicensee.

Collaborative Agreement Revenues

Collaborative agreement revenues include both license revenue and contract research revenue under our agreement with Serono which was executed in May 2005. Collaborative agreement revenues of $4.5 million for the first quarter of 2006 includes the amortization of $1.9 million of the up-front license fee received from Serono recognized as revenue during the period and $2.6 million of reimbursable Phenoptin development costs incurred during the period. The related costs are included in research and development expenses.

Royalty and License Revenues

During the first quarter of 2006, we recognized $42,000 in royalty revenues from Orapred product sold by the third party, subsequent to the sublicense of North American rights in March 2006. Royalty and license revenue for the first quarter of 2006 also includes $0.3 million related to the current period amortization of the $2.5 million up-front license fee received from the third party.

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Research and Development Expense

Our research and development expense includes personnel, facility and external costs associated with the development and commercialization of our product candidates and products. These development costs primarily include preclinical and clinical studies, manufacturing of our product candidates prior to regulatory approval, quality control and assurance and other product development expenses such as regulatory costs. Research and development expenses decreased by $2.7 million to $12.3 million in the first quarter of 2006 from $15.0 million in the first quarter of 2005. Research and development expenses decreased in the first quarter of 2006 primarily as a result of the following (in millions):

Research and development expense for the first quarter of 2005	$	15.0
Decreased Naglazyme clinical trial and manufacturing expenses		(6.1	)
Increased Phenoptin development costs		1.9
Stock-based compensation expense		0.9
Increased 6R-BH4 development costs for endothelial dysfunction		0.6
Increased Phenylase development costs		0.6
Decreased research and development on other programs		(0.6	)
Research and development expense for the first quarter of 2006	$	12.3

The increase in Phenoptin development costs is primarily due to increased clinical trial expenses due to the continuation of the Phase 3 clinical trials. The increase in 6R-BH4 development costs is for additional pre-clinical studies for 6R-BH4 for endothelial dysfunction and planning for a Phase 2 clinical trial of 6R-BH4 for poorly controlled hypertension. The decrease in Naglazyme development costs is primarily due to decreased clinical trial and manufacturing expenses, after marketing approval was received in May 2005. However, we expect to incur significant Naglazyme research and development costs in the foreseeable future due to long-term clinical activities related to post-approval regulatory commitments.

Selling, General and Administrative Expense

Our selling, general and administrative expense includes commercial and administrative personnel, corporate facility and external costs required to support our commercialized products and product development programs. These selling, general and administrative costs include: corporate facility operating expenses and depreciation; sales operations in support of Naglazyme and Orapred and our product candidates; human resources; finance, legal and support personnel expenses; and other corporate costs such as insurance, audit and legal expenses. Selling, general and administrative expenses increased by $0.3 million to $10.9 million in the first quarter of 2006 from $10.6 million in the first quarter of 2005. The components of the increase between the first quarter of 2005 and the first quarter of 2006 primarily include the following (in millions):

Selling, general and administrative expense for the first quarter of 2005	$	10.6
Decreased Orapred sales and marketing expenses		(3.8	)
Increased Naglazyme sales and marketing expenses		1.7
Stock-based compensation expense		0.8
Increased Phenoptin commercial preparation costs		0.8
Net increase in corporate overhead and other administrative costs		0.8
Selling, general and administrative expense for the first quarter of 2006	$	10.9

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets includes the current amortization expense of the intangible assets acquired in the Ascent Pediatrics transaction in May 2004, including the Orapred developed and core technology. The acquired intangible assets are being amortized over approximately 3.5 years and the amortization expense for the first quarter of 2006 was $0.4 million, compared to $0.3 million for the first quarter of 2005, when the expected useful life was 15 years. The amortization period was revised following the sublicense of North American rights to Orapred in March 2006, as the underlying intellectual property will be transferred to the third party in August 2009, following our purchase of the common stock of Ascent Pediatrics from Medicis. We expect that the recurring annual amortization expense associated with the intangible assets will be approximately $4.4 million through the end of the expected useful life in August 2009.

Equity in the Income of BioMarin/Genzyme LLC

Equity in the Income of BioMarin/Genzyme LLC includes our 50% share of the joint venture’s income for the period. Equity in the Income of BioMarin/Genzyme LLC was $3.8 million in the first quarter of 2006 compared to $2.1 million in the first quarter of 2005. The increase in profit from BioMarin/Genzyme LLC in the first quarter of 2006 was principally due to the $5.4 million increase in Aldurazyme net revenue, which totaled $21.3 million in the first quarter of 2006 compared to $15.9 million in the first quarter of 2005.

See the “BioMarin/Genzyme LLC” section below for further discussion of the joint venture’s results of operations.

Interest Income

We invest our cash, short-term investments and restricted cash in government and other high credit quality securities in order to limit default and market risk. Interest income increased to $0.7 million in the first quarter of 2006 from $0.2 million in the first quarter of 2005. The increase is primarily due to higher interest rates and increased levels of cash and investments during the first quarter of 2006 compared to the first quarter of 2005.

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Interest Expense

We incur interest expense on our convertible debt and on our equipment and facility loans. Interest expense also includes imputed interest expense on the discounted acquisition obligation for the Ascent Pediatrics transaction. Interest expense was $2.8 million and $3.3 million in the first quarter of 2006 and the first quarter of 2005, respectively, representing a decrease of $0.5 million. The decrease in the first quarter of 2006 is primarily due to lower imputed interest related to the Ascent Pediatrics transaction resulting from a lower outstanding balance of the acquisition obligation in 2006.

BioMarin/Genzyme LLC Results of Operations

The discussion below gives effect to the inventory capitalization policy that we use for inventory held by the joint venture, which is different from the joint venture’s inventory capitalization policy. We began capitalizing Aldurazyme inventory production costs in May 2003, after U.S. regulatory approval was obtained. The joint venture began capitalizing Aldurazyme inventory production costs in January 2002, when inventory production for commercial sale began. The difference in inventory capitalization policies results in a greater operating expense realized by us prior to regulatory approval, and lower cost of goods sold with higher gross profit realized by us as the previously expensed product is sold by the joint venture, as well as lower research and development expense when Aldurazyme is used in on-going clinical trials. These differences will be eliminated when all of the product manufactured prior to regulatory approval has been sold or has been used in clinical trials. The majority of the differences have been eliminated as of March 31, 2006. See Note 7(a) to the accompanying consolidated financial statements for further discussion of the difference in inventory cost basis between the joint venture and us.

Revenue and Gross Profit

The joint venture received marketing approval for Aldurazyme in the U.S. in April 2003 and in the E.U. in June 2003. We have subsequently received marketing approval in other countries. Aldurazyme was launched commercially in May 2003 in the U.S. and in June 2003 in the E.U. The joint venture recognized $21.3 million and $15.9 million of net revenue in the first quarter of 2006 and the first quarter of 2005, respectively. The increase in net revenue from the first quarter of 2005 to the first quarter of 2006 of $5.4 million is primarily attributable to an increase in the number of patients initiating therapy.

Gross profit was $15.7 million and $13.2 million for the first quarter of 2006 and the first quarter of 2005, respectively, representing gross margins of approximately 74% and 83%, respectively. The decrease in gross margin during the first quarter of 2006 compared to the first quarter of 2005 is attributable to the recognition of higher cost of sales in the first quarter of 2006 as the joint venture sells more of the inventory that was produced after obtaining regulatory approval, which has a higher cost basis. Excluding the effect of the difference in inventory cost bases between us and the joint venture, gross profit was $14.9 million and $10.4 million, representing gross margins of 70% and 65% for the first quarter of 2006 and 2005, respectively.

Operating Expenses

Operating expenses of the joint venture include the costs associated with the development and commercial support of Aldurazyme and totaled $8.3 million for the first quarter of 2006 as compared to $9.1 million for the first quarter of 2005. Operating expenses in the first quarter of 2006 included $4.8 million of selling, general and administrative expenses associated with the commercial support of Aldurazyme and $3.5 million of research and development costs, primarily long-term clinical trial and regulatory costs. Operating expenses in the first quarter of 2005 included $5.1 million of selling, general and administrative expenses associated with the commercial launch of Aldurazyme and $4.0 million of research and development expenses, primarily clinical trial costs. Selling, general and administrative expenses decreased in the first quarter of 2006 due to normalization of sales and marketing efforts for the product following post-launch commercialization.

Liquidity and Capital Resources

Cash and Cash Flow

We have financed our operations by the issuance of common stock, convertible debt, equipment and other commercial financing and the related interest income earned on cash, cash equivalents and short-term investments. During the first quarter of 2006, we received $127.5 million of net proceeds from a public offering of common stock, $167.0 million of net proceeds from a public offering of convertible senior subordinated notes and $2.5 million as consideration for execution of our sublicense of North American rights for Orapred. During the first quarter of 2005, we financed our operations primarily through available cash, cash equivalents and short-term investments, the related interest income earned thereon and net proceeds from equipment and facility loans of $3.6 million.

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As of March 31, 2006, our combined cash, cash equivalents, short-term investments and cash balances related to long-term debt totaled $347.7 million, an increase of $282.9 million from $64.8 million at December 31, 2005. Cash balances related to long-term debt represent an amount totaling $17.0 million as of December 31, 2005 that is a portion of the amount that we are required to keep on deposit with Comerica Bank pursuant to the terms of the equipment and facility loan that we entered into in May 2004. This amount is equal to the long-term portion of the outstanding balance under this facility. The maintenance of a deposit equal to the outstanding amount under the facility, or $10.0 million, whichever is greater, is a covenant of the facility and the failure to satisfy this covenant would constitute a breach under the facility. However, we have the ability to access this amount at our discretion and therefore it is not restricted cash. In April 2006, the outstanding balance on these loans was repaid in full. As a result there was no cash related to long-term debt as of March 31, 2006.

The $282.9 million increase in cash, cash equivalents, short-term investments, restricted cash and cash balances related to long-term debt during the first quarter of 2006 includes net proceeds from the public offering of common stock of $127.5 million and from the concurrent public offering of convertible debt of $167.0 million. Excluding the net offering proceeds, the decrease in cash, cash equivalents, short-term investments, restricted cash and cash balances related to long-term debt during the first quarter of 2006 was $11.6 million, which was $16.6 million less than the net decrease in cash, cash equivalents, short-term investments and restricted cash during the first quarter of 2005 of $28.2 million. The primary items contributing to the decrease in net cash outflow excluding the net offering proceeds in 2005 were as follows (in millions):

Decreased cash payments for the acquisition of the Ascent Pediatrics business	$	12.9
Increased cash flows from BioMarin/Genzyme LLC		6.9
Decrease in net proceeds from equipment and facility loans		(4.6	)
Receipt of cash proceeds from the ESPP and exercise of stock options		3.6
Increased operating spend, including working capital increases		(2.7	)
Up-front license payment from third party for sublicense of North American Orapred rights		2.5
Absence of reimbursement from Medicis for Orapred returns		(2.0	)
Total decrease in net cash outflow excluding net offering proceeds	$	16.6

The increased operating spend relates to cash payments made for operating activities, such as research and development and sales and marketing efforts, as discussed in the “Results of Operations” section above. Increases in net payments for working capital primarily include Naglazyme inventory and accounts receivable.

The primary uses of cash during the first quarter of 2005 were to finance operations, which primarily included the manufacturing and clinical trials of Naglazyme and the related supporting functions, the Ascent Pediatrics transaction and the manufacturing and clinical development of Phenoptin. Uses of cash during the first quarter of 2005 include payments related to the Ascent Pediatrics transaction totaling $15.0 million and net cash outflows for working capital requirements. These uses of cash were partially offset equipment and facility loan net proceeds of $3.6 million, a decrease in the cash investment in the joint venture and $2.0 million of the reimbursement from Medicis for Orapred returns received during the first quarter of 2005.

Pursuant to our settlement of a dispute with Medicis in January 2005, Medicis made available to us a convertible note of up to $25.0 million beginning July 1, 2005 based on certain terms and conditions and provided that the Company does not experience a change of control. Money advanced under the convertible note is convertible into our common stock, at Medicis’ option, according to the terms of the convertible note. As of March 31, 2006, we have not made any draws on the note. We anticipate that we will only draw funds from this note to the extent necessary to fund operations or to maintain financial covenants.

We do not expect to generate net positive cash flow from operations for the foreseeable future because we expect to continue to incur operational expenses and continue our research and development activities, including:

• preclinical studies and clinical trials;

• process development, including quality systems for product manufacture;

• regulatory processes in the U.S. and international jurisdictions;

• clinical and commercial scale manufacturing capabilities and contract manufacturing; and

• expansion of sales and marketing activities, including commercial launch activities for Naglazyme.

As a result of the Ascent Pediatrics transaction and the January 2005 amendments to the transaction agreements, we expect to pay Medicis $84.1 million in specified cash payments through 2009, of which $5.6 million is payable in the remainder of 2006.

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Funding Commitments

We expect to fund our operations with our cash, cash equivalents, short-term investments and currently restricted cash, supplemented by proceeds from equity or debt financings, loans or collaborative agreements with corporate partners. We expect our current cash, short-term investments, currently restricted cash and cash balances related to long-term debt and funds contractually committed to us will meet our operating and capital requirements for the foreseeable future based on our current long-term business plans.

Our investment in our product development programs has a major impact on our operating performance. Our research and development expenses for the first quarter of 2005 and 2006 and for the period since inception (March 1997) represent the following (in millions):

	Three months ended March 31,				Since Program Inception
	2005		2006
Naglazyme	$	9.0	$	2.9	$	97.4
Phenoptin		3.2		5.1		36.8
6R-BH4 for endothelial dysfunction		—		0.6		0.6
Phenylase		0.4		1.0		3.5
Orapred		0.7		0.6		6.4
Vibrilase		0.1		0.1		8.5
Not allocated to specific major current projects		1.6		2.0		110.0
	$	15.0	$	12.3	$	263.2

We cannot estimate the cost to complete any of our product development programs. Additionally, except as disclosed under “Overview” above, we cannot estimate the time to complete any of our product development programs or when we expect to receive net cash inflows from any of our product development programs. Please see “Risk Factors” in this Form 10-Q and in our Form 10-K for the year ended December 31, 2005, for a discussion of the reasons that we are unable to estimate such information, and in particular the following risk factors included in our Form 10-K “—If we fail to maintain regulatory approval to commercially market or sell our drugs, or if approval is delayed, we will be unable to generate revenue from the sale of these products, our potential for generating positive cash flow will be diminished, and the capital necessary to fund our operations will be increased;” “—To obtain regulatory approval to market our products, preclinical studies and costly and lengthy preclinical and clinical trials are required and the results of the studies and trials are highly uncertain;” “—If we are unable to successfully develop manufacturing processes for our drug products to produce sufficient quantities and at acceptable costs, we may be unable to meet demand for our products and lose potential revenue, have reduced margins or be forced to terminate a program;” “—If we fail to compete successfully with respect to product sales, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product and our revenue could be adversely affected;” and “—If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.”

We expect that the proceeds from equity or debt financing, loans or collaborative agreements will be used to fund future operating costs, capital expenditures and working capital requirements, which may include: costs associated with the commercialization of our products; additional clinical trials and the manufacturing of Aldurazyme, Naglazyme and Phenoptin; preclinical studies and clinical trials for our other product candidates; potential licenses and other acquisitions of complementary technologies, products and companies; general corporate purposes; payment of the amounts due with respect to the Ascent Pediatrics transaction; and working capital.

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

• our ability to successfully market and sell Naglazyme in the U.S. and E.U.;

• our joint venture partner’s ability to successfully commercialize Aldurazyme;

• the progress, timing, scope and results of our preclinical studies and clinical trials;

• the amount of royalties we receive from our license of Orapred;

• our ability to maintain compliance with our debt covenants;

• the time and cost necessary to obtain regulatory approvals;

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

• the time and cost necessary to respond to technological and market developments;

• any changes made to or new developments in our existing collaborative, licensing and other commercial relationships or any new collaborative, licensing and other commercial relationships that we may establish; and

• whether our convertible debt is converted to common stock in the future.

Borrowings and Contractual Obligations

Our $125.0 million of 3.5% convertible notes will impact our liquidity due to the semi-annual cash interest payments and the scheduled repayment of the notes in 2008. Should we redeem the notes after June 2006, at our option according to the terms of the notes, we will be subject to premiums upon redemption ranging from 0.7% to 1.4%, depending on the time the notes are redeemed. We also must repay the debt if there is a qualifying change in control or termination of trading of our common stock.

Our $172.5 million of 2.5% convertible notes will impact our liquidity due to the semi-annual cash interest payments and the scheduled repayment of the notes in 2013. There is no call provision included and we are unable to unilaterally redeem the notes prior to maturity in 2013. However, we must repay the debt prior to maturity if there is a qualifying change in control or termination of trading of our common stock.

In May 2004, we entered into a $25.0 million credit facility with Comerica Bank executed to finance our equipment purchases and facility improvements. The outstanding loan balance totaled $19.9 million at March 31, 2006. The loan bore interest at LIBOR plus 1.25% (6.08% as of March 31, 2006), and was secured by liens on certain assets. During 2005, the agreement with Comerica Bank was amended to require that we maintain a total unrestricted cash balance of at least $25.0 million and that we maintain a deposit with Comerica Bank equal to the outstanding principal balance, or $10.0 million, whichever is greater. In April 2006, the outstanding balance on these loans was repaid in full. As a result of the subsequent payment, cash related to long-term debt was classified as cash and cash equivalents as of March 31, 2006. Our unrestricted cash, as defined in the loan agreement, totaled $347.7 million as of March 31, 2006.

As a result of the Ascent Pediatrics transaction, we expect to pay Medicis $92.7 million through 2009, of which $5.6 million is payable in the remainder of 2006. At our option, we may elect to pay Medicis $8.6 million of the amounts due in 2009 through the issuance of our common stock.

We anticipate a need for additional financing to fund our future operations, including the commercialization of our drug product candidates currently under development. We cannot provide assurance that additional financing will be obtained or, if obtained, will be available on reasonable terms or in a timely manner.

We have contractual and commercial obligations under our debt, operating leases and other obligations related to research and development activities, purchase commitments, licenses and sales royalties with annual minimums. Information about these obligations as of March 31, 2006 is presented below (in thousands).

	Payments Due by Period
ROUNDED (10Q Presentation)	Total	2006	2007	2008-2009		2010-2011	2012 and Thereafter
Medicis obligations	92,700	5,600	7,000		80,100	—	—
Convertible debt and related interest	338,722	6,566	8,688		135,910	8,625	178,934
Operating leases	24,683	2,981	3,865		7,863	5,796	4,178
Equipment and facility loans	19,944	19,944	—		—	—	—
Research and development and purchase commitments	9,574	8,584	370		620	—	—
	485,623	43,674	19,922	$	224,493	14,421	183,112

Equipment and facility loans have been adjusted above to reflect the current status of the liability as a result of the subsequent payment in April 2006. We have also licensed technology from others, for which we are required to pay royalties upon future sales, subject to certain annual minimums totaling $0.4 million.

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We are also subject to contingent payments totaling approximately $45.2 million upon achievement of certain regulatory and licensing milestones if they occur before certain dates in the future. Included in the total amount is $8.9 million of contingent payments related to Neutralase, for which we terminated development during 2003 and, accordingly, we do not expect they will ever be payable.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Our market risks at March 31, 2006 have not changed significantly from those discussed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2005, on file with the Securities and Exchange Commission (SEC).

Item 4. Controls and Procedures

An evaluation was carried out, under the supervision of and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls are sufficiently effective to ensure that the information required to be disclosed by us in this Form 10-Q was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions for Form 10-Q. There was no change in our internal control over financial reporting that occurred during the period covered by this Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not party to any legal proceedings not arising in the ordinary course of its business.

Item 1A. Risk Factors

An investment in our securities involves a high degree of risk. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business, financial condition, operating results or cash flows could be materially adversely affected. This could cause the trading price of our securities to decline, and you may lose all or part of your investment. The risk factors previously disclosed in Item 1A. of our Form 10-K for fiscal year ended December 31, 2005 have remained unchanged, except for the risk factors set forth below:

If we fail to obtain the capital necessary to fund our operations, our financial results and financial condition will be adversely affected and we will have to delay or terminate some or all of our product development programs.

We will require additional financing to fund our future operations, including the commercialization of our approved drugs and drug product candidates currently under development, preclinical studies and clinical trials, and potential licenses and acquisitions. We may be unable to raise additional financing when needed due to a variety of factors, including our financial condition, the status of our product programs, and the general condition of the financial markets. If we fail to raise additional financing as we need such funds, we will have to delay or terminate some or all of our product development programs and our financial condition and operating results will be adversely affected.

We expect to continue to spend substantial amounts of capital for our operations for the foreseeable future. The amount of capital we will need depends on many factors, including:

• our ability to successfully market and sell Naglazyme in the U.S.and E.U.;

• our joint venture partner’s ability to successfully commercialize Aldurazyme;

• the progress, timing and scope of our preclinical studies and clinical trials;

• the amount of royalties we receive from our license of Orapred;

• the time and cost necessary to obtain regulatory approvals and the costs of post-marketing studies which may be required by regulatory authorities;

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

• our ability to maintain compliance with our debt covenants;

• the time and cost necessary to respond to technological and market developments;

• any changes made or new developments in our existing collaborative, licensing and other commercial relationships or any new collaborative, licensing and other commercial relationships that we may establish; and

• whether our convertible debt is converted to common stock in the future.

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

• additional licenses and collaborative agreements;

• additional contracts for consulting, maintenance and administrative services;

• additional contracts for product manufacturing; and

• additional financing facilities.

We believe that our cash, cash equivalents, short-term investment securities and cash balances related to long-term debt at March 31, 2006, plus funds contractually committed to us will be sufficient to meet our operating and capital requirements for the foreseeable future based on our current long-term business plans. These estimates are based on assumptions and estimates, including the availability of a $25 million loan from Medicis. These assumptions and estimates may prove to be wrong. We will need to sell equity or debt securities to raise additional funds if we are unable to satisfy our liquidity requirements. The sale of additional securities may result in additional dilution to our stockholders. Furthermore, additional financing may not be available in amounts or on terms satisfactory to us or at all. This could result in the delay, reduction or termination of our research, which could harm our business.

If the option under the securities purchase agreement with Medicis to purchase all of the issued and outstanding capital stock of Ascent Pediatrics is accelerated by Medicis, we may not have sufficient funds to exercise the option, which could result in a termination of the license agreement and our revenue could decrease significantly.

Pursuant to our agreement with a third party, we are obligated to exercise the option under our securities purchase agreement with Medicis to purchase all issued and outstanding capital stock of Ascent Pediatrics in approximately three years. The exercise of the option is subject to acceleration on specified material breaches of our license agreement with Ascent Pediatrics or a bankruptcy or insolvency proceeding involving Medicis or Ascent Pediatrics, and if such acceleration is due to a specified breach of the license by us, then the option exercise price together with an amount equal to all license payments remaining under our license agreement with Ascent Pediatrics will become due on the accelerated closing date for the purchase of shares under the option.

If the option were accelerated, we may not have sufficient funds at that time to exercise the option and/or to make the license payments, and may not be able to obtain the financing to do so, in which case we would not be able to consummate the transaction to acquire such shares and would be in breach of the license agreement and the securities purchase agreement. If we are in breach of the license agreement, Ascent Pediatrics may terminate the license and we would no longer have the ability to manufacture, market, sell, or distribute Orapred and our revenue could decrease significantly.

Actions by wholesalers relating to the purchase of Orapred could affect the timing of royalty revenues.

Orapred is sold to major wholesalers and retail pharmacy chains. Consistent with pharmaceutical industry patterns, most Orapred sales are to three major drug wholesale concerns. Distribution allocation is determined by wholesale and drug chain customers. There can be no assurance that these customers will adequately manage their local and regional inventories to avoid spot outages.

It is difficult to control or influence greatly the purchasing patterns of wholesale and retail drug chain customers. These are highly sophisticated customers that purchase our products in a manner consistent with their industry practices and, presumably based

36

upon their projected demand levels. The buying practices of the wholesalers include occasional speculative purchases of product in excess of the current market demand, at their discretion, in anticipation of future price increases. Purchases by any given customer, during any given period, may be above or below actual prescription volumes of Orapred during the same period, resulting in fluctuations in product inventory in the distribution channel. In addition, if wholesaler inventories substantially exceed retail demand, we could experience reduced royalty revenue from sales of Orapred by our sub-licensee in subsequent periods due to overstocking or low end-user demand.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None.

Item 3. Defaults upon Senior Securities. None.

Item 4. Submission of Matters to a Vote of Security Holders. None.

Item 5. Other Information. None.

Item 6. Exhibits.

1.1	Notes Purchase Agreement dated March 23, 2006, by and between BioMarin Pharmaceutical Inc. and Merrill Lynch, previously filed with the Commission on March 23, 2006 as Exhibit 1.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
1.2	Equity Purchase Agreement dated March 23, 2006, by and among BioMarin Pharmaceutical Inc. and the Equity Underwriters, previously filed with the Commission on March 23, 2006 as Exhibit 1.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
4.1	Indenture dated March 29, 2006, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company, previously filed with the Commission on March 29, 2006 as Exhibit 4.1 to the Company’s Form 8-K, which is incorporated herein by reference.
4.2	First Supplemental Indenture dated March 29, 2006, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company, previously filed with the Commission on March 29, 2006 as Exhibit 4.2 to the Company’s Form 8-K, which is incorporated herein by reference.
4.3	Form of 2.5% Senior Subordinated Convertible Notes due 2013, previously filed until the Commission on March 29, 2006 as Exhibit 4.2 to the Company’s Form 8-K, which is incorporated herein by reference.
10.1*	License Agreement dated March 15, 2006 by and between BioMarin Pharmaceutical Inc. and Alliant Pharmaceuticals, Inc.
10.2*	Purchase and Sale Agreement and Joint Escrow Instructions dated January 24, 2006 by and between BioMarin Pharmaceutical Inc. and Wirrulla Novato LLC.
10.3*	First Amendment to Purchase and Sale Agreement and Joint Escrow Instructions dated February 23, 2006 by and between BioMarin Pharmaceutical Inc. and Wirrula Novato LLC.
25.1	Form T-one Statement of Eligibility under the Trust Indenture Act of 1939, previously filed with the Commission on March 20, 2006 as Exhibit 25.1 to the Companies Form 8-K, which is incorporated herein by reference.
31.1	Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of The Securities Exchange Act of 1934, as amended. This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended.

* - Filed herewith

37

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BIOMARIN PHARMACEUTICAL INC.
Dated: May 4, 2006	By:	/s/ JEFFREY H. COOPER
		Jeffrey H. Cooper, Chief Financial Officer
		(On behalf of the registrant and as principal financial officer)

38

Exhibit Index

1.1	Notes Purchase Agreement dated March 23, 2006, by and between BioMarin Pharmaceutical Inc. and Merrill Lynch, previously filed with the Commission on March 23, 2006 as Exhibit 1.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
1.2	Equity Purchase Agreement dated March 23, 2006, by and among BioMarin Pharmaceutical Inc. and the Equity Underwriters, previously filed with the Commission on March 23, 2006 as Exhibit 1.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
4.1	Indenture dated March 29, 2006, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company, previously filed with the Commission on March 29, 2006 as Exhibit 4.1 to the Company’s Form 8-K, which is incorporated herein by reference.
4.2	First Supplemental Indenture dated March 29, 2006, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company, previously filed with the Commission on March 29, 2006 as Exhibit 4.2 to the Company’s Form 8-K, which is incorporated herein by reference.
4.3	Form of 2.5% Senior Subordinated Convertible Notes due 2013, previously filed until the Commission on March 29, 2006 as Exhibit 4.2 to the Company’s Form 8-K, which is incorporated herein by reference.
10.1*	License Agreement dated March 15, 2006 by and between BioMarin Pharmaceutical Inc. and Alliant Pharmaceuticals, Inc.
10.2*	Purchase and Sale Agreement and Joint Escrow Instructions dated January 24, 2006 by and between BioMarin Pharmaceutical Inc. and Wirrulla Novato LLC.
10.3*	First Amendment to Purchase and Sale Agreement and Joint Escrow Instructions dated February 23, 2006 by and between BioMarin Pharmaceutical Inc. and Wirrula Novato LLC.
25.1	Form T-one Statement of Eligibility under the Trust Indenture Act of 1939, previously filed with the Commission on March 20, 2006 as Exhibit 25.1 to the Companies Form 8-K, which is incorporated herein by reference.
31.1	Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of The Securities Exchange Act of 1934, as amended. This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended.

* - Filed herewith

39

EX-10.1

Exhibit 10.1

LICENSE AGREEMENT

This LICENSE AGREEMENT (this “Agreement”) is entered into as of March 15, 2006 (the “Effective Date”) by and between BioMarin Pharmaceutical Inc., a Delaware corporation (“BioMarin”) and Alliant Pharmaceuticals, Inc., a Delaware corporation (“Alliant”). Each is referred to herein as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, BioMarin is the exclusive licensee of the entire right, title, and interest, together with all goodwill connected therewith, in and to the Licensed Technology, Licensed Trademarks and Licensed Development Technology (each as defined below); and

WHEREAS, BioMarin wishes to grant to Alliant, and Alliant wishes to receive from BioMarin, an exclusive license to the Licensed Technology, Licensed Trademarks and Licensed Development Technology in North America under the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and promises contained herein, the Parties hereby agree as follows:

1. DEFINITIONS. In addition to the terms defined in the text of this Agreement, the following terms shall have the following respective definitions:

1.1 “Acquisition Date” means the date BioMarin consummates the purchase of the shares of capital stock of Ascent pursuant to the Ascent Securities Purchase Agreement.

1.2 “Affiliate” means any Entity, which, at the time in question, is directly or indirectly owned by or controlled by, or under common control with, BioMarin or Alliant, as the case may be. For the purposes of this definition, a Party shall be deemed to have “control” if such Party (a) owns, directly or indirectly, 50% or more of (i) the voting stock or shareholders’ equity of a corporation, (ii) the partnership interests in a partnership, or (iii) the membership interests in a limited liability company, or (b) possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the Entity or the power to elect more than 50% of the members of the governing body of the Entity.

1.3 “Alliant Improvements” means the term defined in Section 7.2.

1.4 “Alliant Indemnitees” means Alliant, its Affiliates and their officers, directors, employees, and agents.

1.5 “Alliant Losses” means the term defined in Section 13.2.

1.6 “ANDA” means Abbreviated New Drug Applications for Orapred and Orapred RT listed in Exhibit A.

1.7 “Ascent” means Medicis Pediatrics, Inc., formerly known as Ascent Pediatrics, Inc.

1.8 “Ascent License” means the License Agreement entered into by and among Bbiomarin, Biomarin Pediatrics Inc., Medicis Pharmaceutical Corporation, and Ascent dated May 18, 2004, as the same may be amended.

1.9 “Ascent Securities Purchase Agreement” means the Securities Purchase Agreement entered into by and among BioMarin, BioMarin Pediatrics Inc., Medicis Pharmaceutical Corporation, and Ascent dated May 18, 2004, as the same may be amended.

1.10 “Assignment” means the term defined in Section 2.1.

1.11 “BioMarin Enforced Patents” means the term defined in Section 11.2(b).

1.12 “BioMarin Indemnitees” means BioMarin, its Affiliates, and their officers, directors, employees, and agents.

1.13 “BioMarin Licensed Trademarks” means all Licensed Trademarks other than the Cima Trademarks.

1.14 “BioMarin Losses” means the term defined in Section 13.1.

1.15 “BioMarin Prosecuted Patents” means the term defined in Section 11.1(a).

1.16 “Breach” means an inaccuracy in or breach of, or any failure to comply with or perform, a representation, warranty, covenant, obligation or other provision.

1.17 “Business Day” means any day excluding Saturday, Sunday and any day which shall be in the State of California a legal holiday or a day on which banking institutions are authorized by law to close.

1.18 “Cardinal” means the term defined in Section 4.9.

1.19 “Cima” means Cima Labs, Inc.

1.20 “Cima Trademarks” means the Licensed Trademarks that are owned by Cima and licensed to BioMarin pursuant to the Cima License.

1.21 “Cima License” means the Development, Commercialization, and License Agreement between BioMarin and Cima dated June 26, 2003, including the First Amendment to the Development, Commercialization, and License Agreement between BioMarin and Cima dated August 28, 2004 and the Second Amendment to the Development, Commercialization, and License Agreement between BioMarin and Cima dated April 5, 2005, as the same may be amended.

1.22 “Cima Supply Agreement” means the Supply and Manufacture Agreement by and between Cima and BioMarin dated June 26, 2003, including the First Amendment to Supply and Manufacture Agreement dated September 28, 2004, as the same may be amended.

1.23 “Claim” means the term defined in Section 13.3.

1.24 “Combination Product” means a product containing a Licensed Product together with one or more other active ingredients, devices, equipment or components that are themselves not Licensed Products.

1.25 “Commercial Launch” mean the first sale for use or consumption of a Licensed Product by Alliant or its Permitted Sublicensee in a country in North America after Regulatory Approval has been granted by the Governmental Body in such country.

1.26 “Confidential Information” means the term defined in Section 8.1.

1.27 “Contract” means any written, oral, implied or other agreement, contract, understanding, arrangement, instrument, note, guaranty, indemnity, deed, assignment, power of attorney, certificate, purchase order, work order, insurance policy, benefit plan, commitment, covenant, assurance or undertaking of any nature.

1.28 “Cost of Goods” means the amounts paid to third party manufacturers to manufacture an Orapred Product, determined in accordance with Generally Accepted Accounting Principles.

1.29 “Development Know How” means technical, scientific and medical information, knowledge, know-how, inventions and trade secrets, that are necessary for the development, registration, manufacturing, packaging, stability, bioavailability, formulation, sale, use or commercialization of the products claimed in the Development Licensed Patents, owned by BioMarin or its Affiliates or licensed to BioMarin or its Affiliates pursuant to the Ascent License, as of the Effective Date.

1.30 “Development Licensed Patents” means all North American patents and utility models, invention registrations, supplementary protection certificates and applications therefor listed in Exhibit B and all reissues, divisionals, renewals, extensions, provisionals, continuations, and continuations-in-part thereof.

1.31 “Disclosing Party” means the term defined in Section 8.1.

1.32 “Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equitable interest, claim, preference, right of possession, lease, license, covenant, infringement, Order, proxy, option, right of first refusal, preemptive right, legend, defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature (including any restriction on the transfer of any asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

1.33 “Entity” means any person, corporation (including any non profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, cooperative, foundation, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.

1.34 “Escrow Agreement” means the Escrow Agreement entered into by and between BioMarin and Alliant concurrently with the execution of this Agreement.

1.35 “FDA” means the United States Food and Drug Administration.

1.36 “FDA License” means a license granted by the FDA that is necessary for the commercial manufacture, use, sale, and distribution of a pharmaceutical in the United States.

1.37 “Generic Product” means, with respect to any product, a different product that is marketed pursuant to an Abbreviated New Drug Application (that is not the same Abbreviated New Drug Application as the product, if applicable) and is listed as therapeutically equivalent to the product in the FDA Orange Book

1.38 “Governmental Body” means any federal, state, provincial, or local judicial, legislative, executive or other regulatory authority.

1.39 “Hi-Tech” means High-Tech Pharmacal Co., Inc.

1.40 “Hi-Tech License and Supply Agreement” means the License and Supply Agreement dated February 15, 2005 by and between Hi-Tech and BioMarin, as the same may be amended.

1.41 “Improvement Patents” means the term defined in Section 11.1(b).

1.42 “Improvements” means any and all inventions, improvements, discoveries, enhancements, extensions, replacements, developments, refinements, or modifications to the Licensed Technology or the Licensed Development Technology, or utilizing the Licensed Technology or the Licensed Development Technology, or the respective use or the manufacturing processes therefor, whether or not patentable, which may be conceived, made, developed or otherwise controlled by or for Alliant or its Permitted Sublicensees or BioMarin or its Affiliates during the License Term including, without limitation, modifications in size, package forms, dosage strength, methods for administration, methods for delivering, or changes in the formulation including the addition of actives to products.

1.43 “Indemnified Parties” means the BioMarin Indemnitees or the Alliant Indemnitees, as the case may be.

1.44 “Indemnifying Parties” means BioMarin or Alliant, as the case may be.

1.45 “Law” or “Laws” means all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of law of any Governmental Body. For purposes of this Agreement, “Laws” shall include current Good Manufacturing Practice.

1.46 “Licensed Assets” means the Licensed Technology, the Licensed Development Technology, the Licensed Trademarks, the Alliant Improvements, and the Improvement Patents.

1.47 “Licensed Development Technology” means the Development Licensed Patents and the Development Know How.

1.48 “Licensed Patents” means the Development Licensed Patents, the Taste Masking Related Licensed Patents, and the Improvement Patents.

1.49 “Licensed Products” means the Orapred Products and any other products made, used, offered for sale, distributed, or sold within North America which, if in the course of such manufacture, use, offer for sale, distribution, or sale, would, in the absence of this Agreement, infringe or misappropriate one or more of the Licensed Technology or Licensed Developed Technology, provided that, after the Assignment, Licensed Products shall be determined as if the Assignment had not occurred and the Sublicense was continuing.

1.50 “Licensed Technology” means the Taste Masking Related Licensed Patents and the Product Know How.

1.51 “Licensed Trademarks” means all business names, trade names, logos, common law trademarks and service trademarks, trademark and service mark registrations and applications therefor as set forth on Exhibit C.

1.52 “Lyne Supply Agreement” means the Manufacturing Agreement by and between BioMarin and Lyne Laboratories, Inc. dated March 15, 2004, as the same may be amended.

1.53 “Milestone Fee” means the term defined in Section 6.2.

1.54 “Multiple Products Sale” means the sale of a Licensed Product by Alliant or Permitted Sublicensees that is associated, by contract or course of dealing, with the use or sale of one or more other products or services.

1.55 “NDA” means 505(b)(2) New Drug Application for Orapred ODT listed in Exhibit A.

1.56 “Net Sales” means, for the applicable period, the gross amount invoiced by Alliant or its Permitted Sublicensees for the sale or other disposition of a Licensed Product, less customary adjustments from gross sales to net sales as determined in accordance with U.S. Generally Accepted Accounting Principles as consistently applied by Alliant, including but not limited to: (a) customary quantity, trade and/or cash discounts, allowances, charge backs, rebates, and price adjustments or reductions consistently applied by Alliant; (b) actual credits, rebates, or refunds for the Licensed Product that are rejected, returned or destroyed by customers; (c) freight, postage, and shipping expenses (including insurance relating thereto) absorbed by Alliant; and (d) sales and other excise taxes and duties directly related to the sale, to the extent included in the gross invoiced amount. Net Sales shall not include any sales of the Licensed Product to Permitted Sublicensees if such Permitted Sublicensees are not end-users, but Net Sales shall include subsequent final sales to third parties by any Permitted Sublicensees.

If the Licensed Product is sold in the form of a Combination Product, then for the purpose of calculating royalties owed under this Agreement on sales of the Combination Product, Net Sales shall be an amount equal to the actual net sales of such Combination Product (calculated using the above described deductions) multiplied by the fraction A/(A+B), where A is the weighted (by sales volume) average invoice price of the actual Licensed Product component of such Combination Product, and B is the total of the weighted (by sales volume) average invoice prices of the other products, active ingredients, devices, equipment or components of such Combination Product.

If the Licensed Product is sold in a Multiple Products Sale, then the Net Sales price of the Licensed Product sold in a Multiple Products Sale shall not be reduced (if it is reduced at all) by an amount that is proportionately greater than the amount by which the other components of such Multiple Products Sale are reduced in such sale.

1.57 “North America” means the United States of America, Puerto Rico, Canada, and Mexico.

1.58 “Oral Disintegrating Tablets” means a solid tablet dosage form containing medicinal substances which disintegrates rapidly, usually within a matter of seconds when taken orally.

1.59 “Orapred” means refrigerated prednisolone sodium phosphate oral solution formulation.

1.60 “Orapred (New Strength)” means Orapred in any strength other than 15mg/5ml.

1.61 “Orapred ODT” means prednisolone sodium phosphate orally disintegrating tablets.

1.62 “Orapred Liquids” means Orapred and Orapred RT.

1.63 “Orapred Products” means collectively Orapred, Orapred ODT, and Orapred RT.

1.64 “Orapred RT” means room temperature stable sodium phosphate oral solution formulation.

1.65 “Orapred RT (New Strength)” means Orapred RT in any strength other than 15mg/5ml.

1.66 “Order” shall mean any order, judgment, injunction, decree, ruling, decision, opinion, verdict, sentence, writ or award issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Body or any arbitrator or arbitration panel.

1.67 “Patents” means all North American patents and utility models, invention registrations, supplementary protection certificates and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in North American in inventions and discoveries.

1.68 “Permitted Sublicensee” means any third party to whom Alliant has granted a sublicense in compliance with Section 2.2.

1.69 “Proceeding” means any claim, action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or any arbitrator or arbitration panel.

1.70 “Product Know How” shall mean technical, scientific and medical information, knowledge, know-how, inventions and trade secrets, that are necessary for the development, registration, manufacturing, packaging, stability, bioavailability, formulation, sale, use or commercialization of Orapred Liquids or Orapred ODT, as the case may be, including, without limitation: (a) physiochemical data, specifications, quality control information and procedures; (b) market research data solely to the extent BioMarin has the right to provide such data to Alliant; and (c) information concerning the clinical, toxicological and pharmacological properties with respect to all of the foregoing, owned or controlled by BioMarin or its Affiliates or licensed to BioMarin or its Affiliates pursuant to the Ascent License or the Cima License, as of the Effective Date.

1.71 “Receiving Party” means the term defined in Section 8.1.

1.72 “Regulatory Agency” means the FDA and any other Governmental Body with regulatory authority comparable to the FDA in any other jurisdiction within North America.

1.73 “Regulatory Approval” means the authorization by an appropriate Regulatory Agency to market and sell a Licensed Product in a jurisdiction.

1.74 “Representatives” means officers, directors, employees, agents, attorneys, accountants, advisors and representatives.

1.75 “Sublicense” means the term defined in Section 2.1.

1.76 “Sublicense Revenue” means the term defined in Section 6.4.

1.77 “Taste Masking Related Licensed Patents” means all North American patents and utility models, invention registrations, supplementary protection certificates and applications therefor listed in Exhibit D and all reissues, divisionals, renewals, extensions, provisionals, continuations, and continuations-in-part thereof.

1.78 “Term” means the term defined in Section 12.1.

1.79 “Term Sheet” means the non-binding term sheet dated January 3, 2006 entered into by and between BioMarin and Alliant.

1.80 “Third-Party Agreements” means the Ascent License, the Cima License, the Cima Supply Agreement, and the Lyne Supply Agreement.

1.81 “Transferred Inventory” means the term defined in Section 4.6.

1.82 “Transferred Materials” means the term defined in Section 2.5.

2. LICENSE GRANT

2.1 License Grant. Subject to the terms and conditions of this Agreement, including payment of all fees required under Section 6, subject to BioMarin’s rights under the Cima License and the Ascent License, and subject to the exclusive license granted by BioMarin to

Hi-Tech to distribute a generic form of Orapred pursuant to the Hi-Tech License and Supply Agreement, BioMarin hereby grants to Alliant an exclusive, non-transferable (except as permitted under Section 15.5), royalty-bearing sublicense to and under the Licensed Assets to develop, make, have made, use, market, offer for sale, sell, distribute, and import the Licensed Products solely during the License Term in North America (the “Sublicense”). Within thirty (30) days of the Acquisition Date, BioMarin will assign all of its right, title, and interest in the ANDA, the NDA, the Third Party Agreements, the Licensed Patents to the extent owned by BioMarin or Ascent, and the Licensed Trademarks to the extent owned by BioMarin or Ascent, provided that BioMarin may enter new agreements with Lyne and Cima related to the production of Orapred Products for sale, distribution or use outside of North America (the “Assignment”). The Assignment shall include a grant by BioMarin to Alliant of a perpetual, royalty free license to all of the other Licensed Technology owned by BioMarin or Ascent for the field and territory described in the first sentence of this Section 2.1.

2.2 Further Sublicense. Alliant shall not grant further sublicenses under the Sublicense to any third party, without BioMarin’s prior written approval, which approval may be withheld in BioMarin’s reasonable discretion. In addition, (a) the terms and conditions of any permitted sublicense granted must be consistent with, and not violate the terms and conditions of, this Agreement, (b) any sublicensee approved by BioMarin must agree in writing that it is subject to and shall be governed by this Agreement, and (c) Alliant shall be fully responsible for all failures by any sublicensee to comply with the terms and conditions of this Agreement. No sublicense shall relieve Alliant of any duty or obligation under this Agreement.

2.3 License Restrictions. Alliant agrees not to: (a) use the Licensed Assets except as expressly permitted under Section 2.1 or to make, manufacture, develop, use, market, offer for sale, sell, or distribute the Licensed Products except as expressly permitted under Section 2.1; or (b) sublicense, transfer or assign the rights granted under Section 2.1 to any third party in violation of this Agreement.

2.4 Reservation. Except for the licenses expressly granted in Sections 2.1, BioMarin reserves and retains all rights with respect to the Licensed Assets, including the right to make, manufacture, develop, use, Licensed Products in or out of North America, solely for the purpose of marketing, offering for sale, selling, and distributing the Licensed Products outside North America. There are no implied licenses granted under this Agreement.

2.5 Technology Transfer. Within thirty (30) days after the Effective Date, BioMarin shall deliver to Alliant copies of the specimens, records, test results, specifications, market studies, filings with the FDA, and other documents embodying the Product Know How and Development Know How that are within BioMarin’s possession as of the Effective Date (the “Transferred Materials”). For a period of sixty (60) days after delivery of the Transferred Materials, BioMarin will provide reasonable technical assistance, necessary to enable Alliant to utilize the Product Know How and Development Know How consistent with the licenses provided hereby at no charge, provided that Alliant reimburse BioMarin for all documented, reasonable, out-of-pocket expenses (not to include any salary or other overhead costs associated with BioMarin personnel) incurred by BioMarin in providing such assistance. Alliant will reimburse BioMarin for expenses incurred by BioMarin in providing such assistance within thirty (30) days of receipt of BioMarin’s documentation.

3. REGULATORY APPROVAL

3.1 Obtaining Regulatory Approval. BioMarin will continue to act as regulatory agent for and be responsible for all ongoing communications with the FDA regarding obtaining Regulatory Approvals for Orapred ODT and Orapred RT in the United States and will bear all costs associated with obtaining such Regulatory Approvals. After FDA grants Regulatory Approvals for Orapred ODT and Orapred RT, Alliant will act as regulatory agent for and be responsible for maintaining Regulatory Approvals for Orapred ODT and Orapred RT, including all costs associated with such maintenance. For Orapred in all of North America, for Orapred ODT and Orapred RT in all of North America other than the United States, and for all other Licensed Products in all of North America, BioMarin shall use commercially reasonable efforts to cause Alliant to be named as regulatory agent for and be responsible for obtaining and maintaining Regulatory Approvals, including all costs associated with those activities, provided that if Alliant is not permitted to act as a regulatory agent under the terms and conditions of the Ascent License, then BioMarin will continue to act as a regulatory agent for the Licensed Products on behalf of Alliant and pursuant to the instructions provided by Alliant; provided that Alliant shall be responsible for preparing, at its expense, all regulatory filings that are required by Law or deemed desirable by Alliant. While acting as a regulatory agent with respect to Licensed Products, each Party will comply with all requirements under 21 CFR Part 203 (Prescription Drug Marketing Act), 21 CFR Part 314.70 (Supplements and Other Changes to an Approved Application), 21 CFR Part 314.80 (Post-Marketing Reporting of Adverse Drug Experiences) and 21 CFR Part 314.81 (Other Post-Marketing Reports). After the Acquisition Date, during the License Term, BioMarin will transfer to Alliant all FDA Licenses for the Orapred Products that the FDA grants to BioMarin or its Affiliate.

3.2 Records. During the License Term, Alliant and BioMarin shall maintain, at a location in the United States, complete and accurate books and records in sufficient detail as necessary for both Alliant and BioMarin to meet their respective filing and other obligations with the FDA and any other applicable Governmental Body in North America. Each Party will provide to the other Party, in a timely manner, copies of all submissions relating to the Licensed Products to the FDA and other Regulatory Agencies in North America, including but not limited to, annual reports and adverse event reports. Not more than once per year and at such additional times as may be reasonably required to respond to communications from the Regulatory Agencies, upon not less than five (5) Business Days’ written notice to the other Party, each Party shall have the right to review, at its expense, inspect, audit and make copies of any such books and records for purposes of verifying the other Party’s compliance with Section 3.

3.3 Change of Party Names and Promotional Materials.

(a) As soon as reasonably practicable following the Effective Date, Alliant and BioMarin shall: (i) jointly notify the FDA that Alliant is the marketer and distributor of Orapred; and (ii) use commercially reasonable efforts to commence taking any and all action necessary to change the National Drug Code number for Orapred.

(b) As soon as reasonably practicable following the Effective Date, Alliant and BioMarin shall jointly notify the manufacturers of Orapred Liquid and Orapred ODT, the contents of which notification shall be mutually agreed upon, that all package inserts, labeling,

and any components thereof, and packaging related thereto to be manufactured or ordered after the Effective Date, must be changed to identify Alliant as the marketer in North America. Alliant shall use commercially reasonable efforts to ensure that such change takes effect for any new orders of Orapred Liquid and Orapred ODT, following the date that is twenty (20) Business Days following the Effective Date.

4. COMMERCIALIZATION

4.1 Commercialization Obligation. Alliant shall use commercially reasonable efforts to develop and commercialize the Licensed Products in North America, which efforts shall include: (a) commercial launch of Orapred ODT within sixty (60) days after Regulatory Approval by the FDA; and (b) allocation of efforts and resources consistent with the resources allocated by Alliant to the development and commercialization of Alliant’s other products with comparable commercial opportunity in the marketplace. Alliant shall be responsible for all costs and expenses incurred by Alliant in the development and commercialization of the Licensed Products in North America.

4.2 Advertising and Promotional Materials. Alliant shall be responsible for development of all new advertising and promotional materials related to the Licensed Products, all in compliance with all applicable Laws, and neither Alliant nor its Permitted Sublicensees shall use any promotional and marketing materials with the corporate identifiers or trade names of BioMarin or BioMarin’s Affiliates, except as permitted under this Agreement. Within ten (10) Business Days following the Effective Date, the Parties shall each submit a letter to the DDMAC division of FDA informing them that Alliant will be the new distributor of Orapred^® in the United States under a license from BioMarin and designating Alliant as the contact for review and discussion of all promotional materials related to Orapred^® in the United States, after which time Alliant will timely file with the appropriate regulatory agency, in accordance with all applicable laws and regulations, all promotional materials for Orapred^® required to be filed with such agency.

4.3 Quality Control. For each Licensed Product, Alliant will

(a) maintain appropriate quality control and quality assurance systems for the distribution of Licensed Product in North America;

(b) comply with all Laws in each jurisdiction in North America where Licensed Products are sold;

(c) comply with all applicable export Laws of the Department of Commerce or other Governmental Body, and not to export any Confidential Information or Licensed Products in violation of any such Laws;

(d) not make any claims, representations or warranties directly or indirectly to any third party about the Licensed Products except as permitted by Law;

(e) keep records of all Licensed Product sales and customers sufficient to adequately administer a recall of any Licensed Product for five (5) years after the sale;

(f) maintain a safety database for the Licensed Product and any clinical studies conducted with the Licensed Product and submit to applicable Regulatory Agencies all required safety reports, and provide product, medical and clinical information regarding the Licensed Product to its customers; and

(g) market and sell the Licensed Products on their own merits and not with the intent of promoting or encouraging the purchase or use of any other product or service.

4.4 Complaints and Recalls. If Alliant receives a complaint or information regarding a Licensed Product which it would be required under applicable Law to disclose to a Regulatory Agency, it shall promptly, but in any event not later than twenty-four (24) hours after receipt, advise BioMarin in writing of the details of such complaint or information. Promptly thereafter, Alliant shall report such complaint or information to the appropriate Regulatory Agencies in the countries in North America, respectively, in which such Licensed Product is being commercialized, each as may be required by, and in accordance with, the appropriate Laws of the relevant countries and Regulatory Agencies. Alliant shall provide to BioMarin with all available follow-up information related to such incident (including any information in such Party’s possession as may be reasonably required by the other Party to satisfy its regulatory filing obligations).

4.5 Recalls. BioMarin and Alliant will cooperate with each other in the event of any product recall and will provide each other with such information and consultation as shall be reasonably required under the circumstances. In the event of any disagreement between BioMarin and Alliant as to whether Product(s) should be recalled, withdrawn or whether any similar action should be taken, BioMarin shall make the final determination as to what action shall be taken. In addition, each party shall immediately notify the other of the details concerning (i) any event or circumstances that might reasonably lead the parties to initiate any recall or withdrawal of, or similar action with respect to, any Product, (ii) any seizure of any Product or any similar action taken by any governmental authority, or (iii) any Product malfunction or defect which presents a reasonable risk of injury or death to end users.

4.6 Recall Costs. If any recall, withdrawal or seizure of any Licensed Product occurs due to (a) the failure of BioMarin to comply in any respect with any applicable law, rule, regulation, standard, court order, decree or any directive of any relevant governmental authority, (b) the failure of BioMarin to comply with any of the terms of this Agreement, or (c) an order by a government authority that a Product bearing BioMarin’s NDC must be removed from the market, then BioMarin shall bear the full cost and expense of any such recall, withdrawal or seizure, subject to any agreement BioMarin may have with a third party requiring contribution to the cost of recall. If any recall, withdrawal or seizure of any Licensed Product occurs in North America for any other reason, then Alliant shall bear the full cost and expense of any such recall, withdrawal or seizure, subject to any agreement Alliant may have, on its own or as an assignee of BioMarin’s rights, with a third party requiring contribution to the cost of recall. If both BioMarin and Alliant contribute to the cause of a seizure, recall or withdrawal of any Licensed Product, the cost and expenses thereof will be shared in proportion to each party’s contribution to the problem.

4.7 Encumbrance. Provided that BioMarin acknowledges that Alliant will be granting Bank of America an “all asset” lien in connection with obtaining the funding of this transaction, Alliant shall not permit or allow this Agreement to be subject to any Encumbrance.

4.8 Transferred Inventory.

(a) Within five (5) calendar days after the Effective Date, conditioned on Alliant’s payment of the fees referenced in Section 6.8, BioMarin shall deliver to Alliant all Orapred finished goods inventory and all raw materials related to Orapred that are owned by BioMarin on the Effective Date (collectively, the “Transferred Inventory”), as listed in Exhibit E (with the exception that BioMarin shall destroy and not transfer the remaining inventory from Lot #RM0420 of NDC# 68135-455-02 and from Lot #RM0501A of NDC# 68135-455-03). BioMarin represents and warrants to Alliant that all lot numbers on the Transferred Inventory have not been used in commerce prior to the date of the transfer and that no product bearing a lot number the same as a lot number on a product transferred to Alliant as Transferred Inventory shall have been sold or otherwise transferred into the stream of commerce, other than 372 10-pack units from Lot RM0502A, and the sample inventory, which is marked as not for sale and not subject to a right of return. Delivery, transfer of title and risk of loss shall occur Exworks (Incoterms 2000) at the current locations such as items are stored. Alliant acknowledges that BioMarin is not required to transfer to Alliant any minimum quantity of the Transferred Inventory pursuant to this Section 4.8(a).

(b) The Parties shall mutually agree on the timing and method of notifying applicable federal agency customers and the Centers for Medicare and Medicaid Services (“CMS”) of the license of the Licensed Assets to Alliant, and shall take whatever action is necessary to simultaneously add Orapred to Alliant’s federal supply schedule and Medicaid rebate agreement, if applicable, and delete Orapred from the federal supply schedule and Medicaid rebate agreement of BioMarin as applicable. BioMarin shall be responsible for the processing and payment of Medicaid and Medicare rebates applicable to Transferred Inventory and submitted under BioMarin’s Orapred NDC numbers 68135-455-02 or 68135-455-03 and any other rebates, charge backs or similar payments owed to a third party for the Transferred Inventory for six (6) months following the Effective Date. After such period, BioMarin shall process and pay Medicaid and Medicare rebates submitted under BioMarin’s Orapred NDC 59439-455-02 and any other rebates, charge backs or similar payments owed to a third party for the Transferred Inventory, but Alliant shall be responsible for reimbursing BioMarin for all such rebates, charge backs and similar payments until one (1) year after the last lot expiration date of Orapred labeled with BioMarin’s Orapred NDC. BioMarin will invoice Alliant for such rebates, charge backs, and similar payments and Alliant shall pay BioMarin for such rebates, charge backs, and similar payments within forty-five (45) days following the date of any such invoice. Each invoice will be submitted to Alliant with the documents supporting such invoices.

4.9 Returns. All returns of Orapred, previously sold by BioMarin, shall be the responsibility of BioMarin, financial and otherwise, and Alliant shall have no responsibility for or accept any returns of Orapred previously sold by BioMarin, with the exception that: (i) Alliant will provide product swaps of Orapred Products, not to exceed, in the aggregate, four hundred thousand dollars ($400,000) worth of product at cost, as a result of returns from Quality King Distributors, Inc. of Orapred previously sold by BioMarin, so long as such returns are made in

compliance with the BioMarin return policy applicable to Quality King Distributors, Inc. and (ii) in the event that Alliant sells more than 1500 bottles of Orapred Liquid to Cardinal Health Care, or any successor or affiliate entity (collectively “Cardinal”), Alliant shall have sole responsibility for all further returns from Cardinal. BioMarin will reimburse Alliant for the Cost of Goods incurred by Alliant related to any product swaps for returns from Quality King Distributors. All reimbursements to be made by BioMarin under this Section 4.9 will be made within thirty (30) calendar days following Alliant’s written request for reimbursement and provided that such request includes the documentation supporting the lot number of the returned product and the Cost of Goods incurred by Alliant as a result of those returns. Alliant agrees that it will not increase or decrease the Wholesale Acquisition Cost for Orapred in the 15mg/5ml concentration or otherwise take any action that would increase the amount payable per bottle by BioMarin upon the return of Orapred.

4.10 Hi-Tech. Subject to receiving Hi-Tech’s consent, BioMarin will assign to Alliant all of BioMarin’s right, title, and interest in and to the Hi-Tech License and Supply Agreement, and Alliant will assume all of the obligations of BioMarin under the Hi-Tech License and Supply Agreement, to the extent such obligations arise after the effective date of the assignment of the Hi-Tech License and Supply Agreement to Alliant. After the assignment of the Hi-Tech License and Supply Agreement, Alliant will pay BioMarin the royalties required under Section 6.3 for each Orapred Product sold or otherwise disposed of by Hi-Tech pursuant to the Hi-Tech License and Supply Agreement.

5. TRADEMARK USE RESTRICTIONS.

5.1 Trademark Use and Quality Control. During the License Term, Alliant agrees and acknowledges that: (a) neither Alliant nor its Permitted Sublicensees shall have any interest, right, or title in the Licensed Trademarks other than the Sublicense; (b) neither Alliant nor its Permitted Sublicensees shall obtain any rights in or to the Licensed Trademarks through Alliant’s or its Permitted Sublicensees’ use in connection with the Licensed Products; (c) BioMarin or its licensor (as applicable) is and will continue to be the sole and exclusive owner of all right, title and interest in and to each Licensed Trademarks in any form or embodiment thereof; (d) all goodwill associated with or attached to the Licensed Trademarks arising out of the use thereof by Alliant and its Permitted Sublicensees shall inure to the benefit of BioMarin or its licensor (as applicable); and (e) the quality of the goods provided by Alliant and its Permitted Sublicensees under the Licensed Trademarks shall conform to applicable Laws, including FDA standards for the applicable goods and shall be subject to a once a year independent third party inspection, upon reasonable notice to Alliant, of such goods upon which Licensed Trademarks appear. During the License Term, Alliant shall furnish at its expense samples of packaging materials and other materials bearing the Licensed Trademarks for inspection and analysis as BioMarin may reasonably request.

5.2 Cima Trademarks. Alliant shall include the applicable Cima Trademarks on the packaging of Orapred Products and, at Alliant’s sole discretion, in marketing and promotional materials. Alliant will use the Cima Trademarks in labeling of Orapred Products as requested in writing by BioMarin or Cima, in a frequency, size, format, and location as reasonably requested by Cima or BioMarin and as reasonably agreed to by Alliant, prior to the required time for Alliant’s submission of artwork as set forth in the Cima Supply. Alliant may use Cima

Trademarks in promoting, marketing, and selling of Orapred Products in accordance with this Section; provided, however, that the particular formulation of any reference to Cima Trademarks in any promotional material shall be subject to Cima’s or BioMarin’s review and consent; and provided, further, that once the formulation of any such reference has been reviewed and consented to by Cima, any subsequent reference to Cima Trademarks using such formulation shall not be subject to the further review or consent of Cima. Alliant shall use commercially reasonable efforts to conform to trademark usage policies and procedures provided by Cima.

5.3 No Contest. During the License Term, Alliant agrees that neither Alliant nor its Permitted Sublicensees will: (a) contest, oppose or challenge, or assist any party in contesting, opposing or challenging, BioMarin’s or its licensor’s ownership of the applicable Licensed Trademarks or the distinctiveness or validity of the applicable Licensed Trademarks; (b) at any time do or suffer to be done any act or thing that will in any way impair BioMarin’s or its licensor’s ownership of or rights in and to the applicable Licensed Trademarks or any registration thereof; (c) register or attempt to register any applicable Licensed Trademark in any jurisdiction; or (d) oppose registration of any applicable Licensed Trademark by BioMarin or its Affiliate or licensor, alone or with other words or designs, in any jurisdiction. Upon the reasonable request of BioMarin or its licensor, Alliant shall give BioMarin or its Affiliates or licensor or an authorized representative thereof all necessary information as to the use of the applicable Licensed Trademarks pursuant to this Agreement which BioMarin or its Affiliates or licensor may reasonably require and will render any assistance reasonably required by BioMarin or its Affiliates or licensor in maintaining the registrations of the applicable Licensed Trademarks.

5.4 Use of the Licensed Trademarks. Alliant agrees to comply in all material respects with all applicable Laws pertaining to the proper use and designation of the Licensed Trademarks. Additionally, during the License Term, Alliant shall use commercially reasonable efforts to:

(a) use the Licensed Trademarks upon or in relation to the Licensed Products only in such manner that the distinctiveness, reputation, and validity of the Licensed Trademarks shall not be impaired. Without prejudice to the generality of the foregoing, Licensee shall ensure in particular that each Licensed Trademark is accompanied by words accurately describing the nature of the goods or services to which it relates, and ensure that each Licensed Trademark is displayed in accordance with the trademark usage guidelines of BioMarin or its Affiliate or licensor, provided to Alliant from time to time by BioMarin;

(b) display the proper form of trademark and service mark notice associated with the Licensed Trademarks; and

(c) neither use nor display any of the Licensed Trademarks in such relation to any other mark or trademarks owned by any third party or Licensee or its Affiliates as to suggest that the multiple Trademarks constitute a single or composite trademark, service mark, or are under the same proprietorship.

5.5 Maintaining Registrations. Alliant shall reimburse BioMarin or its Affiliate or licensor for all expenses incurred by BioMarin or its Affiliate or licensor, during the License

Term, in connection with maintenance of those BioMarin Licensed Trademarks which are already registered as of the Effective Date in North America, including, but not limited to, filing all necessary maintenance and use documents, applying for renewal, and payment of any required periodic taxes or fees due in connection with such registrations. At any time during the License Term, Licensee shall execute any documents as shall be reasonably required by BioMarin or its Affiliate or licensor to confirm BioMarin’s or its Affiliate’s or licensor’s ownership of the BioMarin Licensed Trademarks or to otherwise give effect to the provisions of this Section 5.

5.6 Enforcement of Licensed Trademarks.

(a) During the License Term, if either Party or its Affiliates becomes aware of actual or threatened infringement of any BioMarin Licensed Trademark or of a mark or name confusingly similar to any BioMarin Licensed Trademark, including without limitation by publication of a mark for opposition, such Party or its Affiliates or Permitted Sublicensees shall promptly so notify the other Party in writing. BioMarin or its Affiliates shall have the first right, but not the obligation, to enforce such BioMarin Licensed Trademarks, including the right to bring opposition, infringement or unfair competition actions involving a BioMarin Licensed Mark in North America at BioMarin’s expense, provided that Alliant shall have the right to participate in such actions at Alliant’s expense if such actions occur after the Acquisition Date. If Alliant participates in any such action, BioMarin or its Affiliates shall have sole control of the conduct of any such action which it brings, provided that Alliant shall have the right to provide ongoing comments and advice regarding its position in such action, which comments shall be considered in good faith by BioMarin. Alliant and its Permitted Sublicensees shall, at the request and expense of BioMarin or its Affiliates, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. Any recovery or compensation resulting from such proceeding, including without limitation non-monetary rights, shall belong entirely to BioMarin or its Affiliates.

(b) During the License Term after the Acquisition Date, if (i) BioMarin or its Affiliates fail to take action against such threatened or actual infringement within a reasonable period of no longer than ninety (90) calendar days from the date of receipt of the written notice described in Section 5.6(a), or (ii) within such period of time, and no later than five (5) Business Days prior to the applicable deadline, BioMarin or its Affiliates has not provided a commercially reasonable position for failing to take such action, Alliant may thereafter take such action as it deems necessary to enforce its rights in and to the BioMarin Licensed Trademark, including, without limitation, the right, but not the obligation, to bring, at its own expense, an infringement action or file any other appropriate action or claim related to infringement of the BioMarin Licensed Trademark against any third party. BioMarin shall, at the request and expense of Alliant, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. In such events, the expenses for enforcement will be borne by Alliant, and any recovery or compensation resulting from such proceeding, including without limitation non-monetary rights, shall belong entirely to Alliant. Alliant shall not settle or accept any settlement from any third party without the prior written consent of BioMarin or its licensor, which consent shall not be unreasonably withheld or delayed.

5.7 Third Party Trademark Litigation.

(a) During the License Term, in the event of the initiation of any suit by a third party against BioMarin or Alliant for trademark infringement involving the manufacture, use, sale, promotion or marketing of the Licensed Products in North America, the Party sued shall promptly notify the other Party in writing, and Alliant shall have the right to defend such suit at its expense and Alliant shall provide BioMarin with notice of its intent to defend or not defend such suit, provided that BioMarin shall have the right to participate in such action at BioMarin’s expense. If BioMarin participates in such action, Alliant shall have sole control of the conduct of any such action, provided that BioMarin shall have the right to provide ongoing comments and advice regarding its position in such action, which comments shall be considered in good faith by Alliant. BioMarin shall, at the request and expense of Alliant, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. Alliant shall not settle or accept any settlement from any third party without the prior written consent of BioMarin, which consent shall not be unreasonably withheld or delayed. However, to the extent any suit is asserted against Ascent for trademark infringement involving the manufacture, use, sale, promotion or marketing of the Licensed Products in North America, BioMarin shall have the right to defend such suit at its expense pursuant to the terms and conditions of Ascent License, unless Ascent consents to Alliant defending such suit pursuant to this Section 5.7(a).

(b) During the License Term, if (i) Alliant fails to defend such suit within a reasonable period of no longer than thirty (30) calendar days from the date of receipt of written notice regarding the suit, or no later than five (5) Business Days prior to the applicable deadline, and (ii) within such period of time, Alliant has not provided a commercially reasonable argument for failing to defend such suit, BioMarin may thereafter take such action as it deems necessary to defend its rights in the Licensed Trademark. Alliant shall, at the request and expense of BioMarin, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. In such events, the expenses for defense will be borne by BioMarin. BioMarin shall not settle or accept any settlement from any third party without the prior written consent of Alliant, which consent shall not be unreasonably withheld or delayed. If Alliant fails to defend such suit filed against Ascent, Ascent shall have the right to defend such suit pursuant to the terms and conditions of the Ascent License.

6. CONSIDERATION

6.1 Upfront License Payment. On the Effective Date, as partial consideration for the grant of the Sublicense, Alliant shall pay to BioMarin Two Million Five Hundred Thousand Dollars ($2,500,000). Once paid, this amount is non-refundable and may not be credited against any amounts payable by Alliant under this Agreement.

6.2 Milestone Payments.

(a) As partial consideration for the grant of the Sublicense, within five (5) days after the achievement of each applicable event, Alliant shall pay to BioMarin the following amounts (the “Milestone Fees”):

Event	Milestone Fee
Regulatory Approval of Orapred ODT by FDA	$	7,500,000
Commercial Launch of Orapred ODT	$	4,000,000
One (1) year after the Approval of Orapred ODT by FDA	$	4,000,000

(b) Alliant recognizes that One Million Six Hundred Thousand Dollars ($1,600,000) of the Milestone Fee for Regulatory Approval of Orapred ODT by FDA and One Million Six Hundred Thousand Dollars ($1,600,000) of the Milestone Fee for Commercial Launch of Orapred ODT are amounts BioMarin is required to pay to Cima under the Cima License. BioMarin shall provide Alliant with proof of payment of such amounts promptly, and in any event, subject to payment of the amounts due to BioMarin from Alliant under this subsection, no later than the date such payments are due to Cima. Once paid, the Milestone Fees are non-refundable and may not be creditied against any amounts payable by Alliant under the Cima License

6.3 Royalties

(a) For all Orapred ODT, including any generic versions thereof, sold or otherwise disposed of by Alliant or its Permitted Sublicensees during the License Term, Alliant shall pay to BioMarin twenty-five percent (25%) of Net Sales of Orapred ODT for the first three (3) years after the Commercial Launch of Orapred ODT and thirty percent (30%) of Net Sales of Orapred ODT thereafter; provided that, if a third party sells or offers for sale a Generic Product to Orapred ODT, then the royalty rate for Orapred ODT, not including the generic versions thereof, sold or otherwise disposed of by Alliant or its Permitted Sublicensees will be reduced to twenty-five percent (25%) and the royalty rate for the generic version of Orapred ODT sold or otherwise disposed of by Alliant or its Permitted Sublicensees will be reduced to ten percent (10%).

(b) For each Orapred (New Strength) and Orapred RT (New Strength), including any generic versions thereof, sold or otherwise disposed of by Alliant or its Permitted Sublicensees during the License Term, Alliant shall pay to BioMarin twenty-five percent (25%) of Net Sales of each Orapred (New Strength) or Orapred RT (New Strength), as applicable, for the first three (3) years after the Commercial Launch of each such respective product, and thirty percent (30%) of Net Sales of each such respective product thereafter; provided that, if a third party sells or offers Generic Product to any such Orapred (New Strength) or Orapred RT (New Strength), then the royalty rate for that respective Orapred (New Strength) or Orapred RT (New Strength) sold or otherwise disposed of by Alliant or its Permitted Sublicensees will be reduced to ten percent (10%).

(c) For all Orapred ODT sold or otherwise disposed of by Alliant or its Permitted Sublicensees from the Effective Date through the Assignment, Alliant shall pay to Cima the following additional royalties under the existing Cima License:

Annual Net Sales of Orapred ODT	Royalty
$0 million to $10 million	5.5% of Net Sales of Orapred ODT
Over $10 million to $50 million	6.5% of Net Sales of Orapred ODT
Over $50 million	7.5% of Net Sales of Orapred ODT

For example, in addition to the royalties payable under Section 6.3(a), if annual Net Sales of Orapred ODT in a given calendar year are $55 million, Alliant will pay Cima 5.5% on the first $10 million, 6.5% on the next $40 million, and 7.5% on the remaining $5 million. BioMarin shall provide Alliant with proof of payment of such royalties to Cima promptly and in any event, subject to payment of the amounts due to BioMarin from Alliant under this subsection, no later than the date such royalties are due to Cima. After the Assignment, Alliant shall be directly responsible for the royalties due to Cima.

(d) For all Orapred (15mg/5ml), other than institutional packs, and Orapred RT (15 mg/5ml) sold or otherwise disposed of by Alliant or its Permitted Sublicensees during the License Term, Alliant shall pay to BioMarin ten percent (10%) of Net Sales of such product.

(e) For all Orapred institutional packs sold or otherwise disposed of by Alliant or its Permitted Sublicensees during the License Term, Alliant shall pay to BioMarin twenty percent (20%) of Net Sales of such product.

(f) For all Licensed Products, other than Orapred Products, that are distributed under the trademark “Orapred,” sold or otherwise disposed of by Alliant or its Permitted Sublicensees during the License Term, Alliant shall pay to BioMarin, on a product-by product basis, three percent (3%) of Net Sales related to such Licensed Products for a period of seven (7) years following the commercial launch of each such product.

(g) For all Licensed Products, other than Orapred Products, that would, but for the license granted hereunder, infringe on a valid claim of a Licensed Patent (provided that for purposes of calculating royalties hereunder, after the Assignment, the royalty shall be determined as if the Assignment had not occurred and the Sublicense was continuing), sold or otherwise disposed of by Alliant or its Permitted Sublicensees during the License Term, Alliant shall pay to BioMarin, on a product-by product basis, three percent (3%) of Net Sales related to such Licensed Products for a period of seven (7) years following the Commercial Launch of each such Licensed Product.

(h) Until the Assignment, royalties (other than those payable directly to pursuant to Section 6.3(c), which will be paid to BioMarin) will be paid into escrow pursuant to the Escrow Agreement. After the Assignment, all royalties, other than pursuant to Section 6.3(c), will be paid to BioMarin.

6.4 Payment Schedule. Royalties shall be payable on a quarterly basis, within forty (40) days after the end of each calendar quarter, based upon the Net Sales of all Licensed Products by Alliant and its Permitted Sublicensees during such calendar quarter. In the event that BioMarin has committed a payment default under the Ascent License, Alliant may elect, but is not required to pay the amounts due by BioMarin under the Ascent License and, to the extent that such payments are made, such payments will be deemed to be payments made to BioMarin in full or partial satisfaction of the royalty payments required under Section 6.3.

6.5 Royalty Report. Alliant shall provide to BioMarin a non-binding royalty estimate, within five (5) days after the close of each calendar quarter. Alliant will provide to BioMarin, at the same time as each royalty payment is made, a written report showing: (a) the gross sales of Licensed Products by Alliant and its Permitted Sublicensees during the reporting period and the calculation of the Net Sales from such gross sales; (b) the calculation of the royalty due and payable for the reporting period; (c) the launch date(s) of the Licensed Products in any country(ies) in North America during the reporting period; (d) the exchange rates used in determining the amount of royalty payment hereunder; and (e) any other information reasonably requested by BioMarin to verify the accuracy of the royalty payments hereunder and to comply

with the reporting requirements under the Ascent License and the Cima License. In addition, for so long as BioMarin is required to provide the report required by Section 2.3(b) of the Ascent License, on or before December 5 in each calendar year, Alliant will provide to BioMarin a royalty report containing the information referenced above with respect to the twelve month period beginning on December 1 of the previous year and ending on November 30 of then-current year.

6.6 Records. Alliant shall keep, or cause to be kept, full, complete, and proper records and accounts of all Net Sales of the Licensed Products by Alliant and its Permitted Sublicensees in sufficient detail to enable BioMarin to verify the accuracy of the royalties payable hereunder for a period of three (3) years after the calendar quarter to which the records apply.

6.7 Audit. BioMarin, BioMarin’s Affiliates, Ascent, and Cima shall have the right, at their expense, to appoint an independent certified public accounting firm to audit the books and records of Alliant and its Permitted Sublicensees which are relevant or necessary to verify the royalties payable pursuant to this Agreement; provided, however, that if the audit discloses that BioMarin was underpaid royalties payable under Section 6.3(a), 6.3(b) 6.3(d), 6.3(e), 6.3(f), or 6.3(g) by at least five percent (5%) or Cima was underpaid royalties payable under Section 6.3(b) by at least five percent (5%) for any calendar year, then Alliant shall reimburse to the auditing entity any documented and reasonable costs of such audit and promptly pay to BioMarin an amount equal to the additional royalties to which BioMarin or Cima is entitled as disclosed by the audit, including the late payment charge under Section 6.9. BioMarin, BioMarin’s Affiliate, and/or Cima may exercise its right of audit no more frequently than once in any calendar year, unless Alliant has failed to timely pay any amount payable under this Agreement or there is a dispute with regard to the royalty reports. Any such audit may be conducted upon at least ten (10) days advance notice to Alliant, during normal business hours and in a manner that does not interfere unreasonably with the business of Alliant.

6.8 Cost of Transferred Inventory. On the Effective Date, as consideration for the transfer of the Transferred Inventory by BioMarin to Alliant, Alliant shall pay to BioMarin seven hundred and fifty thousand dollars ($750,000). Additionally, thirty days after Commercial Launch of Orapred ODT, Alliant shall pay BioMarin an additional nine hundred eighty five thousand ($985,000), based on the cost of acquisition, testing and initial processing of prednisolone sodium phosphate held at Cima’s facility for use in the production of Orapred ODT included with the Transferred Inventory.

6.9 Late Payment. If Alliant fails to timely make any payment due to BioMarin under this Agreement, then interest shall accrue on any unpaid amount on a daily basis at the lesser of: (a) an annual rate equal to two percent (2%) above the prime rate, as quoted by The Wall Street Journal, western edition on the date that such payment was due; and (b) the maximum rate permitted by applicable law.

6.10 Form of Payment; Currency. All monies due to BioMarin hereunder shall be paid by wire transfer in immediately available funds or other method designated from time to time by BioMarin, in United States Dollars to BioMarin in Novato, California, United States of America. For purposes of calculating royalties due under this Agreement, Alliant will convert all

sales of Licensed Products under this agreement to United States currency based on the rate of exchange, as quoted by The Wall Street Journal, western edition, on the last Business Day of the month in which the respective sale occurred.

6.11 Tax. BioMarin will be responsible for and will indemnify and hold Alliant harmless from payment of all taxes (including taxes based on BioMarin’s net income, gross receipts, or unified business taxes), fees, duties, and other governmental charges, and any related penalties and interest, arising from the payment of fees and royalties to BioMarin under this Agreement.

7. INTELLECTUAL PROPERTY AND IMPROVEMENTS

7.1 IP Ownership. Alliant acknowledges that BioMarin and its licensors own all Licensed Assets including all intellectual property rights therein. To the extent any Improvements are made by or for BioMarin, BioMarin shall own all rights, title, and interest in and to such Improvements.

7.2 Improvements by Alliant. To the extent any Improvements are made by or for Alliant or its Permitted Sublicensees (collectively, “Alliant Improvements”), BioMarin or its licensor shall own all rights, title, and interest in the Alliant Improvements. Alliant hereby irrevocably and unconditionally grants, conveys, assigns, and transfers to BioMarin or its licensor, as requested by BioMarin, any and all rights and interest Alliant may have in the Alliant Improvements, including all intellectual property rights therein. To the extent any Patent for Alliant Improvements is filed with the United States Patent and Trademark Office or other Governmental Body, such Patent shall be filed in the name of BioMarin or its licensor (at BioMarin’s request); provided, however, that such Alliant Improvements shall be included in the Licensed Technology or Licensed Development Technology, as applicable, without additional charge to Alliant. Alliant shall disclose such Alliant Improvements to BioMarin pursuant to Section 7.3 below.

7.3 Disclosure. During the License Term, Alliant shall promptly disclose to BioMarin any Alliant Improvements. Regarding each such Improvement, Alliant shall:

(a) advise BioMarin within sixty (60) days of Alliant’s receipt from an employee or third party of an invention disclosure for such Improvement;

(b) permit BioMarin’s employees or agents to make such inspections of such Improvement, at reasonable times and at BioMarin’s expense;

(c) have Alliant’s employees or agents experienced in technical data relating to such Improvement impart to the employees or agents of BioMarin information relative to such Improvement;

(d) furnish BioMarin with copies of drawings, schematics and other available technical data relative to the raw materials and equipment developed for or found suitable for use in such Improvement; and

(e) furnish BioMarin with copies of papers, documents and correspondence filed in or received from, the United States Patent and Trademark Office or other Governmental Body pertaining to those Patents or regulatory approvals that cover any aspect of such Improvement.

8. CONFIDENTIALITY

8.1 Confidential Information. During the term of this Agreement, each Party (the “Receiving Party”) may be provided with, have access to, or otherwise learn confidential and/or proprietary information of the other Party or its licensors (the “Disclosing Party”) (including certain information and materials concerning the business, finance, plans, customers, technology, personnel and products of the Disclosing Party) that is of substantial value to the Disclosing Party, which is identified as confidential at the time of disclosure or which should reasonably be considered, under the circumstances of its disclosure, to be confidential to the Disclosing Party (“Confidential Information”). Alliant will treat all Licensed Assets as Confidential Information of BioMarin.

8.2 Confidentiality Obligations. All Confidential Information remains the property of the Disclosing Party. The Receiving Party may disclose the Confidential Information of the Disclosing Party only to its officers and employees who need to know the Confidential Information for purposes of performing under this Agreement and who are bound by the Receiving Party’s written confidentiality agreements with terms no less restrictive than those provided herein. The Receiving Party shall be responsible for any improper use or disclosure of Confidential Information by the Receiving Party’s officers or employees. The Receiving Party will hold the Confidential Information in strict confidence, will not use the Confidential Information without the Disclosing Party’s prior written consent except in performance under this Agreement, and will not disclose to the Confidential Information to any third party, except as permitted under this Section. The Receiving Party will take measures to maintain the confidentiality of the Confidential Information equivalent to those measures the Receiving Party uses to maintain the confidentiality of its own confidential information of like importance but in no event less than reasonable measures. The Receiving Party will give immediate notice to the Disclosing Party of any unauthorized use or disclosure of the Confidential Information that comes to the attention of the Receiving Party’s senior management and agrees to assist the Disclosing Party in remedying such unauthorized use or disclosure. Under no circumstance may Alliant or its Permitted Sublicensees disclose any Confidential Information which originated from Cima to a Cima Competitor, as defined in the Cima License.

8.3 Exceptions. The confidentiality obligations do not extend to Confidential Information which: (a) becomes part of the public domain without the fault of the Receiving Party; (b) is rightfully obtained by the Receiving Party from a third party with the right to transfer such information without obligation of confidentiality; (c) is independently developed by the Receiving Party without reference to or use of the Disclosing Party’s Confidential Information, as evidenced by written records; or (d) was lawfully in the possession of the Receiving Party at the time of disclosure, without restriction on disclosure, as evidenced by written records. In addition, the Receiving Party may disclose Confidential Information of the Disclosing Party as may be required by law, a court order, or a governmental agency with jurisdiction, provided that before making such a disclosure the Receiving Party first notifies the

Disclosing Party promptly and in writing and cooperates with the Disclosing Party, at the Disclosing Party’s reasonable request and expense, in any lawful action to contest or limit the scope of such required disclosure, including seeking a protective order or other appropriate remedy. The Receiving Party shall furnish only that portion of the Confidential Information, as the case may be that is legally required to be disclosed. Any specific Confidential Information shall not be deemed to be available to the public or in the prior possession of the Receiving Party merely because it is embodied in more general information available to the public or in the Receiving Party’s prior possession. Any combination of known information shall be within any of the foregoing exclusions only if the combination as such is within such exclusion. Any information shown to fall within any of the foregoing exception shall not be identified by the Receiving Party as information, which was received from, is used by, or considered proprietary by the Disclosing Party.

8.4 Return of Confidential Information. Upon termination of this Agreement, the Receiving Party will return to the Disclosing Party all tangible copies of Confidential Information of the Disclosing Party in the Receiving Party’s possession or control and will erase from its computer systems all electronic copies thereof, with the sole exception that the Receiving Party may retain a single archival copy of the Confidential Information for purposes only of compliance with government regulations or with the terms of this Agreement.

9. PURCHASE OF ORAPRED PRODUCTS

9.1 Orapred ODT. Alliant agrees to purchase exclusively from Cima all of Alliant’s and its Permitted Sublicensees’ requirements for Orapred ODT for its subsequent use, sale, lease, transfer, or other disposition by Alliant or its Permitted Sublicensees pursuant to the terms and conditions of the Cima Supply Agreement. Alliant will not, and will cause its Permitted Sublicensees not to, enter into any other agreement(s) with any other supplier/manufacturer for the supply and manufacture of Orapred ODT during the term of the Cima Supply Agreement, except as otherwise provided in the Cima Supply Agreement.

9.2 Orapred Liquid. Alliant agrees to purchase Orapred Liquids in amounts no less than eighty percent (80%) of the requirements of Alliant and its Permitted Sublicensees for 8 oz. Trade Pack and one hundred percent (100%) of the requirements of Alliant and its Permitted Sublicensees for  ³/4 oz. Sample pack for resale in the United States of America and the Commonwealth of Puerto Rico pursuant to the terms and conditions of the Lyne Supply Agreement. Alliant and its Permitted Sublicensees may purchase Orapred Liquids for resale within North America outside the United States of America and the Commonwealth of Puerto Rico, pursuant to the terms and conditions of the Lyne Supply Agreement.

9.3 Compliance with Supply Agreements. Alliant agrees to comply with the terms and conditions of the Cima Supply Agreement and the Lyne Supply Agreement and to assume all obligations arising after the Effective Date of this Agreement of BioMarin provided in the Cima Supply Agreement that are applicable to Alliant’s purchase of Orapred ODT from Cima for distribution within North America and to assume all obligations arising after the Effective Date of this Agreement of BioMarin provided in the Lyne Supply Agreement that are applicable to Alliant’s purchase of Orapred Liquids for distribution within North America.

9.4 Interim Supply Agreement. BioMarin will use commercially reasonable efforts to obtain, as soon as practicable, the consent of Cima to assign the obligations under the Cima Supply Agreement as related to the production of Orapred ODT for distribution within North America. Until such consent is obtained, BioMarin and Alliant shall be deemed to have entered into a new supply agreement for the production of Orapred ODT for distribution in North America on the same terms and conditions as the Cima Supply Agreement, whereby BioMarin shall have all of Cima’s rights and obligations under the Cima Supply Agreement and Alliant shall have all of BioMarin’s rights and obligations under the Cima Supply Agreement, except that: (i) all time periods as contained in the Cima Supply Agreement for Cima to act shall be extended by the lesser of (x) three (3) business days or (y) one-half of the time allowed under the Cima Supply Agreement, rounded down to a full business day, and all periods for BioMarin to act shall be reduced by lesser of (x) three (3) business days or (y) one-half of the time allowed under the Cima Supply Agreement, rounded down to a full business day; (ii) BioMarin’s obligations under the deemed agreement shall be contingent on Cima’s performance under the Cima Supply Agreement; (iii) BioMarin cannot guarantee Alliant access to Cima’s facility, but will continue to use commercially reasonable efforts to provide Alliant with all such access; and (iv) the deemed agreement shall include any other appropriate changes to the Cima Supply Agreement based on the premise that BioMarin is intending to pass through its rights to the Cima Supply Agreement to the extent possible without it being deemed to be an assignment of BioMarin’s obligations under the Cima Supply Agreement.

10. REPRESENTATIONS AND WARRANTIES AND COVENANTS

10.1 Representations and Warranties By BioMarin. BioMarin represents and warrants that:

(a) it is a corporation duly organized, validly existing and in good standing under the laws of Delaware;

(b) it has full corporate power and authority to execute and deliver this Agreement and to perform its obligations and consummate the transactions contemplated hereby, and all corporate acts and other proceedings required to be taken to authorize such execution, delivery, performance and consummation have been duly and properly taken and obtained;

(c) this Agreement has been duly executed and delivered by BioMarin and constitutes the legal, valid and binding obligations of BioMarin enforceable against BioMarin in accordance with its terms;

(d) no approval, authorization, consent or other order or action of or filing with any Governmental Body is required for the execution and delivery by BioMarin of this Agreement, the performance by BioMarin of its obligations hereunder or the consummation by BioMarin of the transactions contemplated hereby (other than Regulatory Approvals as contemplated hereby);

(e) none of the execution, delivery or performance of this Agreement by BioMarin conflicts with any agreement, instrument or understanding to which it is a party or by which it is bound;

(f) subject to the Hi-Tech License and the Supply Agreement, it has the right to grant the Sublicense granted to Alliant hereunder;

(g) as of the Effective Date, it is not aware of any Patents of a third party that is infringed by the manufacture, use, sale or importation of Orapred Products within North America;

(h) it has not been debarred and is not subject to debarment and will not use in any capacity, in connection with the obligations to be performed under this Agreement, any person who has been debarred pursuant to section 306 of the FDCA, 21 U.S.C. 335a, or who is the subject of a conviction described in such section or who undergoes any analogous proceeding under foreign law;

(i) all of the Transferred Inventory shall be in good, usable, and merchantable condition, shall substantially meet its applicable product specifications, and shall have been manufactured in compliance with all applicable Laws including current Good Manufacturing Practices; and

10.2 Covenants by BioMarin.

(a) BioMarin covenants that during the term of this Agreement, it will maintain the Ascent License and the Cima License, and shall not do anything to cause a default by BioMarin under such agreements or to terminate such agreements. In addition to and not in limitation of any rights Alliant may have under this Agreement, the Escrow Agreement, or elsewhere, in the event that BioMarin fails to pay one or more payments due to Ascent or Cima under the respective license, Alliant shall have the right (1) to make such payment on BioMarin’s behalf and, upon written notice provided by Alliant to BioMarin, BioMarin shall reimburse Alliant for the payment within ten days of receipt of the notice of payment; and (2) to require that BioMarin escrow an amount equal to the next four payments to be due under the respective license (or, if payments are determined based on revenues, an amount equal to the previous four payments made by BioMarin under the license agreement), with such escrow to be released to BioMarin upon proof of BioMarin’s timely payment of the next four license fee payments, or to Ascent or Cima, as the case may be, for payment of the license fees as they come due.

(b) BioMarin further covenants that it will exercise the option to purchase the shares of capital stock of Ascent pursuant to the Ascent Securities Purchase Agreement, pursuant to the terms and conditions of such agreement and it will name Alliant as an additional recipient of notices of any notice to BioMarin under the Ascent License, Cima License and the Ascent Securities Purchase Agreement.

10.3 By Alliant. Alliant represent and warrants that:

(a) it is a corporation duly organized, validly existing and in good standing under the laws of Georgia;

(b) it has full corporate power and authority to execute and deliver this Agreement and to perform its obligations and consummate the transactions contemplated hereby,

and all corporate acts and other proceedings required to be taken to authorize such execution, delivery, performance and consummation have been duly and properly taken and obtained;

(c) this Agreement has been duly executed and delivered by Alliant and constitutes the legal, valid and binding obligations of Alliant enforceable against Alliant in accordance with its terms;

(d) no approval, authorization, consent or other order or action of or filing with any Governmental Body is required for the execution and delivery by Alliant of this Agreement, the performance by Alliant of its obligations hereunder or the consummation by Alliant of the transactions contemplated hereby (other than Regulatory Approvals as contemplated hereby);

(e) none of the execution, delivery or performance of this Agreement by Alliant conflicts with any agreement, instrument or understanding to which it is a party or by which it is bound; and

(f) it has not been debarred and is not subject to debarment and will not use in any capacity, in connection with the obligations to be performed under this Agreement, any person who has been debarred pursuant to section 306 of the FDCA, 21 U.S.C. 335a, or who is the subject of a conviction described in such section or who undergoes any analogous proceeding under foreign law.

10.4 Covenant by Alliant. Alliant covenants that during the License Term it will not, directly or indirectly, develop, manufacture, sell or distribute any product that contains prednisolone sodium phosphate, prednisolone, or any salt or base thereof, other than an Orapred Product.

10.5 General Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS AND EXTENDS ANY WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED ASSETS OR LICENSED PRODUCTS INCLUDING, BUT NOT LIMITED TO, TITLE, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY OF LICENSED ASSETS, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

11. PATENT PROSECUTION AND INFRINGEMENT

11.1 Patent Prosecution.

(a) Prosecution of Licensed Patents. As between BioMarin and Alliant, BioMarin and its licensors will be responsible for filing, prosecuting, and maintaining all Licensed Patents. Alliant shall bear all reasonable costs and expenses incurred by BioMarin that are related to such filing, prosecution and maintenance of the Licensed Patents that are prosecuted by BioMarin during the term of this Agreement (“BioMarin Prosecuted Patents”). BioMarin shall regularly consult with Alliant and make reasonable efforts to adopt Alliant’s suggestions regarding prosecution tactics and strategy for BioMarin Prosecuted Patents. BioMarin will keep

Alliant advised of the status of the BioMarin Prosecuted Patents and provide Alliant with copies of all material correspondence and filings to and from the patent offices examining such BioMarin Prosecuted Patents, such as office actions, proposed responses and amendments, and notices of allowance. After the Acquisition Date, BioMarin will promptly notify Alliant in writing if BioMarin decides not to continue the prosecution of any pending case or not to maintain any issued patent included in the BioMarin Prosecuted Patents at least thirty (30) days before the pending case is abandoned or the issued patent is lapsed, and to the extent BioMarin has failed to provide a commercially reasonable position for not taking such action, Alliant may request that BioMarin grant Alliant the right to take over the prosecution of the pending case or the maintenance of the issued patent, which request BioMarin will not unreasonably deny. If the request is granted, BioMarin will designate and appoint Alliant and its duly authorized employees and agents as BioMarin’s agent and attorney-in-fact to prosecute any such pending case or to maintain any such patent under the name of BioMarin and in connection therewith to execute, file, and deliver documents in the name of and on behalf of BioMarin. BioMarin will assist and fully cooperate with Alliant, at Alliant’s request and expense, in prosecuting any such pending case which BioMarin has decided not to continue prosecuting or in maintaining any such patent which BioMarin has decided not to continue maintaining.

(b) Prosecution of Improvements. BioMarin shall have the right to file and prosecute any patent applications which cover an Alliant Improvement and to maintain any patents issued from such patent applications in its name (collectively, “Improvement Patents”). Any Improvement Patents will be automatically licensed to Alliant under Section 2.1. Alliant will execute and/or cause to be delivered to BioMarin and shall take such other actions, as BioMarin may reasonably request, at or after the Effective Date, at BioMarin’s expense, for the purpose of evidencing, prosecuting, obtaining and maintaining all patent rights in and to the Alliant Improvements in any and all countries. Such acts may include, but are not limited to, execution of documents and making inventors and employees available to BioMarin.

(c) Power of Attorney. Alliant each hereby designates and appoints the officers of BioMarin as their agents and attorneys-in-fact, respectively, to act for and on behalf and instead of Alliant to execute and file any documents and to do all other lawfully permitted acts to further the purposes set forth in Section 11.2(b) above with the same legal force and effect as if executed by Alliant, respectively. Alliant further acknowledges and agrees that such power of attorney is a power of attorney coupled with an interest and is irrevocable.

11.2 Infringement of Licensed Patents

(a) During the License Term, if either Party or any of its Affiliates or Permitted Sublicensees becomes aware of any actual or threatened infringement of any Licensed Patents based on the manufacture, sale, offer for sale, or importation of a Licensed Product by a third party in North America or any claim that a Licensed Patent is invalid or unenforceable, such Party or its Affiliates or Permitted Sublicensees shall promptly notify the other Party in writing. In addition, if Alliant or any of its Affiliates or Permitted Sublicensees becomes aware of any actual or threatened infringement of any Licensed Technology or the Licensed Development Technology, Alliant or its Permitted Sublicensees (as applicable) shall promptly notify BioMarin and Ascent in writing as required by the Ascent License.

(b) BioMarin or its licensor or Affiliate (as applicable) shall have the first right, but not the obligation, to initiate and conduct legal proceedings to enforce or defend the Licensed Patents; provided, however, that if the proceeding takes place after the Acquisition Date and involves Licensed Patents (other than those licensed by Cima to BioMarin under the Cima License) (collectively, “BioMarin Enforced Patents”), Alliant shall have the right to participate in any such action involving BioMarin Enforced Patents at its expense. If Alliant participates in any such action, BioMarin or its Affiliate shall have sole control of the conduct of any such action which it brings, provided that Alliant shall have the right to provide ongoing comments and advice regarding its position in such action, which comments shall be considered in good faith by BioMarin. Alliant and its Permitted Sublicensees shall, at the request and expense of BioMarin or its licensors or Affiliates, cooperate and provide reasonable assistance in any action described involving actual or threatened infringement of any Licensed Patents, Licensed Technology, or Licensed Development Technology referenced in this Section 11.2, and if required by law, join such action. Any recovery or compensation resulting from such proceeding, including without limitation non-monetary rights, shall being entirely to BioMarin or its Affiliates or its licensors (as applicable).

(c) During the License Term after the Acquisition Date, if (i) BioMarin or its Affiliates fail to take action against such threatened or actual infringement of the BioMarin Enforced Patents or to defend the BioMarin Enforced Patents within a reasonable period of no longer than ninety (90) calendar days from the date of receipt of written notice from Alliant with sufficient evidence of infringement, (ii) within such period of time, and no later than five (5) Business Days prior to the applicable deadline, BioMarin or its Affiliates has not provided a commercially reasonable position for failing to take such action, and (iii) Alliant may request that BioMarin grant Alliant the right to enforce the BioMarin Enforced Patent, which request will not be unreasonably denied, and if the request is granted, Alliant may thereafter take such action as it deems necessary to enforce its rights in and to the BioMarin Enforced Patent, including, without limitation, the right, but not the obligation, to bring, at its own expense, an infringement action or file any other appropriate action or claim related to infringement of the BioMarin Enforced Patent against any third party. BioMarin shall, at the request and expense of Alliant, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. In such events, the expenses for enforcement will be borne by Alliant, and any recovery or compensation resulting from such proceeding, including without limitation non-monetary rights, shall belong entirely to Alliant, provided that such third party infringer will be treated as a Permitted Sublicensee solely for purposes of calculating the amount payable to BioMarin and Alliant will pay BioMarin the Sublicense Revenue and the royalties based on the amount recovered from such third party, net of the expenses of enforcement borne by Alliant . Alliant shall not settle or accept any settlement from any third party without the prior written consent of BioMarin, which consent shall not be unreasonably withheld or delayed.

11.3 Infringement of Third Party IP

(a) During the License Term, in the event of the initiation of any suit by a third party against Alliant that a Licensed Product or the manufacture, use, sale, or importation of a Licensed Product in North America infringes such third party’s intellectual property rights, Alliant shall promptly notify BioMarin in writing, and Alliant shall have the right to defend such suit at its expense and Alliant shall provide BioMarin with notice of its intent to defend or not

defend such suit, provided that BioMarin shall have the right to participate in such action at BioMarin’s expense. If BioMarin participates in such action, Alliant shall have sole control of the conduct of any such action, provided that BioMarin shall have the right to provide ongoing comments and advice regarding its position in such action, which comments shall be considered in good faith by Alliant. BioMarin shall, at the request and expense of Alliant, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. Alliant shall not settle or accept any settlement from any third party without the prior written consent of BioMarin, which consent shall not be unreasonably withheld or delayed.

(b) During the License Term, if (i) Alliant fails to defend such suit within a reasonable period of no longer than thirty (30) calendar days from the date of receipt of written notice regarding the suit, or no later than five (5) Business Days prior to the applicable deadline, and (ii) within such period of time, Alliant has not provided a commercially reasonable argument for failing to defend such suit, BioMarin may request that Alliant grant BioMarin the right to take such action as it deems necessary to defend its rights in the Licensed Products, which request will not be unreasonably denied. Alliant shall, at the request and expense of BioMarin, cooperate and provide reasonable assistance in any action described in this Section and, if required by law, join such action. In such events, the expenses for defense will be borne by BioMarin. BioMarin shall not settle or accept any settlement from any third party without the prior written consent of Alliant, which consent shall not be unreasonably withheld or delayed.

11.4 Patent Marking. Alliant agrees to mark with notices of Licensed Patent, and to have so marked by its Permitted Sublicensees, each marketed Licensed Product and all related packaging, advertising and promotional materials, in accordance with the laws of each country in North America relating to the marketing of patented articles. Subject to any applicable Laws and the availability of sufficient space on the applicable material, Alliant shall indicate on such promotional and packaging materials as reasonably requested by BioMarin, that the Licensed Product is distributed under a license from BioMarin.

12. TERM AND TERMINATION

12.1 Term. The term of this Agreement (the “Term”) will commence on the Effective Date and, unless sooner terminated as provided in Section 12.3, shall continue for as long as BioMarin has the right to grant the Sublicense to Alliant pursuant to the Ascent License and the Cima License and following the Assignment until fifteen (15) years after the Effective Date.

12.2 Termination and Modification of Certain Provisions Following Assignment. Subject in each case to Alliant’s continuing obligations under the Third Party Agreements, and the provisos noted for each respective section, as applicable, the following provisions of this Agreement shall terminate upon the Assignment: Section 3.2, provided that the record retention obligations and access rights shall survive for a period of five (5) years after the Assignment, Section 4.4, Section 4.5, provided that Alliant shall have full control of all recalls following the Assignment, Section 5.1, Sections 5.3-5.7, Section 7, Section 11, provided that Alliant shall have full and immediate authority to prosecute or defend any infringement action and BioMarin’s right to recover a portion of any monetary recovery shall survive, and Section 15.3

12.3 Termination

(a) Except as set forth in Section 12.3(b), either Party shall have the right to terminate this Agreement, including the Sublicense granted herein, in the event that any material term or condition of this Agreement is breached by the other Party, and such breach is not remedied within a period of thirty (30) calendar days after the non-breaching Party provides written notice of such breach to the breaching Party, provided that if such breach can not reasonably be cured within such thirty (30) day period, the cure period shall be extended for so long as the breaching Party is diligently working to cure the breach.

(b) BioMarin may terminate this Agreement immediately upon notice to Alliant if Alliant fails to timely make any payment due under this Agreement and such failure is not cured within ten (10) Business Days after BioMarin provides written notice of such nonpayment to Alliant.

(c) BioMarin may terminate this Agreement immediately upon notice to Alliant if: (i) Alliant files in any court pursuant to any statute, a petition in bankruptcy or insolvency or for reorganization in bankruptcy or for an arrangement or for the appointment of a receiver or trustee for Alliant or of its assets; (ii) Alliant is served with an involuntary petition against it, filed in any insolvency or bankruptcy proceeding, and where such petition has not been dismissed within sixty (60) days after the filing thereof; (iii) Alliant makes an assignment for the benefit of creditors; or (iv) Alliant dissolves or ceases to conduct business.

(d) Alliant may terminate this Agreement immediately upon notice to BioMarin if: (i) BioMarin files in any court pursuant to any statute, a petition in bankruptcy or insolvency or for reorganization in bankruptcy or for an arrangement or for the appointment of a receiver or trustee for BioMarin or of its assets; (ii) BioMarin is served with an involuntary petition against it, filed in any insolvency or bankruptcy proceeding, and where such petition has not been dismissed within sixty (60) days after the filing thereof; (iii) BioMarin makes an assignment for the benefit of creditors; or (iv) BioMarin dissolves or ceases to conduct business.

(e) Alliant may terminate this Agreement at any time without cause by providing BioMarin at least one hundred and eighty (180) days prior written notice; provided that Alliant’s right to terminate this Agreement under this Section 12.3(e) shall terminate upon the Assignment. If Alliant has provided BioMarin with notice of termination under the Section 12.3(e) prior to completing the Assignment, BioMarin shall not be obligated to complete the Assignment.

(f) BioMarin may terminate this Agreement upon notice to Alliant if the Cima License or, before the Acquisition Date, the Ascent License terminates or becomes nonexclusive for any reason, and the termination of this Agreement will become effective on the same day that the Cima License or the Ascent License terminates or becomes non-exclusive (as applicable).

(g) This Agreement may terminate by the mutual written consent of the parties hereto.

12.4 Effects of Termination.

(a) Upon termination or expiration of this Agreement prior to completion of the Assignment, all rights and obligations of BioMarin and Alliant hereunder shall terminate and Alliant shall promptly discontinue the manufacture, marketing, sale and distribution of Licensed Products and any other use or exploitation of the Licensed Assets.

(b) Upon termination of this Agreement prior to the completion of the Assignment for whatever reason:

(i) Alliant shall destroy or return to BioMarin, upon request by BioMarin, all packaging, labels, and promotional materials bearing a Licensed Trademark;

(ii) BioMarin, in its sole discretion, shall have the right to elect to purchase all or any portion of Licensed Products remaining in inventory or ordered by Alliant prior to the effective date of the termination at the carrying cost for such Licensed Products, with the exception that, if the termination is the result of (a) BioMarin’s failure to maintain the Cima License or the Ascent License; (b) BioMarin’s default under this Agreement; (c) the operation of Section 12.2(d); or (d) BioMarin’s failure to acquire the stock of Ascent on or before the Acquisition Date, then BioMarin will, upon request of Alliant, purchase all of the Licensed Products remaining in inventory or ordered by Alliant prior to the effective date of the termination at Alliant’s cost of goods.

(iii) Alliant shall provide to BioMarin all test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, patent and other legal information or descriptions, customer lists and, upon BioMarin’s request, all promotional and marketing materials, in each case, related to the Licensed Products that were conceived, made, developed or otherwise controlled by Alliant or its Affiliates during the term of this Agreement;

(iv) Alliant shall cooperate with BioMarin, which shall be at BioMarin’s expense if the termination is the result of (a) BioMarin’s failure to maintain the Cima License or the Ascent License; (b) BioMarin’s default under this Agreement; (c) the operation of Section 12.2(d); or (d) BioMarin’s failure to acquire the stock of Ascent on or before the Acquisition Date, to transfer all applicable regulatory matters to BioMarin; and

(v) Alliant shall use commercially reasonable efforts to assign to BioMarin, to the extent assignable in whole or in part, as applicable, any agreements of Alliant requested by BioMarin to be assigned to the extent related to the promotion, marketing, manufacture, supply and/or distribution of any of the Licensed Products.

12.5 Accrued Rights. Expiration or termination of this Agreement shall not affect the Parties’ rights and obligations that have accrued as of the expiration or termination date, including the Parties’ obligations with respect to fees and royalties hereunder that have accrued prior to the effectiveness of the expiration or termination. Any right to terminate this Agreement shall be in addition to and not in lieu of all other rights or remedies that the Party giving notice of termination may have at law, in equity or otherwise.

12.6 Survival. Sections 1, 3.2, 6.6, 6.7, 6.11, 7.1, 7.2, 8, 10, 11.1(b), 11.1(c), 12.4, 12.5, 13, 14, and 15 and all then-outstanding payment and reimbursement obligations shall survive any termination or expiration of this Agreement.

13. INDEMNIFICATION

13.1 Indemnification by Alliant. Alliant shall indemnify and hold harmless BioMarin Indemnitees, from and against, and will reimburse each such BioMarin Indemnitee with respect to, any and all third-party claims, actions, demands, losses, damages, liabilities, costs and expenses to which such BioMarin Indemnitee may become subject, including reasonable fees and disbursements of counsel and expenses of reasonable investigation (collectively, “BioMarin Losses”), arising out of, based upon or caused by: (a) the inaccuracy of any representation or the breach of any warranty, covenant or agreement of Alliant contained in this Agreement or any Third Party Agreement; (b) any failure by Alliant or its Permitted Sublicensees to conduct its commercialization and other obligations arising hereunder in a diligent and professional manner and in accordance with Laws; (c) development, making, marketing, selling, distributing, importing, or exporting of the Licensed Products by Alliant or its Permitted Sublicensees; (d) any negligence or intentional wrongdoing by Alliant or its Permitted Sublicensees or their employees or agents in the performance of its obligations; or (e) any allegation of infringement or misappropriation of copyright or trademark rights of any third party resulting from Alliant’s or its Permitted Sublicensee’s instructions for labeling or packaging of Licensed Products.

13.2 Indemnification by BioMarin. BioMarin shall indemnify and hold harmless Alliant Indemnitees, from and against, and will reimburse each such Alliant Indemnitee with respect to, any and all third-party claims, actions, demands, losses, damages, liabilities, costs and expenses to which such Alliant Indemnitee may become subject, including reasonable fees and disbursements of counsel and expenses of reasonable investigation (collectively, “Alliant Losses”), arising out of, based upon or caused by: (a) the inaccuracy of any representation or the breach of any warranty, covenant or agreement of BioMarin contained in this Agreement; (b) any failure by BioMarin to conduct its obligations arising hereunder in a diligent and professional manner and in accordance with Laws; or (c) any negligence or intentional wrongdoing by BioMarin or its employees or agents in the performance of its obligations.

13.3 Procedures Relating to Indemnification for Third Party Claims. Each Party, on behalf of itself and its respective BioMarin Indemnitees or Alliant Indemnitees (each such Person, an “Indemnitee”), agrees to provide the indemnifying Party prompt written notice of any action, claim, demand, discovery of fact, proceeding or suit (collectively, a “Claim”) for which such Indemnitee intends to assert a right to indemnification under this Agreement; provided, however, that failure to give such notification shall not affect each applicable Indemnitee’s entitlement to indemnification (or the corresponding indemnifying Party’s indemnification obligations) hereunder except to the extent that the indemnifying Party shall have been prejudiced as a result of such failure. The indemnifying Party shall have the initial right (but not obligation) to defend, settle or otherwise dispose of any Claim for which an Indemnitee intends to assert a right to indemnification under this Agreement as contemplated in the preceding sentence if, and for so long as, the indemnifying Party has recognized in a written notice to the Indemnitee provided within thirty (30) days of such written notice its obligation to indemnify the Indemnitee for any BioMarin Losses or Alliant Losses (as the case may be) relating to such

Claim; provided, however, that if the indemnifying Party assumes control of the defense, settlement or disposition of a Claim, the indemnifying Party shall obtain the written consent of each applicable Indemnitee prior to ceasing to defend, settling or otherwise disposing of the Claim. If the indemnifying Party fails to state in a written notice during such thirty (30) day period its willingness to assume the defense of such a Claim, the BioMarin Indemnitee(s) or Alliant Indemnitee(s), as the case may be, shall have the right to defend, settle or otherwise dispose of such Claim, subject to the applicable provisions of Section 13.1 or 13.2.

13.4 Settlements. No party may settle any claim, action or proceeding related to a liability to a third party without the consent of the other parties, including but not limited to, if such settlement would impose any monetary obligation on the other parties or require the other parties to submit to an injunction or impose any covenant or commitment on the other party or otherwise limit the other party’s rights under this Agreement, and any payment made by a party in such a settlement without obtaining such consent shall be at its own cost and expense.

14. LIMITATION OF LIABILITY. NO PARTY HERETO (OR ITS AFFILIATES OR LICENSORS) SHALL, UNDER ANY CIRCUMSTANCE, BE LIABLE TO ANY OTHER PARTY (OR ITS AFFILIATES) FOR ANY CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL, OR PUNITIVE DAMAGES CLAIMED BY SUCH OTHER PARTY UNDER THE TERMS OF OR DUE TO ANY BREACH OF THIS AGREEMENT. THESE LIMITATIONS SHALL (A) APPLY NOTWITHSTANDING ANY FAILURE OF THE ESSENTIAL PURPOSE OF ANY REMEDY ARISING UNDER THIS AGREEMENT AND (B) NOT APPLY TO BREACH OF ALLIANT’S OBLIGATIONS UNDER SECTION 2, BREACH OF EITHER PARTY’S OBLIGATIONS UNDER SECTION 8, OR INDEMNIFICATION OBLIGATION UNDER SECTION 13.

15. MISCELLANEOUS

15.1 Third-Party Licenses. Alliant acknowledges that all rights granted to Alliant under this Agreement and all obligations of BioMarin provided in this Agreement are subject to the terms and conditions of the Ascent License and the Cima License. To the extent any right granted to Alliant under this Agreement or any obligation of BioMarin provided in this Agreement conflicts with any terms or conditions provided in the Ascent License or the Cima License, the Ascent License or the Cima License, as applicable, will control.

15.2 Relationship of the Parties. Alliant, on the one hand, and BioMarin, on the other hand, hereby acknowledge that each is an independent entity and is not subject to the control of the other Party hereto in any manner except as specifically provided in this Agreement. Nothing contained in this Agreement shall be construed in any way as creating any relationship of partnership or joint venture, between the Parties, or to render either Party liable for any of the debts or obligations of the other Party hereto. Neither Party shall act or purport to act, or represent itself, directly or by implication, as the agent, legal representative, partner or joint venturer of the other Party, or in any manner assume or create or purport to assume or create any obligation in the name or on behalf of the other Party.

15.3 Insurance. Alliant shall obtain and maintain in effect, in a form and with insurers reasonably acceptable to BioMarin, and which shall name BioMarin as an additional insured:

(a) commercial general liability insurance with a minimum limit of indemnity of Five Million U.S. Dollars (US$5,000,000) per occurrence and in the aggregate;

(b) product liability insurance with a minimum limit of liability of Five Million U.S. Dollars (US$5,000,000) per occurrence and in the aggregate.

It is understood that such insurance shall not be construed to limit Alliant’s liability with respect to such indemnification obligations. Alliant shall provide to BioMarin upon request a certificate evidencing the insurance Alliant is required to obtain and keep in force under this Section 15.2, including naming BioMarin as an additional insured. Such certificate shall provide that such insurance shall not expire or be cancelled or modified without at least thirty (30) days’ prior written notice to BioMarin.

15.4 Governing Law; Venue.

(a) This Agreement shall be construed in accordance with, and governed in all respects by, the internal laws of the State of New York (without giving effect to principles of conflicts of laws).

(b) Any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement must be brought or otherwise commenced solely and exclusively in state courts located in San Francisco County, California and federal courts located in Northern District of California. Consistent with the preceding sentence, each of the Parties:

(i) expressly and irrevocably consents and submits to the jurisdiction of the courts of competent jurisdiction in San Francisco County, California and Northern District of California (and each appellate court thereof) in connection with any such legal proceeding;

(ii) expressly agrees that the courts of competent jurisdiction in San Francisco County, California and Northern District of California shall be deemed to be a convenient forum; and

(iii) expressly agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding commenced in the courts of competent jurisdiction in San Francisco County, California and Northern District of California, any claim that such Party is not subject personally to the jurisdiction of such court, that such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court.

(c) The Parties hereto agree that, if any Proceeding is commenced against any Indemnified Party by any third party in or before any court or other tribunal anywhere in the world, then such Indemnified Party may proceed against the Indemnifying Party in or before such court or other tribunal with respect to any indemnification claim or other claim arising directly or

indirectly from or relating directly or indirectly to such Proceeding or any of the matters alleged therein or any of the circumstances giving rise thereto.

15.5 Dispute Resolution Procedures. In the event any dispute arises between the parties with respect to the interpretation of this Agreement or with respect to the performance of either Party, the Parties shall first seek to resolve such dispute by negotiations between senior executives who have authority to settle the dispute. When a Party believes there is a dispute relating to the Agreement, such Party shall give written notice of the dispute to the other Party. The senior executives shall meet promptly after the date of such notice and shall attempt in good faith within forty-five (45) days after the date of such notice to resolve the dispute prior to initiating litigation with respect to such matter. Notwithstanding the foregoing, if no such resolution is reached within such forty-five (45) days, then any Party may initiate any proceeding or pursue any remedy it deems appropriate and that is not prohibited hereby.

15.6 Assignment. Successors and Assigns; Parties In Interest.

(a) This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, the other Indemnified Parties, and the respective successors and permitted assigns (if any) of the foregoing.

(b) Neither this Agreement nor the rights and obligations of any Party hereunder shall be assigned without the prior written consent of the other Party, which consent may be given or withheld in such Party’s sole discretion. Notwithstanding the foregoing, either Party may assign or transfer this entire Agreement, without the consent of the other Party (a) to any Affiliate; or (b) to any third party with which it merges or consolidates, or to which it transfers all or substantially all of its assets to which this Agreement relates. Any attempted transfer or assignment in violation of the foregoing will be null and void.

15.7 Notices. All notices, demands and other communications under or in connection with this Agreement shall be in writing and shall be deemed properly delivered, given and received (a) if delivered personally, upon delivery, (b) if delivered by registered or certified mail (return receipt requested) from the United States, upon the earlier of actual delivery or three Business Days after being mailed, (c) if sent by overnight delivery by a recognized overnight delivery service for overnight delivery, upon the earlier of actual delivery or one Business Day after being sent, or (d) if given by facsimile, upon confirmation of transmission by facsimile (or, if such confirmation does not occur during normal business hours on a Business Day then on the next Business Day), in each case to the parties at the following addresses or facsimile numbers or to such other address or facsimile numbers as each party may designate for itself by like notice to the other parties:

if to Alliant:

Alliant Pharmaceuticals, Inc.

333 North Point Center East, Suite 250

Alpharetta, GA 30022

Facsimile:

Attn: Mark Pugh

With a copy to each of (which copies shall not constitute notice):

Townsend McKee, P.C.

3820 Mansell Road, Suite 250

Alpharetta, GA 30022

Facsimile: 770 640 1184

if to BioMarin:

BioMarin Pharmaceutical Inc.

105 Digital Drive

Novato, California 94949

Facsimile: (415) 382-7889

Attention: Chief Executive Officer

with copies (which copies shall not constitute notice) to:

BioMarin Pharmaceutical Inc.

105 Digital Drive

Novato, California 94949

Facsimile: (415) 382-7889

Attention: Corporate Counsel

15.8 Publicity. The Parties agree to keep the existence of this Agreement, the terms and conditions hereof, the transactions contemplated hereby, and any proposed termination hereof strictly confidential; provided, however, that:

(a) the Parties shall make an initial public announcement as to the Agreement in a form mutually agreed by them, and, except for any disclosure under (b) or (c), prior to making any subsequent public announcements regarding this Agreement or the transactions contemplated herein, each Party agrees to provide the other Party with a reasonable opportunity to review and comment upon such proposed announcement;

(b) BioMarin and Alliant may disclose the terms and conditions of this Agreement to their attorneys, accountants, and other professional advisors under duty of confidentiality, to assert or enforce such Party’s rights under this Agreement, or to the extent that such disclosure is required by law or legal process, including without limitation the securities and antitrust laws of the United States, provided that the disclosing Party has provided to the other Party a copy of the proposed release or statement no less than two (2) Business Days prior to its release or publication, and the Parties acknowledge and agree that the determination that a disclosure is required by law shall be made in the sole, but reasonably exercised, discretion of the Party making such disclosure; and

(c) if reasonably required in connection with the conduct of their respective businesses, BioMarin and Alliant may disclose the existence or terms of this Agreement to bankers, other business associates and potential investors if such persons have agreed in writing to keep the information confidential, and upon the request of either Party, the other Party shall identify those third parties to whom such disclosure has been made.

15.9 Use of Names, Trade Names and Trademarks. Except as provided herein, nothing contained in this Agreement shall be construed as conferring any right on either Party to use in advertising, publicity or other promotional activities any name, trade name, trademark or other designation of the other Party hereto or of any of its licensors under any Third Party Agreement, including any contraction, abbreviation or simulation of any of the foregoing, unless the prior written consent of such other Party is obtained.

15.10 Remedy. If any legal action is brought to enforce this Agreement, the prevailing Party will be entitled to receive its attorneys’ fees, court costs, and other collection expenses, in addition to any other relief it may receive. Alliant acknowledges and agrees that any actual or threatened breach of Sections 2.1, 2.3 or 8 by Alliant will constitute immediate and irreparable harm to BioMarin for which monetary damages would be an inadequate remedy and that injunctive relief is an appropriate remedy for such breach.

15.11 Force Majeure. If either Party hereto is prevented from carrying out its obligations under this Agreement, other than payment obligations, by events beyond its reasonable control, including acts or omissions of the other Party, acts of God or government, natural disasters or storms, fire, political strife, terrorism, failure of delay or transportation, default by suppliers or unavailability of raw materials, then such Party’s performance of its obligations hereunder shall be excused during the period of such events and for a reasonable period of recovery thereafter, and the time for performance of such obligations shall be automatically extended for a period of time equal to the duration of such events; provided, however, that the Party claiming force majeure shall promptly notify the other Party of the existence of such force majeure, shall use commercially reasonable efforts to avoid or remedy such force majeure and shall continue performance hereunder with the utmost dispatch whenever such force majeure is avoided or remedied. When such circumstances arise, the Parties shall discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution. Notwithstanding the foregoing, if Alliant is unable to perform under this Agreement for a period greater than ninety (90) days as a result of a force majeure event, BioMarin shall have the right to terminate this Agreement.

15.12 Headings. The headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

15.13 Counterparts. This Agreement may be executed in several counterparts (including by facsimile), each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

15.14 Severability. In the event that any provision of this Agreement, or the application of any such provision to any Party or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to the Party or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law.

15.15 Waiver. No failure on the part of either Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of either Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. Neither Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written

instrument duly executed and delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

15.16 Amendments. This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of each Party.

15.17 Interpretation.

(a) Any reference in this Agreement to a Section or Exhibit is a reference to the Sections and Exhibits of this Agreement unless the context requires otherwise. Any reference to a Section shall be deemed to include a reference to any subsidiary Sections.

(b) The captions of the Sections are included for reference purposes only and are not intended to be a part of the Agreement or in any way to define, limit or describe the scope or intent of the particular provision to which they refer.

(c) Whenever the context requires: the singular number shall include the plural and vice versa; the masculine gender shall include the feminine and neuter gender; the feminine gender shall include the masculine and neuter gender; and the neuter gender shall include the feminine and masculine gender.

(d) The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.

(e) As used in this agreement “include” and “including” and variations thereof shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

15.18 Fees and Expenses. Each Party to this Agreement shall bear and pay all fees, costs and expenses (including all legal fees and expenses, that have been incurred or that are in the future incurred by, on behalf of or for the benefit of such Party in connection with: (i) the negotiation, preparation and review of any letter of intent or similar document relating to the transaction contemplated hereby; (ii) the investigation and review conducted by such Party and its Representatives with respect to the transaction contemplated hereby; (iii) the negotiation, preparation and review of this Agreement or any of the documents delivered in connection herewith; (iv) the preparation and submission of any filing or notice required to be made or given in connection with the transaction contemplated hereby, and the obtaining of any consent required to be obtained in connection with the transaction contemplated hereby; and (v) the consummation and performance of the transaction contemplated hereby.

15.19 Entire Agreement. This Agreement, together with all of the Exhibits and Schedules hereto, constitutes the entire agreement between the Parties and supersedes all prior and contemporaneous oral and written agreements, understandings or arrangements relating to the subject matter hereof, including, without limitation, the Term Sheet and all other proposal materials.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by their duly authorized representatives as of the day and year first above written.

ALLIANT PHARMACEUTICALS, INC.	BIOMARIN PHARMACEUTICAL INC.
By:	By:
Its:	Its:

EXHIBIT A

NEW DRUG APPLICATIONS

ABBREVIATED NEW DRUG APPLICATIONS

Orapred (Prednisolone Sodium Phosphate Oral Solution), 20.2 mg/ 5 mL, (equivalent to 15 mg (base)/ 5 mL) - ANDA 75-117

Orapred RT (Prednisolone Sodium Phosphate Oral Solution), 20.2 mg/ 5 mL, (equivalent to 15 mg (base)/ 5 mL) - ANDA 77-485

505(B)(2) NEW DRUG APPLICATION

Orapred ODT (Prednisolone Sodium Phosphate

Orally Disintegrating Tablets, 10 mg, 15 mg, and 30 mg Prednisolone base) - NDA 21-959

EXHIBIT B

DEVELOPMENT LICENSED PATENTS

Patent/Application Number

OraSolv^® Technology

US 5178878 A

US 08/468,913

CA 2,061,917

PakSolv^® Technology

US 6,155,423

CA 2284132

US 6,269,615

US 6,311,462

DuraSolv^® Technology

US 6,024,981

US 6,221,392

CA 2284663

EXHIBIT C

LICENSED TRADEMARKS

Orapred

Orapred ODT

CIMA

CIMA LABS INC.

OraSolv^®

PakSolv^®

DuraSolv^®

CIMA, CIMA LABS INC. OraSolv^®, PakSolv^®, DuraSolv^®, and are Cima Trademarks.

EXHIBIT D

TASTE MASKING RELATED LICENSED PATENTS

Patent/Application Number

Pleasant Tasting Aqueous Liquid Composition of a Bitter-Tasting Drug

Anaebonam, Aloysius O.

Clemente, Emmett

Fawzy, Abdel A.

Medicis Pharmaceutical Corporation, Ascent Pediatrics Inc., BioMarin Pharmaceutical Inc.

08/692,081

5,763,449

United States

09/011,156

5,962,461

United States

2,260,852

2,260,852

Canada

991273

Mexico

Room Temperature Stable Aqueous Liquid Pharmaceutical Composition

Emmett Clemente, Bhiku Patel, Kuljit Bhatia, Frank L. Sorgi, and Emil D. Kakkis

Medicis Pharmaceutical Corporation, Ascent Pediatrics Inc., BioMarin Pharmaceutical Inc.

11/066,113

United States

PCT/US2005/006576

EXHIBIT E

TRANSFERRED INVENTORY OF ORAPRED

Description	Lot Numbers	Expiration Date	Units	NDC Number
8 oz. trade bottles	RM0421 RM0501 RM0502 RM0504	11/30/07 12/31/07 12/31/07 01/31/08	24,204 12,108 12,192 10,740	68135-455-02
Institutional packs	RM0502A	12/31/07	12,960	68135-455-03
8 oz. samples	RM0505	3/31/08	10,656	68135-455-04
6 pack, 20 ml samples	RM0504A RM0505A	3/31/08	13,315 22,408	68135-455-01
8 oz. authorized generic bottles	05PSP05 05PSP06 05PSP07	04/30/08 04/30/08 05/31/08	24,144 24,288 24,348	NA

EX-10.2

Exhibit 10.2

PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

(46 Galli Drive – Novato, CA)

THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is effective as of January 24, 2006 (the “Effective Date”) is entered into by and between WIRRULLA NOVATO LLC, a Washington limited liability company (“Seller”), and BIOMARIN PHARMACEUTICAL INC., a Delaware corporation (“Buyer”).

ARTICLE I

PURCHASE AND SALE OF PROPERTY

Section 1.1 Sale. Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase from Seller (the “Transaction”), subject to the terms and conditions set forth herein, the following:

(a) that certain land located in the City of Novato, County of Marin, State of California located at 46 Galli Drive (APN No. 157-452-14) and being more particularly described in Exhibit “A” attached hereto (the “Real Property”);

(b) all of Seller’s right, title and interest in and to all rights, privileges and easements appurtenant to the Real Property (collectively, the “Appurtenances”);

(c) all of Seller’s right, title and interest in and to all improvements, structures, systems, utilities and equipment, if any, utilized by Seller in the ownership and/or operation of the Real Property and located on the Real Property (collectively, the “Improvements”);

(d) the personal property owned by Seller, if any, located on the Real Property and used exclusively in the operation or maintenance of the Real Property, as described on Schedule 1 attached hereto (the “Personal Property”); and

(e) all of Seller’s right, title and interest in and to that certain lease between Buyer, as tenant, and Seller, as landlord, dated June 25, 1998, as amended by that certain First Amendment to Lease dated April 14, 2000 (the “Lease”).

(f) any intangible personal property now or hereafter owned by Seller and related to the Real Property or Personal Property if any, including, without limitation, any utility contracts, plans, reports, studies, service or maintenance contracts or other agreements or rights relating to the ownership, use and operation of the Property (as defined below), entitlement and development rights to the extent the foregoing are assignable by Seller (collectively, the “Intangible Property”).

All of the items referred to in subparagraphs (a), (b), (c), (d), (e) and (f) above are collectively referred to as the “Property.”

1

Section 1.2 Purchase Price.

(a) The purchase price of the Property is Seventeen Million Dollars ($17,000,000.00) (the “Purchase Price”).

(b) The Purchase Price shall be paid as follows:

(i) Seller has opened escrow (the “Escrow”) with California Land Title located at 7250 Redwood Boulevard, Suite 208, Novato, California 94945, Attention: Patty Bennett, Telephone No. (415) 892-5800 (the “Escrow Holder” or the “Title Company”). No later than two (2) business days following the Effective Date, Buyer shall deposit One Hundred Thousand Dollars ($100,000.00) (the “Initial Deposit”) into the Escrow by wire transfer of immediately available funds. The Initial Deposit shall be held in an interest bearing account and all interest thereon shall be deemed a part of the Deposit.

(ii) In the event that Buyer delivers the Approval Notice (as defined herein) to Seller in accordance with Section 2.2 below, then within two (2) business days following the delivery of the Approval Notice to Seller, Buyer shall deposit into Escrow by wire transfer of immediately available funds an additional One Hundred Thousand Dollars ($100,000.00) (the “Additional Deposit”). The Initial Deposit and the Additional Deposit shall hereinafter be referred to, collectively, as the “Deposit.” Upon the delivery of the Approval Notice to Seller, the Deposit shall be non-refundable to Buyer in accordance with Section 10.2; provided however, that the Deposit shall be refunded to Buyer if (a) this Agreement is terminated pursuant to Article VI, (b) Buyer terminates this Agreement for a Seller default in accordance with Section 10.3 or (c) this Agreement is terminated following the failure of a condition precedent to the Closing other than because of a default by Buyer. In the event the Transaction is consummated, the Deposit shall be credited against the Purchase Price at Closing.

(iii) The balance of the Purchase Price, subject to any adjustments by reason of any applicable prorations and the allocation of the closing costs described in Section 9.5, shall be delivered by Buyer into the Escrow in immediately available funds not less than one (1) business day prior to the Closing Date (as defined below) and paid by the Escrow Holder to Seller in immediately available funds via wire transfer at the consummation of the Transaction, as evidenced by the recordation of the Deed (as defined below) in the Official Records of Marin County on the date on which Title Company is prepared to insure title (the “Closing”).

Section 1.3 Existing Lease. Buyer and Seller shall continue to perform their respective obligations under the Lease until Closing. In the event of a termination of this Agreement, the Lease shall continue in full force and effect.

2

ARTICLE II

TITLE AND SURVEY MATTERS

Section 2.1 Conditions Precedent. Buyer’s obligation to purchase the Property is conditioned upon the following:

(a) Buyer’s review and approval of a commitment for title insurance, together with copies of the underlying documents (the “Title Report”), and a current “as built” survey in sufficient detail to support the issuance of the Title Policy (as defined below) (the “Survey”), which Survey shall include a field note description properly certified to Buyer and Escrow Holder. Buyer shall be responsible for ordering the Survey.

(i) Buyer shall have twenty (20) days from the Effective Date (the “Title Review Period”) within which to notify Seller of any exceptions to title as shown in the Title Report or Survey which Buyer disapproves. If any title matter first contained in or first referred to on any supplemental reports or updates to the Title Report is received after the expiration of the Title Review Period, Buyer shall have the right to approve of any such matter by sending written notice to Seller within three (3) business days after receipt thereof. Any exceptions which are not timely approved by Buyer pursuant to this section shall be referred to collectively as the “Title Objections.” If Buyer fails to timely notify Seller of its approval of any matters shown in the Title Report or Survey or any updates or supplements thereto, Buyer shall conclusively be deemed to have disapproved such matters. Any such matter timely approved in writing by Buyer shall constitute a “Permitted Exception” hereunder. If Buyer does not timely notify Seller of any Permitted Exceptions then, at Seller’s sole discretion, Seller may elect (but shall not be obligated) to remove or cause to be removed any of the Title Objections at Seller’s expense, or to cause any Title Objections to be insured against by the Title Company (which removal will be deemed effected by the issuance of title insurance insuring against the effect of the Title Objections in a manner reasonably acceptable to Buyer) and the Transaction shall proceed to Closing in accordance with the terms of this Agreement. Seller shall notify Buyer in writing (“Seller’s Title Notice”) within three (3) business days after receipt of Buyer’s notice of Title Objections (“Seller’s Cure Notice Period”) whether Seller elects to remove such Title Objections or to cause the Title Company to insure against the same. Seller’s failure to deliver Seller’s Title Notice to Buyer, or failure to address any Title Objection in any such notice, shall be deemed to be Seller’s refusal to cure such Title Objection.

(ii) Notwithstanding the foregoing, Seller agrees to remove by Closing as exceptions to title to the Property (i) all delinquent taxes and assessments and interest and penalties thereon, if any, (ii) all delinquent installments and accrued interest due on any bonds affecting the Property, (iii) all other monetary liens and encumbrances affecting the Property caused by Seller, such as mortgages, deeds of trust and mechanics’ liens, and (iv) any other encumbrances affecting the Property that are created by Seller after the Effective Date and have not been approved in writing by Buyer (the “Liquidated Defects”). The Liquidated Defects shall not include any (x) liens arising from the direct actions of Buyer or work ordered by Buyer and (y) any unpaid taxes, utility charges or any other expenses or assessments that are to be paid directly by Buyer to a person other than Seller under the Lease. If, prior to Closing, Seller fails to cure, remove or, in a manner acceptable to Buyer, insure over such Liquidated Defects, then Buyer may terminate this Agreement by notice to Seller, in which event the provisions of Section 10.3 shall apply, or take title subject to the Liquidated Defects and deduct from the Purchase Price the reasonable amount necessary to pay off the Liquidated Defects in full, including related interest and penalties.

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(iii) If Seller refuses to cause one or more Title Objections to be cured as provided above, prior to or at the Closing other than those it is required to remove pursuant to subsection (a)(ii) above, Buyer may elect by notice to Seller within three (3) business days after Buyer’s receipt of Seller’s Title Notice to terminate this Agreement, in which event the Deposit shall be returned to Buyer and, thereafter, the parties shall have no further rights or obligations hereunder except for those provisions which expressly survive the termination of this Agreement. Buyer’s failure to send such notice of termination to Seller on or before such date shall constitute Buyer’s election not to waive any Title Objections which Seller is unwilling to cure, in which event this Agreement shall terminate and the provisions of Section 10.3 shall apply.

(b) Buyer’s inspection and approval of the physical condition of the Property pursuant to Article III hereof.

(c) Buyer’s review and approval of service contracts, and other contracts or agreements of significance to the Property, including those contracts listed on Schedule 2 attached hereto (hereinafter collectively referred to as “Contracts”).

(d) Buyer’s board of directors (the “Board”) approval of the Transaction by the requisite vote of the Board.

(e) Buyer’s ability to obtain financing for the Transaction on terms and conditions satisfactory to Buyer in its sole discretion.

(f) Buyer’s review and approval of all books, records, correspondence, financial data, and all other documents and matters, public or private, maintained by Seller or its agents, and relating to receipts and expenditures pertaining to the Property for the three most recent full calendar years and the current calendar year and all of the other documents, information, records, reports and other items described that are in its possession or under its control and are not reasonably determined by Seller to be confidential or proprietary in nature, including all of the items described on Schedule 3 attached hereto (the “Due Diligence Documentation”). Seller agrees to deliver to Buyer (via overnight delivery) within five (5) business days after the Effective Date, copies of any soil tests, surveys, reports and engineering studies and any other documents related to the environmental condition of the Property or which might assist Buyer’s in its feasibility study which are in Seller’s or Seller’s agent’s possession including, but not limited to those items listed on Schedule 3.

Section 2.2 Contingency Period.

(a) Buyer shall have until 5:00 p.m. PST on the date that is thirty (30) days after the Effective Date in which to review and approve or disapprove (in Buyer’s sole discretion) the matters described in Section 2.1(b)-(f) above (such period being referred to herein as the “Contingency Period”). Buyer shall send a copy of its notice to proceed to Closing (the “Approval Notice”), if any, to Seller and the Escrow Holder and, upon delivery of such Approval Notice, the conditions described in Sections 2.1(b)-(f) shall be deemed either

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satisfied or waived by Buyer. If Buyer does not send an Approval Notice prior to the expiration of the Contingency Period, this Agreement shall terminate, Buyer shall be entitled to the return of the Deposit, the Escrow Holder shall return to the parties, respectively, the documents they have deposited into Escrow and the parties shall have no further liability to one another arising from this Agreement except for those provisions which expressly survive termination of this Agreement.

(b) If this Agreement is terminated pursuant to Section 2.2(a), Seller shall pay one-half of all Escrow charges to the Escrow Holder and Buyer shall pay all title charges and one-half of all Escrow charges to the Escrow Holder by deduction from the Deposit.

ARTICLE III

BUYER’S EXAMINATION

Section 3.1 Buyer’s Independent Investigation.

(a) Buyer acknowledges and agrees that (i) as the tenant under the Lease, Buyer has been in sole possession of the Real Property since the commencement of the term thereunder and (ii) Buyer has been given or will be given before the end of the Contingency Period, a full opportunity to inspect and investigate, at Buyer’s sole cost and expense, each and every aspect of the Property, either independently or through agents of Buyer’s choosing, including, without limitation:

(i) all matters relating to title, together with all governmental and other legal requirements such as taxes, assessments, zoning, use permit requirements and building codes;

(ii) any easements and/or access rights affecting the Property; and

(iii) the Contracts.

(b) Buyer shall give Seller reasonable advance notice prior to any entry to perform any on-site testing at the Property, including the identity of the company or persons who will perform such testing and the proposed scope of the testing. In the event that Buyer proposes to perform any destructive or invasive testing, Seller shall approve or disapprove, in its reasonable discretion, the proposed destructive or invasive testing within three (3) business days after receipt of such notice. Seller’s failure to provide such notice shall be deemed Seller’s refusal to permit such testing. If Buyer or its agents, employees or contractors take any sample from the Property in connection with any such approved testing, at Seller’s request, Buyer shall provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing. Seller or its representative may be present to observe any testing or other inspection performed on the Property. Buyer shall maintain, and shall require its contractors to maintain, commercial general liability insurance in an amount of at least $1,000,000 per occurrence, and Buyer shall provide Seller with evidence of such insurance coverage upon request by Seller. Buyer shall comply with all applicable federal, state and local

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laws, statutes, regulations, ordinances or policies in conducting any inspection of the Property. Buyer shall provide Seller with copies of any reports or studies prepared by a third-party which are obtained or commissioned by Buyer in connection with Buyer’s investigation of the Property, at Seller’s request and at no charge to Seller.

(c) Buyer hereby agrees that its delivery of the Approval Notice to Seller shall constitute an acknowledgement that Buyer has (i) had and/or will have, pursuant to this Agreement, an adequate opportunity to conduct whatever studies, tests and investigations relating to the Property as Buyer deems necessary, desirable or appropriate including, without limitation, economic reviews and analyses, soil tests, engineering analyses, environmental analyses and analysis of any applicable records of the planning, building, public works or any other governmental or quasi-governmental entity having or asserting jurisdiction over the Property; (ii) reviewed and read (or elected not to do so) and has understood all material instruments and documents affecting the Property and/or its value which Buyer deems relevant, including, without limitation, all documents referred to in the Title Report, the Contracts, the Due Diligence Documentation, operating statements, demographic studies and market analyses; and (iii) made or will make or its consultants have made or will make, pursuant to this Agreement, all such independent studies, analyses and investigations, as Buyer has deemed necessary, including without limitation, those relating to environmental matters.

(d) BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN SECTION 5.1 BELOW, (1) SELLER IS SELLING AND BUYER IS PURCHASING THE PROPERTY ON AN “AS IS WITH ALL FAULTS” BASIS AND (2) BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS, OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY.

Except as set forth in Section 5.1, Seller disclaims the making of any representations or warranties, express or implied, regarding the Property or its value or matters affecting the Property, including, without limitation, the physical condition of the Property, title to or the boundaries of the Property, soil condition, Hazardous Materials, compliance with the Americans With Disabilities Act of 1990 or other building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, traffic patterns and all other information pertaining to the Property. Buyer acknowledges that it (i) has entered into this Agreement with the intention of making and relying upon its own investigation of the physical, environmental, economic and legal condition of the Property and (ii) is not relying upon any representations and warranties made by Seller or anyone acting or claiming to act on Seller’s behalf (other than as provided in Section 5.1) concerning the Property or its value. Buyer further acknowledges that it has not received from Seller any accounting, tax, legal, architectural, engineering, property management or other advice with respect to the Transaction and is relying solely upon the advice of its own accounting, tax, legal, architectural, engineering, property management and other advisors.

(e) Except as otherwise stated in Section 5.2, Buyer, for itself and its agents, affiliates, successors and assigns, hereby releases and forever discharges Seller, its agents, partners, affiliates, successors and assigns (collectively, the “Seller Indemnitees”) from any and all rights, claims and demands at law or in equity, whether known or unknown at the time of this

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agreement, which Buyer has or may have in the future, arising out of the physical, environmental, economic or legal condition of the Property; provided however, the foregoing shall not limit Seller’s obligations under the Lease. Buyer hereby specifically acknowledges that Buyer has carefully reviewed this subsection and discussed its import with legal counsel and that the provisions of this subsection are a material part of this Agreement.

Section 3.2 Indemnification. Buyer hereby agrees to hold harmless, protect, defend and indemnify Seller and its officers, members, employees, contractors, agents, advisors and affiliates and its and their respective successors and assigns and the Property from and against actions, suits, sums paid in settlement of any of the foregoing, judgments, losses, damages, injuries, liabilities, penalties, enforcement actions, fines, taxes, liens, encumbrances, costs or expenses (including, without limitation, reasonable attorneys’ fees) whether direct or indirect, known or unknown (collectively, “Claims”) arising out of (a) any injuries to persons (including death) or damage to the Property or (b) any mechanics’, workers’ or other liens on the Property, in either case by reason of the inspection, physical testing or activities conducted on the Property by Buyer or Buyer’s agents, under the terms of this Agreement, except as, and to the extent that, such Claims shall arise by reason of Seller’s or Seller’s agents’ negligence. This Section 3.2 shall survive the Closing and the termination of the Agreement.

ARTICLE IV

TITLE

Section 4.1 Conditions of Title.

(a) At the Closing, Seller shall convey title to the Real Property to Buyer by good and sufficient grant deed in the form of Exhibit “B” attached hereto (the “Deed”).

(b) At the Closing, Seller shall transfer title to the Personal Property, if any, by a bill of sale in the form attached hereto as Exhibit “C” (the “Bill of Sale”).

(c) At the Closing, Seller shall transfer title to the Contracts and Intangible Property, if any, by an assignment and assumption of Contracts, Warranties and Guaranties and other intangible property in the form attached hereto as Exhibit “D” (the “Assignment and Assumption Agreement”).

Section 4.2 Evidence of Title.

(a) Delivery of title shall be evidenced by the Title Company being committed to issue, at Closing, an Owner’s American Land Title Association Policy of Title Insurance, Form B-1970 in the amount of the Purchase Price showing title to the Real Property and the Appurtenances vested in Buyer, subject to no exceptions other than the following (the “Title Policy”):

(i) Non-delinquent liens for real estate taxes and assessments; and;

(ii) The Permitted Exceptions and any additional exceptions to title which would be disclosed by an inspection and/or survey of the Property.

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(b) Buyer may, at its option and expense, obtain such endorsements to the Title Policy as Buyer may desire; provided, that issuance of such endorsements shall not be a condition precedent to Buyer’s obligations hereunder.

ARTICLE V

SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 5.1 Representations and Warranties of Seller. Seller represents and warrants to Buyer that:

(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Washington and is qualified to do business in the State of California. This Agreement (i) is and at the time of Closing will be duly authorized, executed and delivered by Seller, (ii) constitutes and at the time of Closing will constitute the legal, valid and binding obligations of Seller, and (iii) does not and at the time of Closing will not violate any provision of any agreement or judicial order to which Seller is a party or to which Seller or the Property is subject. All documents, agreements and instruments executed by Seller which are to be delivered to Buyer at Closing (i) are or at the time of Closing will be duly authorized, executed and delivered by Seller, (ii) are or at the time of Closing will be legal, valid and binding obligations of Seller, and (iii) do not and at the time of Closing will not violate any provision of any agreement or judicial order to which Seller is a party or to which Seller or the Property is subject.

(b) Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Federal Code.

(c) To the best of Seller’s knowledge, the list of Contracts in Schedule 2 attached hereto is a complete list of all of the material Contracts affecting the Property as of the date hereof. None of the Contracts have been amended, modified or supplemented except as set forth on Schedule 2. Seller is not in material default under any of the Contracts nor has any event occurred which would constitute a default under any such Contract. Buyer shall not be bound by and shall have no liability for any obligations relating to the contracts or agreements related to the Property which are not listed on Schedule 2. There are no leases or other tenancies or rights of occupancy with respect to the Property other than pursuant to the Lease.

(d) To the best of Seller’s knowledge, except as disclosed on Schedule 4 attached hereto, Seller has not received written notice from any applicable governmental authority that the Property is in violation of any laws, ordinances, code, license, permit or regulation of any applicable governmental authority having jurisdiction thereover or control thereof.

(e) Seller has not received written notice from any applicable governmental authority of any pending or threatened special assessments or condemnation actions with respect to the Property.

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(f) To the best of Seller’s knowledge, except as disclosed on Schedule 5 attached hereto, Seller has not received written notice that the Property is in violation of any federal, state, local or administrative agency ordinance, law, rule, regulation, order or requirement relating to environmental conditions or Hazardous Material (“Environmental Laws”), and Seller has no knowledge that any such violations of Environmental Laws exist with respect to the Property. For the purposes hereof, “Hazardous Material” shall mean any substance, chemical, waste or other material which is listed, defined or otherwise identified as “hazardous” or “toxic” under any federal, state, local or administrative agency ordinance or law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., or any regulation, order, rule or requirement adopted thereunder, as well as any formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, asbestos, and “source,” “special nuclear” and “by-product” material as defined in the Atomic Energy Act of 1985, 42 U.S.C. §§ 3011 et seq.

(g) Seller has not been the subject of any filing of a petition under the federal bankruptcy law or any federal or state insolvency laws or laws for composition of indebtedness or for the reorganization of debtors.

(h) Seller has not received written notice of any pending (or to the best of Seller’s knowledge, written notice of any threatened) lawsuits or claims, affecting all or any portion of Seller’s interest in the Property, including, but not limited to, judicial, municipal or administrative proceedings in eminent domain, except as previously disclosed in writing to Buyer or as disclosed on Schedule 6 attached hereto.

(i) To the best of Seller’s knowledge, Seller has not received from its insurance carrier or brokers, any letter of non-insurance citing a non-insurable condition at the Property which has not been remedied.

(j) To the best of Seller’s knowledge, Seller has delivered to Buyer, or will deliver to Buyer within five (5) days of the Effective Date, true and complete copies of all Due Diligence Documentation in Seller’s possession or control.

(k) Seller has not transferred any of its right, title or interest in and to any of the Property to any of its affiliates.

(l) Seller does not maintain any insurance with respect to the Property other than those policies required under the Lease.

Section 5.2 Survival. All representations and warranties of Seller contained in this Agreement and the provisions of this Section 5.2 shall survive the Closing.

Section 5.3 Contracts. Buyer shall assume Seller’s interest the Contracts listed on Schedule 2. Without Buyer’s prior written consent, which consent shall not be unreasonably withheld, between the Effective Date and the Closing Date, Seller shall not amend any of the

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Contracts being assumed by Buyer in any material way or become a party to any new Contract unless any such contract is terminable without penalty on or before the Closing Date.

Section 5.4 Operation and Maintenance. Between the Effective Date and the Closing Date, Seller shall operate the Property as required by the Lease in all material respects in the same manner in which Seller operated the Property prior to the Effective Date (such operation obligations shall not include capital expenditures or expenditures not incurred in the ordinary course of business).

Section 5.5 Insurance. [Reserved].

Section 5.6 No Assignment. After the Effective Date and prior to Closing, Seller shall not assign, alienate, lien, encumber or otherwise transfer all or any part of the Property or any interest therein. Without limitation of the foregoing, Seller shall not grant any easement, right of way, restriction, covenant or other comparable right affecting the Real Property or the Improvements without obtaining Buyer’s prior written consent, which consent shall not be unreasonably withheld.

Section 5.7 Change in Conditions. Seller shall, to the extent Seller obtains knowledge thereof, promptly notify Buyer in writing of the occurrence of any event or circumstance, that makes any representation or warranty of Seller to Buyer under this Agreement untrue or misleading, or any covenant of Seller under this Agreement incapable of being performed, or any Buyer’s condition precedent incapable of being satisfied. Seller shall promptly (and in any event within five (5) business days) deliver any materials, reports, information or other documents that it obtains or discovers after the Effective Date that would constitute Due Diligence Documentation to the extent Seller did not, for any reason, deliver such items as part of the Due Diligence Documentation.

Section 5.8 Hazardous Materials Waiver.

(a) Except with regard to any liability on the part of Seller for a breach of Seller’s representations and warranties set forth in Section 5.1 of this Agreement and in recognition that Buyer has been in sole possession of the Real Property since the commencement of the Lease, Buyer hereby:

(i) agrees that it is the express intent of the parties that upon Closing, Seller shall have no obligation to Buyer for any Hazardous Material within or emanating from the Property, including, but not limited to, any remediation thereof; and

(ii) releases Seller from all Claims arising out of or in connection with the existence, assessment or remediation of any Hazardous Material under, within or emanating from the soils or groundwater of the Property.

(iii) indemnify, defense and hold the Seller Indemnitees from any Claims arising out of or relating to any Hazardous Materials employed, used, transported across or otherwise dealt with by Buyer (or investees, or persons or entities under the control of Buyer) in connection with Buyer’s use of the Property as a tenant under the Lease.

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(b) The provisions of this Section 5.8 shall survive indefinitely the Closing or termination of this Agreement and shall not be merged into the Closing documents.

Section 5.9 Section 1542 Waiver. Insofar as the foregoing releases are concerned, Buyer hereby waives any and all rights and benefits which it now has, or in the future may have, by virtue of the provisions of Section 1542 of the California Civil Code, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

Buyer acknowledges that it has consulted legal counsel of its choosing with respect to the foregoing release and California Civil Code §1542 and further acknowledges that the provisions of this Sections 5.08 and 5.09 have been fully negotiated and agreed upon in light thereof.

Seller’s Initials Buyer’s Initials

ARTICLE VI

RISK OF LOSS AND INSURANCE PROCEEDS

Section 6.1 Loss. Seller shall give Buyer notice of the occurrence prior to Closing of damage or destruction of, or the commencement of condemnation proceedings affecting, any portion of the Property. In the event that all or any portion of the Property is condemned, or destroyed or damaged by fire or other casualty prior to the Closing and the cost to repair or restore any loss or damage caused thereby is greater than $500,000, then Buyer may, at its option to be exercised within ten (10) days of Seller’s written notice to Buyer of the occurrence of the damage or destruction or the commencement of condemnation proceedings, either terminate this Agreement or consummate the purchase for the full Purchase Price as required by the terms hereof. If Buyer elects to terminate this Agreement or fails to send Seller written notice within such ten (10) day period that Buyer will proceed with the purchase, then this Agreement shall terminate at the end of such ten (10) day period and the Deposit shall be returned to Buyer and neither party shall have any further rights or obligations hereunder except for those provisions which expressly survive termination of this Agreement. In the event that (a) a portion of the Property is condemned or destroyed or damaged by fire or other casualty prior to the Closing and the cost to repair or restore any loss or damage caused thereby is equal to or less than $500,000, or (b) Buyer elects within the aforesaid ten (10) day period to proceed with the purchase, then this Agreement shall not terminate and upon the Closing, there shall be a credit against the Purchase Price due hereunder equal to the amount of any insurance proceeds or condemnation awards collected by Seller as a result of any such damage or destruction or condemnation, plus the amount of any insurance deductible, less any sums expended by Seller toward the restoration or repair of the Property (but in no event shall the amount of such credit exceed the Purchase Price). If the proceeds or awards have not been collected as of the Closing, then such proceeds

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or awards shall not be credited against the Purchase Price, but shall be assigned to Buyer at Closing. The provisions of this Section 6.1 shall survive the Closing.

ARTICLE VII

BROKERS AND EXPENSES

Section 7.1 Brokers.

(a) Seller has been represented by Marcus & Millichap and shall be responsible for any commission or other payment due to Marcus & Millichap. Seller represents and warrants that it has not been represented by any other broker in connection with this Transaction.

(b) Buyer has been represented by BT Commercial Real Estate (“BT Commercial”). Seller agrees to pay a commission to BT Commercial at Closing in an amount equal to 1.0% of the Purchase Price pursuant to a separate written Agreement between Seller and BT Commercial. Buyer represents and warrants that it has not been represented by any other broker in connection with this Transaction.

(c) Seller agrees to indemnify, defend and hold Buyer harmless from (i) any commission owing to Marcus & Millichap and (ii) the foregoing 1% commission to BT Commercial. If any other person brings a claim for a commission or finder’s fee based upon any contact, dealings or communication with Buyer or Seller with respect to the Property, then the party through whom such person makes such claim shall defend the other party (the “Broker Indemnified Party”) from such claim, and shall indemnify the Broker Indemnified Party and hold the Broker Indemnified Party harmless from any and all costs, damages, claims, liabilities or expenses (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by the Broker Indemnified Party in defending against the claim. The provisions of this Section 7.1 shall survive the Closing or, if the Transaction is not consummated, any termination of this Agreement.

Section 7.2 Expenses. Except as provided in Sections 9.5 and 9.6 below, each party hereto shall pay its own expenses incurred in connection with this Agreement and the transactions contemplated hereby.

ARTICLE VIII

LEASE

Section 8.1 Lease. The Lease shall terminate at Closing and neither party shall have any further rights, interests, liabilities or obligations pursuant to the Lease. Any security deposit paid by Buyer to Seller pursuant to the Lease (other than the Letter of Credit (as defined below)) shall be credited to Buyer against the Purchase Price.

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ARTICLE IX

CLOSING AND ESCROW

Section 9.1 Escrow Instructions. Upon the execution of this Agreement, the parties hereto shall deposit an executed counterpart of this Agreement with the Escrow Holder, and this instrument shall serve as the instructions to the Escrow Holder for consummation of the Transaction contemplated hereby. The Escrow Holder shall indicate its willingness to perform its obligations hereunder by executing and returning one counterpart of this Agreement to each of Buyer and Seller. Seller and Buyer may issue such reasonable additional and supplementary escrow instructions as may be appropriate to enable the Escrow Holder to comply with the terms of this Agreement; provided, however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of this Agreement shall control.

Section 9.2 Closing. The Closing hereunder shall be held and delivery of all items to be made at the Closing under the terms of this Agreement shall be made at the offices of the Escrow Holder on the date that is the fifteenth (15th) day after the end of the Contingency Period or if such date is not a business day then upon the next ensuing business day before 1:00 p.m. local time (the “Closing Date”). Such date and time may not be extended without the prior written approval of both Seller and Buyer.

Section 9.3 Deposit of Documents.

(a) At least one (1) business day prior to the Closing Date, Seller shall deposit into Escrow the following items:

(i) the duly executed and acknowledged Deed;

(ii) two (2) duly executed counterparts of the Bill of Sale;

(iii) two (2) duly executed counterparts of the Assignment and Assumption Agreement;

(iv) an affidavit pursuant to Section 1445(b)(2) of the United States Internal Revenue Code of 1986, as amended (the “Code”) in the form attached hereto as Exhibit “E”, and on which Buyer is entitled to rely, that Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code;

(v) a properly executed California Form 593-W certifying that Seller has a permanent place of business in California or is qualified to do business in California;

(vi) any owner’s statements, lien affidavits or mechanic’s lien affidavits, together with authority documents, as may be reasonably requested by the Title Company to issue the Title Policy;

(vii) a “Withholding Exemption Certificate, Form 590” pursuant to the California Revenue and Taxation Code Sections 18805 and 26131 or its equivalent stating either the amount of withholding required from Seller’s proceeds or that Seller is exempt from such requirement;

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(viii) a closing certificate affirming Seller’s representations and warranties are true and correct as of the Closing Date and that all covenants required to be performed by Seller prior to the Closing Date have been performed in all material respects;

(ix) a closing statement conforming to the prorations, adjustments and other relevant provisions of this Agreement; and

(x) the original Irrevocable Letter of Credit issued to Seller as a security deposit pursuant to the Lease (the “Letter of Credit”).

(b) At least one (1) business day prior to the Closing Date, Buyer shall deposit into Escrow the following items:

(i) funds necessary to close this Transaction;

(ii) two (2) duly executed counterparts of the Bill of Sale;

(iii) two (2) duly executed counterparts of the Assignment and Assumption Agreement; and

(iv) a closing statement conforming to the prorations, adjustments and other relevant provisions of this Agreement.

(c) Buyer and Seller shall each deposit such other instruments as are reasonably required by the Escrow Holder or otherwise required to close the escrow and consummate the Transaction in accordance with the terms hereof. Buyer and Seller hereby designate the Escrow Holder as the “Reporting Person” for the Transaction pursuant to Section 6045(e) of the Federal Code and the regulations promulgated thereunder.

Section 9.4 Closing Conditions.

(a) Buyer Closing Conditions. In addition to the other conditions enumerated in this Agreement, Buyer’s obligation to purchase the Property and close the Transaction is further conditioned upon Buyer’s satisfaction or waiver of the following conditions (the “Buyer Closing Conditions”) on or prior to the Closing Date:

(i) Seller shall have duly performed in all material respects each and every agreement to be performed by Seller hereunder and Seller’s representations, warranties and covenants set forth in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date with the same force and effect as if remade by Seller in a separate certificate at that time.

(ii) As of the Closing, the Title Company shall be irrevocably committed to issue the Title Policy to Buyer.

(b) Seller Closing Conditions. In addition to the other conditions enumerated in this Agreement, Seller’s obligation to sell the Property and close the Transaction is further

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conditioned upon Seller’s satisfaction or waiver of the following conditions (the “Seller Closing Conditions”) on or prior to the Closing Date:

(i) Buyer shall have duly performed in all material respects each and every agreement to be performed by Buyer hereunder and Buyer’s representations, warranties and covenants set forth in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date with the same force and effect as if remade by Buyer in a separate certificate at that time.

(ii) Buyer shall have delivered the items described in Section 9.3 and shall have performed in all material respects all of its other obligations hereunder required to be performed or complied with by Buyer at or prior to the Closing.

Section 9.5 Closing Costs.

(a) Seller’s Costs. Seller shall bear, and Escrow Holder shall deduct from sums otherwise payable to Seller hereunder, (a) all sales and use taxes, if any, which Seller advises Escrow Holder are required in connection with the transfer of the Property to Buyer, (b) any county documentary transfer taxes and any local documentary transfer taxes payable in connection with the transfer of the Property to Buyer, and (c) any additional costs and charges customarily charged to sellers in accordance with common escrow practices in the jurisdiction in which the Real Property is located.

(b) Buyer’s Costs.

(i) Buyer shall deposit with Escrow Holder for disbursement by Escrow Holder (a) Escrow Holder’s fee and the recording fees requested in connection with the transfer of the Property to Buyer, (b) the cost of the Title Policy obtained by Buyer, if any, and the costs associated with any endorsements to the Title Policy other than those required to be obtained by Seller to cure any Title Objection, and (c) any additional charges customarily charged to buyers in accordance with common escrow practices in the jurisdiction in which the Real Property is located.

(ii) The Buyer shall bear the costs and expenses of any due diligence investigation conducted by or for the benefit of Buyer, including the Survey and any engineering, structural or environmental reports obtained by or on behalf of Buyer pursuant to this Agreement.

Section 9.6 Prorations.

(a) With respect to the Property, Seller shall be entitled to all income produced from the operation of the Property which is allocable to the period prior to Closing and shall be responsible for all expenses, other than Operating Expenses (as defined in the Lease) allocable to that period; and Buyer shall be entitled to all income and responsible for all expenses allocable to the period beginning at 12:01 A.M. on the day Closing occurs. At the Closing, all items of income and expense with respect to the Property listed below shall be

15

prorated and adjusted in accordance with the foregoing principles and the rules for the specific items set forth hereafter:

(i) Seller shall arrange for a billing under all those Contracts for which fees are based on usage, to include services used up to the Closing Date, and Seller shall pay the resultant bills. In the event any of the Contracts set forth in Schedule 2 extend over periods beyond the Closing the same shall be prorated on a per diem basis.

(ii) All prepaid Operating Expenses for any period commencing on or subsequent to the Closing Date shall be credited to Buyer at Closing. All Operating Expenses which are due but uncollected as of the Closing Date shall be paid by Buyer at Closing. If any statement for any Operating Expense is not available as of the Closing Date, the adjustment between Seller and Buyer shall be made on the basis of the amounts due from the immediately prior year or month, as applicable, and shall be subject to adjustment in cash after Closing outside of escrow within thirty (30) days after the bills for the applicable period are received. If any Operating Expense for the current or prior period is under protest, the closing adjustment shall be re-adjusted between Buyer and Seller at such time as there is a final determination on such protest.

(iii) Any prepaid rent under the Lease, including fixed rent or additional rent, for any period commencing on or subsequent to the Closing Date shall be credited to Buyer at Closing. All rents which are due but uncollected as of the Closing Date shall be paid to Seller at Closing.

(iv) All real estate, personal property and ad valorem taxes, assessments and bonds payable with respect to the Property, which are not included as an Operating Expense, shall be prorated between Seller and Buyer as of the Closing Date for the year in which the Closing is held on the basis of the statements for such amounts for such year. If any statement for the current year is not available as of the Closing Date, the proration between Seller and Buyer shall be made on the basis of the amounts due from the immediately prior year or month, as applicable, and shall be subject to adjustment in cash after Closing outside of escrow within thirty (30) days after the bills for the applicable period are received. If any tax assessment for the current or prior year is under protest, the closing tax proration shall be re-prorated between Buyer and Seller at such time as there is a final determination on such protest.

(v) Gas, water, electricity, heat, fuel, sewer and other utilities charges in the name of Seller relating to the Property shall be cancelled by Seller as of the Closing.

(b) Seller and Buyer shall, no later than three (3) business days before the Closing Date, prepare a statement containing all of the prorations and adjustments of income and expenses required hereunder, and shall prepare and deliver a final statement to the Escrow Holder no later than 5:00 p.m. PST on the business day prior to the Closing Date. Each of Buyer and Seller shall act reasonably and in good faith in preparing such statement, and Seller shall provide the backup for the items in such statement as shall be reasonably requested by Buyer. For purposes of calculating prorations and adjustments, Buyer shall be deemed to be in title to

16

the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs. All such prorations and adjustments shall be made on the basis of the actual number of days of the year and month that shall have elapsed as of the Closing Date. The amount of such prorations and adjustments shall be adjusted in cash after Closing, as and when complete and accurate information becomes available. Unless otherwise stated herein, Seller and Buyer agree to make such adjustments no later than 30 days after the Closing.

(c) The provisions of this Section 9.6 shall survive the Closing.

ARTICLE X

BREACH OF AGREEMENT

Section 10.1 Seller’s Termination. Seller shall have the right to terminate this Agreement and the Escrow upon written notice to Buyer if any of the following occurs: (1) Buyer commits a material breach of this Agreement and does not cure the same to the reasonable satisfaction of Seller within three (3) business days of notice thereof from Seller; or (2) any condition precedent to Seller’s obligations to close contained in Section 9.4(b) has not been satisfied or waived by Seller in writing by the Closing Date.

Section 10.2 Seller’s Remedies; Liquidated Damages. BUYER AND SELLER AGREE THAT IN THE EVENT OF A MATERIAL DEFAULT OR BREACH HEREUNDER BY BUYER WHICH RESULTS IN THE FAILURE OF THE TRANSACTION TO BE CONSUMMATED, WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. BUYER AND SELLER THEREFORE AGREE THAT A REASONABLE PRESENT ESTIMATE OF THE NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT OF BUYER’S DEFAULT OR BREACH HEREUNDER AND THE FAILURE OF ESCROW TO CLOSE IS AN AMOUNT OF MONEY EQUAL TO THE DEPOSIT WHICH SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677 AND SHALL NOT CONSTITUTE FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE 3275 OR 3369. THIS SECTION 10.2 SHALL NOT LIMIT SELLER’S RIGHTS TO (I) SEEK ADDITIONAL REMEDIES IN THE EVENT THAT SUCH MATERIAL DEFAULT OR BREACH IS CAUSED BY THE FRAUD, WILLFUL OR INTENTIONAL MISCONDUCT OF BUYER OR (II) RECEIVE REIMBURSEMENT FOR ITS ATTORNEYS’ FEES, NOR WAIVE OR AFFECT SELLER’S RIGHTS AND BUYER’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT (WHICH ARE NOT LIMITED BY THIS SECTION 10.2). THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.

____________________	____________________
Seller’s Initials	Buyer’s Initials

17

Section 10.3 Buyer’s Remedies.

(a) In the event the Transaction is not consummated because any condition precedent to Buyer’s obligation to close set forth in Section 9.4(a) has not been satisfied or waived by Buyer in writing by the Closing Date, the Deposit shall be returned to Buyer, this Agreement shall terminate and neither party shall have any further rights or obligations hereunder except those rights and obligations which expressly survive termination of this Agreement.

(b) Notwithstanding paragraph (a) above, in the event the Transaction is not consummated on or before the Closing Date on account of a material default by Seller and does not cure the same to the reasonable satisfaction of Buyer within three (3) business days of notice thereof from Buyer, Buyer shall be entitled, as its sole remedies, to either (a) terminate this Agreement and to receive the return of the Deposit, or (b) seek specific performance of Seller’s obligation to sell the Property to Buyer, provided that any such action for specific performance shall not limit the obligations of Buyer and Seller hereunder and shall not limit the prevailing party’s right to recover its attorneys’ fees and costs as provided herein. The remedies in clauses (a) and (b) above are mutually exclusive; Buyer must elect, by written notice to Seller and Escrow Holder, which of these remedies it wishes to pursue no later than ninety days after the date scheduled for the Closing Date. If no such election is made, Buyer shall be deemed to have elected to terminate this Agreement pursuant to clause (a) above. Seller shall have no liability to Buyer under any circumstances for any consequential or punitive damages. Buyer may record a lis pendens against the Property if Buyer has timely commenced an action for specific performance in accordance with the terms of this Agreement. This Section 10.3(b) shall not limit Buyer’s right to seek additional remedies in the event that such material default is attributable to the fraud, willful or intentional misconduct of Seller

ARTICLE XI

MISCELLANEOUS

Section 11.1 Notices. Any notices required or permitted to be given hereunder shall be given in writing and shall be delivered (a) in person, (b) by certified mail, postage prepaid, return receipt requested, (c) by a commercial overnight courier that guarantees next day delivery and provides a receipt, or (d) by telefacsimile or telecopy, and such notices shall be addressed as follows:

To Buyer:	BioMarin Pharmaceutical Inc.
	105 Digital Drive
	Novato, CA 94949
	Attention: Mr. G. Eric Davis
	Phone: 415-506-6307
	Fax No.: 415-382-7889
With copies to:	Paul, Hastings, Janofsky & Walker LLP
	55 Second Street, 24th Floor

18

	San Francisco, CA 94105
	Attention: Scott D. Berg, Esq.
	Phone: 415-856-7000
	Fax No.: 415-856-7100
To Seller:	Wirrulla Novato LLC
	720 Las Flores Road
	Livermore, CA 94550
	Attention:
	Phone:
	Fax No.:
With a copy to:	Riddell Williams P.S.
	1001 Fourth Avenue, Suite 4500
	Seattle, WA 98154
	Attention: Matthew Le Master
	Phone: 206-624-3600
	Fax No.: 206-389-1708

or to such other address as either party may from time to time specify in writing to the other party. Any notice shall be deemed delivered when actually delivered, if such delivery is in person, three (3) business days after deposit with the U.S. Postal Service, if such delivery is by certified mail, one (1) business day upon deposit with the overnight courier service, if such delivery is by an overnight courier service and marked for next day delivery, and upon transmission, if such delivery is by telefacsimile or telecopy.

Section 11.2 Entire Agreement. This Agreement, together with the Schedules and Exhibits attached hereto, contain all of the representations, warranties and covenants made by Buyer and Seller and constitute the entire understanding between the parties hereto with respect to the subject matter hereof. Any prior correspondence, memoranda or agreements are replaced in total by this Agreement together with the Exhibits hereto.

Section 11.3 Time. Time is of the essence in the performance of each of the parties’ respective obligations contained herein.

Section 11.4 Attorneys’ Fees. If either party hereto fails to perform any of its obligations under this Agreement or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Agreement, then the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all reasonable costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements and on appeal. Any such attorneys’ fees and other expenses

19

incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys’ fees obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment.

Section 11.5 Jury Trial Waiver. THE PARTIES HEREBY AGREE TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY, RELATING TO (A) THIS AGREEMENT AND/OR ANY UNDERSTANDINGS OR PRIOR DEALINGS BETWEEN THE PARTIES HERETO, OR (B) THE PROPERTY OR ANY PART THEREOF. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONSTITUTES A WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY PURSUANT TO ANY APPLICABLE STATE STATUTES.

____________________	____________________
Seller’s Initials	Buyer’s Initials

Section 11.6 No Merger. The obligations contained herein shall not merge with the transfer of title to the Property but shall remain in effect until fulfilled.

Section 11.7 Assignment. The terms, conditions and covenants of this Agreement shall be binding upon, and shall inure to the benefit of, the parties and their respective permitted nominees, successors, beneficiaries and assigns; provided, however, no conveyance, assignment or transfer of any interest whatsoever of, in or to the Property or of this Agreement shall be made by Seller during the term of this Agreement. Buyer may assign Buyer’s rights or delegate its obligations hereunder without the prior written consent of Seller in each instance. In the event of a permitted assignment of this Agreement by Buyer, its assignee shall be deemed to be the Buyer hereunder for all purposes hereof, and shall have all rights of Buyer hereunder (including, but not limited to, the right of further assignment pursuant to the terms hereof), but the assignor shall not be released from liability hereunder.

Section 11.8 Natural Hazards Disclosure. Buyer and Seller acknowledge that Seller is required to disclose if any portion of the Land and Improvements lies within the following natural hazard areas or zones: (i) a special flood hazard area designed by the Federal Emergency Management Agency (California Civil Code Section 1102.17); (ii) an area of potential flooding (California Government Code Section 8589.4); (iii) a very high fire hazard severity zone (California Governmental Code Section 51183.5); (iv) a wild land area that may contain substantial forest fire risks and hazards (Public Resources Code Section 4136); (v) an earthquake fault or special studies zone (Public Resources Code Section 2621 et seq.) or (vi) a seismic hazard zone (Public Resources Code Section 2694). Before the Closing Date, Seller shall provide Buyer with a Natural Hazard Disclosure Statement (“Disclosure Statement”).

Section 11.9 Like-Kind Exchange. Seller may elect to consummate the Transaction in whole or in part as a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, so long as such election does not delay the Closing hereunder. If Seller so elects, Buyer shall cooperate with Seller, executing such documents and taking such action as may be reasonably necessary in order to effectuate this Transaction as a like-kind exchange; provided, however, that (i) Buyer’s cooperation hereunder shall be without cost, expense or

20

liability to Buyer of any kind or character, including, without limitation, any attorneys’ fees, costs or expense incurred in connection with the review or preparation of documentation in order to effectuate such like-kind exchange, and Buyer shall have no obligation to take title to any real property; (ii) Seller shall assume all risks in connection with the designation, selection and setting of terms of the purchase or sale of any exchange property; (iii) Seller shall bear all costs and expenses in connection with any such exchange transaction in excess of the costs and expenses which would have otherwise been incurred in acquiring or selling the Property by means of a straight purchase, so that the net effect to Buyer shall be materially identical to that which would have resulted had this Agreement closed on a purchase and sale; (iv) any documents to effectuate such exchange transaction are consistent with the terms and conditions contained in this Agreement; and (v) Seller shall indemnify, defend and hold Buyer harmless from any and all claims, demands, penalties, loss, causes of action, suits, risks, liability, costs or expenses of any kind or nature (including, without limitation, reasonable attorneys’ fees) which Buyer may incur or sustain, directly or indirectly, related to or in connection with, or arising out of, the consummation of this Transaction as a like-kind exchange as contemplated hereunder.

Section 11.10 Counterparts. It is understood and agreed that this Agreement may be executed in several counterparts, each of which shall, for all purposes, be deemed an original and all of such counterparts, taken together, shall constitute one and the same agreement, even though all of the parties may not have executed the same counterpart of this Agreement. A fully executed facsimile copy of this Agreement shall be deemed an original for all relevant purposes.

Section 11.11 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

Section 11.12 Confidentiality. Prior to the Closing, Buyer and Seller (i) shall each maintain as confidential any and all material obtained about the other and, in the case of Buyer, about the Property, and (ii) shall not disclose such information to any third party except for disclosures required by court order or subpoena or to such party’s advisors, consultants, agents, attorneys, accountants, lenders, partners or to any governmental entity in connection with Buyer’s review of the entitlements and other approvals with respect to the Property. In addition, prior to the Closing, neither party shall issue any press release or other public announcement regarding this Transaction without first obtaining the other party’s written approval with respect to the release or announcement and the content thereof.

Section 11.13 Interpretation of Agreement. The article, section and other headings of this Agreement are for convenience of reference only and shall not be construed to affect the meaning of any provision contained herein. Where the context so requires, the use of the singular shall include the plural and vice versa and the use of the masculine shall include the feminine and the neuter. The term “person” shall include any individual, partnership, joint venture, corporation, trust, unincorporated association, any other entity and any government or any department or agency thereof, whether acting in an individual, fiduciary or other capacity.

Section 11.14 Authority of Buyer. Buyer represents and warrants to Seller that Buyer is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of California. Buyer further represents and warrants to Seller that this

21

Agreement and all documents executed by Buyer which are to be delivered to Seller at Closing (a) are or at the time of Closing will be duly authorized, executed and delivered by Buyer, (b) are or at the time of Closing will be legal, valid and binding obligations of Buyer, and (c) do not and at the time of Closing will not violate any provision of any agreement or judicial order to which Buyer is a party or to which Buyer is subject. The foregoing representation and warranty and any and all other representations and warranties of Buyer contained herein shall survive the Closing Date.

Section 11.15 Limited Liability. The obligations of Seller are intended to be binding only on Seller and Seller’s interest in the Property and the proceeds derived therefrom, and the obligations of Seller shall not be personally binding upon, nor shall (except to the extent of interest in the Property or the proceeds derived therefrom) any resort be had to, the private properties of any of its trustees, officers, directors or shareholders, the general partners, officers, directors or shareholders thereof, or any employees or agents of Seller.

Section 11.16 Amendments. This Agreement may be amended or modified only by a written instrument signed by Buyer and Seller.

Section 11.17 Business Day. If any date herein set forth for the performance of any obligations by Seller or Buyer or for the delivery of any instrument or notice as herein provided should be on a Saturday, Sunday or legal holiday, the compliance with such obligations or delivery shall be deemed acceptable on the next business day following such Saturday, Sunday or legal holiday. As used herein, the term “business day” means any state or federal holiday for which financial institutions or post offices are generally closed for observance thereof in the State of California.

[Remainder of Page Intentionally Left Blank]

22

The parties hereto have executed this Agreement as of the date first written above.

SELLER:		WIRRULLA NOVATO LLC,
		a California limited liability company
		By:	/s/ Dharmesh Bhanabhai
		Name:	Dharmesh Bhanabhai
		Its:	Secretary
	By:	/s/ G. Eric Davis
		Name:	G. Eric Davis
		Title:	Vice President, Corporate Counsel
BUYER:		BIOMARIN PHARMACEUTICAL INC.,
		a Delaware corporation
		By:	/s/ G. Eric Davis
		Name:	G. Eric Davis
		Its:	Vice President, Corporate Counsel

23

AGREED AND ACCEPTED:

[CALIFORNIA LAND TITLE]

By: 

Name: 

Title: 

Dated: January     , 2006

24

Exhibits
Exhibit “A”	-	Real Property
Exhibit “B”	-	Grant Deed
Exhibit “C”	-	Bill of Sale
Exhibit “D”	-	Assignment and Assumption Agreement
Exhibit “E”	-	FIRPTA

Schedules
Schedule 1	-	List of Personal Property
Schedule 2	-	List of Contracts
Schedule 3	-	List of Due Diligence Documentation
Schedule 4	-	List of Violations
Schedule 5	-	List of Environmental Violations
Schedule 6	-	List of Pending Litigation

25

SCHEDULE 1

Personal Property

1

SCHEDULE 2

List of Contracts

1. Landscape Management Agreement dated March 23, 2004

1

SCHEDULE 3

Due Diligence Documentation

1

SCHEDULE 4

List of Violations

None.

1

SCHEDULE 5

List of Environmental Violations

None.

1

SCHEDULE 6

List of Pending Litigation

None.

1

EXHIBIT A

DESCRIPTION OF REAL PROPERTY

1

All that certain real property situate in the City of Novato, County of Marin, State of California, described as follows:

Lots 45, 46 and 47, as shown upon that certain map entitled “Map of Ignacio Industrial Park, Unit Two”, filed for record July 30, 1975 in Volume 16 of Maps, at page 45, Marin County Records.

2

EXHIBIT B

GRANT DEED

RECORDING REQUESTED BY

AND WHEN RECORDED RETURN TO:

Paul, Hastings, Janofsky & Walker LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attention: Scott D. Berg, Esq.

Documentary Transfer Tax is not of public record and is shown on a separate sheet attached to this deed.

GRANT DEED

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, WIRRULLA NOVATO LLC, a Washington limited liability company, hereby grants to BIOMARIN PHARMACEUTICAL INC., a Delaware corporation, the real property located in the City of Novato, County of Marin, State of California, described on Exhibit A attached hereto and made a part hereof.

1

Executed as of this          day of                     , 2006.

WIRRULLA NOVATO LLC, a California limited liability company

By:

Name:

Its:

2

Exhibit A to Deed

Real Property Description

All that certain real property situated in Marin County, California, described as follows:

Lots 45, 46 and 47, as shown upon that certain map entitled “Map of Ignacio Industrial Park, Unit Two”, filed for record July 30, 1975 in Volume 16 of Maps, at page 45, Marin County Records.

3

                    , 200    

                         County Recorder

_________________________

                            , California             

                Re:    Request That Statement of Documentary

                          Transfer Tax Not be Recorded

Dear Sir:

Request is hereby made in accordance with Section 11932 of the Revenue and Taxation Code that this statement of tax due not be recorded with the attached deed but be affixed to the deed after recordation and before return as directed on the deed.

The attached deed names                                                      , a                                 , as grantor and                                 , a                                         , as grantee.

The property being transferred and described in the attached deed is located in the City of                                     , County of                                         , State of California.

The amount of Documentary Transfer Tax due on the attached deed is $             computed on full value of the property conveyed.

4

EXHIBIT C

BILL OF SALE

For good and valuable consideration, the receipt of which is hereby acknowledged,                                                      , a                                          (“Seller”), does hereby sell, transfer, and convey to                                     , a                              (“Buyer”), any and all personal property owned by Seller and located on and used in connection with the operation of that certain real property located in the City of                     , County of                     , State of California, described on Exhibit A attached hereto and made a part hereof, as such personal property is more particularly described in the attached Schedule 1.

BUYER ACKNOWLEDGES THAT SELLER IS SELLING AND BUYER IS PURCHASING SUCH PERSONAL PROPERTY ON AN “AS IS WITH ALL FAULTS” BASIS AND THAT BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS, OR BROKERS AS TO ANY MATTERS CONCERNING SUCH PERSONAL PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES AS TO TITLE OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

This Bill of Sale may be executed in two or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.

Dated this             day of                     , 2006.

SELLER:	WIRRULLA NOVATO LLC, a California limited liability company
	By:

Name: 

	Its:
BUYER:	BIOMARIN PHARMACEUTICAL INC., a Delaware corporation
	By:

Name: 

Its: 

1

Schedule 1 to Bill of Sale

List of Personal Property

2

Exhibit A to Bill of Sale

Real Property Description

All that certain real property situated in Marin County, California, described as follows:

3

EXHIBIT D

ASSIGNMENT AND ASSUMPTION OF CONTRACTS,

WARRANTIES AND GUARANTIES

AND OTHER INTANGIBLE PROPERTY

THIS ASSIGNMENT AND ASSUMPTION (the “Assignment”) dated as of                         , 200__, is between                     , a                                      (“Assignor”), and                                                  , a                                                          (“Assignee”).

A. Assignor owns certain real property and certain improvements thereon located in the City of                     , County of                     , State of California, and more particularly described in attached Exhibit A (the “Property”).

B. Assignor has entered into certain contracts which affect the Property, which contracts are described on Exhibit B attached hereto (the “Contracts”).

C. Assignor and Assignee have entered into an Agreement of Purchase and Sale dated as of                     , 200    (the “Agreement”), pursuant to which Assignee agreed to purchase the Property from Assignor and Assignor agreed to sell the Property to Assignee, on the terms and conditions contained therein.

D. Assignor desires to assign to Assignee its interest in the Contracts and in certain warranties, guaranties, and intangible personal property with respect to the Property, and Assignee desires to accept the assignment thereof, on the terms and conditions below.

ACCORDINGLY, the parties hereby agree as follows:

1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the “Conveyance Date”), Assignor hereby assigns without recourse or warranty of enforceability all of its right, title and interest in and to the following:

(a) all of the Contracts approved by Assignee and listed on Exhibit B;

(b) any warranties and guaranties (“Warranties and Guaranties”) made by or received from any third party with respect to any improvements owned by Assignor on the Property; and

(c) any intangible property now owned by Assignor in connection with the Property excluding claims by Assignor, if any, arising out of matters occurring before the Conveyance Date.

2. Assignor hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all liabilities, losses, damages, claims, costs or expenses, including, without limitation, reasonable attorneys’ fees and costs (collectively, “Claims”), originating prior to the Conveyance Date and arising out of Assignor’s obligations under the Contracts.

1

3. Concurrently with the conveyance of Assignor’s interest in the Property to Assignee, Assignee hereby assumes all of Assignor’s obligations under the Contracts which arise as of and after the Conveyance Date and agrees to indemnify Assignor against and hold Assignor harmless from any and all Claims originating on or subsequent to the Conveyance Date and arising out of Assignor’s obligations under the Contracts.

4. In the event of any dispute between Assignor and Assignee arising out of the obligations of Assignor under this Assignment or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party’s costs and expenses of such dispute, including, without limitation, reasonable attorneys’ fees and costs.

5. This Assignment shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.

6. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.

7. The obligations of Assignor are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to, the private properties of any of its trustees, officers, directors or shareholders, its investment manager, the partners, officers, directors or shareholders thereof, or any employees or agents of the Assignor or the investment manager. The obligations of Assignor are subject to the limitations on liability contained in Section 5.3 of the Agreement.

Assignor and Assignee have executed this Assignment the day and year first above written.

ASSIGNOR:	WIRRULLA NOVATO LLC, a California limited liability company
	By:

Name: 

	Its:
ASSIGNEE:	BIOMARIN PHARMACEUTICAL INC., a Delaware corporation
	By:

Name: 

Its: 

2

Exhibit A to Assignment

and Assumption of Contracts

Real Property Description

All that certain real property situated in Marin County, California, described as follows:

3

Exhibit B to Assignment

and Assumption of Contracts

List of Approved Contracts

4

EXHIBIT E

CERTIFICATE OF TRANSFEROR OTHER

THAN AN INDIVIDUAL

(FIRPTA Affidavit)

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform                             , a                                          (“Transferee”), the transferee of certain real property located in the City of                     , County of                     , State of California, that withholding of tax is not required upon the disposition of such U.S. real property interest by                                                      , a                              (“Transferor”), the undersigned hereby certifies the following on behalf of Transferor:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor’s U.S. employer identification number is                             ; and

3. Transferor’s office address is                                                                  .

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalty of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor.

Dated as of                     , 2006.

WIRRULLA NOVATO LLC,

a California limited liability company

By: 

Name: 

Its: 

NOTICE TO TRANSFEREE (BUYER): You are required by law to retain this Certificate until the end of the fifth tax year following the tax year in which the transfer takes place and make the Certificate available to the Internal Revenue Service if requested to do so during that period.

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EX-10.3

Exhibit 10.3

FIRST AMENDMENT TO PURCHASE AND SALE

AGREEMENT AND JOINT ESCROW INSTRUCTIONS

(46 Galli Drive – Novato, CA)

THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “First Amendment”) is effective as of February 23, 2006 by and between WIRRULLA NOVATO LLC, a Washington limited liability company (“Seller”) and BIOMARIN PHARMACEUTICAL INC., a Delaware corporation (“Buyer”).

R E C I T A L S :

A. Seller and Buyer are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions effective as of January 24, 2006 (the “Original Agreement”).

B. Seller and Buyer desire to amend the Original Agreement in accordance with the terms of this First Amendment to amend the timing of the Contingency Period and the Closing and to waive certain contingencies.

C. The term “Agreement” as used in this First Amendment shall mean and refer to the Original Agreement as amended and modified by this First Amendment.

D. All capitalized terms not otherwise specifically defined in this First Amendment shall have meanings ascribed to such terms in the Original Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Contingency Period. Section 2.2(a) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

(a) Buyer shall have until 5:00 p.m. PST on the date that is thirty (30) days after the Effective Date in which to review and approve or disapprove (in Buyer’s sole discretion) the matters described in Section 2.1(b)-(f) above (such period being referred to herein as the “Contingency Period”), provided however,

(i) As of February 23, 2006, Buyer hereby satisfies and waives the contingencies set forth in Section 2.1(a)-(c) and (f),

(ii) Buyer shall have until 5:00 p.m. Pacific on March 6, 2006 to satisfy the contingency set forth in Section 2.1(d) and Buyer shall inform Seller and Escrow Holder in writing by such date and time of the satisfaction of such contingency (the “Board Approval Notice”), and

(iii) Buyer shall have until 5:00 p.m. Pacific on April 24, 2006 to satisfy the contingency set forth in Section 2.1(e).

Satisfaction of the contingency set forth in Section 2.1(e) shall conclude the Contingency Period and Buyer shall deliver its notice to proceed to Closing (the

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“Approval Notice”), if any, to Seller and the Escrow Holder no later than April 24, 2006 and, upon delivery of such Approval Notice, the condition described in Sections 2.1(e) shall be deemed either satisfied or waived by Buyer. If Buyer does not send the Board Approval Notice or the Approval Notice, this Agreement shall terminate, Buyer shall be entitled to the return of the Deposit, the Escrow Holder shall return to the parties, respectively, the documents they have deposited into Escrow and the parties shall have no further liability to one another arising from this Agreement except for those provisions which expressly survive termination of this Agreement.

2. The word “California” is hereby replaced by the word “Washington” in Seller’s signature block in the Original Agreement

3. Effect of this First Amendment. Except as amended by this First Amendment, the Original Agreement is hereby ratified and confirmed and all other terms of the Original Agreement shall remain full force and effect, unaltered and unchanged by this First Amendment. In the event of any conflict between the provisions of this First Amendment and the provisions of the Original Agreement, the provisions of this First Amendment shall prevail. Whether or not specifically amended by the provisions of this First Amendment, all of the terms and provisions of the Original Agreement are hereby amended to the extent necessary to give effect to the purpose and intent of this First Amendment.

4. Counterparts. This First Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together will constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto except having additional signature pages executed by other parties to this First Amendment attached thereto. Executed counterparts of this Agreement exchanged by facsimile transmission shall be fully enforceable.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

“SELLER”	WIRRULLA NOVATO LLC, a Washington limited liability company
		WIRRULLA USA, INC., a Washington corporation Its Member
			/s/ Dharmesh Bhanabhai
			By Dharmesh Bhanabhai, Secretary
“BUYER”	BIOMARIN PHARMACEUTICAL INC., a Delaware corporation
	By:	/s/ G. Eric Davis
		Name:  G. Eric Davis
		Title:  Vice President, Corporate Counsel

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jean-Jacques Bienaimé, Chief Executive Officer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BioMarin Pharmaceutical Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2006

/s/ JEAN-JACQUES BIENAIMÉ

Jean-Jacques Bienaimé

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey H. Cooper, Chief Financial Officer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BioMarin Pharmaceutical Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2006

/s/ JEFFREY H. COOPER

Jeffrey H. Cooper

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of BioMarin Pharmaceutical Inc. (the “Company”) for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jean-Jacques Bienaimé, as Chief Executive Officer of the Company, and Jeffrey H. Cooper, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JEAN-JACQUES BIENAIMÉ

Jean-Jacques Bienaimé

Chief Executive Officer

May 4, 2006

/s/ JEFFREY H. COOPER

Jeffrey H. Cooper

Chief Financial Officer

May 4, 2006