10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the fiscal year ended December 31, 2007

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)

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.001 par value	The NASDAQ Global Market
Preferred Share Purchase Rights	The Swiss Main Board

Securities registered under Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 97,381,263 shares common stock, par value $0.001, outstanding as of February 19, 2008. The aggregate market value of the voting stock held by non-affiliates of the Registrant as of June 30, 2007 was $1,720.5 million.

The documents incorporated by reference are as follows:

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held May 22, 2008, are incorporated by reference into Part III.

BIOMARIN PHARMACEUTICAL INC.

2007 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Part I
Item 1.	Description of Business	1
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	32
Item 3.	Legal Proceedings	32
Item 4.	Submission of Matters to a Vote of Security-Holders	32
Part II
Item 5.	Market for Common Equity and Related Stockholder Matters	33
Item 6.	Selected Consolidated Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk	56
Item 8.	Financial Statements and Supplementary Data	58
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	58
Item 9A.	Controls and Procedures	58
Part III
Item 10.	Directors and Executive Officers of the Registrant	60
Item 11.	Executive Compensation	60
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	60
Item 13.	Certain Relationships and Related Transactions	60
Item 14.	Principal Accountant Fees and Services	60
Part IV
Item 15.	Exhibits and Financial Statement Schedules	60
SIGNATURES		66

Kuvan^™ is our trademark. BioMarin^® and Naglazyme^® are our registered trademarks. Aldurazyme^® is a registered trademark of BioMarin/Genzyme LLC. Orapred^® is a registered trademark and Orapred ODT^™ is a trademark of Medicis Pediatrics, Inc., and both are used under license.

Part I.

FORWARD LOOKING STATEMENTS

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

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

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 annual report. In addition to the other information in this Form 10-K, investors should carefully consider the following discussion and the information under “Risk Factors” when evaluating us and our business.

Item 1. Description of Business

Overview

BioMarin Pharmaceutical Inc. (BioMarin, the Company, we or our) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. We select product candidates for diseases and conditions that represent a significant unmet medical need, have well-understood biology and provide an opportunity to be first-to-market or offer a significant benefit over existing products. Our product portfolio is comprised of three approved products and multiple investigational product candidates. Approved products include Naglazyme (galsulfase), Kuvan (sapropterin dihydrochloride) and Aldurazyme (laronidase).

We are conducting clinical trials on several investigational product candidates for the treatment of genetic diseases including: PEG-PAL, formerly referred to as Phenylase™ (phenylalanine ammonia lyase), an enzyme substitution therapy for the treatment of phenylketonurics who are not responsive to Kuvan. Effective December, 2007, we began referring to Phenylase as PEG-PAL. In the future, we will refer to the product by this new name. We are also developing BH4 for the treatment of multiple cardiovascular indications.

We are conducting 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 some protein-based pharmaceuticals.

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A summary of our various commercial products and development programs, including key metrics as of December 31, 2007, is provided below:

Program	Indication	Orphan Drug Designation	Stage	2007 Total Product Revenue (in millions)			2007 Research & Development Expense (in millions)
Naglazyme	MPS VI	Yes	Approved	$	86.2		$	8.8
Aldurazyme	MPS I	Yes	Approved	$	123.7	(1)		N/A
Kuvan	PKU	Yes	Approved	$	0.4		$	19.9
6R-BH4	Cardiovascular Indications	Not yet determined	Clinical		N/A		$	15.0
PEG-PAL	PKU	Yes	Clinical		N/A		$	13.2

(1) We developed Aldurazyme through a 50/50 joint venture with Genzyme Corporation (Genzyme) and BioMarin/Genzyme LLC (the LLC), and recognized our 50% share of the net income of BioMarin/Genzyme LLC as Equity in the Income of BioMarin/Genzyme LLC in our consolidated statements of operations through December 31, 2007. The revenue noted here is the total product revenue recognized by the joint venture. Effective January 1, 2008, we restructured our relationship with Genzyme, as discussed in “Recent Developments”, below.

Recent Developments

BioMarin/Genzyme Joint Venture Reorganization

On January 3, 2008, we announced the restructuring of our relationship with our joint venture partner, Genzyme, regarding the manufacturing, marketing and sale of Aldurazyme. Under the revised structure, the operational responsibilities for Genzyme and us will not significantly change. As part of this restructuring, we entered into a number of agreements with Genzyme and the LLC (the Restructuring Agreements). Effective January 1, 2008, we entered into a Manufacturing, Marketing and Sales Agreement with Genzyme and the LLC. Genzyme will continue to globally distribute, market and sell Aldurazyme, and is required to purchase its requirements exclusively from us. We will continue to manufacture Aldurazyme. The parties are subject to a non-competition restriction preventing both parties from participating in certain activities related to Aldurazyme and other pharmaceutical compositions of alpha-L-iduronidase (Collaboration Products) for alpha-L-iduronidase deficiencies outside of the Restructuring Agreements. Genzyme will record sales of Aldurazyme and is required to pay us, on a quarterly basis, a tiered royalty ranging from approximately 39.5% to 50% on worldwide net product sales.

Effective January 1, 2008, Genzyme, the LLC and we also amended and restated our Collaboration Agreement. The LLC will no longer engage in commercial activities related to Aldurazyme and will solely (1) hold the intellectual property relating to Aldurazyme and other Collaboration Products and license all such intellectual property on a royalty-free basis to us and Genzyme to allow us to exercise our rights and perform our obligations under the agreements related to the restructuring and (2) engage in research and development activities that are mutually selected and funded by Genzyme and us. Genzyme and we license rights related to Aldurazyme to the LLC, and the LLC sublicenses these rights to Genzyme and us such that each may perform our obligations under the Restructuring Agreements.

Pursuant to a Members Agreement entered into by Genzyme, the LLC and us related to the restructuring, in February 2008 the LLC distributed cash and inventory to us and cash, accounts receivable and certain other assets and liabilities to Genzyme, such that the fair value of the net assets distributed to us and to Genzyme was equivalent to both parties according to the terms of the restructuring. The value of the assets, including cash and inventory, that we received was $43.5 million.

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Purchase of 300 Bel Marin Keys Facility

On January 3, 2008, we purchased our previously leased facility at 300 Bel Marin Keys Boulevard in Novato, California. The purchase price of the building was approximately $12.0 million, which was fully paid in cash. We use this 85,400 square foot facility for our technical operations group’s administrative offices and laboratories.

Re-acquisition of Rights to Kuvan in Canada

On December 18, 2007, we announced that we re-acquired the Canadian rights for tetrahydrobiopterin (BH4), including Kuvan, from Merck Serono, a division of Merck KGaA. The terms of the agreement specified a reduction in royalties owed to BioMarin on Merck Serono sales outside the United States and Japan. Based on the structure of the amended agreement, the reduction in royalties cannot exceed an undisclosed amount.

FDA Approval for Kuvan

On December 13, 2007, we announced that the U.S. Food and Drug Administration (FDA) granted marketing approval for Kuvan, an orally administered preparation for the treatment of phenylketonuria (PKU). Kuvan has received orphan drug designation from the FDA, conferring upon it seven years of market exclusivity in the United States, until 2014. We began shipping product to the distribution channel the day after the announcement of Kuvan approval, and immediately began promotion. Our list sales price for Kuvan is $0.29 per mg.

Collaboration with IGAN BioSciences on Development of Enzyme Therapy to Treat IGA Nephropathy

On December 3, 2007, we announced a collaboration with IGAN BioSciences (IGAN) to develop an IgA protease for treating IgA nephropathy or Berger’s disease, an orphan kidney disorder with few treatment alternatives. Twenty percent of adults with the disorder progress to end stage renal disease (ESRD). In the U.S., approximately 800 patients per year develop ESRD caused by IgA nephropathy out of the 40,000 patients affected by the disorder.

PEG-PAL FDA Filing

On November 27, 2007, we announced that we filed an investigational new drug application (IND) with the FDA for PEG-PAL for the treatment of PKU. We expect to initiate a clinical study of PEG-PAL in PKU patients in the first quarter of 2008.

MAA submitted to EMEA for European Marketing Authorization of Sapropterin for Hyperphenylalaninemia

On November 8, 2007, we announced that our partner Merck Serono submitted the Marketing Authorization Application (MAA) to the European Medicines Agency (EMEA) for Kuvan as an oral treatment for patients suffering from significant hyperphenylalaninemia (HPA) due to PKU or BH4 deficiency. We received the $15.0 million milestone related to the filing from Merck Serono in December 2007.

Commercial Products

Naglazyme

Naglazyme is a recombinant form of N-acetylgalactosamine 4-sulfatase (arylsulfatase B) indicated for patients with mucopolysaccharidosis VI (MPS VI). MPS VI is a debilitating life-threatening genetic disease for which no other drug treatment currently exists and is caused by the deficiency of N-acetylgalactosamine 4-sulfatase (arylsulfatase B), an enzyme normally required for the breakdown of certain complex carbohydrates known as glycosaminoglycans (GAGs). Patients with MPS VI typically become progressively worse and experience multiple severe and debilitating symptoms resulting from the build-up of carbohydrate residues in all tissues in the body. These symptoms include: inhibited growth, spinal cord compression, enlarged liver and spleen, joint deformities and reduced range of motion, skeletal deformities, impaired cardiovascular function, upper airway obstruction, reduced pulmonary function, frequent ear and lung infections, impaired hearing and vision, sleep apnea, malaise and reduced endurance.

Naglazyme was granted marketing approval in the U.S. in May 2005 and in the E.U. in January 2006. Naglazyme has been granted orphan drug status in the U.S. and the E.U., which confers seven years of market

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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. However, different drugs can be approved for the same condition and even the same active ingredient can be approved for the same condition if the new product has a better safety or efficacy profile than Naglazyme. We market Naglazyme in the U.S., E.U., Latin America and Turkey using our own sales force and commercial organization. Additionally, we use local distributors in several other countries to help us pursue registration and/or market Naglazyme on a named patient basis. Naglazyme net product sales for 2007 totaled $86.2 million, as compared to $46.5 million for 2006. Naglazyme net product sales for 2005 were $6.1 million.

Kuvan

Kuvan was granted marketing approval for the treatment of PKU in the U.S. in December 2007. We market Kuvan in the U.S. using our own sales force and commercial organization. Kuvan has been granted orphan drug status in the U.S., which provides for seven years of market exclusivity. Kuvan net product sales for the approximate two-week period after approval and launch in December 2007 were $0.4 million.

Kuvan is a proprietary synthetic oral form of 6R-BH4, a naturally occurring enzyme co-factor for phenylalanine hydroxylase (PAH) indicated for patients with PKU. Kuvan is the first drug 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 approximately 30-50% of those with PKU could benefit from treatment with Kuvan. PKU is caused by a deficiency of activity of an enzyme, PAH, which is required for the metabolism of phenylalanine (Phe). Phe is an essential amino acid found in all 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, including severe mental retardation and brain damage, mental illness, seizures and other cognitive problems.

In the U.S. and most developed countries, PKU is diagnosed at birth through a blood test. To manage the disease and maintain non-toxic blood Phe levels, people with PKU must adhere to a highly-restrictive diet comprised of foods that are low in Phe and supplemented with medical foods. Compliance with this diet is difficult for patients and usually only occurs through middle childhood, a critical period to ensure normal brain development. Recent data demonstrates that adolescent and adult PKU patients who no longer follow restricted diets suffer from a number of psychological and neurological symptoms. In October 2000, a Consensus Panel convened by the National Institutes of Health recommended that all people with PKU should adhere to this special diet throughout their lives. Kuvan is intended to provide PKU patients with a more convenient and effective way to manage their disease and maintain blood Phe levels at the recommended levels.

In May 2005, we entered into an agreement with Merck Serono for the further development and commercialization of Kuvan and PEG-PAL for PKU and 6R-BH4, the active ingredient in Kuvan, for other diseases such as cardiovascular indications including those associated with endothelial dysfunction. Through the agreement, Merck Serono acquired exclusive rights to market these products in all territories outside the U.S. and Japan, and we retained exclusive rights to market these products in the U.S. On December 8, 2007, we announced that we re-acquired Canadian rights for BH4 from Merck Serono. We and Merck Serono will generally share equally all development costs following successful completion of Phase 2 clinical trials for each product candidate in each indication. In November 2007, Merck Serono submitted a MAA to the EMEA for sapropterin dihydrochloride as an oral treatment for patients suffering from HPA due to PKU or BH4 deficiency. Kuvan has received orphan drug designation in the E.U. We are entitled to receive a $30.0 million milestone payment from Merck Serono upon approval of Kuvan in the E.U. We recorded collaborative agreement revenue associated with Kuvan in the amounts of $28.3 million in 2007, $18.7 million in 2006, and $12.6 million in 2005.

Aldurazyme

Aldurazyme has been approved for marketing in the U.S., E.U. and other countries for patients with mucopolysaccharidosis I (MPS I), for which no other drug treatment currently exists. MPS I is a progressive and debilitating life-threatening genetic disease that is caused by the deficiency of alpha-L-iduronidase, a lysosomal

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enzyme normally required for the breakdown of GAGs. Patients with MPS I typically become progressively worse and experience multiple severe and debilitating symptoms resulting from the build-up of carbohydrate residues in all tissues in the body. These symptoms include: inhibited growth, delayed and regressed mental development (in the severe form), enlarged liver and spleen, joint deformities and reduced range of motion, impaired cardiovascular function, upper airway obstruction, reduced pulmonary function, frequent ear and lung infections, impaired hearing and vision, sleep apnea, malaise and reduced endurance.

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. However, different drugs can be approved for the same condition and even the same active ingredient can be approved for the same condition if the new product has a better safety or efficacy profile than Aldurazyme. We developed Aldurazyme through a 50/50 joint venture with Genzyme Corporation. Prior to the restructuring of our collaboration with Genzyme, we were responsible for product development, manufacturing and U.S. regulatory submissions while Genzyme was responsible for sales, marketing, distribution, obtaining reimbursement for Aldurazyme worldwide and international regulatory submissions. After the restructuring of our relationship, as discussed in “Recent Developments,” above, the operational responsibilities for us and Genzyme have not significantly changed. Genzyme will continue to globally market and sell Aldurazyme and we will continue to manufacture Aldurazyme. As of January 1, 2008, instead of sharing all costs and profits equally through the 50/50 joint venture, Genzyme will record sales of Aldurazyme and will pay us a quarterly tiered royalty ranging from approximately 39.5 to 50 percent of worldwide net product sales. As a result of the restructuring of the joint venture, we expect to record product revenue related to the royalty as well as product revenue related to incremental product delivered to Genzyme to meet future product demand. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—BioMarin/Genzyme LLC” for discussion of the financial results of Aldurazyme. Aldurazyme net revenue recorded by our joint venture for 2007 totaled $123.7 million, compared to $96.3 million for 2006. Aldurazyme net revenue recorded by our joint venture for 2005 totaled $76.4 million.

Products in Clinical Development

PEG-PAL (formerly referred to as Phenylase) is an investigational enzyme substitution therapy. It is being developed as a subcutaneous injection and is intended for those who do not respond to Kuvan. In preclinical models, PEG-PAL produced a rapid, dose-dependent reduction in blood phenylalanine (Phe) levels, the same endpoint that was used in the Kuvan studies. We plan to conduct additional preclinical studies of PEG-PAL in 2008, and to initiate a Phase 1 open-label, single-dose, dose-escalation clinical trial of PEG-PAL for PKU in 2008, with clinical trial results expected in the first quarter of 2009, depending on trial enrollment rates.

We are also developing BH4 for the treatment of other indications, including indications associated with endothelial dysfunction. Endothelial dysfunction has been associated with many cardiovascular diseases, such as hypertension and peripheral arterial disease. Endothelial dysfunction is a condition characterized by the inability of the endothelium (the single cell layer lining of the blood vessels) to respond to physiological changes correctly. In preclinical and investigator-sponsored studies, administration of BH4 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. Data from preclinical and clinical trials suggest that treatment with BH4 is generally safe and well tolerated.

In January 2007, we announced the initiation of a Phase 2 clinical trial of 6R-BH4 for peripheral arterial disease, which is a 24-week, multi-center, double-blind, placebo-controlled study. We expect results from the Phase 2 clinical trial in the fourth quarter of 2008, depending on trial enrollment rates. In May 2007, we announced the initiation of a Phase 2 clinical trial of 6R-BH4 for sickle cell disease, which is a 16-week, multi-center, open label, dose-escalation study. We expect results from the Phase 2 clinical trial in the second half of 2008. We plan to initiate several additional preclinical and clinical studies of BH4 for indications related to endothelial dysfunction in 2008.

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Manufacturing

We manufacture Naglazyme and Aldurazyme, which are both recombinant enzymes, in our approved Good Manufacturing Practices (GMP) production facility located in Novato, California. Vialing and packaging are performed by contract manufacturers. We believe that we have ample operating capacity to support the commercial demand of both Naglazyme and Aldurazyme through at least the next five years.

Our facilities have been licensed by the FDA, EC and health agencies in other countries for the commercial production of Aldurazyme and by the FDA and the EC for the commercial production of Naglazyme. Our facilities and those of any third-party manufacturers will be subject to periodic inspections confirming compliance with applicable law. Our facilities must be GMP certified before we can manufacture our drugs for commercial sales.

Kuvan is manufactured on a contract basis. There are two approved manufacturers of the active pharmaceutical ingredient (API) for Kuvan. In general, we expect to continue to contract with outside service providers for certain manufacturing services, including final product vialing and packaging operations for our recombinant enzymes and API production and tableting for Kuvan. Third-party manufacturers’ facilities are subject to periodic inspections confirming compliance with applicable law and must be GMP certified. We believe that our current agreements with third party manufacturers provide for ample operating capacity to support the anticipated commercial demand for Kuvan. In certain instances, there is only one approved contract manufacturer for certain aspects of the manufacturing process. In such cases, we attempt to prevent disruption of supplies through supply agreements, maintaining safety stock and other appropriate strategies. Although we have never experienced a disruption in supply from our contract manufacturers, we cannot provide assurance that we will not experience a disruption in the future.

Raw Materials

Raw materials and supplies required for the production of our products and product candidates are available, in some instances from one supplier, and in other instances, from multiple suppliers. In those cases where raw materials are only available through one supplier, such supplier may be either a sole source (the only recognized supply source available to us) or a single source (the only approved supply source for us among other sources). We have adopted policies to attempt, to the extent feasible, to minimize our raw material supply risks, including maintenance of greater levels of raw materials inventory and implementation of multiple raw materials sourcing strategies, especially for critical raw materials. Although to date we have not experienced any significant delays in obtaining any raw materials from our suppliers, we cannot provide assurance that we will not face shortages from one or more of them in the future.

Sales and Marketing

We have established a commercial organization to support our product lines directly in the U.S., Europe, Latin America and Turkey. For other selected markets, we have signed agreements with other companies to act as distributors of Naglazyme. Most of these agreements generally grant the distributor the right to market the product in the territory and the obligation to secure all necessary regulatory approvals for commercial or named patient sales. Additional markets are being assessed at this time and additional agreements may be signed in the future. We maintain a relatively small sales force in the U.S. that markets Naglazyme and Kuvan and in the E.U. that markets Naglazyme. We believe that the size of our sales force is appropriate to effectively reach our target audience in markets where Naglazyme and Kuvan are directly marketed. We utilize a third-party logistics company to store and distribute Naglazyme from its warehouse in the United Kingdom (U.K.) for customers in the E.U. and from a second warehouse in Tennessee for customers in the U.S. and other countries.

Pursuant to our prior joint venture agreement, Genzyme was responsible for sales, marketing, distribution, obtaining reimbursement worldwide and international regulatory submissions of Aldurazyme. Pursuant to the

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restructuring of our relationship with Genzyme, effective January 1, 2008, Genzyme has the exclusive right to distribute, market and sell Aldurazyme globally and is required to purchase its requirements exclusively from us. See “Recent Developments” for information regarding the restructuring of our relationship with Genzyme.

Customers

Our Naglazyme customers include a limited number of specialty pharmacies and end-users, such as hospitals, which act as retailers. We also sell Naglazyme to our authorized European distributor and to certain larger pharmaceutical wholesalers, which act as intermediaries between us and end-users and generally do not stock quantities of Naglazyme. During 2007, sales to our three largest customers accounted for the following portions of our Naglazyme net product sales and no other customer individually accounted for more than 5% of total net sales:

Healthcare at Home	56	%
Uno Healthcare	7	%
Med Supplies	5	%
	68	%

Despite the significant concentration of customers, the demand for Naglazyme is driven primarily by patient therapy requirements and we are not dependent upon any individual distributor with respect to Naglazyme sales. Due to the pricing of Naglazyme and the limited number of patients, the specialty pharmacies and wholesalers generally carry a very limited inventory, resulting in sales of Naglazyme being closely tied to end-user demand. In the E.U., hospital customers are generally serviced by an authorized distributor, which is our primary customer in the E.U.

Our Kuvan customers include a limited number of specialty pharmacies which dispense to patients. Due to the pricing of Kuvan and the limited number of patients, the specialty pharmacies carry a limited inventory.

Competition

The biopharmaceutical industry is rapidly evolving and highly competitive. The following is a summary analysis of known competitive threats for each of our major product programs:

Naglazyme and Aldurazyme

We know of no active competitive program for enzyme replacement therapy for MPS VI or MPS I that has entered clinical trials.

Bone marrow transplantation has been used to treat severely affected patients, generally under the age of two, with some success. Bone marrow transplantation is associated with high morbidity and mortality rates as well as with problems inherent in the procedure itself, including graft vs. host disease, graft rejection and donor availability, which limits its utility and application. There are other developing technologies that are potential competitive threats to enzyme replacement therapies. However, we know of no such technology that has entered clinical trials related to MPS VI or MPS I.

Kuvan and PEG-PAL

There are currently no other approved drugs for the treatment of PKU. PKU is commonly treated with a medical food diet that is highly-restrictive and unpalatable. We perceive medical foods as a complement to Kuvan and PEG-PAL and not a significant competitive threat. Dietary supplements of large neutral amino acids (LNAA) have also been used in the treatment of PKU. This treatment may be a competitive threat to Kuvan and

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PEG-PAL. However, because LNAA is a dietary supplement, the FDA has not evaluated any claims of efficacy of LNAA.

With respect to Kuvan, we are aware of one other company that produces forms of 6R-BH4 (or BH4) for sale outside of Japan, and that BH4 has been used in certain instances for the treatment of PKU. We do not believe, but cannot know for certain, that this company is currently actively developing BH4 in sponsored trials as a drug product to treat PKU in the U.S. or E.U. Although a significant amount of specialized knowledge and resources would be required to develop and commercially produce BH4 as a drug product to treat PKU in the U.S. and E.U., this company may build or acquire the capability to do so. Additionally, we are aware that another company is developing an oral enzyme therapy to treat PKU; however we understand that the therapy is in an early stage of preclinical development.

With respect to BH4 as a drug product to treat endothelial dysfunction, there is currently no comparable directly competing product on the market. However, there is a significant amount of competition for the treatment of hypertension, peripheral arterial disease and other conditions associated with endothelial dysfunction through other active ingredients, some of which are currently on the market or are in development. We believe that the BH4 mechanism of action is unique and has multiple levels of benefit, with a good safety profile. We are not currently aware of other companies that are actively developing or conducting clinical trials of BH4 for the treatment of hypertension, peripheral arterial disease and other conditions associated with endothelial dysfunction.

Patents and Proprietary Rights

Our success depends on an intellectual property portfolio that supports our future revenue streams and also erects barriers to our competitors. We are maintaining and building our patent portfolio through: filing new patent applications; prosecuting existing applications; licensing and acquiring new patents and patent applications; and enforcing our issued patents. Furthermore, we seek to protect our ownership of know-how, trade secrets and trademarks through an active program of legal mechanisms including assignments, confidentiality agreements, material transfer agreements, research collaborations and licenses.

The number of our issued patents now stands at approximately 258, including approximately 37 patents issued by the U.S. Patent and Trademark Office (USPTO). Furthermore, our portfolio of pending patent applications totals approximately 261 applications, including approximately 47 pending U.S. applications.

With respect to Naglazyme, we have a patent that covers our ultrapure N-acetylgalactosamine-4-sulfatase compositions of Naglazyme, methods of treating deficiencies of N-acetylgalactosamine-4-sulfatase, including MPS VI, and methods of producing and purifying such ultrapure N-acetylgalactosamine-4-sulfatase compositions. A second U.S. patent covers the use of any recombinant human N-acetylgalactosamine-4-sulfatase to treat MPS VI at approved doses.

With respect to Kuvan and BH4, we have or have licensed a number of patents and pending patent applications that relate generally to formulations and forms of our drug substance, and methods of use for various indications under development and the dose regimen. With respect to the pending patent applications, unless and until actually issued, the protective value of these applications is impossible to determine.

We have five core patents related to Aldurazyme. These patents cover our ultra-pure alpha-L-iduronidase composition of Aldurazyme, methods of treating deficiencies of alpha-L-iduronidase by administering pharmaceutical compositions comprising such ultra-pure alpha-L-iduronidase, a method of purifying such ultra-pure alpha-L-iduronidase and the use of compositions of ultra-pure biologically active fragments of alpha-L-iduronidase.

Transkaryotic Therapies Inc. (TKT), which was acquired by Shire PLC, has announced that three U.S. patents on alpha-L-iduronidase had been issued and that these patents had been exclusively licensed to TKT. We

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have examined such issued U.S. patents, the related U.S. and foreign applications and their file histories, the prior art and other information. Corresponding foreign applications were filed in Canada, Europe and Japan. The European application was rejected and abandoned and cannot be re-filed, but the Japanese application is still pending and is being prosecuted by the applicants. Claims in the related Canadian application have recently issued. We believe that such patents and patent applications may not survive a challenge to patent validity. However, the processes of patent law are uncertain and any patent proceeding is subject to multiple unanticipated outcomes. We believe that it is in the best interest of our joint venture with Genzyme to market Aldurazyme with commercial diligence, in order to provide MPS I patients with the benefits of Aldurazyme.

In October 2003, Genzyme and TKT announced their collaboration to develop and commercialize an unrelated drug product. In connection with the collaboration agreement, Genzyme and TKT signed a global legal settlement involving an exchange of non-suits between the companies. As part of this exchange, TKT has agreed not to initiate any patent litigation against Genzyme or our joint venture relating to Aldurazyme.

We believe that these patents and patent applications do not affect our ability to market Aldurazyme in Europe. As described above, a European patent application with similar claims was rejected by the European Patent Office, abandoned by the applicants, and cannot be refiled.

Government Regulation

We operate in a highly regulated industry, which is subject to significant Federal, state, local and foreign regulation. Our present and future business has been, and will continue to be, subject to a variety of laws including, the Federal Food, Drug and Cosmetic Act, the Medicaid rebate program, the Veterans Health Care Act of 1992, and the Occupational Safety and Health Act, among others.

The Federal Food, Drug and Cosmetic Act and other federal and state statutes and regulations govern the testing, manufacture, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of our products. As a result of these laws and regulations, product development and product approval processes are very expensive and time consuming.

FDA Approval Process

In the U.S., pharmaceutical products are subject to extensive regulation by the U.S. Food and Drug Administration, or the FDA. The Federal Food, Drug, and Cosmetic Act, or the FDC Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications or NDAs, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

Pharmaceutical product development in the U.S. typically involves preclinical laboratory and animal tests, the submission to the FDA of a notice of claimed investigational exemption or an investigational new drug application or IND, which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease.

Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conduct of the

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preclinical tests must comply with federal regulations and requirements including good laboratory practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other information including information about product chemistry, manufacturing and controls and a proposed clinical trial protocol. Long term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has not commented on or questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted in compliance with federal regulations, good clinical practices or GCP, as well as under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The study protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements, or may impose other conditions.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population, to determine the effectiveness of the drug for a particular indication or indications, dosage tolerance and optimum dosage, and identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin in the U.S. The NDA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee. In 2008 the application fee for NDAs requiring clinical data will be $1,178,000. Manufacturers and/or sponsors under an approved new drug application are also subject to annual product and establishment user fees. In 2008, product and establishment fees will be $65,030 and $392,700 per product and establishment, respectively. These fees are typically increased annually.

The FDA has 60 days from its receipt of a NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of new drug applications. Most such applications for non-priority drug products are reviewed within ten months. The review process may be extended by the FDA for three additional months to consider certain information or clarification regarding information already provided in the submission. The FDA may also refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review,

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evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current good manufacturing practices is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues an approval letter, an approvable letter or a not-approvable letter. Both approvable and not-approvable letters generally outline the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in 2 or 6 months depending on the type of information included. It is not unusual, however, for the FDA to reject an application because it believes that the drug is not safe enough or effective enough or because it does not believe that the data submitted are reliable or conclusive.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy and may impose other conditions, including labeling restrictions which can materially affect the potential market and profitability of the drug. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

The Hatch-Waxman Act

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential competitors in support of approval of an abbreviated new drug application, or ANDA. An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to the listed drug. ANDA applicants are not required to conduct or submit results of pre-clinical or clinical tests to prove the safety or effectiveness of their drug product, other than the requirement for bioequivalence testing. Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug.

The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. A certification that the new product will not infringe the already approved product’s listed patents or that such patents are invalid is called a Paragraph IV certification. If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30

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months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA applicant.

The ANDA application also will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product has expired. Federal law provides a period of five years following approval of a drug containing no previously approved active ingredients, during which ANDAs for generic versions of those drugs cannot be submitted unless the submission contains a Paragraph IV challenge to a listed patent, in which case the submission may be made four years following the original product approval. Federal law provides for a period of three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage form, route of administration or combination, or for a new use, the approval of which was required to be supported by new clinical trials conducted by or for the sponsor, during which the FDA cannot grant effective approval of an ANDA based on that listed drug.

Other Regulatory Requirements

Once an NDA is approved, a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, risk minimization action plans, and surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. In addition, quality control as well as drug manufacture, packaging, and labeling procedures must continue to conform to current good manufacturing practices, or cGMPs, after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA during which the agency inspects manufacturing facilities to access compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.

Pediatric Information

Under the Pediatric Research Equity Act of 2003, or PREA, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted.

Fast Track Designation

The FDA is required to facilitate the development and expedite the review of drugs that are intended for the treatment of a serious or life-threatening condition for which there is no effective treatment and which

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demonstrate the potential to address unmet medical needs for the condition. Under the fast track program, the sponsor of a new drug candidate may request the FDA to designate the drug candidate for a specific indication as a fast track drug concurrent with or after the filing of the IND for the drug candidate. The FDA must determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

In addition to other benefits such as the ability to use surrogate endpoints and have greater interactions with the FDA, the FDA may initiate review of sections of a fast track drug’s NDA before the application is complete. This rolling review is available if the applicant provides and the FDA approves a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the FDA’s time period goal for reviewing an application does not begin until the last section of the NDA is submitted. Additionally, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Priority Review

Under the FDA policies, a drug candidate is eligible for priority review, or review within a six-month time frame from the time a complete NDA is accepted for filing, if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease. A fast track designated drug candidate would ordinarily meet the FDA’s criteria for priority review.

Accelerated Approval

Under the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.

Section 505(b)(2) New Drug Applications

Most drug products obtain FDA marketing approval pursuant to an NDA or an ANDA. A third alternative is a special type of NDA, commonly referred to as a Section 505(b)(2) NDA, which enables the applicant to rely, in part, on the safety and efficacy data of an existing product, or published literature, in support of its application.

505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. The applicant may rely upon certain preclinical or clinical studies conducted for an approved product. The FDA may also require companies to perform additional studies or measurements to support the change from the approved product. The FDA may then approve the new product candidate for all or some of the label indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.

To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would. Thus approval of a 505(b)(2) NDA can be

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stalled until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.

Food and Drug Administration Amendments Act of 2007

On September 27, 2007, the Food and Drug Administration Amendments Act, or the FDAAA, was enacted into law, amending both the FDC Act and the Public Health Service Act. The FDAAA makes a number of substantive and incremental changes to the review and approval processes in ways that could make it more difficult or costly to obtain approval for new pharmaceutical products, or to produce, market and distribute existing pharmaceutical products. Most significantly, the law changes the FDA’s handling of postmarket drug product safety issues by giving the FDA authority to require post approval studies or clinical trials, to request that safety information be provided in labeling, or to require an NDA applicant to submit and execute a Risk Evaluation and Mitigation Strategy, or REMS.

The FDAAA also reauthorized the authority of the FDA to collect user fees to fund the FDA’s review activities and made certain changes to the user fee provisions to permit the use of user fee revenue to fund the FDA’s drug safety activities and the review of Direct-to-Consumer (“DTC”) advertisements.

The FDAAA also reauthorized and amended the Pediatric Research Equity Act, or PREA. The most significant changes to PREA are intended to improve FDA and applicant accountability for agreed upon pediatric assessments.

Orphan Drug Designation

Naglazyme, Aldurazyme and Kuvan have received orphan drug designations from the FDA. Orphan drug designation is granted by the FDA to drugs intended to treat a rare disease or condition, which for this program is defined as having a prevalence of less than 200,000 individuals in the U.S. Orphan drug designation must be requested before submitting a marketing application. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug exclusive marketing rights may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug.

Orphan drug designation does not shorten the regulatory review and approval process for an orphan drug, nor does it give that drug any advantage in the regulatory review and approval process. However, if an orphan drug later receives approval for the indication for which it has designation, the relevant regulatory authority may not approve any other applications to market the same drug for the same indication, except in very limited circumstances, for seven years in the U.S. Although obtaining approval to market a product with orphan drug exclusivity may be advantageous, we cannot be certain:

• that we will be the first to obtain approval for any drug for which we obtain orphan drug designation;

• that orphan drug designation will result in any commercial advantage or reduce competition; or

• that the limited exceptions to this exclusivity will not be invoked by the relevant regulatory authority.

U.S. Foreign Corrupt Practices Act

The U.S. Foreign Corrupt Practices Act, to which we are subject, prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity. It is illegal to pay, offer to pay, or authorize the payment of anything of value to any foreign

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government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.

Regulation in the European Union

Drugs are also subject to extensive regulation outside of the United States. In the E.U., for example, there is a centralized approval procedure that authorizes marketing of a product in all countries of the E.U. (which includes most major countries in Europe). If this procedure is not used, approval in one country of the E.U. can be used to obtain approval in another country of the E.U. under two simplified application processes, the mutual recognition procedure or the decentralized procedure, both of which rely on the principle of mutual recognition. After receiving regulatory approval through any of the European registration procedures, pricing and reimbursement approvals are also required in most countries.

A similar system for orphan drug designation exists in the E.U. Naglazyme, Aldurazyme and Kuvan received orphan medicinal product designation by the European Committee for Orphan Medicinal Products. Orphan drug designation does not shorten the regulatory review and approval process for an orphan drug, nor does it give that drug any advantage in the regulatory review and approval process. However, if an orphan drug later receives approval for the indication for which it has designation, the relevant regulatory authority may not approve any other applications to market the same drug for the same indication, except in very limited circumstances, for 10 years in the E.U.

Employees

As of February 8, 2008, we had 525 full-time employees, 243 of whom are in operations, 130 of whom are in research and development, 81 of whom are in sales and marketing and 71 of whom are in administration.

We consider our employee relations to be good. Our employees are not covered by a collective bargaining agreement. We have not experienced employment related work stoppages.

Other Information

Our principal executive offices are located at 105 Digital Drive, Novato, California 94949 and our telephone number is (415) 506-6700. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge at www.bmrn.com as soon as reasonably practicable after electronically filing such reports with the U.S. Securities and Exchange Commission (SEC). Such reports and other information may be obtained by visiting the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. Additionally, these reports are available at the SEC’s website at http://www.sec.gov. Information contained in our website is not part of this or any other report that we file with or furnish to the SEC.

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.

If we continue to incur operating losses for a period longer than anticipated, we may be unable to continue our operations at planned levels and be forced to reduce or discontinue operations.

Since we began operations in March 1997, we have been engaged in very substantial research and development and have operated at a net loss for the entire time. Based on our current business plans, we expect to

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continue to operate at an annual net loss at least until 2008. Our future profitability depends on our marketing and selling of Naglazyme and Kuvan, the successful commercialization of Aldurazyme by Genzyme, the receipt of regulatory approval of our product candidates, our ability to successfully manufacture and market any approved drugs, either by ourselves or jointly with others, and our spending on our development programs. The extent of our future losses and the timing of profitability are highly uncertain. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or discontinue operations.

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 may 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 if 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 if we need such funds, we may 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;

• our ability to successfully market and sell Kuvan;

• Genzyme’s ability to successfully commercialize Aldurazyme;

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

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

• 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.

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

• additional licenses and collaborative agreements;

• additional contracts for product manufacturing; and

• additional financing facilities.

We believe that our cash, cash equivalents and short-term investment securities at December 31, 2007 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, which may prove to be wrong. We

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may need to raise additional funds from equity or debt securities, loans, or collaborative agreements 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.

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.

As part of the regulatory approval process, we must conduct, at our own expense, preclinical studies in the laboratory on animals and clinical trials on humans for each product candidate. We expect the number of preclinical studies and clinical trials that the regulatory authorities will require will vary depending on the product candidate, the disease or condition the drug is being developed to address and regulations applicable to the particular drug. Generally, the number and size of clinical trials required for approval increases based on the expected patient population that may be treated with a drug. We may need to perform multiple preclinical studies using various doses and formulations before we can begin clinical trials, which could result in delays in our ability to market any of our product candidates. Furthermore, even if we obtain favorable results in preclinical studies on animals, the results in humans may be significantly different. After we have conducted preclinical studies in animals, we must demonstrate that our drug products are safe and efficacious for use in the targeted human patients in order to receive regulatory approval for commercial sale.

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

• slow or insufficient patient enrollment;

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

• longer treatment time required to demonstrate efficacy;

• lack of sufficient supplies of the product candidate;

• adverse medical events or side effects in treated patients;

• lack of effectiveness of the product candidate being tested; and

• regulatory requests for additional clinical trials.

Typically, if a drug product is intended to treat a chronic disease, as is the case with some of our product candidates, safety and efficacy data must be gathered over an extended period of time, which can range from six months to three years or more.

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

As part of our business strategy, we intend to develop some drugs that may be eligible for FDA and E.U. orphan drug designation. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, defined as a patient population of less than 200,000 in the U.S. The company that first obtains FDA approval for a designated orphan drug for a given rare disease receives marketing exclusivity for use of that drug for the stated condition for a period of seven years. Orphan drug exclusive marketing rights may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug. Similar regulations are available in the E.U. with a 10-year period of market exclusivity.

Because the extent and scope of patent protection for some of our drug products is limited, orphan drug designation is especially important for our products that are eligible for orphan drug designation. For eligible

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drugs, we plan to rely on the exclusivity period under the Orphan Drug Act to maintain a competitive position. If we do not obtain orphan drug exclusivity for our drug products that do not have broad patent protection, our competitors may then sell the same drug to treat the same condition and our revenues will be reduced.

Even though we have obtained orphan drug designation for certain of our products and product candidates and even if we obtain orphan drug designation for our future product candidates, due to the uncertainties associated with developing pharmaceutical products, we may not be the first to obtain marketing approval for any orphan indication. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

If we fail to maintain regulatory approval to commercially market and 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.

We must obtain regulatory approval before marketing or selling our drug products in the U.S. and in foreign jurisdictions. In the U.S., we must obtain FDA approval for each drug that we intend to commercialize. The FDA approval process is typically lengthy and expensive, and approval is never certain. Products distributed abroad are also subject to foreign government regulation. Naglazyme and Aldurazyme have received regulatory approval to be commercially marketed and sold in the U.S., E.U. and other countries. Kuvan has received regulatory approval to be commercially marketed and sold in the U.S. If we fail to obtain regulatory approval for our other product candidates, we will be unable to market and sell those drug products. Because of the risks and uncertainties in pharmaceutical development, our product candidates could take a significantly longer time to gain regulatory approval than we expect or may never gain approval.

From time to time during the regulatory approval process for our products and our product candidates, we engage in discussions with the FDA and foreign regulatory authorities regarding the regulatory requirements for our development programs. To the extent appropriate, we accommodate the requests of the regulatory authorities and, to date, we have generally been able to reach reasonable accommodations and resolutions regarding the underlying issues. However, we are often unable to determine the outcome of such deliberations until they are final. If we are unable to effectively and efficiently resolve and comply with the inquiries and requests of the FDA and foreign regulatory authorities, the approval of our product candidates may be delayed and their value may be reduced.

After any of our products receive regulatory approval, they remain subject to ongoing regulation, including, for example, changes to the product labeling, new or revised regulatory requirements for manufacturing practices and reporting adverse reactions and other information. If we do not comply with the applicable regulations, the range of possible sanctions includes issuance of adverse publicity, product recalls or seizures, fines, total or partial suspensions of production and/or distribution, suspension of marketing applications, enforcement actions, including injunctions and civil or criminal prosecution. The FDA and foreign regulatory agencies can withdraw a product’s approval under some circumstances, such as the failure to comply with existing or future regulatory requirements or unexpected safety issues. Further, the government authorities may condition approval of our product candidates on the completion of additional post-marketing clinical studies. These post-marketing studies may suggest that a product causes undesirable side effects or may present a risk to safety. If data we collect from post-marketing studies suggest that one of our approved products may present a risk to safety, the government authorities could withdraw our product approval, suspend production or place other marketing restrictions on our products. If regulatory sanctions are applied or if regulatory approval is delayed or withdrawn, our management’s credibility, the value of our company and our operating results will be adversely affected. Additionally, we will

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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.

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

Before we can begin commercial manufacture of our products, we, or our contract manufacturer, must obtain regulatory approval of our manufacturing facilities, processes and quality systems. In addition, pharmaceutical manufacturing facilities are continuously subject to inspection by the FDA, the State of California and foreign regulatory authorities, before and after product approval. Our manufacturing facilities have been inspected and licensed by the State of California for pharmaceutical manufacture and have been approved by the FDA, the EC and health agencies in other countries for the manufacture of Aldurazyme, and by the FDA and EC for the manufacture of Naglazyme. In addition, our third-party manufacturers’ facilities involved with the manufacture of Naglayzme, Kuvan and Aldurazyme have also been inspected and approved by various regulatory authorities.

Due to the complexity of the processes used to manufacture our products and product candidates, we may be unable to continue to pass or initially pass federal or international regulatory inspections in a cost effective manner. For the same reason, any potential third-party manufacturer of Naglazyme, Kuvan and Aldurazyme or our product candidates may be unable to comply with GMP regulations in a cost effective manner.

If we, or our third-party manufacturers with whom we contract, are unable to comply with manufacturing regulations, we may be subject to fines, unanticipated compliance expenses, recall or seizure of our products, total or partial suspension of production and/or enforcement actions, including injunctions, and criminal or civil prosecution. These possible sanctions would adversely affect our financial results and financial condition.

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.

Due to the complexity of manufacturing our products we may not be able to manufacture drug products successfully with a commercially viable process or at a scale large enough to support their respective commercial markets or at acceptable margins.

Improvements in manufacturing processes typically are very difficult to achieve and are often very expensive and may require extended periods of time to develop. If we contract for manufacturing services with an unproven process, our contractor is subject to the same uncertainties, high standards and regulatory controls, and may therefore experience difficulty if further process development is necessary. Even a developed manufacturing process can encounter difficulties due to changing regulatory requirements, human error, mechanical breakdowns, and other events that cannot always be prevented or anticipated. Further, the availability of suitable contract manufacturing capacity at scheduled or optimum times is not certain.

Although we have entered into contractual relationships with third-party manufacturers to produce the active ingredient in Kuvan, 6R-BH4, if those manufacturers are unwilling or unable to fulfill their contractual obligations, we may be unable to meet demand for that product or sell that product at all and we may lose potential revenue. We also rely on third parties for portions of the manufacture of Naglazyme and Aldurazyme. If those manufacturers are unwilling or unable to fulfill their contractual obligations, we may be unable to meet demand for these products or sell these products at all and we may lose potential revenue.

In addition, our manufacturing processes subject us to a variety of federal, state and local laws and regulations governing the use, generation, manufacture, storage, handling and disposal of hazardous materials and wastes resulting from their use. We may incur significant costs in complying with these laws and regulations.

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If our manufacturing processes have a higher than expected failure rate, we may be unable to meet demand for our products and lose potential revenue, have reduced margins, or be forced to terminate a program.

The processes we use to manufacture our product and product candidates are extremely complex. Many of the processes include biological systems, which add significant complexity, as compared to chemical synthesis. We expect that, from time to time, consistent with biotechnology industry expectations, certain production lots will fail to produce product that meets our quality control release acceptance criteria. To date, our historical failure rates for all of our product programs, including Naglazyme and Aldurazyme, have been within our expectations, which are based on industry norms.

In order to produce product within our time and cost parameters, we must continue to produce product within our expected success rate and yield expectations. Because of the complexity of our manufacturing processes, it may be difficult or impossible for us to determine the cause of any particular lot failure and we must effectively take corrective action in response to any failure in a timely manner.

If we are unable to effectively address manufacturing issues, we may be unable to meet demand for our products and lose potential revenue, have reduced margins, or be forced to terminate a program.

Our sole manufacturing facility for Naglazyme and Aldurazyme is located near known earthquake fault zones, and the occurrence of an earthquake or other catastrophic disaster could cause damage to our facility and equipment, or that of our third-party manufacturers or single-source suppliers, which could materially impair our ability to manufacture Naglazyme and Aldurazyme or our third-party manufacturer’s ability to manufacture Kuvan.

Our Galli Drive facility is our only manufacturing facility for Naglazyme and Aldurazyme. It is located in the San Francisco Bay Area near known earthquake fault zones and is vulnerable to significant damage from earthquakes. We, and the third-party manufacturers with whom we contract and our single-source suppliers of raw materials, are also vulnerable to damage from other types of disasters, including fires, floods, power loss and similar events. If any disaster were to occur, or any terrorist or criminal activity caused significant damage to our facilities or the facilities of our third-party manufacturers and suppliers, our ability to manufacture Naglazyme and Aldurazyme, or to have Kuvan manufactured, could be seriously, or potentially completely impaired, and our Naglazyme, Kuvan and Aldurazyme commercialization efforts, revenue from the sale of Naglazyme, Kuvan and Aldurazyme could be seriously impaired. The insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.

Supply interruptions may disrupt our inventory levels and the availability of our products and cause delays in obtaining regulatory approval for our product candidates, or cause a loss of our market share and reduce our revenues.

Numerous factors could cause interruptions in the supply of our finished products, including:

• timing, scheduling and prioritization of production by our contract manufacturers or a breach of our agreements by our contract manufacturers;

• labor interruptions;

• changes in our sources for manufacturing;

• the timing and delivery of shipments;

• our failure to locate and obtain replacement manufacturers as needed on a timely basis; and

• conditions affecting the cost and availability of raw materials.

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Any interruption in the supply of finished products could hinder our ability to distribute finished products to meet commercial demand.

With respect to our product candidates, production of product is necessary to perform clinical trials and successful registration batches are necessary to file for approval to commercially market and sell product candidates. Delays in obtaining clinical material or registration batches could delay regulatory approval for our product candidates.

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

Naglazyme, Aldurazyme and Kuvan all target diseases with small patient populations. As a result, our per-patient prices must be relatively high in order to recover our development and manufacturing costs and achieve profitability. For Naglazyme, we believe that we will need to market worldwide to achieve significant market penetration of the product. Due to the expected costs of treatment for our products for genetic diseases, we may be unable to maintain or obtain sufficient market share at a price high enough to justify our product development efforts.

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

The course of treatment for patients using Naglazyme, Kuvan and Aldurazyme is expensive. We expect patients to need treatment throughout their lifetimes. We expect that most families of patients will not be capable of paying for this treatment themselves. There will be no commercially viable market for Naglazyme, Kuvan or Aldurazyme without reimbursement from third-party payers. Additionally, even if there is a commercially viable market, if the level of reimbursement is below our expectations, our revenue and gross margins will be adversely affected.

Third-party payers, such as government or private health care insurers, carefully review and increasingly challenge the prices charged for drugs. Reimbursement rates from private companies vary depending on the third-party payer, the insurance plan and other factors. Reimbursement systems in international markets vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis.

Reimbursement in the E.U. must be negotiated on a country-by-country basis and in many countries the product cannot be commercially launched until reimbursement is approved. The negotiation process in some countries can exceed 12 months.

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

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

We make a significant portion of our international sales of Naglazyme through special access or “named patient” programs, which do not require full product approval. The specifics of the programs vary from country to country. Generally, special approval must be obtained for each patient. The approval normally requires an

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application or suit accompanied by evidence of medical need. Generally, the approvals for each patient must be renewed from time to time.

These programs are not well defined in some countries and are subject to changes in requirements and funding levels. Any change to these programs could adversely affect our ability to sell product in those countries and delay sales. If the programs are not funded by the respective government, there could be insufficient funds to pay for all patients.

Without the special access programs we would need to seek full product approval to commercially market and sell the products. This can be an expensive and time-consuming process. Because the number of patients is so small in some countries, it may not be economically feasible to seek and maintain a full product approval, and therefore the sales in such country would be permanently reduced or eliminated. For all of these reasons, if the special access programs that we are currently using are eliminated or restricted, our revenues could be adversely affected.

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.

Our competitors may develop, manufacture and market products that are more effective or less expensive than ours. They may also obtain regulatory approvals for their products faster than we can obtain them (including those products with orphan drug designation) or commercialize their products before we do. If we do not compete successfully, 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.

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

We expect that, in the future, reimbursement will be increasingly restricted both in the U.S. and internationally. The escalating cost of health care has led to increased pressure on the health care industry to reduce costs. Governmental and private third-party payers have proposed health care reforms and cost reductions. A number of federal and state proposals to control the cost of health care, including the cost of drug treatments, have been made in the U.S. In some foreign markets, the government controls the pricing, which can affect the profitability of drugs. Current government regulations and possible future legislation regarding health care may affect reimbursement for medical treatment by third-party payers, which may render our products not commercially viable or may adversely affect our future revenues and gross margins.

In the U.S., we expect branded pharmaceutical products to be subject to increasing pricing pressures. Implementation of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), providing an out-patient prescription drug benefit under the Medicare program, became effective on January 1, 2006. While it is difficult to predict the final business impact of this legislation, there is additional risk associated with increased pricing pressures. While the MMA prohibits the Secretary of Health and Human Services (HHS) from directly negotiating prescription drug prices with manufacturers, we expect continued challenges to that prohibition over the next several years. Also, the MMA retains the authority of the HHS to prohibit the importation of prescription drugs, but we expect Congress to consider several measures that could remove that authority and allow for importation of products into the U.S. regardless of their safety or cost. If adopted, such legislation would likely have a negative effect on our U.S. sales.

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As a result of the passage of the MMA, aged and disabled patients jointly eligible for Medicare and Medicaid will receive certain prescription drug benefits through Medicare, instead of Medicaid, as of January 1, 2006. This may relieve some state budget pressures but is unlikely to result in reduced pricing pressures. Additionally, in the U.S., we are required to provide rebates to state governments on their purchases of certain of our products under state Medicaid programs. Many states have begun to implement supplemental rebates and restricted formularies in their Medicaid programs, and these programs are expected to continue in the post-MMA environment. Other cost containment measures have been adopted or proposed by federal, state, and local government entities that provide or pay for health care. In most international markets, we operate in an environment of government-mandated cost containment programs, which may include price controls, reference pricing, discounts and rebates, restrictions on physician prescription levels, restrictions on reimbursement, compulsory licenses, health economic assessments, and generic substitution. Several states are also attempting to extend discounted Medicaid prices to non-Medicaid patients. Additionally, notwithstanding the federal law prohibiting pharmaceutical importation, several states have implemented importation schemes for their citizens, usually involving a website that links patients to selected Canadian pharmacies. At least one state has such a program for its state employees. In the absence of federal action to curtail state activities, we expect other states to launch importation efforts. As a result, we expect pressures on pharmaceutical pricing to continue.

International operations are also generally subject to extensive price and market regulations, and there are many proposals for additional cost-containment measures, including proposals that would directly or indirectly impose additional price controls or reduce the value of our intellectual property portfolio.

We cannot predict the extent to which our business may be affected by these or other potential future legislative or regulatory developments. However, future price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our current and future products, which would adversely affect our revenue and results of operations.

If we are found in violation of federal or state “fraud and abuse” laws, we may be required to pay a penalty or be suspended from participation in federal or state health care programs, which may adversely affect our business, financial condition and results of operation.

We are subject to various federal and state health care “fraud and abuse” laws, including antikickback laws, false claims laws and laws related to ensuring compliance. The federal health care program antikickback statute makes it illegal for any person, including a pharmaceutical company, to knowingly and willfully offer, solicit, pay or receive any remuneration, directly or indirectly, in exchange for or to induce the referral of business, including the purchase, order or prescription of a particular drug, for which payment may be made under federal health care programs, such as Medicare and Medicaid. Under federal government regulations, certain arrangements (“safe harbors”) are deemed not to violate the federal antikickback statute. We seek to comply with these safe harbors. False claims laws prohibit anyone from knowingly and willfully presenting or causing to be presented for payment to third party payers (including government payers) claims for reimbursed drugs or services that are false or fraudulent, claims for items or services that were not provided as claimed, or claims for medically unnecessary items or services. Other cases have been brought under false claims laws alleging that off-label promotion of pharmaceutical products has resulted in the submission of false claims to government health care programs. Under the Health Insurance Portability and Accountability Act of 1996, we also are prohibited from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and/or exclusion or suspension from federal and state health care programs such as Medicare and Medicaid.

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Many states have adopted laws similar to the federal antikickback statute, some of which apply to referral of patients for health care services reimbursed by any source, not just governmental payers. In addition, California passed a law that requires pharmaceutical companies to comply with both the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and the July 2002 PhRMA Code on Interactions with Healthcare Professionals.

Neither the government nor the courts have provided definitive guidance on the application of these laws to our business. Law enforcement authorities are increasingly focused on enforcing these laws, and it is possible that some of our practices may be challenged under these laws. While we believe we have structured our business arrangements to comply with these laws, it is possible that the government could allege violations of, or convict us of violating, these laws. If we are found in violation of one of these laws, we are required to pay a penalty or are suspended or excluded from participation in federal or state health care programs, our business, financial condition and results of operation may be adversely affected.

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

A significant portion of the sales of Aldurazyme and Naglazyme are generated from countries other than the United States. Additionally, we have operations in several European countries, Brazil and Turkey. We expect that we will continue to expand our foreign operations in the future. International operations inherently subject us to a number of risks and uncertainties, including:

• changes in foreign regulatory requirements;

• fluctuations in foreign currency exchange rates;

• political and economic instability;

• diminished protection of intellectual property in some countries outside of the United States;

• trade protection measures and import or export licensing requirements;

• difficulty in staffing and managing foreign operations;

• differing labor regulations and business practices; and

• potentially negative consequences from changes in tax laws or if foreign jurisdictions successfully challenge our interpretation of local taxation.

Any of these factors may, individually or as a group, have a material adverse effect on our business and results of operations.

As we expand our existing international operations, we may encounter new risks. For example, as we focus on building our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local distributors and trading companies. If we are not successful in developing these relationships, we may not be able to grow sales in these geographic regions. These or other similar risks could adversely affect our revenue and profitability.

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

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

The patent positions of biopharmaceutical products are complex and uncertain. The scope and extent of patent protection for some of our products and product candidates are particularly uncertain because key

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information on some of our product candidates has existed in the public domain for many years. The composition and genetic sequences of animal and/or human versions of Naglazyme, Aldurazyme, and many of our product candidates have been published and are believed to be in the public domain. The chemical structure of BH4 has also been published. Publication of this information may prevent us from obtaining composition-of-matter patents, which are generally believed to offer the strongest patent protection.

For enzymes or compounds with no prospect of broad composition-of-matter patents, other forms of patent protection or orphan drug status may provide us with a competitive advantage. As a result of these uncertainties, investors should not rely solely on patents as a means of protecting our products or product candidates, including Naglazyme, Kuvan, Aldurazyme or PEG-PAL.

We own or license patents and patent applications related to Naglazyme, Kuvan, Aldurazyme and certain of our product candidates. However, these patents and patent applications do not ensure the protection of our intellectual property for a number of reasons, including the following:

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

• Competitors may interfere with our patent process in a variety of ways. Competitors may claim that they invented the claimed invention prior to us. Competitors may also claim that we are infringing on their patents and therefore cannot practice our technology as claimed under our patent. Competitors may also contest our patents by showing the patent examiner that the invention was not original, was not novel or was obvious. In litigation, a competitor could claim that our issued patents are not valid for a number of reasons. If a court agrees, we would lose that patent. We have no meaningful experience with competitors interfering with our patents or patent applications.

• Enforcing patents is expensive and may absorb significant time of our management. Management would spend less time and resources on developing products, which could increase our operating expenses and delay product programs.

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

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

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

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

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

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

It is also unclear whether our trade secrets are adequately protected. While we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our information to competitors. Enforcing a claim that someone else illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the

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U.S. are sometimes less willing to protect trade secrets. Our competitors may independently develop equivalent knowledge, methods and know-how.

We may also support and collaborate in research conducted by government organizations, hospitals, universities or other educational institutions. These research partners may be unwilling to grant us any exclusive rights to technology or products derived from these collaborations prior to entering into the relationship.

If we do not obtain required licenses or rights, we could encounter delays in our product development efforts while we attempt to design around other patents or even be prohibited from developing, manufacturing or selling products requiring these licenses. There is also a risk that disputes may arise as to the rights to technology or products developed in collaboration with other parties.

The U.S. Patent and Trademark Office (USPTO) has issued three patents to a third-party that relate to alpha-L-iduronidase and a related patent has issued in Canada. If we are not able to successfully challenge these patents or a related patent in Japan, if it issues, we may be prevented from producing Aldurazyme in countries with issued patents unless and until we obtain a license.

The USPTO has issued three patents to a third-party that cover composition-of-matter, isolated genomic nucleotide sequences, vectors including the sequences, host cells containing the vectors, and method of use claims for human, recombinant alpha-L-iduronidase. Aldurazyme is based on human, recombinant alpha-L-iduronidase. A corresponding patent application was filed by a third party in the European Patent Office claiming composition-of-matter for human, recombinant alpha-L-iduronidase, and it was rejected over prior art and withdrawn and cannot be re-filed. However, a corresponding application is still pending in Japan, and this application is being prosecuted by the applicants. We do not know whether the Japanese application will issue or the scope of the claims that would issue. A corresponding Canadian patent recently issued and covers enzyme, pharmaceutical composition, nucleic acid encoding the enzyme, host and cell vector. We believe that these patents, and the Japanese patent application, if issued, are invalid or not infringed on a number of grounds. In addition, under U.S. law, issued patents are entitled to a presumption of validity, and a challenge to the U.S. patents may be unsuccessful. Even if we are successful, challenging the patents may be expensive, require our management to devote significant time to this effort and may adversely impact commercialization of Aldurazyme in the U.S. and Canada (or in Japan, should a patent issue in that country.)

The holder of the patents described above has granted an exclusive license for products relating to these patents to one of our competitors, Transkaryotic Therapies Inc. (TKT), which was acquired by Shire PLC in 2005. If we are sued and are unable to successfully challenge the patents, we may be forced to pay damages to the patent holder and we may be unable to produce Aldurazyme in the U.S. (or in Canada or Japan, should patents issue in these countries) unless we can reach an accommodation with the patent holder and licensee. Neither the current licensee nor the patent holder is required to grant us a license or other accommodation and even if a license or other accommodation is available, we may have to pay substantial license fees, which could adversely affect our business and operating results.

On October 8, 2003, Genzyme, our joint venture partner, and TKT, which was subsequently acquired by Shire PLC, announced their collaboration to develop and commercialize an unrelated drug product. In connection with the collaboration agreement, Genzyme and TKT signed a global legal settlement involving an exchange of non-suits between the companies. As part of this exchange, TKT has agreed not to initiate any patent litigation against Genzyme or our joint venture relating to Aldurazyme. The holder of the patents, who is not party to the TKT-Genzyme settlement discussed above may also have a right to enforce the patents.

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

Pursuant to the restructuring of our relationship Genzyme, either party may terminate the Manufacturing, Marketing and Sales Agreement (MMS Agreement) for specified reasons, including if the other party is in

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material breach of the agreement, has experienced a change of control, or has declared bankruptcy and also is in breach of the agreement. Although we are not currently in breach of this agreement and we believe that Genzyme is not currently in breach of this agreement, there is a risk that either party could breach the agreement in the future. Either party may also terminate the agreement upon one year prior written notice for any reason.

If the MMS Agreement is terminated for breach, the breaching party will transfer its interest in the LLC to the non-breaching party, and the non-breaching party will pay a specified buyout amount for the breaching party’s interest in Aldurazyme and in the LLC. If we are the breaching party, we would lose our rights to Aldurazyme and the related intellectual property and regulatory approvals. If the MMS Agreement is terminated without cause, the non-terminating party would have the option, exercisable for one year, to buy out the terminating party’s interest in Aldurazyme and in the LLC at a specified buyout amount. If such option is not exercised, all rights to Aldurazyme will be sold and the LLC will be dissolved. In the event of termination of the buy out option without exercise by the non-terminating party as described above, all right and title to Aldurazyme is to be sold to the highest bidder, with the proceeds to be split between Genzyme and us in accordance with our percentage interest in the LLC.

If the MMS Agreement is terminated by either party because the other declared bankruptcy, the terminating party would be obligated to buy out the other and would obtain all rights to Aldurazyme exclusively. If the MMS Agreement is terminated by a party because the other party experienced a change of control, the terminating party shall notify the other party, the offeree, of its intent to buy out the offeree’s interest in Aldurazyme and the LLC for a stated amount set by the terminating party at its discretion. The offeree must then either accept this offer or agree to buy the terminating party’s interest in Aldurazyme and the LLC on those same terms. The party who buys out the other would then have exclusive rights to Aldurazyme. The Amended and Restated Collaboration Agreement between us and Genzyme will automatically terminate upon the effective date of the termination of the MMS Agreement and may not be terminated independently from the MMS Agreement.

If we were obligated, or given the option, to buy out Genzyme’s interest in Aldurazyme and the LLC, and gain exclusive rights to Aldurazyme, we may not have sufficient funds to do so and we may not be able to obtain the financing to do so. If we fail to buy out Genzyme’s interest we may be held in breach of the agreement and may lose any claim to the rights to Aldurazyme and the related intellectual property and regulatory approvals. We would then effectively be prohibited from developing and commercializing Aldurazyme.

Our strategic alliance with Merck Serono may be terminated at any time by Merck Serono, and if it is terminated, our expenses could increase and our operating performance could be adversely affected.

Merck Serono may terminate the agreement forming our strategic alliance with them at any time by giving 90 days prior written notice if such termination occurs prior to the commercialization of any of the products licensed under our agreement, or by giving 180 days prior written notice if such termination occurs after the commercialization of such a product. Either Merck Serono or we may terminate our strategic alliance under certain circumstances, including if the other party is in material breach of the agreement and does not remedy the breach within a specified period of time, or has suffered certain financial difficulties, including filing for bankruptcy or making an assignment for the benefit of creditors. Although we are not currently in breach of the agreement and we believe that Merck Serono is not currently in breach of the agreement, there is a risk that either party could breach the agreement in the future. Upon a termination of the agreement by Merck Serono by giving notice or by us for a material breach by Merck Serono, all rights licensed to us under the agreement become irrevocable and fully-paid except in those countries where restricted by applicable law or for all intellectual property that Merck Serono does not own.

Upon a termination of the agreement by Merck Serono for a material breach by us or based on our financial difficulty, or upon the expiration of the royalty term of the products licensed under the agreement, all rights licensed to Merck Serono under the agreement become irrevocable and fully-paid upon the payment of amounts due by Merck Serono to us which accrued prior to the expiration of the royalty term, except in those countries

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where restricted by applicable law or for all intellectual property that we do not own and for which we do not have a royalty-free license. Upon a termination of the agreement for a material breach by us or for our financial difficulty, all rights and licenses granted by Merck Serono to us under or pursuant to the agreement will automatically terminate. Under the terms of our agreement with Merck Serono, Merck Serono is responsible to pay for a portion of the development costs of products developed pursuant to such agreement. However, at any time upon 90 days notice, Merck Serono can opt out of this responsibility. If Merck Serono opts out, or if the agreement is terminated by either Merck Serono or us, and we continue the development of products related to that agreement, we would be responsible for 100% of future development costs, our expenses could increase and our operating performance could be adversely affected.

If we fail to compete successfully with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop new products and to continue to expand our product pipeline.

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

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

If we do not achieve our projected development goals in the timeframes 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.

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

We depend upon our key personnel and our ability to attract, train and retain employees.

Our future growth and success depend on our ability to recruit, retain, manage and motivate our employees. The loss of the services of any member of our senior management or the inability to hire or retain experienced

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management personnel could adversely affect our ability to execute our business plan and harm our operating results.

Because of the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. In particular, the loss of one or more of our senior executive officers could be detrimental to us if we cannot recruit suitable replacements in a timely manner. While certain of our senior executive officers are parties to employment agreements with us, these agreements do not guarantee that they will remain employed with us in the future. In addition, in many cases, these agreements do not restrict their ability to compete with us after their employment is terminated. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

Our success depends on our ability to manage our growth.

Our product candidates are intended for patient populations that are significantly larger than either MPS I or MPS VI. In order to continue development and market these products, if approved, we will need to significantly expand our operations. To manage expansion effectively, we need to continue to develop and improve our research and development capabilities, manufacturing and quality capacities, sales and marketing capabilities and financial and administrative systems. Our staff, financial resources, systems, procedures or controls may be inadequate to support our operations and our management may be unable to manage successfully future market opportunities or our relationships with customers and other third parties.

Growth in our business may also contribute to fluctuations in our operating results, which may cause the price of our securities to decline. Our revenue may fluctuate due to many factors, including changes in:

• wholesaler buying patterns;

• reimbursement rates;

• physician prescribing habits; and

• the availability or pricing of competitive products.

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

Even if our drug products are approved, doctors must prescribe treatments that require using those products. If doctors elect a course of treatment which does not include our drug products, this decision would reduce demand for our drug products and adversely affect revenues. For example, if gene therapy becomes widely used as a treatment of genetic diseases, the use of enzyme replacement therapy, such as Naglazyme and Aldurazyme in MPS diseases could be greatly reduced. Changes in treatment method can be caused by the introduction of other companies’ products or the development of new technologies or surgical procedures which may not directly compete with ours, but which have the effect of changing how doctors decide to treat a disease.

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

We are exposed to the potential product liability risks inherent in the testing, manufacturing and marketing of human pharmaceuticals. We maintain insurance against product liability lawsuits for commercial sale of our products and for the clinical trials of our product candidates. Pharmaceutical companies must balance the cost of insurance with the level of coverage based on estimates of potential liability. Historically, the potential liability associated with product liability lawsuits for pharmaceutical products has been unpredictable. Although we believe that our current insurance is a reasonable estimate of our potential liability and represents a commercially reasonable balancing of the level of coverage as compared to the cost of the insurance, we may be subject to

29

claims in connection with the commercial use of Orapred, our clinical trials and commercial use of Naglazyme, Kuvan and Aldurazyme, or our clinical trials for BH4 or PEG-PAL, for which our insurance coverage may not be adequate.

The product liability insurance we will need to obtain in connection with the commercial sales of our product candidates if and when they receive regulatory approval may be unavailable in meaningful amounts or at a reasonable cost. In addition, while we continue to take what we believe are appropriate precautions, we may be unable to avoid significant liability if any product liability lawsuit is brought against us. If we are the subject of a successful product liability claim that exceeds the limits of any insurance coverage we obtain, we may incur substantial charges that would adversely affect our earnings and require the commitment of capital resources that might otherwise be available for the development and commercialization of our product programs.

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

Our valuation and stock price since the beginning of trading after our initial public offering have had no meaningful relationship to current or historical earnings, asset values, book value or many other criteria based on conventional measures of stock value. The market price of our common stock will fluctuate due to factors including:

• product sales and profitability of Naglazyme, Aldurazyme and Kuvan;

• manufacture, supply or distribution of Naglazyme, Aldurazyme or Kuvan;

• progress of our product candidates through the regulatory process;

• results of clinical trials, announcements of technological innovations or new products by us or our competitors;

• government regulatory action affecting our product candidates or our competitors’ drug products in both the U.S. and foreign countries;

• developments or disputes concerning patent or proprietary rights;

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

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

• broad market fluctuations in the U.S. or in the E.U.;

• actual or anticipated fluctuations in our operating results; and

• changes in company assessments or financial estimates by securities analysts.

In addition, the value of our common stock may fluctuate because it is listed on both the Nasdaq Global Market and the Swiss Main Board. Listing on both exchanges may increase stock price volatility due to:

• trading in different time zones;

• different ability to buy or sell our stock;

• different market conditions in different capital markets; and

• different trading volume.

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

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

We are incorporated in Delaware. Certain anti-takeover provisions of Delaware law and our charter documents as currently in effect may make a change in control of our company more difficult, even if a change in control would be beneficial to the stockholders. Our anti-takeover provisions include provisions in our certificate of incorporation providing that stockholders’ meetings may only be called by the board of directors and provisions in our bylaws providing that the stockholders may not take action by written consent and requiring that stockholders that desire to nominate any person for election to the board of directors or to make any proposal with respect to business to be conducted at a meeting of our stockholders be submitted in appropriate form to our Secretary within a specified period of time in advance of any such meeting. Additionally, our board of directors has the authority to issue an additional 249,886 shares of preferred stock and to determine the terms of those shares of stock without any further action by our stockholders. The rights of holders of our common stock are subject to the rights of the holders of any preferred stock that may be issued. The issuance of preferred stock could make it more difficult for a third-party to acquire a majority of our outstanding voting stock. Delaware law also prohibits corporations from engaging in a business combination with any holders of 15% or more of their capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. Our board of directors may use these provisions to prevent changes in the management and control of our company. Also, under applicable Delaware law, our board of directors may adopt additional anti-takeover measures in the future.

In 2002, our board of directors authorized a stockholder rights plan and related dividend of one preferred share purchase right for each share of our common stock outstanding at that time. In connection with an increase in our authorized common stock, our board approved an amendment to this plan in June 2003. As long as these rights are attached to our common stock, we will issue one right with each new share of common stock so that all shares of our common stock will have attached rights. When exercisable, each right will entitle the registered holder to purchase from us one two-hundredth of a share of our Series B Junior Participating Preferred Stock at a price of $35.00 per 1/200 of a Preferred Share, subject to adjustment.

The rights are designed to assure that all of our stockholders receive fair and equal treatment in the event of any proposed takeover of us and to guard against partial tender offers, open market accumulations and other abusive tactics to gain control of us without paying all stockholders a control premium. The rights will cause substantial dilution to a person or group that acquires 15% or more of our stock on terms not approved by our board of directors. However, the rights may have the effect of making an acquisition of us, which may be beneficial to our stockholders, more difficult, and the existence of such rights may prevent or reduce the likelihood of a third-party making an offer for an acquisition of us.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

The following table contains information about our current significant owned and leased properties:

Location	Approximate Square Feet	Use	Lease expiration date
Several locations in Novato, California	163,000	Corporate headquarters, office and laboratory	2008-2014
Galli Drive facility, Novato, California	70,000	Clinical and commercial manufacturing and laboratory	NA: owned property
Bel Marin Keys facility, Novato, California	85,400	Technical operations, office and laboratory	NA: owned property

Our administrative office space and plans to develop additional space are expected to be adequate for the foreseeable future. In addition to the above, we also maintain small offices in London, England, Sao Paulo, Brazil and Istanbul, Turkey. During 2008 and beyond, we plan to expand the capacity of our production facilities in order to meet future market demands and product development requirements. We believe that, to the extent required, we will be able to lease or buy additional facilities at commercially reasonable rates. We plan to use contract manufacturing when appropriate to provide product for both clinical and commercial requirements until such time as we believe it prudent to develop additional in-house clinical and/or commercial manufacturing capacity.

Item 3. Legal Proceedings

We have no material legal proceedings pending.

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

No matters were submitted to a vote of our security holders during the quarter ended December 31, 2007.

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Part II

Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed under the symbol “BMRN” on both the Nasdaq Global Market and the Swiss SWX Main Board. The following table sets forth the high and low sales prices for our common stock for the periods noted, as reported by Nasdaq Global Market.

		Prices
Year	Period	High		Low
2006	First Quarter	$	15.29	$	10.55
2006	Second Quarter	$	14.73	$	11.55
2006	Third Quarter	$	16.90	$	13.38
2006	Fourth Quarter	$	18.40	$	14.97
2007	First Quarter	$	20.53	$	15.53
2007	Second Quarter	$	19.00	$	15.95
2007	Third Quarter	$	25.00	$	17.63
2007	Fourth Quarter	$	37.17	$	24.81

On February 19, 2008, the last reported sale price on the Nasdaq Global Market for our common stock was $40.12. We have never paid any cash dividends on our common stock and we do not anticipate paying cash dividends in the foreseeable future.

Equity Compensation Plans

We incorporate information regarding the securities authorized for issuance under our equity compensation plans into this section by reference from the section captioned “Equity Compensation Plans” in the proxy statement for our 2008 annual meeting of stockholders.

Issuer Purchase of Equity Securities

We did not make any purchases of our common stock during the three months ended December 31, 2007, which is the fourth quarter of our fiscal year.

Holders

As of February 19, 2008, there were 77 holders of record of 97,381,263 outstanding shares of our common stock. Additionally, on such date, options to acquire 11,404,027 shares of our common stock were outstanding.

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Performance Graph

The following is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.

The following graph compares the cumulative total stockholder return with the cumulative total return of the Nasdaq Composite Index (U.S.) and the Nasdaq Biotechnology Index, assuming a $100 investment in BioMarin’s common stock on December 31, 2002 and reinvestment of dividends during the period. Our common stock is traded on the Nasdaq Global Market and is a component of both the Nasdaq Composite Index and the Nasdaq Biotechnology Index. The comparisons shown in the graph are based upon historical data and we caution that the stock price performance shown in the graph is not indicative of, nor intended to forecast, the potential future performance of our stock.

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Item 6. Selected Consolidated Financial Data

The selected consolidated financial data set forth below contains only a portion of our financial statement information and should be read in conjunction with the consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this annual report.

We derived the statement of operations data for the years ended December 31, 2003, 2004, 2005, 2006 and 2007 and balance sheet data as of December 31, 2003, 2004, 2005, 2006 and 2007 from audited financial statements. Historical results are not necessarily indicative of results that we may experience in the future.

	Year ended December 31, (in thousands, except for per share data)
	2003			2004			2005			2006			2007
Consolidated statements of operations data:
Revenues:
Net product sales	$	—		$	18,641		$	13,039		$	49,606		$	86,802
Collaborative agreement revenues		12,100			—			12,630			18,740			28,264
Royalty and license revenues		—			—			—			15,863			6,515
Total revenues		12,100			18,641			25,669			84,209			121,581
Operating expenses:
Cost of sales (excludes amortization of developed product technology)		—			3,953			2,629			8,740			18,359
Research and development		53,932			49,784			56,391			66,735			78,600
Selling, general and administrative		15,278			37,606			41,556			48,507			77,539
Amortization of acquired intangible assets		—			3,987			1,144			3,651			4,371
Acquired in-process research and development		—			31,453			—			—			—
Impairment of acquired intangible assets		—			68,251			—			—			—
Total operating expenses		69,210			195,034			101,720			127,633			178,869
Loss from operations		(57,110	)		(176,393	)		(76,051	)		(43,424	)		(57,288	)
Equity in the (loss) income of BioMarin/Genzyme LLC		(18,693	)		(2,972	)		11,838			19,274			30,525
Interest income		2,559			2,466			1,861			12,417			25,932
Interest expense		(3,131	)		(10,544	)		(11,918	)		(13,411	)		(14,243	)
Debt conversion expense		—			—			—			(3,315	)		—
Net loss from continuing operations		(76,375	)		(187,443	)		(74,270	)		(28,459	)		(15,074	)
Gain on disposal of discontinued operations		577			—			—			—			—
Loss before income taxes		(75,798	)		(187,443	)		(74,270	)		(28,459	)		(15,074	)
Income taxes		—			—			—			74			729
Net loss	$	(75,798	)	$	(187,443	)	$	(74,270	)	$	(28,533	)	$	(15,803	)
Net loss per share, basic and diluted:
Net loss from continuing operations	$	(1.23	)	$	(2.91	)	$	(1.08	)	$	(0.34	)	$	(0.16	)
Gain on disposal of discontinued operations		0.01			—			—			—			—
Net loss per share, basic and diluted	$	(1.22	)	$	(2.91	)	$	(1.08	)	$	(0.34	)	$	(0.16	)
Weighted average common shares outstanding, basic and diluted		62,125			64,354			68,830			84,582			95,878

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	December 31, (in thousands)
	2003		2004			2005			2006		2007
Consolidated balance sheet data:
Cash, cash equivalents and short-term investments	$	206,357	$	48,815		$	47,792		$	288,847	$	585,594
Total current assets		213,262		85,159			68,941			334,224		644,297
Total assets		256,340		232,966			195,303			463,436		815,279
Long-term liabilities, net of current portion		125,672		230,890			232,398			299,589		566,010
Total stockholders’ equity (deficit)		117,853		(67,978	)		(77,462	)		117,802		187,726

You should read the following tables presenting our unaudited quarterly results of operations in conjunction with the consolidated financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. We have prepared this unaudited information on the same basis as our audited consolidated financial statements. The Company’s quarterly operating results have fluctuated in the past and may continue to do so in the future as a result of a number of factors, including, but not limited to, the timing and nature of research and development activities.

	Quarter ended
	March 31			June 30			September 30			December 31
	(In thousands, except per share data)
	(unaudited)
2007:
Total revenue	$	22,838		$	28,884		$	25,006		$	44,853
Net (loss) income		(9,293	)		(3,864	)		(5,216	)		2,570
Net (loss) income per share, basic		(0.10	)		(0.04	)		(0.05	)		0.03
Net (loss) income per share, diluted		(0.10	)		(0.04	)		(0.05	)		0.03
Common stock price per share:
High		20.53			19.00			25.00			37.17
Low		15.53			15.95			17.63			24.81
2006:
Total revenue	$	13,812		$	23,450		$	24,927		$	22,020
Net loss		(9,780	)		(1,325	)		(7,036	)		(10,392	)
Net loss per share, basic and diluted		(0.13	)		(0.02	)		(0.08	)		(0.11	)
Common stock price per share:
High		15.29			14.73			16.90			18.40
Low		10.55			11.55			13.38			14.97

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

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this annual report. In addition to the other information in this Form 10-K, 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 unmet medical need, have well-understood biology and provide an opportunity to be first-to-market. Our product portfolio is comprised of three approved products and multiple investigational product candidates. Approved products include Naglazyme, Aldurazyme, and Kuvan. Additionally, we have rights to receive royalties related to Orapred and Orapred ODT^®.

Naglazyme received marketing approval in the U.S. in May 2005 and in the E.U. in January 2006. Naglazyme net product sales for 2007 totaled $86.2 million compared to $46.5 million for 2006.

Aldurazyme has been approved for marketing in the U.S., E.U., Japan and in other countries. We have developed Aldurazyme through a joint venture with Genzyme. Aldurazyme net revenue recorded by our joint venture for 2007 totaled $123.7 million, compared to $96.3 million for 2006. Effective January 2008, we restructured our relationship with Genzyme as discussed in Item 1 of this Form 10-K.

Kuvan was granted marketing approval in the U.S. in December 2007. Kuvan net product sales for the approximate two-week period after approval and launch in December 2007 were $0.4 million.

In May 2004, we completed the transaction to acquire the Orapred product line from Ascent Pediatrics, a wholly owned subsidiary of Medicis. In March 2006, we entered into an agreement with Alliant Pharmaceuticals, Inc., which was subsequently acquired by Sciele Pharma Inc. (Sciele), for the continued sale and commercialization of the Orapred product line. Through the sublicense agreement, Sciele acquired exclusive rights to market these products in North America. Sciele is responsible for the costs of commercializing the products in North America. In June 2006, the FDA granted marketing approval for Orapred ODT (prednisolone sodium phosphate orally disintegrating tablets), the first orally disintegrating tablet form of prednisolone available in the United States.

We are developing several product candidates for the treatment of genetic diseases including: PEG-PAL, a preclinical enzyme substitution therapy for the treatment of the more severe form of PKU. We are developing PEG-PAL for phenylketonurics who are not BH4-responsive. We are also developing BH4 for the treatment of other indications, including cardiovascular indications, with trials initiated in peripheral arterial disease and sickle cell disease.

Key components of our results of operations for the years ended December 31, 2005, 2006 and 2007, include the following:

	2005			2006			2007
Total net product sales	$	13,039		$	49,606		$	86,802
Collaborative agreement revenue		12,630			18,740			28,264
Research and development expense		56,391			66,735			78,600
Selling, general and administrative expense		41,556			48,507			77,539
Net loss		(74,270	)		(28,533	)		(15,803	)
Orapred acquisition-related expenses		6,703			8,336			8,898
Stock-based compensation expense		327			9,590			18,283

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See “Results of Operations” for discussion of the detailed components and analysis of the amounts above. Our cash, cash equivalents, short-term investments and cash balances related to long-term debt totaled $585.6 million as of December 31, 2007 compared to $288.8 million as of December 31, 2006.

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, clinical trial accruals 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, 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, 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 years ended December 31, 2006 and 2007.

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 only one reporting unit as per SFAS No. 142, “Goodwill and Other Intangible Assets”. The amount of our goodwill originated from the acquisition of the Orapred business in 2004. The Orapred business was eliminated as a reporting unit following the sublicense of North American rights for Orapred, which was previously our only separate reporting unit. Immediately 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. No triggering events occurred during 2007 that required an impairment test.

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 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.

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As a result of the restructuring of our joint venture with Genzyme, we have realized most of our investment in the joint venture as of December 31, 2007, through the distribution of cash and inventory in February 2008. We expect that our remaining ongoing investment in the joint venture will include our investment in the joint venture cash on hand to fund certain research and development activities related to Aldurazyme and intellectual property management. Management believes that the ongoing investment in the joint venture will be recoverable.

The recoverability of the carrying value of buildings and leasehold improvements for our 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 product sales during 2006 and 2007 and Orapred product sales through March 2006, revenues from our collaborative agreement with Merck Serono and revenues from our Orapred sublicense agreement.

Naglazyme and Kuvan product sales—We recognize revenue from Naglazyme and Kuvan 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. Our product sales transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents. Amounts collected from customers and remitted to governmental authorities, which are primarily comprised of value-added taxes (VAT) in foreign jurisdictions, are presented on a net basis in our income statement, in that taxes billed to customers are not included as a component of net product sales, as per Emerging Issues Task Force (EITF) Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement”.

In the U.S., Naglazyme and Kuvan are 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 distributors and also to hospitals, which act as end-users. Because of the pricing of our products, the limited number of patients and the customers’ limited return rights, Naglazyme customers and retailers generally carry a very limited inventory. We also sell our products to certain larger pharmaceutical wholesalers, which, with respect to Naglazyme and Kuvan, act as intermediaries between us and end-users and generally do not stock quantities of Naglazyme and Kuvan. Accordingly, we expect that sales related to our product 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 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 to Naglazyme. Based on these factors, management has concluded that Naglazyme and Kuvan product returns will

39

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, our historical experience with rebates and returns specific to Naglazyme serves as a reasonable basis for our estimates of rebates and returns for both Naglazyme and Kuvan. Management uses, 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 to Naglazyme. Certain of our customers receive distributor fees based on sales volume. In accordance with EITF Issue No. 01-09, “Accounting for Consideration given by a Vendor to a Customer (including a Reseller of a Vendor’s Products),” these fees are presumed to be a reduction of the selling price of Naglazyme and, therefore, are presented as a reduction of revenue on our consolidated statements of operations. We were able to leverage our experience with Naglazyme to determine our estimates for Kuvan, while also considering factors unique to the Kuvan product. The nature and amount of our current estimates of the applicable revenue dilution item that are currently applied to aggregate world-wide gross sales of Naglazyme and Kuvan to derive net sales are described in the table below.

Revenue Dilution Item	Percentage of Gross Sales	Description
Rebates	2-4%	Rebates payable to state Medicaid, other government programs and certain managed care providers
Distributor fees	3-5%	Fees paid to authorized distributors
Cash Discounts	1-2%	Discounts offered to customers for prompt payment of accounts receivable
Total	6-11%

We maintain a policy to record allowances for doubtful accounts for estimated losses resulting from the inability of Naglazyme and Kuvan customers to make required payments. As of December 31, 2007, 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—As a result of 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 were 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

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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 nine 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 quarter of 2006, our liability for certain rebates was reduced due to the sublicense of North American rights for Orapred to a third party. The decrease in estimated future rebates resulted in reserve reversals and an increase in net revenue of approximately $1.3 million for the year ended December 31, 2006. No significant adjustments were made to these reserves during 2007. 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 were established as a reduction of product sales at the time such revenues were recognized. These revenue reductions were 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 reserves. These revenue reductions were 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. Based on actual retail product demand realized during 2006 and the early settlement of product returns with a customer for an amount less than previous estimates, we adjusted our estimates of the return liabilities, which resulted in reserve reductions of approximately $1.2 million, which was recorded as an increase to net revenue of approximately $0.7 million and $0.5 million of reduced expense for returns of product sold by the previous owner during 2006. As additional information is obtained regarding retail demand and wholesaler inventory levels, additional reserves may be required or reserves may need to be reversed.

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As discussed above and prior to the sublicense of the North American rights to Orapred to a third party in March 2006, our estimates of revenue dilution items were based primarily on the historical experience for the product, as adjusted to reflect known and forecasted changes in the factors that could impact the revenue dilutions. The nature and amount of our estimates of the applicable effective rates for revenue dilution items that were applied to gross sales of Orapred to derive net sales are described in the table below. There were no additional material revenue dilution items other than those disclosed below. The Orapred product had not experienced significant credit losses.

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	%

Collaborative agreement revenues—Collaborative agreement revenues from Merck 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 for 2007 includes the portion of the $25.0 million up-front license fee received from Merck Serono recognized as revenue during the development period and the $15.0 million milestone payment related to the EMEA acceptance of the Kuvan filing. Milestone payments related to our collaborative agreements are recognized in full when the related milestone performance goal is achieved and we have no further performance obligations related to that payment.

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 Merck Serono and recognized it as revenue on a straight-line basis over approximately 3.25 years, which represented our initial estimate of the time from inception of the agreement until European regulatory approval of Kuvan for the treatment of PKU, at which point our performance obligations to Merck Serono for developing Kuvan for the treatment of PKU will end. The estimate was revised in July 2006 from approximately 3.25 years to approximately 3.4 years, based on updated information regarding the estimated timing of European regulatory approval. The change in estimate reduced revenues during 2006 by approximately $0.3 million, and the change in estimate reduced license revenues in 2007 by $0.6 million, and is expected to increase license revenues in 2008 by approximately $0.9 million. Our estimate of the Kuvan commercialization period is based on several underlying assumptions about uncertain events, including actions by European regulatory authorities. As Kuvan advances through the European regulatory process, our estimates of our performance obligation period may change. Further changes in our estimates of our performance obligation period will be recognized prospectively over the remaining estimated performance obligation period. We regularly review our estimates of the period over which we have an ongoing performance obligation. There is no cost of sales associated with the amortization of the up-front license fee received from Merck Serono.

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 Merck Serono’s share of Kuvan development costs under the agreement, which are recorded as research and development expenses.

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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 in subsequent periods.

We deferred the up-front license fee of $2.5 million received from a third party for the North American Orapred rights, and recognized it as revenue on a straight-line basis over a period of approximately 5 months, which represented the estimated time from inception of the agreement until commercial launch of Orapred ODT, at which point our performance obligations ended. Our estimate of the Orapred ODT commercial launch period was based on several underlying assumptions about uncertain events, including actions by U.S. regulatory authorities and successful commercialization efforts by the third party. 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. The commercial launch of Orapred ODT by our sublicensee occurred in August 2006.

Milestone payments are recognized in full when the related milestone performance goal is achieved and we have no future performance obligations related to that payment. As a result of the FDA approval for the marketing application for Orapred ODT in June 2006, we received a milestone payment of $7.5 million, which has been recorded as revenue during the period. As a result of the commercial launch of Orapred ODT, we also recognized $4.0 million in milestone revenue during the third quarter of 2006. We also received a milestone payment of $4.0 million in June 2007 for the one-year anniversary of FDA approval of Orapred ODT. Although the receipt of the $4.0 million payment was based solely on the passage of time from FDA approval, the Company did not recognize the payment during the twelve-month period following approval because the fee was not considered to be fixed or determinable until the due and payable date. In making this determination, management considered the extended one-year payment term and the related uncertain future product sales and the Company’s lack of experience with Sciele.

Inventory

We value inventories at the lower of cost or net realizable 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 quantities in excess of expected requirements. Expired inventory is disposed of and the related costs are written off to costs of sales. 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 regulatory approval for Kuvan was received in December 2007, and costs related to the manufacturing of those products 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 and Kuvan, prior to regulatory approval, were not capitalized as inventory. When regulatory approval was obtained in May 2005 for Naglazyme and in December 2007 for Kuvan, we began capitalizing inventory at the lower of cost or fair value for the respective products. Stock-based compensation of $1.0 and $1.7 million was capitalized into Naglazyme and Kuvan inventory for the years ended December 31, 2006 and 2007, respectively.

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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. In instances where we enter into agreements with third parties for research and development activities, costs are expensed upon the earlier of when non-refundable amounts are due or as services are performed unless there is an alternative future use of the funds in other research and development projects. Amounts due under such arrangements may be either fixed fee or fee for service, and may include upfront payments, monthly payments, and payments upon the completion of milestones or receipt of deliverables.

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 (CRO’s), 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 CRO’s 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, which may occur several months after the related services were performed. 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 our 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 our stock and the implied volatility of traded options on our stock. The expected life of options is based on contractual life and observed historical exercise patterns, which can vary over time.

As stock-based compensation expense recognized in the Consolidated Statements 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.

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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.

Income taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We have recorded a full valuation allowance against our net deferred tax assets, the principal amount of which is the tax effect of net operating loss carryforwards of approximately $294.4 million at December 31, 2007. Future taxable income and ongoing prudent and feasible tax planning strategies have been considered in assessing the need for the valuation allowance. If we later determine that it is more likely than not that the net deferred tax assets would be realized, the previously provided valuation allowance would be reversed. In order to realize our deferred tax assets we must be able to generate sufficient taxable income in the tax jurisdictions in which the deferred tax assets are located. This critical accounting assumption has been historically accurate, as we have not been able to utilize our net deferred tax assets. However, as our revenues increase and approaches profitability, this assumption may change in the near future as the ultimate realizability of the deferred tax assets becomes more certain.

Recent Accounting Pronouncements

See Note 2(r) 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 for the year ended December 31, 2007 decreased by $12.7 million, to $15.8 million, from $28.5 million for the year ended December 31, 2006. Net loss for 2007 decreased primarily as a result of the following (in millions):

Net loss for the period ended December 31, 2006	$	(28.5	)
Increased Naglazyme gross profit		28.5
Milestone revenue related to the Kuvan EMEA filing		15.0
Decreased other collaborative agreement revenues		(5.5	)
Increased profits from BioMarin/Genzyme LLC		11.3
Decreased net Orapred profits, including license revenues		(10.5	)
Increased research and development expense		(11.9	)
Increased selling, general and administrative expense		(29.0	)
Increased interest income		13.5
Absence of debt conversion expense		3.3
Increase in corporate overhead and other		(2.0	)
Net loss for the period ended December 31, 2007	$	(15.8	)

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The increase in Naglazyme gross profit during 2007 as compared to 2006 is primarily the result of additional patients initiating Naglazyme therapy in the U.S., E.U. and other countries. The decrease in collaborative agreement revenues primarily relates to lower reimbursable Kuvan spend. The increase in selling, general and administrative expense was primarily due to the continued international expansion of our Naglazyme commercialization and preparation for commercializing Kuvan. The decrease in Orapred profits primarily relates to the timing of the milestone payments under the Orapred sublicense. See below for additional information related to the primary net loss fluctuations presented above, including details of our operating expense fluctuations.

Our net loss for the year ended December 31, 2006 decreased by $45.8 million, to $28.5 million, from $74.3 million for the year ended December 31, 2005. Net loss for 2006 decreased primarily as a result of the following (in millions):

Net loss for the period ended December 31, 2005	$	(74.3	)
Increased Naglazyme gross profit		33.7
Increased collaborative agreement revenues		6.1
Milestone and license revenue related to sublicense of Orapred franchise		14.0
Increased profits from BioMarin/Genzyme LLC		7.5
Decreased Orapred net operating expenses		6.7
Increased selling, general and administrative expense		(11.2	)
Increased research and development expense		(5.0	)
Stock-based compensation expense upon adoption of FAS 123R		(9.6	)
Increased interest expense		(4.8	)
Increased interest income		11.0
Increase in corporate overhead and other		(2.6	)
Net loss for the period ended December 31, 2006	$	(28.5	)

The increase in Naglazyme gross profit during 2006 as compared to 2005 is primarily the result of increased Naglazyme sales, primarily in the U.S. and E.U. We also recorded $14.0 million in milestone and license revenue from the sublicense of North American rights of Orapred to a third party. The decrease in Naglazyme development costs is primarily due to decreased clinical trial and manufacturing expenses, after marketing approval was received in the U.S. in May 2005 and E.U. in January 2006.

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

Net Product Sales and Gross Profit

Net product sales increased $37.2 million to $86.8 million in 2007 from $49.6 million in 2006. Net product sales in 2007 primarily included $86.2 million of net product sales of Naglazyme and $0.4 million of net product sales of Kuvan. Net product sales in 2006 of $49.6 million included $46.5 million of net product sales of Naglazyme and $3.1 million of net product sales of Orapred. We expect net product sales of Naglazyme and Kuvan to increase in future periods, primarily due to additional patients initiating therapy.

We received marketing approval for Naglazyme in the U.S. in May 2005 and began shipping product in June 2005. In January 2006, we received marketing approval for Naglazyme in the E.U. Net product sales for Naglazyme in 2007 were $86.2 million, of which $68.7 million was from customers based outside of the U.S. The impact of foreign currency exchange rates on Naglazyme sales from customers based outside of the U.S. was approximately $4.3 million in 2007. Gross profit from Naglazyme in 2007 was approximately $67.9 million, representing gross margins of approximately 79% as compared to $39.4 million in 2006, representing gross margins of approximately 85%. 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,

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some of the product sold in 2006 had an insignificant cost basis and therefore lower cost of goods sold was reported. Net product sales of Naglazyme during 2005 were $6.1 million. As all of the product sold in 2005 had a zero cost basis, gross profit in 2005 was also $6.1 million, as it was manufactured prior to regulatory approval. Similarly, a significant amount of Kuvan inventory that will be sold in 2008 was manufactured as part of the development cycle for Kuvan and was previously expensed, and therefore will have either zero or nominal cost of goods sold. Substantially all of the Naglazyme inventory with an insignificant cost basis has been sold or used in clinical trials as of December 31, 2007.

During the year ended December 31, 2006 we recognized net product sales of $3.1 million related to the Orapred product line, as compared to $6.9 million for the year ended December 31, 2005. In March 2006, we sublicensed rights to sell and distribute Orapred in North America for up-front and milestone payments of $18.0 million and royalties on future sales of all Orapred products, including Orapred ODT. As a result of the sublicense, we do not expect to record future net product sales related to the Orapred product line. Current and future revenue streams related to the Orapred product will include license and royalty revenues for future sales of Orapred product by the sublicensee, which are discussed below.

Collaborative Agreement Revenues

Collaborative agreement revenues include both license revenue and contract research revenue under our agreement with Merck Serono, which was executed in May 2005. License revenues are related to amortization of the $25.0 million up-front license payment received from Merck Serono and contract research revenues are related to shared development costs that are incurred by us, of which approximately 50% is reimbursed by Merck Serono. As development spending on Kuvan and 6R-BH4 for other indications increases or decreases, contract research revenues may also change proportionately following the completion of Phase 2 clinical trials for each indication. The related costs are included in research and development expenses.

Collaborative agreement revenues in 2006 and 2007 were $18.7 million and $28.3 million, respectively, and includes the amortization of $7.4 million and $6.9 million, respectively, of the up-front license fee received from Merck Serono and recognized as revenue during the period, and $11.3 million and $6.4 million, respectively, of reimbursable Kuvan development costs incurred during the period. Collaborative agreement revenues in 2007 also include the $15.0 million milestone payment received from Merck Serono upon EMEA acceptance of the Kuvan filing that was recognized as revenue during the period.

Collaborative agreement revenues in 2005 and 2006 were $12.6 million and $18.7 million, respectively, and includes the amortization of $5.5 million and $7.4 million, respectively, of the up-front license fee received from Merck Serono and recognized as revenue during the period, and $7.1 million and $11.3 million, respectively, of reimbursable Kuvan development costs incurred during the period.

Royalty and License Revenues

Royalty and license revenues, totaling $6.5 million in 2007, include a $4.0 million milestone payment related to the one-year anniversary of FDA approval of the marketing application for Orapred ODT. Royalty and license revenues, totaling $15.9 million in 2006, include a $7.5 million milestone payment related to FDA approval of the marketing application for Orapred ODT, received in June 2006 and a $4.0 million milestone payment related to the commercial launch of Orapred ODT, received in September 2006. Royalty and license revenues in 2006 also include $2.5 million related to the up-front license fee received from the third party. During 2007, we recognized $2.3 million in royalty revenues from Orapred product sold by the sublicensee, as compared to $1.6 million during 2006. There were no royalty and license revenues during 2005.

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Research and Development Expense

Our research and development expense includes personnel, facility and external costs associated with the research and development of our product candidates and products. These research and 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 increased by $11.9 million to $78.6 million for the year ended December 31, 2007, from $66.7 million for the year ended December 31, 2006. Research and development expenses changed for the year ended December 31, 2007 primarily as a result of the following (in millions):

Research and development expenses for the year ended December 31, 2006	$	66.7
Decreased Naglazyme development expenses		(1.1	)
Decreased Kuvan clinical trial and manufacturing costs		(7.6	)
Increased 6R-BH4 development costs for endothelial dysfunction		3.6
Increased PEG-PAL development costs		8.4
Increased stock-based compensation expense		3.4
Absence of milestone payments to third party co-developer for approval and launch of Orapred ODT		(3.2	)
Increase in research and development expense on early stage programs		2.0
Non-allocated research and development expense and other changes		6.4
Research and development expenses for the year ended December 31, 2007	$	78.6

The increase in 6R-BH4 development costs is related to increases for the ongoing pre-clinical studies of 6R-BH4 in other indications including endothelial dysfunction and costs related to planning and conducting Phase 2 clinical trials in peripheral arterial disease and sickle cell disease. The increase in PEG-PAL development costs is related to increases for pre-clinical studies and manufacturing costs. The decrease in Kuvan clinical trial and manufacturing costs is primarily due to decreased clinical trial and manufacturing expenses approaching marketing approval, which was received in December 2007. However, we expect to continue incurring significant Kuvan research and development costs for the foreseeable future due to long-term clinical activities related to post-approval regulatory commitments. The increase in research and development on other programs primarily includes increases in facilities costs, general research costs and research and development personnel. We expect research and development expense to increase in future periods, primarily as a result of spending on our 6R-BH4 program for other indications and on our PEG-PAL program.

Research and development expenses increased by $10.3 million to $66.7 million for the year ended December 31, 2006, from $56.4 million for the year ended December 31, 2005. Research and development expenses changed for the year ended December 31, 2006 primarily as a result of the following (in millions):

Research and development expenses for the year ended December 31, 2005	$	56.4
Decreased Naglazyme development expenses		(10.9	)
Increased Kuvan clinical trial and manufacturing costs		8.2
Increased 6R-BH4 development costs for endothelial dysfunction		5.4
Increased PEG-PAL development costs		2.3
Stock-based compensation expense		4.3
Increased research and development on other programs		1.0
Research and development expenses for the year ended December 31, 2006	$	66.7

The increase in Kuvan clinical trial and manufacturing costs was primarily due to increased clinical trial expenses due to the continuation of the Phase 3 clinical trials. The increase in 6R-BH4 development costs was related to increases for pre-clinical studies of 6R-BH4 in endothelial dysfunction and costs related to a Phase 2

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clinical trial of 6R-BH4 for poorly controlled hypertension and peripheral arterial disease. The decrease in Naglazyme development costs was primarily due to decreased clinical trial and manufacturing expenses, after marketing approval was received in May 2005.

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; marketing and sales operations in support of Naglazyme 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 $29.0 million, to $77.5 million for the year ended December 31, 2007, from $48.5 million for the year ended December 31, 2006. The components of the increase for the year ended December 31, 2007 primarily include the following (in millions):

Selling, general and administrative expenses for the year ended December 31, 2006	$	48.5
Increased Naglazyme sales and marketing expenses		8.4
Increased stock-based compensation expense		5.3
Increased Kuvan commercial preparation costs		7.8
Net increase in corporate overhead and other administrative costs		7.5
Selling, general and administrative expenses for the year ended December 31, 2007	$	77.5

We initiated commercial operations in the E.U. and South America during 2006 and incurred related costs during 2007 primarily related to the commercialization of Naglazyme. During 2007, we also incurred significant expenses related to the preparation for the Kuvan commercial launch. The increase in stock-based compensation expense is the result of an increased number of options outstanding and a higher average stock price on the related grant date. The increase in corporate overhead and other administrative costs is primarily related to increases in salaries and benefits due to the company’s significant growth in headcount. We expect selling, general and administrative expenses to increase in future periods as a result of the international expansion of Naglazyme and Kuvan.

Selling, general and administrative expenses increased by $6.9 million, to $48.5 million for the year ended December 31, 2006, from $41.6 million for the year ended December 31, 2005. The components of the increase for the year ended December 31, 2006 primarily include the following (in millions):

Selling, general and administrative expenses for the year ended December 31, 2005	$	41.6
Decreased Orapred sales and marketing expenses		(12.3	)
Increased Naglazyme sales and marketing expenses		9.0
Stock-based compensation expense		5.3
Increased Kuvan commercial preparation costs		2.2
Net increase in corporate overhead and other administrative costs		2.7
Selling, general and administrative expenses for the year ended December 31, 2006	$	48.5

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We initiated commercial operations in the E.U and Brazil during 2006 and expect additional costs to be incurred in future periods as a result. The increase in Naglazyme sales and marketing expenses relates to additional costs associated with the world-wide commercial launch and increased U.S. commercial activities. The decrease in Orapred sales and marketing expenses is primarily attributable to the decrease in sales and marketing efforts during 2006 following the reduction in the Orapred sales force in July 2005. The increase in corporate overhead and other administrative costs is primarily related to increases in facilities costs, accounting costs and insurance.

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 2007 was $4.4 million, compared to $3.7 million for 2006. The increase in amortization expense is due to the change in expected useful life as the amortization period was revised from 15 years to 3.5 years following the sublicense of North American rights to Orapred in March 2006. Following our expected purchase of the common stock of Ascent Pediatrics from Medicis in August 2009, the underlying intellectual property will be transferred to Sciele. We expect that the annual amortization expense associated with the intangible assets will be approximately $4.4 million in 2008 and $2.9 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 $30.5 million for 2007, compared to $19.3 million for 2006. The increase in profit from BioMarin/Genzyme LLC in 2007 was principally due to increases in Aldurazyme net revenue, which totaled $123.7 million for 2007, compared to $96.3 million for 2006.

Equity in the income of BioMarin/Genzyme LLC was $19.3 million for 2006, compared to $11.8 million for 2005. The increase in profit from BioMarin/Genzyme LLC in 2006 was principally due to increases in Aldurazyme net revenue, which totaled $96.3 million for 2006, compared to $76.4 million for 2005.

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

Interest Income

We invest our cash and short-term investments in government and other high credit quality securities in order to limit default and market risk. Interest income increased to $25.9 million for 2007, from $12.4 million for 2006, primarily due to higher interest rates and increased levels of cash and investments during 2007.

Interest income increased to $12.4 million in 2006, from $1.9 million in 2005, primarily due to higher interest rates and increased levels of cash and investments on hand throughout the year.

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 $14.2 million for 2007, as compared to $13.4 million for 2006, representing an increase of $0.8 million. The decrease in 2007 is primarily due to the lack of interest expense related to our 3.5% Senior Subordinated Convertible Notes due in 2008, which were converted into common stock in two separate transactions in September 2006 and January 2007. This decreased interest expense was partially offset by

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increased interest expense on our $324.9 million of 1.875% senior subordinated convertible notes due in 2017 that were issued in April 2007.

In April 2007, we sold $324.9 million of 1.875% Senior Subordinated Convertible Notes due 2017. As a result of the Company’s net increase in convertible debt balances, we expect interest expense to increase in future periods.

The decline in imputed interest expense was due to a lower outstanding balance of the acquisition obligation in 2007. Imputed interest expense totaled $4.5 million for 2007, as compared to $4.7 million for 2006.

Interest expense was $13.4 million and $11.9 million in 2006 and 2005, respectively, representing an increase of $1.5 million. The increase in 2006 is primarily due to the convertible debt issuance in March 2006, partially offset by lower imputed interest expense related to the Ascent Pediatrics transaction and lower interest as a result of the conversion of a portion of 3.5% convertible notes due in 2008 in September 2006. In 2006 and 2005, the imputed interest related to the Ascent Pediatrics transaction was $4.7 million and $5.4 million, respectively.

Debt Conversion Expense

In September 2006, certain holders of our 3.50% Convertible Senior Subordinated Notes due in 2008 agreed to convert $73.6 million in aggregate principal amount of the notes to approximately 5.25 million shares of our common stock. As a result of the conversion, we agreed to pay an inducement to the holders of approximately $3.3 million, which was recognized as additional expense during year ended December 31, 2006. In January 2007, the remaining outstanding balance of $51.4 million for our 3.50% Convertible Senior Subordinated Notes due in 2008 were converted into approximately 3.7 million shares of common stock.

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 post-regulatory approval 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. Substantially all of the differences have been eliminated as of December 31, 2007. Effective January 1, 2008, the Company restructured its relationship with its joint venture partner, Genzyme, regarding the manufacturing, marketing and sale of Aldurazyme.

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 $123.7 million of net revenue for 2007, compared to $96.3 million for 2006. The increase in net revenue of $27.4 million is primarily attributable to an increase in the number of patients receiving therapy. We expect net revenue of Aldurazyme to increase in future periods, primarily due to additional patients initiating therapy.

Gross profit was $96.8 million for 2007, as compared to $73.1 million for 2006, representing an increase of $23.7 million. Gross margins for 2007 were approximately 78%, as compared to gross margins for 2006 of 76%.

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The increase in gross margin during 2007 compared to 2006 is attributable to exchange rate benefits. The increase in gross margin in 2007 is attributable to the effect of foreign currency rate fluctuations on Aldurazyme sales.

Operating Expenses

Operating expenses of the joint venture include the costs associated with the development and commercial support of Aldurazyme and totaled $36.5 million for 2007, as compared to $35.3 million for 2006. Operating expenses in 2007 included $23.9 million of selling, general and administrative expenses associated with the commercial support of Aldurazyme, and $11.8 million of research and development costs, primarily long-term clinical trial and regulatory costs. Operating expenses in 2006 included $22.2 million of selling, general and administrative expenses associated with the commercial launch of Aldurazyme, and $13.1 million of research and development expenses, primarily clinical trial costs.

Operating expenses in 2005 totaled $36.9 million and included $22.0 million of selling, general and administrative expenses associated with the commercial support of Aldurazyme and $14.9 million of research and development costs, primarily long-term clinical trial costs.

Liquidity and Capital Resources

Cash and Cash Flow

As of December 31, 2007, our combined cash, cash equivalents and short-term investments totaled $585.6 million, an increase of $296.8 million from $288.8 million at December 31, 2006. During 2007, we received $316.4 million of net proceeds from a public offering of convertible senior subordinated notes, distributions from the joint venture of $17.1 million, $4.0 million in milestone payments for the one-year anniversary of the FDA approval of Orapred ODT and $15.0 million in milestone payments for the EMEA acceptance of the Kuvan filing. During 2006, we received $127.4 million of net proceeds from a public offering of common stock, $166.9 million of net proceeds from a public offering of convertible senior subordinated notes, distributions from the joint venture of $19.8 million and $14.0 million of proceeds related to our sublicense of North American rights for Orapred.

The $296.8 million increase in cash, cash equivalents, short-term investments and restricted cash during 2007 includes net proceeds from the public offering of convertible debt of $316.4 million. Excluding the net offering proceeds, the decrease in cash, cash equivalents, and short-term investments during 2007 was $19.5 million, which was $50.9 million less than the net decrease in cash, cash equivalents, short-term investments and restricted cash during 2006 of $70.4 million, excluding net offering proceeds of $294.3 million. The primary items contributing to the decrease in net cash outflow, excluding the net offering proceeds, in 2007 were as follows (in millions):

Decreased capital asset purchases	$	2.2
Absence of conversion premium and accrued interest payment		4.1
Decreased license proceeds related to sublicense of North American Orapred rights		(10.0	)
Absence of milestone payment for the approval and launch of Orapred ODT		3.2
Absence of net repayments of equipment and facility loans		20.9
Decreased cash flows from BioMarin/Genzyme LLC		(2.7	)
Increased proceeds from stock option exercises		2.1
Receipt of milestone payment for acceptance of Kuvan MAA filing by the EMEA		15.0
Net decreased operating spend, including net payments for working capital, and other		16.1
Total decrease in net cash outflow excluding net offering proceeds	$	50.9

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The net decreased operating spend includes increases in cash receipts from net revenues partially offset by increases in 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. Decreases in net payments for working capital in 2007 primarily include decreased inventory build of $6.8 million, decreased accounts receivable build of $6.5 million and increased accounts payable and accrued liabilities build of $1.2 million.

Our combined cash, cash equivalents, short-term investments and cash balances related to long-term debt increased $224.0 million in 2006 to $288.8 million from $64.8 million at December 31, 2005. The $224.0 million increase in cash, cash equivalents, short-term investments and cash balances related to long-term debt during 2006 included net proceeds from the public offering of common stock of $127.4 million and concurrent public offering of convertible debt of $167.0 million.

Excluding the net offering proceeds, the decrease in cash, cash equivalents, short-term investments and cash balances related to long-term debt during 2006 was $70.4 million, which was $11.6 million less than the net decrease in cash, cash equivalents, short-term investments and cash balances related to long-term debt during 2005 of $82.0 million. The primary items contributing to the decrease in net cash outflow, excluding the net offering proceeds, in 2006 were as follows (in millions):

Decreased cash payments for the acquisition of the Ascent Pediatrics business	$	26.5
Increased cash flows from BioMarin/Genzyme LLC		15.2
Net repayments of equipment and facility loans		(21.7	)
Increased capital asset purchases		(18.1	)
Absence of Merck Serono license payment received in 2005		(25.0	)
License proceeds related to sublicense of North American Orapred rights		14.0
Decreased operating spend, net, partially offset by working capital increases		22.3
Other		(1.6	)
Total increase in net cash outflow excluding net offering proceeds	$	11.6

The net decreased operating spend in 2006 included increases in cash receipts from net revenues partially offset by increases in 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 included Naglazyme inventory and accounts receivable.

We expect that our net cash outflow in 2008 related to capital asset purchases will increase significantly compared to 2007. The expected increase in capital asset purchases primarily includes a planned expansion of our manufacturing facility, increased spending on manufacturing and lab equipment, expansion of our corporate campus including leasehold improvements and the continued development of information technology systems upgrades.

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 December 31, 2007, we have not made any draws on the note. We do not anticipate that we will draw funds from this note.

We have historically financed our operations primarily by the issuance of common stock, convertible debt and by relying on equipment and other commercial financing. During 2008, and for the foreseeable future, we will be highly dependent on our net product revenue to supplement our current liquidity and fund our operations. We may in the future elect to supplement this with further debt or equity offerings or commercial borrowing.

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Funding Commitments

We expect to fund our operations with our net product revenues from Naglazyme, Aldurazyme and Kuvan, cash, cash equivalents and short-term investments supplemented by proceeds from equity or debt financings, loans or collaborative agreements with corporate partners, to the extent necessary. We expect our current cash, cash equivalents and short-term investments will meet our operating and capital requirements for the foreseeable future based on our current long-term business plans and assuming that we are able to achieve our long-term goals. This expectation could also change depending on how much we elect to spend on our development programs and for potential licenses and acquisitions of complementary technologies, products and companies.

Our investment in our product development programs has a major impact on our operating performance. Our research and development expenses for the years ended December 31, 2005, 2006 and 2007 and for the period since inception (March 1997 for the portion not allocated to any major program) represent the following (in millions):

	2005		2006		2007		Since Program Inception
Naglazyme	$	20.6	$	9.7	$	8.8	$	113.0
Kuvan		22.7		27.4		19.9		79.0
6R-BH4 for other indications, including endothelial dysfunction		3.5		8.9		15.0		27.4
PEG-PAL		2.2		4.5		13.2		20.2
Not allocated to specific major current projects		7.4		16.2		21.7		156.6
	$	56.4	$	66.7	$	78.6	$	396.2

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-K, 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 may elect to increase our spending above our current long-term plans and may be unable to achieve our long-term goals. This could increase our capital requirements, including: costs associated with the commercialization of our products; additional clinical trials and the manufacturing of Naglazyme, Aldurazyme and Kuvan; 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.

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

• our ability to successfully market and sell Naglazyme and Kuvan;

• Genzyme’s ability to successfully market and sell Aldurazyme;

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

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

• 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.

Off-Balance Sheet Arrangements

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

Borrowings and Contractual Obligations

In April 2007, we sold approximately $324.9 million of senior subordinated convertible debt due April 2017. The debt was issued at face value and bears interest at the rate of 1.875% per annum, payable semi-annually in cash. The debt is convertible, at the option of the holder, at any time prior to maturity, into shares of our common stock at a conversion price of approximately $20.36 per share, subject to adjustment in certain circumstances. There is a no call provision included and we are unable to unilaterally redeem the debt prior to maturity in 2017. We also must repay the debt if there is a qualifying change in control or termination of trading of its common stock. In March 2006, we sold approximately $172.5 million of senior subordinated convertible notes due 2013. The debt was issued at face value and bears interest at the rate of 2.5% per annum, payable semi-annually in cash. There is a no call provision included and we are unable to unilaterally redeem the debt prior to maturity in 2013. The debt is convertible, at the option of the holder, at any time prior to maturity, into shares of our common stock at a conversion price of approximately $16.58 per share, subject to adjustment in certain circumstances. 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. Our $497.4 million of convertible debt will impact our liquidity due to the semi-annual cash interest payments and the scheduled repayments of the debt.

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 loan balance was repaid in April 2006.

As a result of the Ascent Pediatrics transaction, we expect to pay Medicis $80.1 million through 2009, of which $6.5 million is payable in 2008. 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.

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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 December 31, 2007 is presented below (in thousands).

	Payments Due by Period
	2008		2009		2010-2011		2012-2013		2014 and Thereafter		Total
Medicis obligations	$	6,500	$	73,600	$	—	$	—	$	—	$	80,100
Convertible debt and related interest		10,404		10,404		20,808		191,152		346,195		578,963
Operating leases		2,874		2,898		5,746		4,746		40		16,304
Research and development and purchase commitments		34,139		1,307		541		483		1,185		37,655
Total	$	53,917	$	88,209	$	27,095	$	196,381	$	347,420	$	713,022

The purchase commitments above include $11.5 million, which is net of a $0.5 million deposit paid in 2007, related to a purchase agreement for an office and laboratory facility in January 2008 related to our corporate expansion. We are also subject to contingent payments related to various development activities totaling approximately $62.2 million, which are due upon achievement of certain regulatory and licensing milestones, and if they occur before certain dates in the future.

Related Party Transactions

Our Chief Medical Officer, Emil D. Kakkis, M.D., Ph.D., formerly held an adjunct faculty position with LA Biomedical, formerly known as Harbor-UCLA Research Educational Institute, for purposes of conducting research. LA Biomedical licenses certain intellectual property and provides other research services to us. We are also obligated to pay LA Biomedical a minimum annual payment and royalties on future sales of products covered by the license agreement. Our joint venture with Genzyme is subject to a second agreement with LA Biomedical that requires the joint venture to pay LA Biomedical a royalty on sales of Aldurazyme through November 2019. Pursuant to Dr. Kakkis’ agreements with LA Biomedical, which were entered into prior to his employment by us, Dr. Kakkis is entitled to certain portions of these amounts payable to LA Biomedical. The license agreements were effective before Dr. Kakkis was an officer of our company. Pursuant to Dr. Kakkis’ agreements with LA Biomedical, he was entitled to approximately $1.1 million and $1.4 million related to Aldurazyme during 2006 and 2007, respectively.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Market Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. By policy, we place our investments with highly rated credit issuers and limit the amount of credit exposure to any one issuer. As stated in our policy, we seek to improve the safety and likelihood of preservation of our invested funds by limiting default risk and market risk.

We mitigate default risk by investing in high credit quality securities and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity.

As of December 31, 2007, our investment portfolio does not include any investments with significant exposure to the subprime mortgage market issues. Based on our investment portfolio and interest rates at December 31, 2007, we believe that a 100 basis point decrease in interest rates could result in a potential loss in fair value of our investment portfolio of approximately $5.9 million. Changes in interest rates may affect the fair value of our investment portfolio. However, we will not recognize such gains or losses in our consolidated statement of operations unless the investments are sold.

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The table below presents the carrying value of our cash and investment portfolio, which approximates fair value at December 31, 2007 (in thousands):

	Carrying Value
Cash and cash equivalents	$	228.3	*
Short-term investments		357.3	**
Total	$	585.6

  * 9% of cash and cash equivalents invested in money market funds, 71% in commercial paper, 14% in repurchase agreements and 6% of uninvested cash.

** 3% of short-term investments invested in U.S. agency securities, 25% in corporate securities and 72% in commercial paper.

Our debt obligations consist of our convertible debt, which carries a fixed interest rate and, as a result, we are not exposed to interest rate market risk on our convertible debt. The carrying value of our convertible debt approximates its fair value at December 31, 2007.

Foreign Currency Exchange Rate Market Risk

A significant portion of Aldurazyme sales by BioMarin/Genzyme LLC are earned outside of the U.S. and, therefore, our equity in the income of BioMarin/Genzyme LLC, and in the future our royalty on Aldurazyme sales, is subject to risk of foreign currency rate fluctuations, primarily to the Euro and British pound. The policies and procedures related to the management of foreign currency risk of Aldurazyme sales are maintained and performed by our joint venture partner, Genzyme, which includes foreign currency forward contracts.

A significant portion of Naglazyme sales are earned outside of the U.S. and our related revenues and account receivables are subject to risk of foreign currency rate fluctuations. These risks may be managed with selective use of derivatives. We use derivatives to mitigate or eliminate certain financial and market risks because we conduct business in diverse markets around the world. We periodically enter into foreign currency forward contracts, which have a maturity of less than one year. These contracts have not been designated as hedges and, accordingly, unrealized gains or losses on these contracts are reported in current earnings. At December 31, 2007, we had net outstanding foreign exchange forward contracts to sell $13.7 million, comprised of sell contracts of $15.0 million of equivalent Euros and $4.2 million of equivalent British Pounds and buy contracts of $5.5 million of equivalent Euros, all of which have a term of less than 3 months. As of December 31, 2007, the weighted average settlement rate for our Euro and British Pound denominated contracts was 1.46 and 1.99, respectively. None of our forward exchange contracts are designated as hedges under SFAS No. 133. As a result, the fair value changes of all contracts are reported in earnings as foreign exchange gain or loss. For the year ended December 31, 2007, approximately $1.0 million of loss has been included in our statement of consolidated earnings with respect to these forward exchange contracts, as compared to loss of $0.3 million for the year ended December 31, 2006. The notional settlement value of foreign currency forward contracts outstanding was $12.9 million at December 31, 2006.

At December 31, 2007, we had cash of approximately $3.0 million denominated in foreign country currencies, which represented approximately 1% of the total investment portfolio. As a result, our investment portfolio is subject to limited amounts of foreign exchange risk.

Based on our overall currency rate exposures at December 31, 2007, we expect that a near-term 10% depreciation of the U.S. dollar could result in the potential loss of the fair value of our foreign currency sensitive assets and investments by approximately $0.6 million. We expect to enter into new transactions based in foreign currencies that could be impacted by changes in exchange rates.

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Item 8. Financial Statements and Supplementary Data

The information required to be filed in this item appears on pages F-1 to F-39 of this report.

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

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure 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 effective to ensure that the information required to be disclosed by us in this Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions for Form 10-K.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting. Under the supervision of and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, our management has assessed the effectiveness of internal control over financial reporting as of December 31, 2007. Our management’s assessment was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, Internal Control-Integrated Framework.

Based on using the COSO criteria, we believe our internal control over financial reporting as of December 31, 2007 was effective.

Our independent registered public accounting firm, KPMG LLP, has audited the financial statements included in this Form 10-K and has issued a report on the effectiveness of our internal control over financial reporting. The attestation report of KPMG LLP is incorporated by reference from Item 8 of this Form 10-K.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fourth quarter of 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Scope of the Effectiveness of Controls

Our internal control over financial reporting is a process designed 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. Our internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts

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and expenditures are being made only in accordance with authorizations of our management and our board of directors; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Item 9B. Other Information

None.

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Part III

Item 10. Directors and Executive Officers of the Registrant

We incorporate information regarding our directors and executive officers into this section by reference from sections captioned “Election of Directors” and “Executive Officers” in the proxy statement for our 2008 annual meeting of stockholders.

Item 11. Executive Compensation

We incorporate information regarding our directors and executive officers into this section by reference from the section captioned “Executive Compensation” in the proxy statement for our 2008 annual meeting of stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We incorporate information regarding our directors and executive officers into this section by reference from the section captioned “Security Ownership of Certain Beneficial Owners” in the proxy statement for our 2008 annual meeting of stockholders.

Item 13. Certain Relationships and Related Transactions

We incorporate information regarding our directors and executive officers into this section by reference from the section captioned “Interest of Insiders in Material Transactions” in the proxy statement for our 2008 annual meeting of stockholders.

Item 14. Principal Accountant Fees and Services

We incorporate information regarding our principal accountant fees and services into this section by reference from the section captioned “Auditors” in the proxy statement for our 2008 annual meeting of stockholders.

Part IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements

Reports of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) and Comprehensive Income (Loss)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7
Schedule II	F-39

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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, between 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.
2.1	Asset Purchase Agreement dated as of April 20, 2004, by and among BioMarin Pharmaceutical Inc., Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc. and BioMarin Pediatrics Inc., previously filed with the Commission on June 2, 2004 as Exhibit 2.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
2.2	Securities Purchase Agreement dated as of May 18, 2004, by and among BioMarin Pharmaceutical Inc., Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc. and BioMarin Pediatrics Inc., previously filed with the Commission on June 2, 2004 as Exhibit 2.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
2.3	License Agreement dated as of May 18, 2004, by and among BioMarin Pharmaceutical Inc., Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc. and BioMarin Pediatrics Inc., previously filed with the Commission on June 2, 2004 as Exhibit 2.3 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
2.4	Settlement Agreement and Mutual Release dated January 12, 2005, by and among BioMarin Pharmaceutical Inc., BioMarin Pediatrics Inc., Medicis Pharmaceutical Corporation and Medicis Pediatrics, Inc. (f/k/a Ascent Pediatrics, Inc.), previously filed with the Commission on March 16, 2005 as Exhibit 2.4 to the Company’s Annual Report on Form 10-K, which is incorporated herein by reference.
2.5	Amendment to Securities Purchase Agreement dated January 12, 2005, by and among BioMarin Pharmaceutical Inc., BioMarin Pediatrics Inc., Medicis Pharmaceutical Corporation and Medicis Pediatrics, Inc. (f/k/a Ascent Pediatrics, Inc.), previously filed with the Commission on March 16, 2005 as Exhibit 2.5 to the Company’s Annual Report on Form 10-K, which is incorporated herein by reference.
2.6	Amendment to License Agreement dated January 12, 2005, by and among BioMarin Pharmaceutical Inc., BioMarin Pediatrics Inc., Medicis Pharmaceutical Corporation and Medicis Pediatrics, Inc. (f/k/a Ascent Pediatrics, Inc.), previously filed with the Commission on March 16, 2005 as Exhibit 2.6 to the Company’s Annual Report on Form 10-K, which is incorporated herein by reference.
3.1	Amended and Restated Certificate of Incorporation, as amended June 12, 2003, previously filed with the Commission on June 23, 2003 as Exhibit 3.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
3.2	Certificate of Correction to Certificate of Amendment to the Amended and Restated Certificate of Incorporation of BioMarin Pharmaceutical Inc., previously filed with the Commission on April 4, 2005 as Exhibit 3.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
3.3	Amended and Restated By-Laws of BioMarin Pharmaceutical Inc., previously filed with the Commission on June 26, 2006 as Exhibit 3.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
4.1	Rights Agreement, dated as of September 11, 2002, between BioMarin Pharmaceutical Inc. and Mellon Investor Services LLC, as Rights Agent, previously filed with the Commission on September 13, 2002 as Exhibit 4.1 to the Company’s Form 8-K, which is incorporated herein by reference.

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4.2	Indenture dated June 23, 2003, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company, previously filed with the Commission on August 12, 2003 as Exhibit 4.1 to the Company’s Quarterly report on Form 10-Q, which is incorporated herein by reference.
4.3	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 Current Report on Form 8-K, which is incorporated herein by reference.
4.4	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 Current Report on Form 8-K, which is incorporated herein by reference.
4.5	Form of 2.5% Senior Subordinated Convertible Notes due 2013, previously filed with the Commission on March 29, 2006 as Exhibit 4.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.1	Form of Indemnification Agreement for Directors and Officers, previously filed with the Commission on May 4, 1999 as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (Registration No. 333-77701), which is incorporated herein by reference.
10.2	Severance Plan and Summary Plan Description as originally adopted on January 27, 2004 and amended and restated on March 23, 2005, previously filed with the Commission on March 29, 2005 as Exhibit 10.42 to the Company’s Annual Report on Form 10-K/A, which is incorporated herein by reference.
10.3	1997 Stock Plan, as amended on December 22, 1998, and forms of agreements, previously filed with the Commission on May 4, 1999 as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-77701), which is incorporated herein by reference.
10.4	Amendment to 1997 Stock Plan, as amended, as adopted March 20, 2002, previously filed with the Commission on March 21, 2002 as Exhibit 99.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.5	Amendment No. 2 to 1997 Stock Plan, as adopted May 5, 2004, previously filed with the Commission on August 9, 2004 as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.6	Amended and Restated BioMarin Pharmaceutical Inc. 2006 Share Incentive Plan, as adopted on June 21, 2006, previously filed with the Commission on June 16, 2006 as Exhibit 99.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.7	1998 Director Option Plan and forms of agreements thereunder, previously filed with the Commission on May 4, 1999 as Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (Registration No. 333-77701), which is incorporated herein by reference.
10.8	Amendment to 1998 Director Plan as adopted March 26, 2003 previously filed with the Commission on May 15, 2003 as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.9	Amendment No. 2 to 1998 Director Option Plan, as adopted June 12, 2003 and July 21, 2003, previously filed with the Commission on August 12, 2003 as Exhibit 10.1 to the Company’s Quarterly report on Form 10-Q, which is incorporated herein by reference.
10.10	Amendment No. 3 to 1998 Director Option Plan, as adopted May 5, 2004, previously filed with the Commission on August 9, 2004 as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.11	Amended and Restated 2006 Employee Stock Purchase Plan, as adopted on June 21, 2006, previously filed with the Commission on August 3, 2006 as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.

62

10.12	BioMarin Pharmaceutical Inc. Nonqualified Deferred Compensation Plan, as adopted December 1, 2005, previously filed with the Commission on December 2, 2005 as Exhibit 10.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.13	Employment Agreement with Jean-Jacques Bienaimé, dated May 11, 2005, previously filed with the Commission on May 12, 2005, as Exhibit 10.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.14	Amendment No. 1 to Employment Agreement dated December 15, 2005 between BioMarin Pharmaceutical Inc. and Jean-Jacques Bienaimé, previously filed with the Commission on December 13, 2005 as Exhibit 10.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.15	Amendment No. 2 to Employment Agreement dated May 10, 2006, between BioMarin Pharmaceutical Inc. and Jean-Jacques Bienaime, previously filed with the Commission on May 9, 2006 as Exhibit 10.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.16	Employment Agreement with Jeffrey H. Cooper, dated April 9, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.17	Employment Agreement with Emil D. Kakkis, M.D., Ph.D., dated April 9, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.18	Employment Agreement with Robert A. Baffi, Ph.D., dated April 9, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.19	Employment Agreement with Stephen Aselage, dated April 9, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.20	Employment Agreement with Stuart J. Swiedler, M.D., Ph.D., dated April 9, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.21	Employment Agreement with G. Eric Davis, dated April 9, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by this reference.
10.22	Employment Agreement with Mark Wood, dated July 16, 2007, previously filed with the Commission on August 9, 2007 as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by this reference.
10.23	Grant Terms and Conditions Agreement between BioMarin Pharmaceutical Inc. and Harbor-UCLA Research and Education Institute dated April 1, 1997, as amended, previously filed with the Commission on July 21, 1999 as Exhibit 10.17 to the Company’s Amendment No. 3 to Registration Statement on Form S-1 (Registration No. 333-77701), which is incorporated herein by reference. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.
10.24	License Agreement between BioMarin Pharmaceutical Inc., and Children’s Hospital, Adelaide, Australia dated August 14, 1998, previously filed with the Commission July 21, 1999 as Exhibit 10.18 to the Company’s Amendment No. 3 to Registration Statement on Form S-1 (Registration No. 333-77701), which is incorporated herein by reference. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.

63

10.25	License Agreement dated July 30, 2004, between BioMarin Pharmaceutical Inc. and Daiichi Suntory Pharma Co., Ltd., as amended by Amendment No. 1 to License Agreement dated November 19, 2004, previously filed with the Commission on March 16, 2005 as Exhibit 10.25 to the Company’s Annual Report on Form 10-K, which is incorporated herein by reference. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.
10.26	Development, License and Commercialization Agreement dated May 13, 2005, between BioMarin Pharmaceutical Inc. and Ares Trading S.A., previously filed with the Commission on July 6, 2005 as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A, which is incorporated herein by reference. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.
10.27	Operating Agreement with Genzyme Corporation, previously filed with the Commission on July 21, 1999 as Exhibit 10.30 to the Company’s Amendment No. 2 to Registration Statement on Form S-1 (Registration No. 333-77701), which is incorporated herein by reference.
10.28	License Agreement dated March 15, 2006 between BioMarin Pharmaceutical Inc. and Alliant Pharmaceuticals, Inc., previously filed with the Commission on May 4, 2006 as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference.
10.29	License Agreement between BioMarin Pharmaceutical Inc. and Women’s and Children’s Hospital dated February 7, 2007, previously filed with the Commission on May 3, 2007 as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q, which is incorporated herein by reference. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.
10.30*	Manufacturing, Marketing and Sales Agreement dated as of January 1, 2008, by and among BioMarin Pharmaceutical Inc., Genzyme Corporation and BioMarin/Genzyme LLC. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.
10.31*	Amended and Restated Collaboration Agreement dated as of January 1, 2008, by and among BioMarin Pharmaceutical Inc., Genzyme Corporation and BioMarin/Genzyme LLC. Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed pursuant to the Freedom of Information Act.
10.32*	Members Agreement dated as of January 1, 2008 by and among BioMarin Pharmaceutical Inc., Genzyme Corporation, BioMarin Genetics Inc., and BioMarin/Genzyme LLC. Portions of this document have been redacted pursuant to a request for confidential treatment filed pursuant to the Freedom of Information Act.
21.1*	Subsidiaries of BioMarin Pharmaceutical Inc.
23.1*	Consent of KPMG LLP, Independent Registered Public Accounting Firm for BioMarin Pharmaceutical Inc.
23.2*	Consent of PricewaterhouseCoopers, LLP, Independent Registered Public Accounting Firm for BioMarin/Genzyme LLC.
24.1*	Power of Attorney (Included in Signature Page)
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 Company’s Current Report on 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.

64

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.
99.1*	BioMarin/Genzyme LLC Consolidated Financial Statements as of December 31, 2007 and 2006, and for the years ended December 31, 2007, 2006 and 2005.

* Filed herewith.

65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: February 27, 2008	By:	/S/    JEFFREY H. COOPER
		Jeffrey H. Cooper Senior Vice President, Chief Financial Officer

POWER OF ATTORNEY

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/    JEAN-JACQUES BIENAIMÉ Jean-Jacques Bienaimé	Chief Executive Officer (Principal Executive Officer)	February 27, 2008
/s/    JEFFREY H. COOPER Jeffrey H. Cooper	Senior Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	February 27, 2008
/s/    PIERRE LAPALME Pierre LaPalme	Chairman and Director	February 27, 2008
/s/    ELAINE HERON Elaine Heron	Director	February 27, 2008
/s/    JOSEPH KLEIN, III Joseph Klein, III	Director	February 27, 2008
/s/    ALAN J. LEWIS Alan J. Lewis	Director	February 27, 2008
/s/    MICHAEL G. GREY Michael G. Grey	Director	February 27, 2008
/s/    RICHARD A. MEIER Richard A. Meier	Director	February 27, 2008
/s/    V. BRYAN LAWLIS	Director	February 27, 2008
V. Bryan Lawlis

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INDEX TO BIOMARIN PHARMACEUTICAL INC.

CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) and Comprehensive Income (Loss)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7
Schedule II	F-39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

BioMarin Pharmaceutical Inc.:

We have audited the accompanying consolidated balance sheets of BioMarin Pharmaceutical Inc. and subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule II. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule II based on our audits. We did not audit the financial statements of BioMarin/Genzyme LLC (a 50 percent owned joint venture) for the years 2007, 2006 and 2005. The Company’s investment in BioMarin/Genzyme LLC (in thousands) at December 31, 2007 and 2006 was $44,881 and $31,457, respectively, and its equity in income of BioMarin/Genzyme (in thousands) was $30,525, $19,274 and $11,838 for the years ended December 31, 2007, 2006 and 2005, respectively. The financial statements of BioMarin/Genzyme LLC for those years were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for BioMarin/Genzyme LLC for those years, is based solely on the report of the other auditors.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BioMarin Pharmaceutical Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule II, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the Consolidated Financial Statements, effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 27, 2008, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

(signed) KPMG LLP

San Francisco, California

February 27, 2008

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

BioMarin Pharmaceutical Inc.:

We have audited BioMarin Pharmaceutical Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, BioMarin Pharmaceutical Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of BioMarin Pharmaceutical Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated February 27, 2008, expressed an unqualified opinion on those consolidated financial statements. Our report was based on our audit and the report of other auditors.

(signed) KPMG LLP

San Francisco, California

February 27, 2008

F-2

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2006 and 2007

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

	December 31, 2006			December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	89,162		$	228,343
Short-term investments		199,685			357,251
Accounts receivable, net		14,670			16,976
Advances to BioMarin/Genzyme LLC		1,596			2,087
Inventory		25,075			32,445
Other current assets		4,036			7,195
Total current assets		334,224			644,297
Investment in BioMarin/Genzyme LLC		31,457			44,881
Property, plant and equipment, net		55,466			76,818
Intangible assets, net		11,655			9,596
Goodwill		21,262			21,262
Restricted cash		1,731			2,889
Other assets		7,641			15,536
Total assets	$	463,436		$	815,279
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	32,166		$	49,907
Current portion of acquisition obligation, net of discount		6,787			6,309
Current portion of deferred revenue		7,092			5,327
Total current liabilities		46,045			61,543
Convertible debt		223,940			497,375
Long-term portion of acquisition obligation, net of discount		68,548			66,553
Deferred revenue, net of current portion		5,023			—
Other long-term liabilities		2,078			2,082
Total liabilities		345,634			627,553
Stockholders’ equity:
Common stock, $0.001 par value: 150,000,000 and 250,000,000 shares authorized at December 31, 2006 and December 31, 2007, respectively; 91,725,528 and 97,114,159 shares issued and outstanding at December 31, 2006 and December 31, 2007, respectively		92			97
Additional paid-in capital		709,359			794,917
Accumulated other comprehensive (loss) income		(25	)		139
Accumulated deficit		(591,624	)		(607,427	)
Total stockholders’ equity		117,802			187,726
Total liabilities and stockholders’ equity	$	463,436		$	815,279

See accompanying notes to consolidated financial statements.

F-3

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2005, 2006 and 2007

(In thousands, except for per share data)

	December 31,
	2005			2006			2007
Revenues:
Net product sales	$	13,039		$	49,606		$	86,802
Collaborative agreement revenues		12,630			18,740			28,264
Royalty and license revenues		—			15,863			6,515
Total revenues		25,669			84,209			121,581
Operating expenses:
Cost of sales (excludes amortization of developed product technology)		2,629			8,740			18,359
Research and development		56,391			66,735			78,600
Selling, general and administrative		41,556			48,507			77,539
Amortization of acquired intangible assets		1,144			3,651			4,371
Total operating expenses		101,720			127,633			178,869
Loss from operations		(76,051	)		(43,424	)		(57,288	)
Equity in the income of BioMarin/Genzyme LLC		11,838			19,274			30,525
Interest income		1,861			12,417			25,932
Interest expense		(11,918	)		(13,411	)		(14,243	)
Debt conversion expense		—			(3,315	)		—
Loss before income taxes		(74,270	)		(28,459	)		(15,074	)
Provision for income taxes		—			74			729
Net loss	$	(74,270	)	$	(28,533	)	$	(15,803	)
Net loss per share, basic and diluted	$	(1.08	)	$	(0.34	)	$	(0.16	)
Weighted average common shares outstanding, basic and diluted		68,830			84,582			95,878

See accompanying notes to consolidated financial statements.

F-4

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)

For the Years ended December 31, 2005, 2006 and 2007 (in thousands)

	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)			Accumulated deficit			Total stockholders’ equity (deficit)
	Shares	Amount
Balance at January 1, 2005	64,501	$	65	$	421,141	$	(363	)	$	(488,821	)	$	(67,978	)
Net loss	—		—		—		—			(74,270	)		(74,270	)
Fair market value adjustments of available-for-sale investments	—		—		—		346			—			346
Foreign currency translation adjustment	—		—		—		1			—			1
Comprehensive loss													(73,923	)
Issuance of common stock in a public offering, net of issuance costs	8,500		8		56,320		—			—			56,328
Issuance of common stock under ESPP	251		—		889		—			—			889
Exercise of common stock options	1,050		2		6,893		—			—			6,895
Stock compensation expense related to modification of awards	—		—		327		—			—			327
Balance at December 31, 2005	74,302	$	75	$	485,570	$	(16	)	$	(563,091	)	$	(77,462	)
Net loss	—		—		—		—			(28,533	)		(28,533	)
Fair market value adjustments of available-for-sale investments	—		—		—		23			—			23
Foreign currency translation adjustment	—		—		—		(32	)		—			(32	)
Comprehensive loss													(28,542	)
Issuance of common stock in a public offering, net of issuance costs	10,350		10		127,422		—			—			127,432
Issuance of common stock under ESPP	326		—		1,405		—			—			1,405
Exercise of common stock options	1,499		2		11,679		—			—			11,681
Conversion of convertible notes	5,249		5		72,687		—			—			72,692
Stock-based compensation	—		—		10,596		—			—			10,596
Balance at December 31, 2006	91,726	$	92	$	709,359	$	(25	)	$	(591,624	)	$	117,802
Net loss	—		—		—		—			(15,803	)		(15,803	)
Fair market value adjustments of available-for-sale investments	—		—		—		62			—			62
Foreign currency translation adjustment	—		—		—		102			—			102
Comprehensive loss													(15,639	)
Issuance of common stock under ESPP	275		—		1,928		—			—			1,928
Exercise of common stock options	1,443		1		13,291		—			—			13,292
Conversion of convertible notes	3,670		4		50,925		—			—			50,929
Stock-based compensation	—		—		19,414		—			—			19,414
Balance at December 31, 2007	97,114	$	97	$	794,917	$	139		$	(607,427	)	$	187,726

See accompanying notes to consolidated financial statements.

F-5

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2005, 2006 and 2007

(In thousands)

	December 31,
	2005			2006			2007
Cash flows from operating activities
Net loss	$	(74,270	)	$	(28,533	)	$	(15,803	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,748			11,958			13,543
Amortization of discount on short-term investments		—			(2,167	)		(12,453	)
Imputed interest on acquisition obligation		5,444			4,685			4,527
Equity in the income of BioMarin/Genzyme LLC		(11,838	)		(19,274	)		(30,525	)
Stock-based compensation		327			10,596			19,415
Loss on disposals and impairments of property and equipment		404			—			9
Changes in operating assets and liabilities:
Accounts receivable		(1,813	)		(8,809	)		(2,306	)
Advances to BioMarin/Genzyme LLC		1,089			(526	)		(491	)
Inventory		(8,582	)		(14,177	)		(7,371	)
Other current assets		(679	)		(716	)		(3,158	)
Other assets		(59	)		(3,091	)		(4,745	)
Accounts payable and accrued liabilities		(3,642	)		10,490			11,648
Other liabilities		4,799			(4,795	)		3
Deferred revenue		19,921			(7,807	)		(6,788	)
Net cash used in operating activities		(59,151	)		(52,166	)		(34,495	)
Cash flows from investing activities
Purchase of property and equipment		(6,486	)		(24,583	)		(22,413	)
Decrease in restricted cash		25,180			—			—
Sale of short-term investments		26,380			29,906			693,814
Purchase of short-term investments		—			(217,724	)		(838,864	)
Distributions from BioMarin/Genzyme LLC		3,000			19,800			17,100
Settlement of dispute with Medicis		6,000			—			—
Settlement of forward contracts		—			(91	)		(633	)
Net cash provided by (used in) investing activities		54,074			(192,692	)		(150,996	)
Cash flows from financing activities
Proceeds from equipment and facility loans		17,543			—			—
Proceeds from ESPP and exercise of stock options		7,782			13,087			15,220
(Increase) Decrease in cash balances related to long-term debt		(643	)		17,049			—
Repayment of equipment and facility loans		(16,723	)		(20,909	)		—
Repayment of acquisition obligation		(34,200	)		(7,700	)		(7,000	)
Net proceeds from public offering of common stock		56,328			127,431			—
Net proceeds from convertible debt offering		—			166,979			316,350
Net cash provided by financing activities		30,087			295,937			324,570
Effect of foreign currency translation on cash		1			(9	)		102
Net increase in cash and cash equivalents		25,011			51,070			139,181
Cash and cash equivalents:
Beginning of year		13,081			38,092			89,162
End of year	$	38,092		$	89,162		$	228,343

See accompanying notes to consolidated financial statements.

F-6

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006 and 2007

(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. BioMarin received marketing approval for Naglazyme^® (galsulfase) in the U.S. in May 2005, and in the E.U. in January 2006. Aldurazyme^® (laronidase) has been approved in the U.S and E.U. and is marketed by the Company and its joint venture partner, Genzyme Corporation (Genzyme). Effective January 2008, the Company restructured its relationship with Genzyme as discussed in Item 1 of this Form 10-K. In December 2007, Kuvan™ (sapropterin dihydrochloride) received marketing approval in the U.S. In May 2004, BioMarin acquired the Ascent Pediatrics business, for which, in March 2006, BioMarin sublicensed the North American rights to Alliant Pharmaceuticals, Inc., which was recently acquired by Sciele Pharma, Inc. (Sciele). The May 2004 transaction included the exclusive marketing and development rights to Orapred (prednisolone sodium phosphate oral solution). See Note 4 for further discussion of the acquisition transaction in 2004 and Note 5 for further discussion of the sublicense in 2006. There were 77 common stockholders of record at December 31, 2007. No dividends have ever been paid by the Company. The Company is incorporated in the state of Delaware.

Through December 31, 2007, the Company had accumulated losses of approximately $607.4 million. Management believes that the Company’s cash, cash equivalents and short-term investments at December 31, 2007 will be sufficient to meet the Company’s obligations for the foreseeable future based on management’s current long-term business plans and assuming that the Company achieves its long-term goals. If the Company elects to increase its spending on development programs significantly above current long-term plans or enter into potential licenses and other acquisitions of complementary technologies, products or companies, the Company may need additional capital. Until the Company can generate sufficient levels of cash from its operations, the Company expects to continue to finance net future cash needs primarily through its current cash, cash equivalents and short-term investments, and to the extent necessary, through proceeds from equity or debt financings, loans and collaborative agreements with corporate partners. In April 2007, the Company raised approximately $316.4 million in net proceeds from a public offering of senior subordinated convertible debt due in 2017. The proceeds are intended to fund future business development transactions and for general corporate purposes.

The Company is subject to a number of risks, including the financial performance of Naglazyme, Kuvan™ (sapropterin dihydrochloride), and Aldurazyme; the potential need for additional financings; 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; significant competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; dependence on corporate partners and collaborators; and possible restrictions on reimbursement, as well as other changes in the health care industry.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and include the accounts of BioMarin and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated.

F-7

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

(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) Cash and Cash Equivalents

The Company treats liquid investments with original maturities of less than three months when purchased as cash and cash equivalents.

(d) Short-Term Investments

The Company records its investments as either held-to-maturity or available-for-sale. Held-to-maturity investments are recorded at amortized cost. Available-for-sale investments are recorded at fair market value, with unrealized gains or losses being included in accumulated other comprehensive income (loss). Short-term investments are comprised mainly of corporate securities, commercial paper, repurchase agreements, federal agency investments and money market funds. As of December 31, 2007, the Company had no held-to-maturity investments. See Note 15 for further information.

(e) Inventory

The Company values inventories at the lower of cost or net realizable 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 obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory quantities in excess of expected requirements. Expired inventory is disposed of and the related costs are written off to cost of sales.

Regulatory approvals for Naglazyme and Kuvan were received in May 2005 and December 2007, respectively, and manufacturing costs for the respective products prior to these dates 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 and Kuvan prior to regulatory approval were not capitalized as inventory. When regulatory approvals were obtained, the Company began capitalizing inventory at the lower of cost or net realizable value. Stock-based compensation of $1.0 million and $1.7 million were capitalized into Naglazyme and Kuvan inventory for the years ended December 31, 2006 and 2007, respectively. See Note 8 for further information on inventory balances as of December 31, 2006 and 2007.

(f) Investment in and Advances to BioMarin/Genzyme LLC and Equity in the Income of BioMarin/Genzyme LLC

Effective January 1, 2008, the Company restructured its relationship with Genzyme (see note 11 (a) for further information). The Company accounts for its investment in the joint venture using the equity method. Accordingly, the Company records an increase in its investment for contributions to the joint venture and for its 50% share of the income of the joint venture, and a reduction in its investment for its 50% share of any losses of the joint venture or disbursements of profits from the joint venture. Equity in the income of BioMarin/Genzyme LLC includes the Company’s 50% share of the joint venture’s loss/income for the period. The distribution

F-8

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

receivable from BioMarin/Genzyme LLC includes the assets distributed to the Company by the joint venture in February 2008 pursuant to the terms of the restructuring of the joint venture. Advances to BioMarin/ Genzyme LLC include the current receivable from the joint venture for the reimbursement related to services provided to the joint venture by the Company during the most recent month, and the investment in BioMarin/Genzyme LLC includes the Company’s share of the net equity of the joint venture.

(g) Goodwill, 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 December 31, 2007, the Company has only one reporting unit. The sublicense of North American rights of Orapred, in March 2006, 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, for which no impairment was determined. 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.

The recoverability of the carrying value of buildings and leasehold improvements for the Company’s 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.

(h) Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the related estimated useful lives, except for leasehold improvements, which are depreciated over the shorter of the useful life of the asset or the lease term. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred. Property and equipment purchased for specific research and development projects with no alternative uses are expensed as incurred. See Note 9 for further information on property, plant and equipment balances as of December 31, 2006 and 2007.

Certain of the Company’s operating lease agreements include scheduled rent escalations over the lease term, as well as tenant improvement allowances. The Company accounts for these operating leases in accordance with

F-9

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

SFAS No. 13, “Accounting for Leases”, and FASB Technical Bulletin No. 85-3, “Accounting for Operating Leases with Scheduled Rent Increases”. Accordingly, the scheduled increases in rent expense are recognized on a straight-line basis over the lease term. The difference between rent expense and rent paid is recorded as deferred rent and included in other liabilities in the accompanying consolidated balance sheets. The tenant improvement allowances are recognized as a credit to rent expense over the lease term on a straight-line basis.

(i) 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”.

The Company’s revenues consist of Naglazyme and Kuvan product sales and Orapred product sales through March 2006, revenues from its collaborative agreement with Merck Serono and revenues from its sublicense agreement with Sciele 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 and Kuvan product sales—The Company recognizes revenue from Naglazyme and Kuvan 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 and Kuvan product sales transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents. Amounts collected from customers and remitted to governmental authorities, which are primarily comprised of value-added taxes (VAT) related to Naglazyme sales in foreign jurisdictions, are presented on a net basis in the Company’s statements of operations, in that taxes billed to customers are not included as a component of net product sales, as per Emerging Issues Task Force Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement”.

In the U.S., Naglazyme and Kuvan are 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 distributors or directly to hospitals, which act as the end users. Additionally, the Company receives revenue from named patient sales of Naglazyme in other countries, which are generally made to local distributors. Because of the pricing of Naglazyme and Kuvan, the limited number of patients and the customers’ limited return rights, Naglazyme and Kuvan customers and retailers generally carry a very limited inventory. Accordingly, the Company expects that sales related to Naglazyme and Kuvan 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 fees paid to distributors as a reduction of revenue, in accordance with EITF Issue No. 01-09, “Accounting for Consideration given by a Vendor to a Customer (including a Reseller of a Vendor’s Products)”.

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 and Kuvan is required, including market exclusivity of the products based on their orphan

F-10

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

drug status, the 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 customers to make required payments. As of December 31, 2007, the Company has 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 because of the sublicense of North American rights to the product to Sciele 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 were evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents.

The Company established and maintained 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 were generally 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 2006, the Company reduced its Orapred rebate reserves, which increased net revenues by $1.3 million for rebates related to product sold by the Company. The reduction was due to the sublicense of North American Orapred rights to Sciele, which reduced the Company’s liability for certain rebates. No significant adjustments were made to the Orapred rebate reserves during the year ended December 31, 2007.

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 were 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. During 2006, the Company adjusted estimates of return liabilities primarily due to retail product demand realized in excess of previous estimates and the early settlement of product returns with a customer for an amount less than the previous estimate. This adjustment resulted in reserve reductions of approximately $1.2 million, which was recorded as an increase in revenue of $0.7 million for returns of product sold by the Company and $0.5 million of reduced expense for returns of product sold by the previous owner.

Collaborative agreement revenues—Collaborative agreement revenues from Merck 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. The Company estimates that its performance obligation related to the $25.0 million upfront payment from Merck Serono will end in the fourth quarter of 2008. There is no cost of sales associated with the amortization of the up-front license fee received from Merck Serono. Nonrefundable amounts received

F-11

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

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 Merck Serono’s share of Kuvan™ (sapropterin dihydrochloride) development costs under the agreement, which are recorded as research and development expenses. Allowable costs during the development period must have been included in the pre-approved annual budget in order to be subject to reimbursement, or must be separately approved by both parties.

Collaborative agreement revenues include $7.4 million and $6.9 million of the up-front license fee received from Merck Serono recognized as revenue during 2006 and 2007, respectively, and $11.3 million and $6.4 million of reimbursable Kuvan development costs, respectively. Collaborative agreement revenues in 2007 also includes the $15.0 million milestone payment received from Merck Serono upon acceptance of the Kuvan filing by the EMEA and recognized as revenue during the period.

Royalty and license revenues—Royalty revenue is recognized based on sublicensee sales of Orapred liquid and Orapred ODT (Oral Disintegrating Tablets) 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, when the royalty amount is fixed or determinable based on information received from the sublicensee 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 substantially exceed 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 was deferred and was recognized as revenue on a straight-line basis over approximately 5 months, which represented the best estimate of the time from inception of the agreement until commercial launch of Orapred ODT in August 2006, at which point the Company’s performance obligations ended. Royalty and license revenue includes $2.5 million related to the up-front license fee received from the third party recognized as revenue during 2006. There are no cost of sales associated with the royalty and license revenues recorded during the periods and no related costs are expected in future periods.

The Company recognized $4.0 million in milestone revenue during the second quarter of 2007 as a result of the one-year anniversary of FDA approval for the marketing application of Orapred ODT. Although the receipt of the $4.0 million payment was based solely on the passage of time from FDA approval, the Company did not recognize the payment during the twelve-month period following approval because fee was not considered to be fixed or determinable until the due and payable date. In making this determination, management considered the extended one-year payment term and the related uncertain future product sales and the Company’s lack of experience with Sciele. In 2006, the Company recognized $11.5 million related to the initial FDA approval and commercial launch of Orapred ODT. 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.

(j) 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

F-12

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

internal research and development costs. In instances where the Company enters into agreements with third parties for research and development activities, costs are expensed upon the earlier of when non-refundable amounts are due or as services are performed unless there is an alternative future use of the funds in other research and development projects. Amounts due under such arrangements may be either fixed fee or fee for service, and may include upfront payments, monthly payments, and payments upon the completion of milestones or receipt of deliverables. The Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the vendors that perform the activities.

The Company believes that regulatory approval of its product candidates is uncertain, and does not assume that products manufactured prior to regulatory approval will be sold commercially. As a result, inventory costs for product candidates are expensed as research and development until regulatory approval is obtained, at which time inventory is capitalized at the lower of cost or net realizable value.

(k) 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 loss per share is calculated by dividing net loss 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 upon the exercise of outstanding common stock employee awards 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):

	December 31,
	2005	2006	2007
Options to purchase common stock	6,969	10,374	11,413
Common stock issuable under convertible debt	8,920	14,075	26,361
Portion of acquisition payable in common stock at the option of the Company	798	525	243
Restricted share units	—	—	117
Potentially issuable common stock for ESPP purchases	432	429	311
Total	17,119	25,403	38,445

(l) Stock-Based Compensation

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.

F-13

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

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 are estimated based on historical experience.

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

(m) Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. There is a full valuation allowance against net deferred tax assets of $294.4 million at December 31, 2007. Future taxable income and ongoing prudent and feasible tax planning strategies have been considered in assessing the need for the valuation allowance. An adjustment to the valuation allowance would increase or decrease income in the period such adjustment was made. For the years ended December 31, 2006 and 2007, the Company recognized $0.1 million and $0.7 million of income tax expense related to income earned in certain of the Company’s international subsidiaries. See Note 14 for further discussion of the Company’s income taxes.

(n) Derivative Instruments

The Company utilizes derivative financial instruments, including foreign exchange forward contracts, to manage its exposure to foreign currency exchange rate fluctuation risks. The Company does not hold or issue financial instruments for speculative or trading purposes.

The Company has transactions denominated in foreign currencies and, as a result, is exposed to changes in foreign currency exchange rates. The Company manages some of these exposures on a consolidated basis, which results in the netting of certain exposures to take advantage of natural offsets. Forward exchange contracts are used to hedge a portion of the net exposures. Gains or losses on net foreign currency hedges are intended to offset losses or gains on the underlying net exposures in an effort to reduce the earnings and cash flow volatility resulting from fluctuating foreign currency exchange rates. See Note 16 for further discussion of the Company’s derivative instruments.

(o) Fair Value of Financial Instruments

SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” requires the Company to disclose the fair value of financial instruments for assets and liabilities for which it is practicable to estimate that value.

The carrying amounts of all cash equivalents and forward exchange contracts approximate fair value based upon quoted market prices or discounted cash flows. The fair value of trade accounts receivables, accounts payable and other financial instruments approximates carrying value due to their short-term nature.

F-14

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

(p) Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive loss includes net loss and certain changes in stockholders’ equity that are excluded from net loss, such as changes in unrealized gains and losses on the Company’s available-for-sale securities and changes in the Company’s cumulative foreign currency translation account. Comprehensive loss for the years ended December 31, 2007, 2006 and 2005 is included in the Company’s consolidated statements of stockholders’ equity. There were no tax effects allocated to any components of other comprehensive income during 2005, 2006 and 2007.

Comprehensive loss was approximately $73.9 million, $28.5 million and $15.6 million for the years ended December 31, 2005, 2006 and 2007, respectively, and included the following components of accumulated other comprehensive income (loss) (in thousands):

	Year ended December 31,
	2005		2006			2007
Net unrealized gain (loss) on available-for-sale securities	$	346	$	23		$	(22	)
Net foreign currency translation gain (loss)		1		(32	)		186
Accumulated other comprehensive income (loss)	$	347	$	(9	)	$	164

(q) Restricted Cash

Restricted cash of $1.7 million and $2.9 million as of December 31, 2006 and 2007, respectively, includes $0.9 million and $2.4 million related to cash received for royalties pursuant to the Orapred sublicense agreement, respectively, which are restricted until August 2009, upon the stock purchase of Ascent Pediatrics from Medicis (see Note 4). Restricted cash also includes investments of $0.8 million and $0.5 million held by the Company’s Nonqualified Deferred Compensation Plan as of December 31, 2006 and 2007, respectively (see Note 20(c)).

(r) Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board released Statement of Financial Accounting Standards (SFAS) No. 141(R), “Business Combinations”. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which is business combinations in the year ending November 30, 2010 for the Company. The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. The effect of this statement on the Company’s consolidated financial position, results of operations or cash flows will depend on the potential future business combinations subject to the statement.

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

In June 2007, the FASB ratified the EITF consensus reached in EITF Issue No. 07-3 “Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities”, which provides guidance for prepayments for goods or services that will be used or rendered for

F-15

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

future research and development activities should be deferred and capitalized. Such amounts should be recognized as an expense as the goods are delivered or the related services are performed. EITF No. 07-3 is effective for interim and annual reporting periods beginning after December 15, 2007. Management does not expect the adoption of EITF No. 07-3 to have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. This statement provides entities the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Management is currently evaluating the impact of adopting this Statement.

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”. FIN 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company had no material unrecognized tax benefits before or after the adoption of FIN 48. There was no effect on the Company’s consolidated financial position, results of operations or cash flows as a result of adopting FIN 48. The Company’s policy is to recognize accrued interest and penalties for unrecognized tax benefits as a component of tax expense. As of December 31, 2007, there was no accrued interest and penalties for unrecognized tax benefits. During 2007, there was no interest or penalties included as a component of tax expense for unrecognized tax benefits.

In September 2006, the Financial Accounting Standards Board released SFAS 157, “Fair Value Measurements” and is effective for fiscal years beginning after November 15, 2007, which is the year ending December 31, 2008 for the Company. FASB 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. In November 2007, FASB agreed to a one-year deferral of the effective date for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. The Company is currently assessing the impact the adoption of this pronouncement will have on the financial statements.

(s) Reclassifications

The Company’s equity in the income of the BioMarin/Genzyme LLC joint venture has been presented as non-operating income in the consolidated statements of operations. During the first quarter of 2007, management determined that the significance of the joint ventures’ operations with respect to the Company has decreased on a relative basis compared to the Company’s other activities and that presenting the equity in the income of the joint venture as a non-operating income item was now more representative of the Company’s operations as a whole. Changes to the proportionate significance of the operating nature of the joint venture to the Company’s total operations include the continued world-wide commercialization of Naglazyme, the planned commercial launch of Kuvan pending FDA approval, and the increasing requirements of the Company’s ongoing research and development programs. Prior periods have been reclassified to conform to the current presentation for consistency.

Certain amounts in the year ended December 31, 2005 as reported in the Consolidated Statements of Cash Flows have been revised to reflect the portions of the Company’s unpaid acquisitions of property, plant and equipment included in accrued liabilities. Prior to the reclassification, the consolidated statements of cash flows

F-16

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

presented the Company’s purchases of property, plant and equipment for statement of cash flow purposes on an accrual basis whereby the balances for accounts payable and accrued liabilities used to calculate the changes for purposes of operating cash flows included unpaid amounts related to purchases of property, plant and equipment. In order to reflect the direct cash flows related to acquisitions of property, plant and equipment, $3.5 million was reclassified from Net Cash Used In Operating Activities to Net Cash Provided By (Used In) Investing Activities for the year ended December 31, 2005.

Additionally, approximately $1.7 million was reclassified from Other Assets to Restricted Cash on the consolidated balance sheet as of December 31, 2006.

Certain other items in the prior years’ consolidated financial statements have been reclassified to conform to the current 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, “Share Based Payment”, as interpreted by SAB 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) amortization related to the remaining unvested portion of all stock option awards granted prior to January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123; and (2) amortization related to all restricted stock and stock option awards granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R. In addition, the Company records expense related to shares issued under its employee stock purchase plan over the offering period.

The compensation expense for stock-based compensation awards includes an estimate for forfeitures and is recognized over the requisite service period of the options using the straight-line method. 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 year ended December 31, 2007, net excess tax benefits generated from option exercises were insignificant. The Company evaluated the need to record a cumulative effect adjustment for estimated forfeitures upon the adoption of SFAS No. 123R and determined the amount to be insignificant. Pursuant to the income tax provisions included in SFAS 123R, the Company has elected the long method of computing its hypothetical additional paid-in capital pool.

Stock-based compensation expense for the year ended December 31, 2007 totaled $18.3 million, of which $10.7 million was included in selling, general and administrative expense, $7.0 million was included in research and development expense and $0.6 million of stock-based compensation was included in cost of goods sold. Stock-based compensation expense for the year ended December 31, 2006 totaled $9.6 million, of which $5.3 million was included in selling, general and administrative expense, $4.3 million was included in research and development expense and an insignificant amount was included in cost of goods sold. Stock-based compensation of $1.0 million and $1.7 million was capitalized into Naglazyme and Kuvan inventory for the year ended December 31, 2006 and 2007, respectively, and will be recognized as cost of goods sold when the related product

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

is sold. No stock compensation costs were recognized for the year ended December 31, 2005, which was 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:

	Year Ended December 31, 2005
Net loss as reported	$	(74,270	)
Add: Total stock based compensation expense determined under intrinsic value based method recognized in net loss as reported		327
Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of tax		(10,184	)
Pro forma net loss	$	(84,127	)
Net loss per common share as reported, basic and diluted	$	(1.08	)
Pro forma net loss per common share, basic and diluted		(1.22	)

The following summarizes the weighted average assumptions used to determine the fair value of the stock options granted prior to the adoption of SFAS No. 123R, using the Black-Scholes option-pricing model:

Dates of grant	Interest rate		Expected dividend yield		Expected life	Expected volatility
January 1, 2005 to December 31, 2005	4.4	%	0.00	%	6 years	54	%

Share Incentive Plan

BioMarin’s 2006 Share Incentive Plan, which was approved in June 2006 and replaces the Company’s previous stock option plans, provides for grants of options to employees to purchase common stock at the fair market value of such shares on the grant date, as well as other forms of equity compensation. As of December 31, 2007, awards issued under the 2006 Share Incentive Plan include both stock options and restricted stock units. Stock option awards generally vest over a four-year period on a cliff basis six months after the grant date and then monthly thereafter. The 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. Restricted stock units granted to employees generally vest in a straight-line, annually over a four-year period after the grant date. Restricted stock units granted to directors generally vest in full one year after the grant date.

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 December 31, 2007. The expected volatility of stock options is based upon proportionate weightings of the historical volatility of BioMarin stock and the implied volatility of traded options on the Company’s stock for fiscal periods in which there is sufficient trading volume in options on the Company’s stock. The risk free interest rate is based on the

F-18

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

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.

	Year Ended December 31,
Stock Option Valuation Assumptions	2006	2007
Expected volatility	52.2-57.9%	44.4-50.8%
Dividend yield	0.0%	0.0%
Expected life	4.9-5.3 years	5.2-5.5 years
Risk-free interest rate	4.4-5.1%	3.7-5.1%

The Company recorded $9.0 million and $16.8 million of compensation expense related to current period vesting of stock options for the year ended December 31, 2006 and 2007, respectively, recognized in accordance with SFAS No. 123R. As of December 31, 2007, there was $46.5 million of total unrecognized compensation cost related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.7 years.

A summary of stock option activity under all plans, including plans that were suspended upon adoption of the 2006 Share Incentive Plan, for the year ended December 31, 2007 is presented as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Fair Value of Options Granted		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
								(in thousands)
Balance as of December 31, 2006	10,374,194		$	11.75
Granted	2,892,275		$	18.39	$	9.22
Exercised	(1,443,058	)	$	9.21				$	19,178
Expired and Forfeited	(409,959	)	$	14.63
Balance as of December 31, 2007	11,413,452		$	13.65			7.7	$	248,285
Options expected to vest as of December 31, 2007	4,972,585		$	15.39			8.8	$	99,509
Exercisable as of December 31, 2007	5,379,694		$	11.36			6.4	$	129,334

The aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock as of the end of the period. There were 11.4 million options that were in-the-money at December 31, 2007. The aggregate intrinsic value of options exercised was determined as of the date of option exercise.

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. Until January 2007, on each anniversary date of becoming a director, each outside member was granted options to purchase 30,000 shares of common stock at the fair market value on such date. Effective June 7, 2007, on the date of each annual meeting of stockholders, other than newly elected directors, each outside director is granted options for the purchase of 15,000 shares of common stock and 2,500 restricted stock units. The options vest over one year and have a term of ten years. The restricted stock units vest on the anniversary of the date of grant.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

As of December 31, 2007, the options outstanding consisted of the following:

	Options Outstanding				Options Exercisable
Range of exercise prices	Number of Options Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Options Exercisable	Weighted Average Exercise Price
$ 3.52 to 7.03	1,527,837	5.85	$	5.93	1,104,829	$	5.82
7.04 to 10.55	1,723,439	5.87		8.73	1,511,830		8.68
10.56 to 14.06	2,587,143	7.46		12.22	1,345,517		12.22
14.07 to 17.58	4,556,611	8.99		17.14	1,148,131		16.90
17.59 to 21.10	465,622	9.19		18.30	59,387		18.21
21.11 to 24.61	351,800	5.31		22.23	210,000		22.00
24.62 to 28.13	176,000	9.82		26.72	—		0.00
28.14 to 31.65	—	—		—	—		0.00
31.66 to 35.17	25,000	9.96		35.17	—		0.00
	11,413,452				5,379,694

A summary of non-vested restricted stock unit activity under the plan for the year ended December 31, 2007 is presented as follows:

	Shares	Weighted Average Grant Date Fair Value
Non-vested units as of December 31, 2006	—	$	—
Granted	116,625		17.39
Vested	—		—
Forfeited	—		—
Non-vested units as of December 31, 2007	116,625	$	17.39

The Company recorded $0.3 million of compensation expense related to restricted stock units for the year ended December 31, 2007, recognized in accordance with SFAS No. 123R. There were no restricted stock unit grants prior to 2007 and therefore no compensation expense was recognized related to restricted stock units in previous years. As of December 31, 2007, there was $1.7 million of total unrecognized compensation cost related to unvested restricted stock units. These costs are expected to be recognized over a weighted average period of 3.3 years.

At December 31, 2007, an aggregate of approximately 11.5 million unissued shares were authorized for future issuance under the Company’s stock plans, which include shares issuable under the Company’s 2006 Share Incentive Plan and the Company’s Employee Stock Purchase Plan. Awards under the 2006 Share Incentive Plan that expire or are cancelled without delivery of shares generally become available for issuance under the plan. Awards that expire or are cancelled under the Company’s suspended 1997 Stock Plan or 1998 Director Option Plan may not be reissued.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

Employee Stock Purchase Plan

Under BioMarin’s Employee Stock Purchase Plan, which was approved in June 2006 and replaces the Company’s previous 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. Each offering period will span up to two years. The Employee Stock Purchase Plan permits eligible employees to purchase common stock through payroll deductions for up to 10% of qualified compensation, up to an annual limit of $25,000. The Employee Stock Purchase Plan has been treated as a compensatory plan. The Company recorded compensation expense of $0.6 million and $1.4 million related to the Employee Stock Purchase Plan in the year ended December 31, 2006 and 2007, respectively.

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

	Year Ended December 31,
Employee Stock Purchase Plan	2006	2007
Expected volatility	44-55%	44-54%
Dividend yield	0.0%	0.0%
Expected life	6-24 months	6-24 months
Risk-free interest rate	2.7 to 5.2%	3.8-5.2%

(4) ASCENT PEDIATRICS TRANSACTION

In 2004, the Company acquired the Orapred product line from Ascent Pediatrics, a wholly owned subsidiary of Medicis Pharmaceutical Corporation (Medicis). The transaction provided the Company with financial and strategic benefits, primarily the addition of a commercial product and a commercial infrastructure. In July 2005, the Company reduced the Orapred sales force through the elimination of 52 positions. 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 also agreed to pay the Company $6.0 million for Orapred returns, all of which was received in 2005. In March 2006, the Company entered into a license agreement with Alliant Pharmaceuticals, Inc., which was recently acquired by Sciele Pharma, Inc. (Sciele) for the continued sale and commercialization of Orapred and other Orapred formulations then under development. See Note 5 additional details of the sublicense.

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, if drawn upon, 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 December 31, 2007, the Company has not made any draws on the note.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

The amended transaction agreements provided for total acquisition payments of $169.0 million payable to Medicis in specified amounts through 2009, of which $80.1 million remains payable as of December 31, 2007. 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 December 31, 2007
2008	$	6,500
2009		73,600
Total	$	80,100

The acquisition was 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(a) for further discussion of the Company’s acquired intangible assets.

In-process research and development represented the fair value of the two additional proprietary formulations of Orapred that were under development at the time of the transaction but which had not yet been 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.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

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 Sciele for the continued sale and commercialization of Orapred and other Orapred formulations then 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, Sciele paid BioMarin $2.5 million as consideration for executing the agreement, and agreed to make additional milestone payments of $15.5 million based on the approval and successful commercial launch of Orapred ODT. In 2006, the Company recognized $11.5 million related to the initial FDA approval and commercial launch of Orapred ODT. During the year ended December 31, 2007, the Company recognized $2.3 million in royalty revenues from Orapred product sold by the sublicensee and $4.0 million in milestone revenue as a result of the one-year anniversary of FDA approval for the marketing application for Orapred ODT. Although the receipt of the $4.0 million payment was based solely on the passage of time from FDA approval, the Company did not recognize the payment during the twelve-month period following approval because fee was not considered to be fixed or determinable until the due and payable date. In making this determination, management considered the extended one-year payment term and the related uncertain future product sales and the Company’s lack of experience with Sciele.

(6) INTANGIBLE ASSETS AND GOODWILL

(a) Orapred 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 December 31, 2007. The gross and net carrying value of the Orapred product technology were as follows (in thousands):

	December 31,
	2006			2007
Gross value	$	20,437		$	20,437
Accumulated amortization		(8,782	)		(13,152	)
Net carrying value	$	11,655		$	7,285

The Company completed its 2007 annual impairment test during the fourth quarter of 2007 and determined that no impairment of the acquired intangible assets existed as of December 31, 2007. 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.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

The amortizable 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. Accordingly, the Orapred product technology is being amortized on a straight-line basis over the 3.5 year period until the assets are transferred to Sciele in 2009. The Company will continue to receive royalties on net sales of Orapred by Sciele subsequent to the asset transfer. The estimated amortization expense associated with the revised amortizable life of the Orapred product technology is as follows (in thousands):

	As of December 31, 2007
2008		4,371
2009		2,914
Total	$	7,285

Amortization expense for the year ended December 31, 2007 was $4.4 million, as compared to amortization expense for the year ended December 31, 2006 of $3.7 million.

(b) Kuvan Intangible Asset

Kuvan intangible assets relate to license payments made to third parties as a result of the FDA approval of Kuvan in December 2007. At December 31, 2007, Kuvan intangible assets totaled a gross value of $2.3 million. Amortization expense during the year ended December 31, 2007 was insignificant.

(c) Goodwill

Goodwill as of December 31, 2007 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, 2007. Following the sublicense of North American rights of Orapred in March 2006, the Company has concluded it only has one reporting unit. Whether or not goodwill will be impaired in the future is dependent upon the future estimated fair value of the Company.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

(7) JOINT VENTURE

(a) Joint Venture Financial Data

The results of the joint venture’s operations for the years ended December 31, 2005, 2006 and 2007, are presented in the table below (in thousands). Effective January 2008, the Company restructured its relationship with Genzyme (see Note 11 (a) for further information). Equity in the income of BioMarin/Genzyme LLC represents the Company’s 50% share of the joint venture’s income for the periods presented prior to the restructuring.

	Year ended December 31,
	2005		2006		2007
Revenue	$	76,417	$	96,291	$	123,671
Cost of goods sold		16,089		23,173		26,877
Gross profit		60,328		73,118		96,794
Operating expenses		36,906		35,262		36,510
Income from operations		23,422		37,856		60,284
Other income		254		692		766
Net income	$	23,676	$	38,548	$	61,050
Equity in the income of BioMarin/Genzyme LLC	$	11,838	$	19,274	$	30,525

At December 31, 2006 and 2007, 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,
	2006			2007
Assets	$	71,192		$	98,340
Liabilities		(8,278	)		(8,577	)
Net equity	$	62,914		$	89,763
Investment in BioMarin/Genzyme LLC (50% share of net equity)	$	31,457		$	44,881

As a result of the restructuring, beginning on January 1, 2008, instead of recording its 50% share of the net Aldurazyme profits through Equity in the Income of BioMarin/Genzyme LLC, the Company expects to present its Aldurazyme-related transactions under the terms of the restructuring agreements with Genzyme. Pursuant to the terms of the restructuring agreements, the Company will recognize royalty revenue related to third-party net sales by Genzyme and revenue related to product transfers to Genzyme to meet future product demand. The Company will also present the related cost of sales and operating expenses as operating expenses in the consolidated statements of operations. Equity in the loss of BioMarin/Genzyme LLC subsequent to the restructuring will include BioMarin’s 50% share of the net loss of BioMarin/Genzyme LLC related to intellectual property management and ongoing research and development activities.

(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

F-25

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

reasonably assured. Revenue transactions are evidenced by customer purchase orders, customer contracts, invoices and/or the related shipping documents.

The timing of product shipment and receipts can have a significant impact on the amount of Aldurazyme revenue that the Company recognizes in a particular period. Also, Aldurazyme is sold in part through distributors. Inventory in the distribution channel consists of inventory held by distributors, and inventory held by retailers, such as pharmacies and hospitals. Aldurazyme revenue in a particular period can be impacted by increases or decreases in distributor inventories. If distributor inventories increased to excessive levels, the Company could experience reduced royalty revenue in subsequent periods. To determine the amount of Aldurazyme inventory in the 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 Genzyme, future inventory write-offs may be required. BioMarin/Genzyme LLC capitalizes inventory produced for commercial sale.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

(8) SUPPLEMENTAL BALANCE SHEET INFORMATION

As of December 31, 2006 and December 31, 2007, accounts payable and accrued liabilities consisted of the following (in thousands):

	December 31,
	2006		2007
Accounts payable	$	2,285	$	1,169
Accrued accounts payable		13,901		27,377
Accrued vacation		2,109		2,820
Accrued compensation		6,302		9,931
Accrued interest and taxes		1,305		2,533
Accrued royalties		819		1,329
Other accrued expenses		996		1,154
Accrued rebates		819		1,816
Acquired rebates and returns reserve		906		743
Returns reserve		2,633		61
Short-term portion of deferred compensation liability		—		859
Current portion of deferred rent		91		115
	$	32,166	$	49,907

As of December 31, 2006 and December 31, 2007, other long-term liabilities consisted of the following (in thousands):

	December 31,
	2006		2007
Long-term portion of deferred rent	$	1,234	$	1,635
Long-term portion of deferred compensation liability		844		447
Total other long-term liabilities	$	2,078	$	2,082

As of December 31, 2006 and December 31, 2007, inventory consisted of the following (in thousands):

	December 31,
	2006		2007
Kuvan raw materials	$	—	$	1,120
Kuvan work in process		—		198
Naglazyme raw materials		2,747		4,596
Naglazyme work in process		13,305		14,215
Naglazyme finished goods		9,023		12,316
Total inventory	$	25,075	$	32,445

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

A rollforward of significant estimated revenue dilution reserves is as follows (in thousands):

	Balance at beginning of period		Provision for current period sales		Provision/ (Reversals) for prior period sales			Actual charges related to current period sales			Actual charges related to prior period sales			Balance at end of period
Year ended December 31, 2006:
Returns reserve	$	6,014	$	42	$	118		$	—		$	(3,541	)	$	2,633
Accrued rebates		1,751		1,187		(1,323	)		(603	)		(193	)		819
Reserve for cash discounts		24		167		—			(150	)		(20	)		21
Year ended December 31, 2007:
Returns reserve	$	2,633	$	—	$	(106	)	$	—		$	(2,466	)	$	61
Accrued rebates		819		2,023		—			(941	)		(85	)		1,816
Reserve for cash discounts		21		298		—			(267	)		(18	)		34

(9) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 2006 and December 31, 2007, consisted of (in thousands):

	December 31,						Estimated Useful Lives
Category	2006			2007
Leasehold improvements	$	24,733		$	33,583		Shorter of life of asset or lease term
Building and improvements		22,604			26,784		20 years
Manufacturing and laboratory equipment		16,045			19,403		5 years
Computer hardware and software		6,484			9,657		3 years
Office furniture and equipment		3,617			3,991		5 years
Land		4,259			4,259		Not applicable
Construction-in-progress		4,777			13,952		Not applicable
	$	82,519		$	111,629
Less: Accumulated depreciation		(27,053	)		(34,811	)
Total property, plant and equipment, net	$	55,466		$	76,818

Depreciation for the years ended December 31, 2005, 2006, and 2007 was, $7.7 million, $6.8 million and $7.8 million, respectively, of which $1.0, $1.5 million and $1.2 million was capitalized into inventory, respectively.

Capitalized interest related to the Company’s fixed asset purchases during the years ended December 31, 2005, 2006 and 2007 was insignificant.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

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

(10) CONVERTIBLE DEBT

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

In connection with the placement of the April 2007 debt, the Company paid approximately $8.5 million in offering costs, which have been deferred and are included in other assets. They are being amortized as interest expense over the life of the debt, and the Company recognized $0.6 million of amortization expense during the year ended December 31, 2007.

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 debt 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.

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 $0.6 million and $0.8 million of amortization expense during the year ended December 31, 2006 and 2007, respectively.

In June 2003, the Company sold $125 million of convertible debt due on June 15, 2008. In September 2006, certain holders of the Company’s 3.50% Convertible Senior Subordinated Notes due in 2008 agreed to convert $73.6 million in aggregate principal amount of the notes to approximately 5.25 million shares of the Company’s common stock. The Company agreed to make a cash payment to the holders, comprised of accrued interest through the date of conversion of $0.7 million and an inducement for the holders to convert of approximately $3.3 million. The inducement payment of $3.3 million was recognized as additional expense during the third quarter. Also as a result of the conversion, approximately $0.9 million in previously capitalized debt offering costs were reclassified to additional paid in capital. As of December 31, 2006, the Company had an outstanding balance of $51.4 million of the Company’s 3.5% Senior Subordinated Convertible Notes due 2008, which was converted into approximately 3.7 million shares of common stock in January 2007. As a result of this conversion, approximately $0.5 million in previously capitalized debt offering costs were reclassified to additional paid in capital.

Interest expense for the years ended December 31, 2005, 2006 and 2007 was, $11.9 million, $16.7 million and $14.2 million, respectively, and included $5.4 million, $4.7 million and $4.5 million in imputed interest

F-29

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

expense related to the Company’s acquisition obligation, respectively. Capitalized interest related to the Company’s fixed asset purchases during the years ended December 31, 2005, 2006 and 2007 was insignificant.

(11) COLLABORATIVE AGREEMENTS

(a) Genzyme

As a result of the restructuring, beginning on January 1, 2008, instead of recording its 50% share of the net Aldurazyme profits through Equity in the Income of BioMarin/Genzyme LLC, the Company expects to present its Aldurazyme-related transactions under the terms of the restructuring agreements with Genzyme. Pursuant to the terms of the restructuring agreements, the Company will recognize royalty revenue related to third-party net sales by Genzyme and revenue related to product transfers to Genzyme to meet future product demand. The Company will also present the related cost of sales and operating expenses as operating expenses in the consolidated statements of operations. Equity in the loss of BioMarin/Genzyme LLC subsequent to the restructuring will include BioMarin’s 50% share of the net loss of BioMarin/Genzyme LLC related to intellectual property management and ongoing research and development activities.

In 1998, the Company entered into an agreement with Genzyme to establish a joint venture (BioMarin/Genzyme LLC) for the worldwide development and commercialization of Aldurazyme to treat mucopolysaccharidosis I (MPS I). Under the Aldurazyme joint venture agreement with Genzyme, the Company and Genzyme each provide 50% of the funding for the joint venture, as needed. All manufacturing, research and development, sales and marketing, and other services performed by Genzyme and the Company on behalf of the joint venture are billed to the joint venture at cost. Any profits or losses of the joint venture are shared equally by the two parties.

(b) Merck Serono

In May 2005, the Company entered into an agreement with Merck Serono S.A. (Merck Serono) for the further development and commercialization of BH4, both in Kuvan for PKU and for other indications, and PEG-PAL (phenylalanine ammonia lyase). Through the agreement and subsequent amendment, Merck Serono acquired exclusive rights to market these products in all territories outside the U.S., Canada and Japan, and BioMarin retained exclusive rights to market these products in the U.S. and Canada. The Company and Merck Serono will generally share equally all development costs following successful completion of Phase 2 trials for each product candidate in each indication. BioMarin and Merck Serono are individually responsible for the costs of commercializing the products within their respective territories. Merck Serono will also pay BioMarin royalties on its net sales of these products.

In September 2007 the Company licensed to Asubio Pharma Co., Ltd. (a subsidiary of Daiichi Sankyo) exclusive rights to data and intellectual property contained in the Kuvan new drug application. The Company will receive a milestone payment for approval and royalties on net sales of the product.

Pursuant to the agreement, Merck Serono paid BioMarin $25.0 million as consideration for executing the agreement, and will make additional milestone payments of up to $232.0 million based on the successful development and approval of both products in multiple indications, including $45.0 million associated with Kuvan for the treatment of PKU. The term of the agreement is the later of 10 years after the first commercial sale of the products or the period through the expiration of all related patents within the territories. As of December 31, 2006 and 2007, deferred revenue included $12.1 million and $5.2 million, respectively, related to

F-30

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

the remaining unamortized up-front license fee and accounts receivable included $3.1 million and $0.9 million, respectively, due from Merck Serono for reimbursable Kuvan development costs.

(c) Other Agreements

The Company is engaged in research and development collaborations with various other entities. These provide for sponsorship of research and development by the Company and may also provide for exclusive royalty-bearing intellectual property licenses or rights of first negotiation regarding licenses to intellectual property development under the collaborations. Typically, these agreements can be terminated for cause by either party upon 90 days written notice.

(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. The outstanding balance on this loan was repaid in full in April 2006.

(13) STOCKHOLDERS’ EQUITY

(a) Common Stock

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 $127.4 million.

(b) Stockholders’ Rights Plan

In 2002, the Board of Directors authorized a stockholders’ rights plan. Terms of the plan provide for stockholders of record at the close of business on September 23, 2002 to receive one preferred share purchase right (a “Right”) for each outstanding share of common stock held. The Rights will be exercisable if a person or group acquires 15% or more of the Company’s common stock or announces a tender offer or exchange offer for 15% or more of the common stock. Depending on the circumstances, the effect of the exercise of the Rights will be to permit each holder of a Right to purchase shares of Series B Junior Participating Preferred Stock of the Company that have significantly superior dividend, liquidation, and voting rights to the common stock. The Company will be entitled to redeem the Rights at $0.001 per Right at any time before a person has acquired 15% or more of the outstanding common stock. The stockholders’ rights plan expires in 2012.

(14) INCOME TAXES

The Company has operated at a loss since its inception in 1997. As of December 31, 2007, the Company had federal net operating loss carryforwards of approximately $325.6 million and state net operating loss carryforwards of approximately $153.2 million. The Company also had federal research and development and orphan drug credit carryforwards of approximately $92.0 million as of December 31, 2007, and state research credit carryovers of approximately $17.0 million. The federal net operating loss and credit carryforwards expire at various dates beginning in the year 2011 through 2027, if not utilized. The state net operating loss carryforwards will begin to expire in 2012 and will completely expire in 2017 if not utilized. Certain state research credit carryovers will begin to expire in 2015 if not utilized with others carrying over indefinitely. The

F-31

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

Company also has net operating loss carryforwards of $5.1 million and research credit carryovers of $7.4 million in Canada that it currently does not expect to utilize.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets for financial reporting and the amount used for income tax purposes. Significant components of the Company’s net deferred tax assets for federal and state income taxes are as follows (in thousands):

	December 31,
	2006			2007
Net deferred tax assets:
Net operating loss carryforwards	$	132,163		$	124,512
Credit and contribution carryforwards		93,960			118,208
Capitalized research expenses		16,521			4,240
Property, plant and equipment		8,076			8,280
Accrued expenses, reserves, and prepaids		3,623			3,906
Intangible assets		30,161			35,263
Deferred revenue		5,311			2,137
Other		4,834			135
Gross deferred tax assets	$	294,649		$	296,681
Deferred tax liability related to joint venture basis difference	$	(1,667	)	$	(2,280	)
Valuation allowance		(292,982	)		(294,401	)
Net deferred tax assets	$	—		$	—

A full valuation allowance is maintained to reduce the Company’s deferred tax assets to zero, as management believes that it is more likely than not that the deferred tax assets will not be realized, because ultimate profitability of the Company is uncertain as of December 31, 2007. The net valuation allowance increased by $31.8 million and $1.4 million during the years ended December 31, 2006 and 2007, respectively.

As of December 31, 2007, approximately $17.6 million of the federal net operating loss carryforwards and $19.6 million of the state net operating loss carryforwards arose from the exercise of employee stock options which will be accounted for as an increase to additional paid-in-capital if and when realized.

For the years ended December 31, 2006 and 2007, the Company recognized $0.1 million and $0.7 million of income tax expense related to income earned in certain of the Company’s international subsidiaries. The Company had no current U.S. federal income tax expense and minimal current state income tax expense for the years ended December 31, 2005, 2006 and 2007. The reconciliations between the U.S. federal statutory tax rates to the Company’s effective tax rates are as follows:

	December 31,
	2005		2006		2007
Federal tax	35.0	%	35.0	%	35.0	%
Permanent items	(6.4	)%	(10.4	)%	(55.0	)%
General business credits	13.6	%	26.9	%	95.4	%
Foreign income tax	—		(0.3	)%	(4.8	)%
Other	—		(0.4	)%	0	%
Valuation allowance	(42.2	)%	(51.1	)%	(75.4	)%
Effective income tax rate	—		(0.3	)%	(4.8	)%

F-32

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

	December 31,
	2005		2006		2007
Federal income tax expense	$	—	$	—	$	—
State income tax expense		—		—		—
Foreign income tax expense		—		74		729
Total income tax expense	$	—	$	74	$	729

The Company adopted the provisions of Financial Accounting Standards (“FASB”) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109,” (“FIN 48”) on January 1, 2007. As a result of the adoption of FIN 48, there was no effect to the opening balance of retained earnings, deferred taxes, and net assets in the balance sheet of fiscal year 2007. The Company had no material unrecognized tax benefits before or after the adoption of FIN 48.

The Company’s deferred tax assets as of December 31, 2007 may include potential uncertain tax positions, which if recognized would affect the Company’s effective tax rate; however no benefits have been recognized from the deferred tax assets due to a full valuation allowance.

The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items in the income tax expense. No interest or penalties have been recorded as of December 31, 2007.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. For income tax returns filed by the Company, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for tax years before 2003, although carryforward tax attributes that were generated prior to 2003 may still be adjusted upon examination by tax authorities. Currently the Company has no pending or open tax return examinations or audits

In accordance with APB 23, deferred taxes have not been provided on the cumulative undistributed earnings approximating $0.9 million as of December 31, 2007, of certain foreign subsidiaries as such earnings have been permanently reinvested. The Company has also elected to treat certain foreign entities as disregarded entities for U.S. tax purposes, which results in their net income or loss being recognized currently in the Company’s U.S. tax return. As such, the tax benefit of net operating losses available for foreign statutory tax purposes has already been recognized for U.S. purposes.

(15) SHORT-TERM INVESTMENTS

At December 31, 2007, the principal amounts of short-term investments by contractual maturity are summarized in the table below (in thousands). All short-term investments were classified as available-for-sale at December 31, 2007.

	Contractual Maturity Date For the Years Ending December 31,						December 31, 2007
	2008		2009		Total Book Value		Unrealized Gain (Losses)			Aggregate Fair Value
Corporate securities	$	88,324	$	—	$	88,324	$	(99	)	$	88,225
Commercial paper		259,067	$	—		259,067		155			259,222
U.S. Government agencies		9,798		—		9,798		6			9,804
Total	$	357,189	$	—	$	357,189	$	62		$	357,251

F-33

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

At December 31, 2006, the principal amounts of short-term investments by contractual maturity are summarized in the table below (in thousands). All short-term investments were classified as held-to-maturity at December 31, 2006.

	Contractual Maturity Date For the Years Ending December 31,						December 31, 2006
	2007		2008		Total Book Value		Unrealized Gains		Aggregate Fair Value
Corporate securities	$	27,212	$	—	$	27,212	$	7	$	27,219
Commercial paper		157,563	$	—		157,563		15		157,578
U.S. Government agencies		14,910		—		14,910		5		14,915
Total	$	199,685	$	—	$	199,685	$	27	$	199,712

At December 31, 2007, the aggregate amount of unrealized losses and related fair value of investments with unrealized losses were as follows (in thousands):

	Less Than 12 Months					12 Months or More				Total
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses		Aggregate Fair Value		Unrealized Losses
Corporate securities	$	44,826	$	(135	)	$	—	$	—	$	44,826	$	(135	)
Commercial paper		4,948		(1	)		—		—		4,948		(1	)
U.S. Government Agencies		—		—			—		—		—		—
Total	$	49,774	$	(136	)	$	—	$	—	$	49,774	$	(136	)

The Company completed an evaluation of its investments and determined that it did not have any other-than-temporary impairments as of December 31, 2007. The investments are placed in financial institutions with strong credit ratings and management expects full recovery of the amortized cost.

At December 31, 2006, the aggregate amount of unrealized losses and related fair value of investments with unrealized losses were as follows (in thousands):

	Less Than 12 Months					12 Months or More				Total
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses		Aggregate Fair Value		Unrealized Losses
Corporate securities	$	3,969	$	(1	)	$	—	$	—	$	3,969	$	(1	)
Commercial paper		9,761		(1	)		—		—		9,761		(1	)
U.S. Government Agencies		—		—			—		—		—		—
Total	$	13,730	$	(2	)	$	—	$	—	$	13,730	$	(2	)

(16) DERIVATIVE FINANCIAL INSTRUMENTS

The Company periodically enters into foreign currency forward contracts, which have a maturity of less than one year. These contracts have not been designated as hedges and, accordingly, unrealized gains or losses on these contracts are reported in current earnings.

At December 31, 2007, the Company had net outstanding foreign exchange forward contracts to sell $13.7 million, comprised of sell contracts of $15.0 million of equivalent Euros and $4.2 million of equivalent

F-34

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

British Pounds and buy contracts of $5.4 million of equivalent Euros, all of which have a term of less than 3 months. The notional settlement value of all foreign currency forward contracts outstanding as of December 31, 2007 was $12.9 million.

None of the Company’s forward exchange contracts are designated as hedges under SFAS No. 133. As a result, the fair value changes of all contracts are reported in earnings as foreign exchange gain or loss. For the year ended December 31, 2007, approximately $1.0 million of net loss has been included in the Company’s consolidated statement of operations with respect to these forward exchange contracts, as compared to $0.3 million as of December 31, 2006.

(17) COMMITMENTS AND CONTINGENCIES

(a) Lease Commitments

The Company leases office space and research, testing and manufacturing laboratory space in various facilities under operating agreements expiring at various dates through 2014. Certain of the leases provide for options by the Company to extend the lease for multiple five-year renewal periods and also provide for annual minimum increases in rent, usually based on a Consumer Price Index or annual minimum increases. Minimum lease payments for future years are as follows (in thousands):

2008	$	3,815
2009		3,867
2010		4,005
2011		3,768
2012		3,581
Thereafter		3,171
	$	22,207

Rent expense for the years ended December 31, 2005, 2006, and 2007 was $3.7 million, $3.1 million and $3.9 million, respectively. Deferred rent accruals were $1.7 million, of which $0.1 million was current, at December 31, 2007, and $1.3 million, of which $0.1 million was current, at December 31, 2006.

(b) Research and Development Funding and Technology Licenses

The Company uses experts and laboratories at universities and other institutions to perform certain research and development activities. These amounts are included as research and development expenses as services are provided.

The Company has also licensed technology, for which it is required to pay royalties upon future sales, subject to certain annual minimums. As of December 31, 2007, such minimum annual commitments are approximately $0.4 million.

(c) Contingencies

From time to time the Company is involved in legal actions arising in the normal course of its business. The Company is not presently subject to any material litigation nor, to management’s knowledge, is any litigation threatened against the Company that collectively is expected to have a material adverse effect on the Company’s

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

cash flows, financial condition or results of operations. The Company is also subject to contingent payments totaling approximately $62.2 million upon achievement of certain regulatory and licensing milestones if they occur before certain dates in the future.

There have been several lawsuits filed in Brazil alleging that the Company’s joint venture with Genzyme and/or the affiliates of the joint venture are contractually obligated to provide Aldurazyme at no cost to several patients in Brazil. The joint venture and/or its affiliates are vigorously defending against these actions. The joint venture and management of the Company are not able to predict the outcome of these cases or estimate with certainty the amount or range of any possible loss the joint venture might incur if the joint venture and/or its affiliates do not prevail in the final, non-appealable determination of these matters.

(18) RELATED-PARTY TRANSACTIONS

During 2005, an officer of the Company held an adjunct faculty position with LA Biomedical, formerly known as Harbor-UCLA Research Educational Institute, for purposes of conducting research. LA Biomedical licenses certain intellectual property and provides other research services to the Company. The Company is also obligated to pay LA Biomedical royalties on future sales of products covered by the license agreement. The Company’s joint venture with Genzyme is subject to a second agreement with LA Biomedical that requires the joint venture to pay LA Biomedical a royalty on sales of Aldurazyme through November 2019, of which the officer is entitled to certain portions, based on the sales level per the terms of the agreement. The license agreement was effective before the officer was a BioMarin employee. Pursuant to these agreements, the officer was entitled to approximately $1.1 million and $1.4 million related to Aldurazyme during 2006 and 2007, respectively.

(19) DAIICHI SUNTORY PHARMA LICENSE

In May 2005, the Company entered into a license agreement with Daiichi Suntory Pharma Co., Ltd. (Daiichi Suntory Pharma) whereby the Company obtained the exclusive worldwide rights, excluding Japan, for the use of tetrahydrobiopterin (6R- BH4) to treat the endothelial dysfunction that causes vascular complications in diabetes, cardiovascular and other diseases. 6R- BH4 is the active pharmaceutical ingredient in Kuvan. BioMarin paid Daiichi Suntory Pharma $3.3 million in connection with the license, which was included in research and development expense during 2005 as management determined there was no alternative future use for the license at the time of the transaction. In December 2007, Biomarin recorded a liability to Daiichi Suntory Pharma for approximately $2.2 million as a result of FDA approval of Kuvan. This transaction was capitalized as an intangible asset and will be amortized over the useful life of the Kuvan product.

In September 2007 the Company licensed to Asubio Pharma Co., Ltd. (a subsidiary of Daiichi Sankyo) exclusive rights to data and intellectual property contained in the Kuvan new drug application. The Company will receive a milestone payment for approval and royalties on net sales of the product.

(20) COMPENSATION AGREEMENTS AND PLANS

(a) Employment Agreements

The Company has entered into employment agreements with certain officers. Generally, these agreements can be terminated without cause by the Company upon written prior notice, or by the officer upon four weeks’ prior written notice to the Company.

F-36

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

(b) 401(k) Plan

The Company sponsors the BioMarin Retirement Savings Plan (401(k) Plan). Most employees (Participants) are eligible to participate following the start of their employment, at the beginning of each calendar month. Participants may contribute up to the lesser of 100% of their current compensation to the 401(k) Plan or an amount up to a statutorily prescribed annual limit. The Company pays the direct expenses of the 401(k) Plan and matches 100% of Participant’s contributions up to a maximum of the lesser of 2% of the employee’s annual compensation or $4,000 per year. The Company’s matching contribution vests over four years from employment commencement and was approximately $0.5 million, $0.6 million and $0.8 million for the years ended December 31, 2005, 2006 and 2007, respectively. Employer contributions not vested upon employee termination are forfeited.

(c) Deferred Compensation Plan

In December 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, annual cash bonus and restricted stock. 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 $0.8 million and $0.5 million and the related deferred compensation liability of $0.8 million and $0.5 million were recorded as of December 31, 2006 and 2007, respectively. The change in market value was insignificant for the years ended December 31, 2006 and 2007.

(21) SUPPLEMENTAL CASH FLOW INFORMATION

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

	Years Ended December 31,
	2005			2006		2007
Settlement of dispute with Medicis, net of discount	$	22,648		$	—	$	—
Conversion of 3.5% convertible notes due 2008		—			73,560		51,440
Deferred offering costs reclassified to additional paid in capital as a result of the conversion of a portion of notes due in 2008		—			868		512
Change in accrued payables related to fixed asset additions		(3,529	)		965		6,726
Stock-based compensation capitalized into inventory		—			1,006		1,710

Interest paid for the years ended December 2005, 2006 and 2007 was, $5.5 million, $9.6 million and $7.4 million, respectively.

Cash paid for income taxes for the years ended December 31, 2005, 2006 and 2007 was $0 million, $0 million and $0.4 million, respectively.

F-37

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2006 and 2007

(22) 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 December 31, 2007 related to net product sales of Naglazyme and Kuvan. A significant portion of net product sales are made to a limited number of financially viable specialty pharmacies and distributors. The Company’s two largest customers accounted for 56% and 7% of net product sales, respectively, or 63% of the Company’s total net product sales of Naglazyme in aggregate for the year ended December 31, 2007. For 2007, net product sales of Naglazyme were $17.5 million from customers based in the U.S. and $68.7 million from customers based outside of the U.S, as compared to $15.5 million and $31.0 million for 2006, respectively. Significant specific concentrations of the Company’s total net product sales include net product sales of Naglazyme related to sales in Germany and France totaling $20.2 million and $10.0 million, respectively, for the year ended December 31, 2007, and $14.3 million and $5.4 million, respectively, for the year ended December 31, 2006.

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 December 31, 2007.

(23) SUBSEQUENT EVENTS

In January 2008, the Company purchased its previously leased office building located at 300 Bel Marin Keys Drive.

Pursuant to the restructuring of the relationship with Genzyme, the Company received $16.5 million of cash and $27.0 million of inventory in February 2008 as distributions of its investment in the joint venture. See Note 7 for further information regarding the joint venture restructuring.

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SCHEDULE II

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES VALUATION ACCOUNTS

Years ended December 31, 2006 and 2007

(in thousands)

	Balance at beginning of period		Additions (Deductions) charged to costs and expenses			Deductions			Balance at end of period
Year ended December 31, 2006:
Returns reserve	$	6,014	$	160		$	(3,541	)	$	2,633
Accrued rebates		1,751		(137	)		(795	)		819
Reserve for cash discounts		24		167			(170	)		21
Acquired returns reserve		100		590			(449	)		241
Acquired rebates reserve		1,546		(389	)		(491	)		666
Year ended December 31, 2007:
Returns reserve	$	2,633	$	(106	)	$	(2,466	)	$	61
Accrued rebates		819		2,023			(1,026	)		1,816
Reserve for cash discounts		21		298			(285	)		34
Acquired returns reserve		241		(11	)		(108	)		122
Acquired rebates reserve		666		—			(45	)		621

F-39

EX-10.30

EXHIBIT 10.30

CONFIDENTIAL TREATMENT REQUESTED

Redacted Portions are indicated by [****]

MANUFACTURING, MARKETING AND SALES AGREEMENT

THIS MANUFACTURING, MARKETING AND SALES AGREEMENT (this “Agreement”) is made effective as of the 1^st day of January, 2008 (the “Effective Date”), by and among BioMarin Pharmaceutical Inc., a Delaware corporation having its principal place of business at 105 Digital Drive, Novato, California 94949 (“BioMarin”); Genzyme Corporation, a Massachusetts corporation having its principal place of business at 500 Kendall Square, Cambridge, Massachusetts 02142 (“Genzyme”) and BioMarin/Genzyme LLC, a Delaware limited liability company having its principal place of business at 500 Kendall Street, Cambridge, Massachusetts 02142 (“BioMarin/Genzyme LLC”).

RECITALS

A. BioMarin, Genzyme and BioMarin/Genzyme LLC are parties to a Collaboration Agreement dated as of September 4, 1998 (the “Original Collaboration Agreement”) pursuant to which BioMarin and Genzyme through BioMarin/Genzyme LLC develop, manufacture, market and sell Aldurazyme (as defined herein).

B. The Parties no longer desire to develop, manufacture, market and sell Aldurazyme through a joint venture and instead have agreed that: (1) BioMarin will manufacture Aldurazyme and sell finished product to Genzyme; (2) Genzyme will label and commercially distribute, market and sell Aldurazyme globally; (3) each of Genzyme and BioMarin may conduct its own research and development of Aldurazyme and other Collaboration Products (as defined herein) in accordance with the terms of this Agreement and the Amended and Restated Collaboration Agreement (as defined herein); and (4) BioMarin/Genzyme LLC will maintain and provide intellectual property licenses and sublicenses to BioMarin and Genzyme so that they may fulfill their respective obligations under this Agreement, the Amended and Restated Collaboration Agreement and the Fill Agreement (as defined herein).

C. BioMarin and Genzyme have amended and restated the Original Collaboration Agreement so that hereafter BioMarin/Genzyme LLC will no longer engage in commercial activities and will solely (1) hold the intellectual property relating to Aldurazyme and license all such intellectual property on the terms set forth herein to BioMarin and Genzyme on the terms set forth in the Amended and Restated Collaboration Agreement (as defined below) and (2) and engage in research and development activities that are mutually selected and funded by BioMarin and Genzyme.

D. To effect the foregoing, the Parties are also entering into (1) a separate Fill Agreement of even date herewith pursuant to which Genzyme will continue to provide fill services for Aldurazyme to BioMarin (the “Fill Agreement”); (2) the aforementioned amendment and restatement of the Original Collaboration Agreement of even date herewith (the “Amended and Restated Collaboration Agreement”); and (3) a Members Agreement of even date herewith pursuant to which certain current assets and liabilities of BioMarin/Genzyme LLC and its subsidiaries will be distributed to its Members (the “Members Agreement”).

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

1. DEFINITIONS.

1.1 “Adverse Experience” shall mean any undesirable physical, psychological or behavioral effect experienced by a human Patient or subject that is associated with the use of Aldurazyme, whether or not considered product-related, including an adverse experience occurring: in the course of the use of Aldurazyme in professional practice; from an overdose of Aldurazyme (whether accidental or intentional); from the abuse of Aldurazyme; from the withdrawal of Aldurazyme; or from any failure of Aldurazyme’s expected pharmacological action.

1.2 “Affiliate” shall mean any corporation, limited liability company, firm, partnership, limited liability partnership or other entity, whether de jure or de facto, which, at the time in question, is directly or indirectly owned by or controlled by, or under common control with, BioMarin or Genzyme, 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, fifty percent (50%) or more (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of (i) the voting stock or shareholders’ equity of a corporation, (ii) the partnership interests in a partnership, (iii) the membership interests in a limited liability company, or (iv) in the case of any other entity, the right to receive fifty percent (50%) or more of either the profits or the assets upon dissolution; or (b) possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect more than fifty percent (50%) of the members of the governing body of the corporation, limited liability company or other entity.

1.3 “Agreement” shall have the meaning set forth in the introductory paragraph hereof.

1.4 “Aldurazyme” shall mean alpha-L-iduronidase meeting the Specifications.

1.5 “alpha-L-iduronidase” shall mean recombinant human alpha-L-iduronidase.

1.6 “Amended and Restated Collaboration Agreement” shall have the meaning set forth in the recitals.

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1.7 “Annual Net Sales” shall have the meaning set forth in Section 6.1(a).

1.8 “Batch” or “Lot” shall mean each separate and distinct quantity of Aldurazyme processed under continuous conditions and designated by BioMarin with a batch or lot number.

1.9 “BioMarin Companies” shall mean BioMarin and BioMarin Genetics.

1.10 “BioMarin Genetics” shall mean BioMarin Genetics, Inc., a Delaware corporation and wholly-owned subsidiary of BioMarin.

1.11 “BLA” shall mean a Biologics License Application or similar application as approved by the FDA on April 30, 2003, that provides for marketing approval for Aldurazyme in the United States, as the same may be updated or amended from time to time.

1.12 “cGMP Regulations” means the applicable current Good Manufacturing Practices as promulgated under ICH Q7A-Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, U.S. Federal Food, Drug and Cosmetic Act at 21 CFR and the EEC Guide to Good Manufacturing Practices for Medical Products (Vol. IV — rules governing medical products in the European Community 1989) in the most recent version.

1.13 “Certificate of Analysis” or “COA” shall mean a document in the form attached as Exhibit B executed by BioMarin to certify that a Batch or Lot of Aldurazyme meets the Specifications.

1.14 “Certificate of Compliance” or “COC” shall mean a document certifying a Batch or Lot of Aldurazyme meets Genzyme’s product release criteria and was produced in compliance with cGMP requirements.

1.15 “Collaboration Product” shall mean Aldurazyme and any other pharmaceutical compositions of alpha-L-iduronidase, including without limitation any and all improvements, derivatives, analogs, combination products, delivery systems and dosage forms related thereto.

1.16 “commercially reasonable and diligent efforts” will mean that level of effort which, consistent with the exercise of prudent scientific and business judgment, is applied by the Party in question to its other therapeutic products at a similar stage of development and with similar commercial potential.

1.17 “Control” shall mean possession of the ability to grant a license or sublicense as provided for herein without violating the terms of an agreement with a Third Party.

1.18 “Effective Date” shall mean January 1, 2008.

1.19 “EMEA” shall mean the European Agency for the Evaluation of Medical Products or any successor agency.

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1.20 “European Commission” shall mean that body of the European Union that grants Marketing Application Approvals.

1.21 “FDA” shall mean the United States Food and Drug Administration, or any successor agency.

1.22 “Field” shall mean any and all therapeutic applications of alpha-L-iduronidase for MPS I and other alpha-L-iduronidase deficiencies. Notwithstanding the foregoing, the Field shall not include Gene Therapy for MPS I or other alpha-L-iduronidase deficiencies. For purposes of this Agreement, “Gene Therapy” shall mean treatment or prevention of MPS I or other alpha-L-iduronidase deficiencies by means of ex vivo or in vivo introduction (via viral or nonviral gene transfer systems) of nucleotide sequences (including without limitation, DNA, RNA and complementary and reverse complementary nucleotide sequences thereto, whether coding or non-coding).

1.23 “Fill Agreement” shall have the meaning set forth in the recitals.

1.24 “GAAP” shall mean the then-current United States generally accepted accounting principles, consistently applied.

1.25 “Insolvency Event” shall mean, with respect to a Party, that the Party (i) applies for or consents to the appointment of a receiver, trustee, liquidator or custodian for itself or of all or a substantial part of its property; (ii) becomes unable, or admits in writing its inability, to pay its debts generally as they mature; (iii) makes a general assignment for the benefit of its or any of its creditors; (iv) is dissolved or liquidated in full or in part; (v) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consents to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it; or (vi) takes any action for the purpose of effecting any of the foregoing; or (vii) the Party has commenced against it proceedings for the appointment of a receiver, trustee, liquidator or custodian, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect and such proceeding is not dismissed or discharged within sixty (60) calendar days of commencement.

1.26 “Labeling Materials” shall have the meaning set forth in Section 3.1.

1.27 “MAA” shall mean the Marketing Application as approved by the EMEA on June 10, 2003 that provides for marketing approval for Aldurazyme in the European Union, as the same may be updated or amended from time to time.

1.28 “Manufacturing Know-How” shall mean all information, techniques, inventions, discoveries, improvements, practices, methods, knowledge, skill, experience and other technology, whether or not patentable or copyrightable, and any copyrights based thereon, relating to or necessary or useful for the production, purification, packaging,

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storage and transportation of Collaboration Products, including without limitation specifications, acceptance criteria, manufacturing batch records, standard operating procedures, engineering plans, installation, operation and process qualification protocols for equipment, validation records, master files submitted to the FDA, process validation reports, environmental monitoring processes, test data including pharmacological, toxicological and clinical test data, cost data and employee training materials.

1.29 “Marketing Application” shall mean a marketing authorization application filed by or under authority of Genzyme with the requisite health regulatory authority of any country requesting approval for commercialization of Aldurazyme for a particular indication in such country, including as applicable, the MAA.

1.30 “Marketing Application Approval” shall mean, with respect to each country approval of the Marketing Application filed in such country by the health regulatory authority in such country, including as applicable, the MAA.

1.31 “Marketing Costs” with respect to Aldurazyme shall mean the sales and marketing costs and expenses incurred by Genzyme with respect to work performed by Genzyme and its Affiliates and subcontractors in connection with the performance of and in accordance with the marketing plan for Aldurazyme, including without limitation, sales and marketing costs related to performing market research, advertising, producing promotional literature, sponsoring seminars and symposia, sales training meetings and seminars, originating sales, providing reimbursement and other patient support services, recruitment costs and salaries and associated expenses for sales and marketing personnel and support staff, and distribution fees.

1.32 “Master Batch Record” shall mean a written description of the procedure to be followed by BioMarin in processing of a Batch of Aldurazyme, which description shall include, but not be limited to, a complete list of all active and inactive ingredients, components, weights and measures and procedures used in processing the Aldurazyme within the meaning of 21 CFR part 211.186, or its successor as in effect from time to time.

1.33 “Members Agreement” shall have the meaning set forth in the recitals.

1.34 “MPS-I” shall mean mucopolysaccharidosis I.

1.35 “Multiple Products Sale” shall mean a sale of Aldurazyme by Genzyme or its Affiliates to an independent Third Party customer that is associated, by contract or course of dealing, with the use or sale or one or more other products or services [ ****]. In determining the consideration received for Aldurazyme, the following shall be excluded: (i) Aldurazyme from the quantities provided to Genzyme pursuant to Section 6.1(d)(i), and (ii) transfers of Aldurazyme that are excluded from the definition of Net Sales under Section 1.36 below.

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1.36 “Net Sales” with respect to Aldurazyme shall mean the gross invoiced sales price of Aldurazyme billed to independent Third Party customers, including without limitation Third Party distributors, in fully legitimate, arms length transactions, less: (a) credits or allowances granted upon billing corrections, (b) credits or allowances granted upon returns or rejections, provided that such Aldurazyme shall be deemed to be unsold and treated in accordance with Section 6.7; (c) freight, shipping and insurance costs (incurred in transporting Aldurazyme to such customers to the extent separately billed); (d) quantity, cash and other trade discounts [****], credits or allowances actually allowed and taken; (e) customs duties, surcharges and taxes and other governmental charges incurred in connection with the production, sale, transportation, delivery, use, exportation or importation of Aldurazyme in final form; (f) amounts incurred resulting from governmental mandated rebate or discount programs; and (g) Third Party rebates and charge backs, hospital buying group/group purchasing organization administration fees or managed care organization rebates; all in accordance with standard allocation procedures, allowance methodologies and accounting requirements consistently applied, which procedures, methodologies and requirements are in accordance with GAAP. “Net Sales” with respect to Aldurazyme sold in Multiple Products Sales shall be calculated by Genzyme in good faith and shall equal a fair and equitable allocation of all consideration received by Genzyme in connection with a Multiple Products Sale, considering the nature and economic value of each component of the Multiple Products Sale. The transfer of Aldurazyme by Genzyme or one of its Affiliates to another Affiliate of Genzyme in furtherance of a sale to a Third Party shall not be considered a sale; in such cases, Net Sales shall be determined based on the invoiced sales price by the Affiliate to its customer, less the deductions allowed under this Section 1.36. “Net Sales” shall not include transfers of Aldurazyme for use for clinical purposes, in compassionate or expanded access programs, or in programs for patients paying a nominal price for Aldurazyme.

1.37 “Operating Agreement” shall mean that certain Operating Agreement of BioMarin/Genzyme LLC dated as of September 4, 1998 entered into by and among the BioMarin Companies and Genzyme.

1.38 “Order” shall mean a firm purchase order originated by Genzyme and sent to BioMarin which sets forth, at a minimum, the quantities of Aldurazyme ordered, the delivery dates and other material information as set forth in Section 3.3.

1.39 “Original Collaboration Agreement” shall have the meaning set forth in the recitals.

1.40 “Party” shall mean BioMarin, Genzyme or BioMarin/Genzyme LLC, as applicable, and “Parties” shall mean BioMarin, Genzyme and BioMarin/Genzyme LLC, collectively.

1.41 “Patent Rights” shall mean all US and foreign patents and patent applications (including continuations, continuations-in-part, divisionals, reissues, re-examinations, renewals, supplemental protection certificates and extensions) which are or become owned or controlled by a Party or to which such Party has, now or in the future, the right to grant licenses and other rights, which generically or specifically claim Collaboration Products, a process for manufacturing Collaboration Products, an intermediate used in such process or a use of a Collaboration Product.

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1.42 “Patient” shall mean any person who is the actual recipient of Aldurazyme for clinical or medical purposes.

1.43 “Percentage Interest” shall have the meaning set forth in the Operating Agreement.

1.44 “Post-Marketing Studies” shall mean any clinical trial using Aldurazyme performed by Genzyme or its Affiliates required by regulatory authorities as a condition to the issuance, continuation, or maintenance of a Marketing Application Approval. Post-Marketing Studies shall not include registries.

1.45 “Regulatory Approvals” shall mean all approvals from regulatory authorities in any country required lawfully to manufacture and market Aldurazyme in any such country, including without limitation approval of any BLA, any establishment license application filed with the FDA to obtain approval of the facilities and equipment to be used to manufacture Aldurazyme, any Marketing Application Approval and any product pricing approvals where applicable.

1.46 “Regulatory Scheme” shall mean the U.S. Food, Drug and Cosmetics Act and the regulations, interpretations and guidelines promulgated thereunder by the FDA or the regulatory scheme applicable to Aldurazyme in any country other than the United States, as such statutes, regulations, interpretations and guidelines or regulatory schemes may be amended from time to time.

1.47 “Related Agreements” shall mean the Amended and Restated Collaboration Agreement, the Members Agreement, the Fill Agreement and the Operating Agreement.

1.48 “Serious Adverse Experience” shall mean any Adverse Experience associated with the use of any of Aldurazyme that results in one or more of the following outcomes: death; a life-threatening experience; required or prolonged inpatient hospitalization; persistent or significant disability or incapacity; a congenital anomaly or defect; or the occurrence of an important medical event that may jeopardize the health of a Patient or subject, and may require medical or surgical intervention to prevent one of the outcomes listed above.

1.49 “SOP” shall mean standard operating procedure.

1.50 “Specifications” shall mean the written specifications for Aldurazyme set forth in Exhibit A hereto; provided that such specifications shall at all times comply with the relevant Regulatory Scheme in the country of sale and in the country of use. The Specifications with respect to any particular country shall automatically be amended upon receipt of required Regulatory Approvals from the regulatory authorities in such country for any changes thereto. Copies of the then-current Specifications shall be maintained by both BioMarin and Genzyme and shall become a part of this Agreement as if incorporated herein.

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1.51 “Taxes” shall have the meaning set forth in Section 6.5.

1.52 “Technology” shall mean inventions, trade secrets, copyrights, know-how, data and other intellectual property of any kind (including without limitation any proprietary biological or other materials, compounds or reagents, but not including Patent Rights).

1.53 “Technical Agreement” shall have the meaning set forth in Section 3.18.

1.54 “Territory” shall mean the world.

1.55 “Third Party” shall mean any entity other than BioMarin/Genzyme LLC, BioMarin or Genzyme and their respective Affiliates.

1.56 “Third Party Licenses” shall mean those licenses between BioMarin/Genzyme LLC and Third Parties set forth on Schedule 1.56. If after the Effective Date any Party enters into an agreement to license or acquire rights from a Third Party with respect to subject matter to be utilized in connection with Aldurazyme in accordance with Section 3.1.4 of the Amended and Restated Collaboration Agreement, such agreements shall also be included in the definition of Third Party Licenses for purposes of this Agreement.

2. EXCLUSIVE RELATIONSHIP.

2.1 Non-Compete. Except as otherwise expressly provided herein or in the Amended and Restated Collaboration Agreement and the Fill Agreement, during the term of this Agreement, neither BioMarin/Genzyme LLC, Genzyme nor BioMarin, nor any of their respective Affiliates, shall independently, or with or through a Third Party, conduct research or development activities regarding, or engage in the manufacture, marketing, sale or distribution of, Collaboration Products in the Field and in the Territory.

3. MANUFACTURING.

3.1 Manufacturing. Subject to the terms and conditions of this Article 3, during the term of this Agreement, BioMarin shall supply Genzyme with filled (but not labeled) Aldurazyme, and Genzyme shall exclusively purchase its requirements from BioMarin except as provided herein. The Aldurazyme supplied to Genzyme (i) shall conform in all respects to the Specifications, (ii) will be manufactured under cGMP using the process licensed or approved by regulatory authorities, (iii) shall have a remaining shelf life at the time of delivery to Genzyme of at least [****] of the total expiry of the product and (iv) shall not have experienced any manufacturing process deviations that would require notice to any regulatory authorities unless, prior to delivery to Genzyme, such regulatory authorities have been notified and have approved the deviations. BioMarin shall ensure that Genzyme has a complete and accurate copy of the Master Batch Record (as it may be modified from time to time pursuant to this Agreement). BioMarin and Genzyme shall be responsible for release testing as provided in the Technical Agreement; provided, however, that BioMarin agrees to complete all release testing for which is responsible under the Technical Agreement and provide the testing and release documentation to Genzyme within [****] of delivery of each such Lot. Genzyme shall prepare all Aldurazyme in final packaged form, including, without limitation, all product labeling and other package inserts and materials required by applicable regulatory agencies (collectively, “Labeling Materials”).

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3.2 Forecasts.

3.2.1  Initial Forecast and Initial Shipments. Prior to the Effective Date, Genzyme will provide to BioMarin a written initial forecast of sales and estimates of forthcoming orders of Aldurazyme from BioMarin that will cover the fifteen (15) month period commencing on the Effective Date. On the Effective Date, BioMarin will deliver sufficient vials of Aldurazyme to Genzyme such that Genzyme will hold at least [****] of filled Aldurazyme. Thereafter, BioMarin will promptly deliver all additional quantities of filled Aldurazyme as soon as each Lot is available for delivery in accordance with the delivery schedule specified in the initial forecast through September 30, 2008.

3.2.2  Rolling Forecasts. Beginning on March 17, 2008, Genzyme will provide to BioMarin a rolling written fifteen (15) month forecast of sales and estimates of forthcoming orders of Aldurazyme from BioMarin that will cover the period commencing at the beginning of the third (3^rd) following calendar quarter. For example, assuming that this Agreement is effective as of January 1, 2008, the forecast delivered by March 17, 2008 would cover the period of October 1, 2008 through December 31, 2009. Genzyme shall update such rolling fifteen-month forecast every calendar quarter (such that each forecast shall cover fifteen (15) months on a rolling basis), and such updates shall be provided not later than fifteen (15) days prior to the commencement of each quarterly period during the term hereof. The first three (3) months of each such forecast (i.e. October 1, 2008 through December 31, 2008 in the above example) shall constitute a binding commitment to order the quantity of Aldurazyme forecast for such period (the “Firm Period”). Projections for months four (4) through fifteen (15) (i.e., January 1, 2009 through December 31, 2009 in the above example) shall constitute Genzyme’s reasonable best estimates of future orders, but shall not be binding on Genzyme. To the extent that any new quarterly forecast calls for BioMarin to provide vials of Aldurazyme in quantities that exceed the average quarterly volume sold by Genzyme for the previous [****] period by more than [****], BioMarin shall not be required to provide such increased quantity of Aldurazyme without its consent; provided, however, that BioMarin will use its commercially reasonable and diligent efforts to supply the entire quantity of Aldurazyme ordered by Genzyme during such period. Additionally, BioMarin shall not be obligated to supply vials of Aldurazyme in quantities that exceed [****] of Genzyme’s estimate for vials of Aldurazyme for the relevant twelve-month non-binding period (based on the lowest non-binding forecast for each respective calendar quarter); provided, however, that BioMarin will use its commercially reasonable and diligent efforts to supply the entire quantity of Aldurazyme ordered by Genzyme during such period, provided further, that BioMarin shall be under no obligation to alter its scheduled manufacturing of other products.

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3.3 Orders. Genzyme shall submit to BioMarin an Order with each rolling fifteen-month forecast covering the Firm Period reflected in each such forecast. Each Order shall specify the quantity ordered, the required delivery date (provided that such delivery date is not earlier than [****] days after the date of such Order), and any special instructions or invoicing information. For example, the forecast delivered by March 17, 2008 shall state a required delivery date no earlier than [****], 2008 for the Order covering the Firm Period (i.e., the quarterly period running from October 1, 2008 through December 31, 2008) reflected in such forecast. With respect to the quantity ordered, Genzyme shall indicate in the Order the number of vials of Aldurazyme (specifying the number of vials of Aldurazyme meeting each different Specification) to be used for each of the following categories, based on Genzyme’s good faith estimates at such time: (a) commercial sales, (b) compassionate use or expanded access programs, (c) Post-Marketing Studies (other than Post-Marketing Studies conducted under the Amended & Restated Collaboration Agreement), and (d) acceptance and in-country testing, final Lot release and regulatory requirements. Each Order issued shall be governed by the terms of this Agreement. BioMarin shall accept and fill all properly placed Orders that are consistent with the rolling forecasts and the limitations set forth in Section 3.2. BioMarin shall notify Genzyme (i) within [****] business days of the date of the Order with respect to all Orders that conform to this Agreement of its acceptance of such Order and (ii) within [****] business days of the date of the Order with respect to all Orders that BioMarin questions, in good faith, the consistency of such Order with the rolling forecasts or the limitations set forth in Section 3.2, whether or not it is accepting such Order. Any terms or conditions of any such Order that conflict or are inconsistent with the terms of the Agreement are hereby rejected. Genzyme agrees to use its commercially reasonable and diligent efforts to manage the purchase and delivery cycle so that Genzyme or its Affiliates is at all times after October 1, 2008 holding at least [****] of filled inventory of Aldurazyme, with the exact amount being held in inventory to be determined based on anticipated demand as determined by Genzyme in good faith.

3.4 Safety Stock. Except as provided below, BioMarin agrees to use its commercially reasonable and diligent efforts to hold at least [****] inventory of Aldurazyme at all times after October 1, 2008, with the exact amount being held in inventory to be determined based on anticipated demand as reflected in Genzyme’s rolling forecasts. In addition, in the event that there is a proposed change in the facilities used to manufacture Aldurazyme pursuant to Section 3.10 below or a proposed modification of the Specifications or the processes used to manufacture Aldurazyme pursuant to Section 3.11, BioMarin shall (i) hold ready for immediate transfer to Genzyme sufficient additional inventory of filled Aldurazyme (“Change Control Safety Stock”) to reasonably ensure uninterrupted supply of such Aldurazyme in each country in the Territory in which Aldurazyme is distributed, marketed and sold until the necessary Regulatory Approvals for such change or modification are obtained in such country; and (ii) ensure that all such Change Control Safety Stock shall at all times be manufactured and produced using the facilities, Specifications or processes approved by

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the appropriate government or regulatory authorities in each country in the Territory as appropriate to enable sale of such Change Control Safety Stock in such country until the necessary Regulatory Approvals for such change or modification are obtained in such country.

3.5 Shipping of Aldurazyme. BioMarin will deliver Aldurazyme sold to Genzyme [****] by such means of transportation as shall be reasonably determined by BioMarin from time to time. BioMarin shall use its commercially reasonable and diligent efforts to ship Aldurazyme so that it will arrive at Genzyme’s facility on or within [****] business days of the date specified in the relevant Order. To the extent BioMarin incurs any shipping charges, premiums for freight insurance, customs duties or other import or export fees, or other transportation costs in connection with shipments of Aldurazyme to Genzyme, BioMarin will be solely responsible for such amounts. Included with each shipment or provided separately but concurrently with such shipment shall be the Certificate of Analysis for the drug product, Certificate(s) of Analysis for each Lot of drug substance or intermediate that went into the drug product, and a certificate of cGMP compliance in a form reasonably agreed to by BioMarin and Genzyme. All other obligations of BioMarin relating to the documents to be provided in connection with each shipment of Aldurazyme shall be governed by the Technical Agreement.

3.6 Compliance with Laws. BioMarin shall comply with all applicable laws, rules and regulations applicable to the manufacture, storage, handling and shipment of Aldurazyme.

3.7 Direct Shipment to Customers. BioMarin shall not be required to ship Aldurazyme directly to a customer of Genzyme unless Genzyme first seeks and obtains BioMarin’s prior written approval for such a shipment. BioMarin shall not ship Aldurazyme to any Third Party (other than bulk material to vendors for the sole purpose of filling Aldurazyme on behalf of BioMarin), without Genzyme’s prior written authorization.

3.8 Risk of Loss. [****]

3.9 Testing; Rejection.

(a) [****]

(b) [****]

(c) [****]

(d) [****]

(e) [****]

(f) [****]

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(g) Genzyme shall not be obligated under any circumstances to accept delivery of any Lot of Aldurazyme unless it meets the Specifications and Regulatory Approvals for the relevant country in the Territory (as determined through the mechanism set forth in this Section 3.9) and the applicable warranties set forth herein. Genzyme shall be entitled to return to BioMarin any Aldurazyme which the Parties reasonably agree cannot or should not be sold due to a change in the Specifications or Regulatory Approvals, and BioMarin shall promptly replace, at no additional expense to Genzyme, such Aldurazyme with new Aldurazyme that does conform with the approved Specifications and Regulatory Approvals for the relevant country in the Territory.

3.10  Suppliers. Without limiting BioMarin’s responsibility under this Agreement, BioMarin shall have the right at any time to satisfy its supply obligations to Genzyme hereunder, either in whole or in part, through arrangements with Third Parties engaged to perform services or supply facilities or goods in connection with the manufacture, testing, and/or packaging of Aldurazyme. BioMarin shall ensure that all such facilities comply with applicable regulations and will give Genzyme written notice at least [****] days in advance of any such arrangement to determine whether such arrangement would require changes to a Marketing Application Approval application filed in any country and, if so, whether prior approval of any such changes is required by the regulatory authority in such country. To the extent that a change is required, after receipt of all necessary data from BioMarin, Genzyme shall, at BioMarin’s expense, use its commercially reasonable and diligent efforts to prepare and make such filings and, if required, seek approval for such change in such countries that Genzyme has responsibility for pursuant to Section 5.1.2(a); and BioMarin shall, at its own expense, use its commercially reasonable and diligent efforts to make such filings and, if required, seek approval for such change in the United States. BioMarin shall be required to continue to supply drug product using materials or testing from previously approved suppliers for each country in the Territory until such Regulatory Approvals are received in such country and to clearly mark which Lots use the new suppliers or testing laboratories at the time of shipment.

3.11  Changes to Aldurazyme.

(a) BioMarin may, at its election and in its sole discretion, modify the Specifications of or processes used to manufacture Aldurazyme at any time, subject to (i) BioMarin generating such data, including without limitation development, comparability, stability and validation data, as may be necessary to obtain Regulatory Approvals for such changes and (ii) such Regulatory Approvals being obtained; provided, however, that to the extent that any such modification would require clinical trials with MPS-I patients in order to obtain the necessary Regulatory Approvals for such modification, BioMarin may not implement such modification without the prior written consent of Genzyme, which consent shall not be unreasonably withheld, delayed or conditioned. BioMarin will give Genzyme written notice of any such change at least [****] days prior to its implementation, together with a proposed amendment to Exhibit A reflecting and identifying such change. Exhibit A shall not be amended to reflect any such change unless and until any necessary amendments to any Marketing Applications and Regulatory Approvals to implement such changes are approved by the appropriate regulatory authorities.

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(b) [****]

(c) Additionally, Genzyme may be required, as a result of negotiations with or directions from a regulatory authority of a country in the Territory, to propose changes in the Specifications as a condition to marketing or continuing to market Aldurazyme in that country. BioMarin shall use its commercially reasonable and diligent efforts to accommodate such changes to the Specifications for such country; provided that BioMarin may decide not accommodate any such change to the extent that it would require a change to the manufacturing process, if (i) historical data does not support such proposed Specification changes, (ii) such change would increase BioMarin’s cost of goods sold, or (iii) such change would jeopardize BioMarin’s ability to manufacture Aldurazyme for global demand. BioMarin recognizes that any such failure to accommodate any changes required by a regulatory authority in the Territory (or any delay in accommodating any such changes) may result in the prevention or suspension of distribution and sales of Aldurazyme in that country.

(d) Subject to Sections 3.2 and 3.3, BioMarin shall continue to supply Genzyme with Aldurazyme for each country in the Territory conforming to the then-approved Specifications or manufacturing process for such country as requested by Genzyme until such time as any change in the Specifications or manufacturing process, as applicable, is approved by the relevant regulatory authority(ies) for such country.

3.12 Responsibility for Costs. BioMarin shall be solely responsible for all costs resulting from decisions made by BioMarin pursuant to Sections 3.10 and 3.11 above, including without limitation, Genzyme’s fully burdened costs incurred in accordance with such Sections (including Genzyme’s FTE costs, filing fees, translation costs, and the costs of any changes to Labeling Materials resulting from decisions or changes made pursuant to such Sections) unless the change is related to (a) updating filings for raw materials, reagents, replacements for obsolete equipment or other material used in the manufacture or testing of Aldurazyme that are no longer available on commercially reasonable terms or (b) updating filings related to material used in the manufacture, release or testing of Aldurazyme based on the process and procedures included with then current Regulatory Approvals (such as validation of quantities of reference material), in which cases Genzyme shall make such filings and secure such Regulatory Approvals outside of the United States at Genzyme’s sole expense and BioMarin shall make such filings and secure such Regulatory Approvals in the United States at BioMarin’s sole expense. Genzyme shall provide BioMarin with quarterly, reasonably detailed invoices for all such costs, and BioMarin shall reimburse Genzyme for such costs within forty-five (45) days after receipt thereof. Notwithstanding any of the above, (i) any changes resulting from the request or direction of the FDA, EMEA or any other regulatory authority other than as a direct result of a change proposed or implemented by BioMarin pursuant to Section 3.10 or 3.11, (ii) those changes set forth on Schedule 3.12 and (iii) the

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validation of a Third Party [****] pursuant to Section 3.8 of the Fill Agreement shall not be deemed to be decisions made by BioMarin pursuant to Section 3.10 and 3.11 above and Genzyme shall bear all costs and expenses related to making all filings and seeking approval for such changes in all countries outside of the United States while BioMarin shall bear all costs and expenses related to making all filings and seeking approval for such changes in the United States; provided, however, that with respect to the changes set forth in Schedule 3.12, priority shall be given to those changes that fall into the categories described in clauses (a), (b) and (i) above; provided further that Genzyme’s responsibility under this Section 3.12 with respect to the cost of making regulatory filings and securing Regulatory Approvals outside of the United States (A) for the changes set forth in Schedule 3.12 shall end upon the earlier of (x) completion of such regulatory activities or (y) such time as the costs incurred with respect to such regulatory activities equal [****] and (B) related to the validation of a Third Party pursuant to clause (iii) above shall be for the first [****] of such costs (thereafter, BioMarin shall be responsible for the next [****], of such costs and BioMarin and Genzyme shall share equally any such costs in excess of [****] (with BioMarin reimbursing Genzyme for BioMarin’s portion of all such costs within forty-five (45) days after receipt of reasonably detailed invoices therefor)).

3.13 Failure to Supply.

(a) In the event that technical, regulatory or other reasons or events beyond BioMarin’s reasonable control prevent BioMarin from producing Aldurazyme, BioMarin will use its commercially reasonable and diligent efforts to secure a Third Party contract manufacturer in a timely manner. All such contract manufacturing activities will be at BioMarin’s sole cost and expense and BioMarin shall have full authority to direct and control the contract manufacturer and Genzyme, except as provided below, shall continue to purchase Aldurazyme from BioMarin. Notwithstanding the foregoing, during the technology transfer to and validation of any Third Party contract manufacturer, Genzyme may, at its election and expense, have technical representatives present for such activities and BioMarin will consider, but will have no obligation to implement, any suggestions or recommendations made by such representatives.

(b) In the event that BioMarin is unable to secure a Third Party contract manufacturer within [****] days, then BioMarin shall offer Genzyme the opportunity to produce Aldurazyme. If Genzyme agrees to produce Aldurazyme, then BioMarin and Genzyme shall promptly negotiate in good faith commercially reasonable and diligent terms and conditions for such arrangement; provided, however, BioMarin and Genzyme shall negotiate in good faith for payment amounts and structures to compensate Genzyme for its out of pocket and internal expenses incurred in the technology transfer and regulatory process, cost of involvement to allow it to manufacture Aldurazyme and variable costs associated with the actual production of Aldurazyme. If BioMarin and Genzyme enter into such arrangement, then BioMarin will promptly initiate a technology transfer process during which BioMarin and its

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subcontractors, as appropriate, will provide Genzyme or its designee with all know-how, data and information necessary or desirable to enable Genzyme to manufacture or have manufactured Aldurazyme for the Territory. Additionally, BioMarin will make such employees involved in the development, manufacture and release of Aldurazyme available to ensure a complete technology transfer is achieved in a timely fashion.

(c) In the event that BioMarin and Genzyme enter into an arrangement pursuant to clause (b) above and BioMarin is subsequently able to resume production of Aldurazyme, BioMarin may elect, upon [****] days prior written notice to Genzyme to reacquire such production responsibilities from Genzyme. If BioMarin elects to reacquire production responsibilities from Genzyme, then BioMarin will promptly reimburse Genzyme the total amount of costs incurred by Genzyme (including, without limitation any and all capital expenditures) in connection with the technology transfer process described in clause (b) above, building or acquiring capacity and resources to manufacture Aldurazyme, filing for and obtaining all necessary Regulatory Approvals to produce Aldurazyme, and transferring such manufacturing responsibility back to BioMarin. Such amounts to be reimbursed by BioMarin to Genzyme pursuant to the previous sentence shall be offset by the amount such costs have already been recovered by Genzyme pursuant to payments made by BioMarin pursuant to clause (b) above. BioMarin shall reimburse Genzyme for such amounts within forty-five (45) days after receipt of reasonably detailed invoices therefor. Upon BioMarin resuming production responsibilities from Genzyme with respect to Aldurazyme, the royalty payable by Genzyme to BioMarin shall be increased to those levels set forth in Section 6.1 for Aldurazyme produced by BioMarin.

(d) BioMarin will use its commercially reasonable and diligent efforts to continue to produce Aldurazyme for supply to such countries in the Territory where Aldurazyme is used or sold until such time as this Third Party manufacturer or Genzyme, as the case may be, has been approved in all countries in the Territory. If BioMarin is not able to do so, then Genzyme will not be held in breach of any of its obligations due to an inability to supply Patients and commercialize Aldurazyme in such country resulting from BioMarin’s failure to supply product that meets the regulatory requirements in such country.

3.14 Certificates of Analysis. BioMarin shall perform, or cause its contract manufacturer(s) to perform, quality assurance, control tests, and release on each Lot of Aldurazyme, to the extent specified in and in compliance with the Technical Agreement, before delivery and shall prepare, or cause its contract manufacturer(s) to prepare and deliver, a written report of the results of such tests (for purposes of Sections 3.14 through 3.17 (inclusive), such contract manufacturer(s) shall be included in the definition of the term “BioMarin”). Each test report shall set forth for each Lot delivered the items tested, specifications and results in a Certificate of Analysis containing the types of information typical for such reports or required by the FDA or other applicable regulatory authority. BioMarin shall maintain such certificates for a period of not less than five (5) years from the date of manufacture or for such longer period as required under applicable requirements of the FDA or other applicable regulatory authority.

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3.15 Certificates of Manufacturing Compliance. BioMarin shall prepare, or cause to be prepared and delivered, and maintain for a period of not less than five (5) years or for such longer period as required under applicable requirements of the FDA or other applicable regulatory authority for each Lot of Aldurazyme manufactured a certificate of manufacturing compliance containing the types of information typical for such reports or required by the FDA or other applicable regulatory authority, which certificate will certify that the Lot of Aldurazyme was manufactured in accordance with the Specifications and the cGMP Regulations as the same may be amended from time to time.

3.16 Regulatory Inspections; Reports. BioMarin shall advise Genzyme immediately if an authorized agent of the FDA or other regulatory authority visits any of manufacturing facilities used to produce Aldurazyme, for an inspection with respect to the Aldurazyme, and of any written or oral inquiries by any such authority about such facilities or the procedures for the manufacture, storage or handling of Aldurazyme or the packaging, labeling, marketing, distribution, promotion, commercialization for sale and sale of Aldurazyme. BioMarin shall furnish to Genzyme the report and any and all correspondence issued by or provided to such agency in connection with such visit or inquiry, to the extent that such report or correspondence relates to Aldurazyme, within ten (10) business days after BioMarin’s receipt of such report or correspondence, as the case may be, and Genzyme shall have the right to comment on any response by BioMarin to such inspecting agency. Notwithstanding the prior sentence, BioMarin shall be under no obligation to accept any comments provided by Genzyme on any response by BioMarin to such inspecting agency and all submissions to such agency by BioMarin shall be at its sole and absolute discretion.

3.17 Access to BioMarin Facilities. Genzyme shall have the right to audit once annually each of those portions of the manufacturing, finish processing or storage facilities where Aldurazyme is being manufactured, finished or stored, or any subcontractor who is manufacturing, finishing or storing Aldurazyme for BioMarin, at any time during regular business hours and upon reasonable advance notice to ascertain compliance with the cGMP Regulations, as the same may be amended from time to time. Subject to the terms and conditions of Section 8.1 below, confidential information disclosed to or otherwise gathered by Genzyme during any such audit or provided by BioMarin shall be maintained as confidential.

3.18 Technical Agreement. Within ninety (90) days after the Effective Date, the Parties shall execute and deliver a new Technical Agreement containing customary provisions consistent with the allocation of responsibilities set forth in this Agreement. Until a new agreement is executed and delivered, the Parties shall operate under the existing Technical Agreement.

3.19 Hollister-Stier Agreement. BioMarin shall have sole responsibility for managing the relationship with Hollister-Stier Laboratories, LLC pursuant to the Supply Agreement

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by and between Hollister-Stier Laboratories, LLC and BioMarin/Genzyme LLC dated as of November 6, 2006, as it may be amended from time to time (as amended, the “Hollister-Stier Agreement”) and shall be solely responsible for all amounts payable to Hollister-Stier and liabilities arising under such Agreement. As soon as practicable after the Effective Date, BioMarin shall use its commercially reasonable and diligent efforts to cause the Hollister-Stier Agreement to be assigned from BioMarin/Genzyme LLC to BioMarin.

4. MARKETING AND SALES

4.1 Exclusive Right to Market, Sell and Distribute. Subject to the terms and conditions of this Article 4, Genzyme shall have the exclusive right to distribute, market and sell Aldurazyme throughout the world, including without limitation all pricing and reimbursement activities. Genzyme agrees (by itself or through its Affiliates or Third Parties selected by Genzyme at its election and in its sole discretion) to use its commercially reasonable and diligent efforts to establish Aldurazyme in the markets, fulfill market demand and meet the marketing and distribution goals for Aldurazyme determined by Genzyme in its good faith, subject to the receipt of necessary Regulatory Approvals and subject to BioMarin’s performance of its obligations under Article 3.

4.2 Compliance With Laws. Genzyme shall comply with applicable laws, rules and regulations in each country in which Aldurazyme is licensed, marketed or sold relating to the marketing, sale and distribution of Aldurazyme. Without limiting the foregoing, Genzyme shall comply with all U.S. federal and state laws pertaining to price reporting and, except to the extent such compliance is BioMarin’s responsibility as the holder of the BLA and subject to BioMarin’s compliance with its obligations under Section 5.1.2, marketing disclosure.

4.3 Marketing and Distribution Expenses.

4.3.1 Genzyme shall be solely responsible for payment of all Marketing Costs.

4.3.2 Beginning on January 1, 2008 and continuing so long as this Agreement remains in force, Genzyme agrees to [****].

4.3.3 Genzyme shall keep complete and accurate books and records of all Marketing Costs relating to Aldurazyme. BioMarin shall have the right, at BioMarin’s expense, through a certified independent public accountant, to have reasonable access upon reasonable advance notice and during normal business hours to such books and records for the purpose of verifying the accuracy of such Marketing Costs; provided, however, that BioMarin shall not have the right to perform any audit work pursuant to this Section 4.3.3 unless and until [****]. BioMarin and Genzyme shall agree in good faith upon reasonable procedures before BioMarin’s auditors begin the audit work pursuant to this Section 4.3.3. The report issued by such auditor shall be final, binding and conclusive upon each of BioMarin and Genzyme. Such verifications may be conducted not more than once in each calendar year. The books and records for any particular calendar quarter may not be examined under this Section 4.4.3 more than once.

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4.3.4 BioMarin agrees that all information subject to review under this Section 4.3 (other than information directly related to Aldurazyme) is Genzyme’s confidential information and that it shall cause its accounting firm to retain all such information in confidence (even as to BioMarin) subject to the confidentiality restrictions of Article 8 hereof. Notwithstanding the prior sentence, Genzyme acknowledges and agrees that such accounting firm’s obligation to retain all such information in confidence from BioMarin shall not apply in the event that BioMarin and Genzyme are involved in a dispute under Section 13.8 related to this Section 4.3 and such information is necessary for BioMarin’s use in connection with such dispute; provided, however, that BioMarin shall only use such information in connection with such dispute and such information shall remain subject to the confidentiality restrictions of Article 8.

4.4 Medical Information. Genzyme shall have sole responsibility for responding to all requests for medical information regarding Aldurazyme. If BioMarin receives any such requests, it shall promptly direct such requests to Genzyme. Notwithstanding the foregoing, BioMarin may maintain a website or other informational resources where it may publish general medical information relating to MPS I, so long as such website complies in all respects with applicable laws, rules and regulations. This Section 4.4 shall not prohibit BioMarin from publishing non-medical information in its investor relations communications, including on BioMarin’s website, provided that such publication is consistent with the terms and conditions of Article 8.

4.5 Pharmacovigilance.

4.5.1 Genzyme and its Affiliates will be responsible for continuing all pharmacovigilance activities with respect to Aldurazyme, including without limitation maintaining Aldurazyme Core Safety Information. BioMarin shall have the right to audit, at any time during regular business hours and upon reasonable advance notice to audit such pharmacovigiliance activities with respect to Aldurazyme. Such audit rights shall include the right to review, inspect and/or audit any systems or processes involved or utilized in such pharmacovigilance activities as well as the right to review, inspect or audit all information or data necessary to be filed with any regulatory or governmental authority.

4.5.2 In the event that the Aldurazyme Labeling Materials must be updated per new Core Safety Information, after receipt of all necessary information and data from Genzyme, BioMarin agrees to use its commercially reasonable and diligent efforts make all necessary regulatory filings to FDA and obtain approvals in order to ensure the content of Aldurazyme Labeling Materials in the United States is in-line with the Core Safety Information. Genzyme shall be responsible for using its commercially reasonable and diligent efforts to

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make such filings and obtain such approvals outside of the United States. Each of BioMarin and Genzyme shall be given the opportunity to attend and participate in any meetings or discussions that the other Party may have with any regulatory authorities regarding any submissions or approvals and shall be provided with an opportunity to review and comment upon any correspondence, submission or communication that the other Party may have with any such regulatory authority prior to such correspondence, submission or communication being made or submitted to such regulatory authority.

4.5.3 As of the Effective Date and throughout the term of this Agreement, Genzyme shall maintain one or more written SOP(s) to collect Adverse Experience information. The content of any SOP(s) shall include, but not be limited to, specific instructions regarding the type of Adverse Experience information collected, the time frame for collection, provisions for secure transmissions, and inter-company processes to be used for notification of said information. In addition to the foregoing, the Parties shall update the current guidelines and procedures to govern receipt, processing, assessment and submission of Aldurazyme Adverse Experience and Serious Adverse Experience reports to the FDA, the European Commission and other regulatory authorities within sixty (60) days after the Effective Date. Procedures described therein shall ensure compliance with all applicable laws and regulations. The Parties acknowledge that Genzyme’s SOPs as they exist as of the Effective Date satisfy the requirements of this Section 5.2.1 for reports to the FDA.

4.5.4 BioMarin shall have responsibility for filing all 15-day alert reports, 15-day alert follow-up reports and periodic adverse event reports to the FDA per 21 CFR §600.80. Genzyme or its designee shall have responsibility for filing such reports outside of United States, including EMEA and other regulatory authorities according to the local regulations.

4.6 Complaints. Within sixty (60) days after the Effective Date, Genzyme and BioMarin shall develop a written protocol for exchanging information on product complaints concerning Aldurazyme of which either Party becomes aware, so as to allow each of Genzyme and BioMarin to comply with its regulatory obligations. At a minimum, such protocol shall provide that the Party receiving such complaint or information shall promptly, but in any event not later than twenty-four (24) hours after receipt, advise the other Party (excluding, for purposes of this Section, BioMarin/Genzyme LLC) in writing of the details of such complaint or information, after learning of such information. Promptly thereafter, Genzyme shall report such incident to the appropriate regulatory authorities in the countries in which Aldurazyme is being commercialized, in accordance with the appropriate laws and regulations of the relevant countries and authorities; provided, however, that with respect to reports that are to be made with the FDA, BioMarin shall make such report using the information prepared by Genzyme. Such reporting activities shall be coordinated between Genzyme and BioMarin where time and law permit. The Party initially receiving the complaint or information shall provide the other Party with all follow-up information related to such incident generated by the receiving Party or required by the other Party to satisfy its regulatory filing obligations.

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4.7 Registries; Post-Marketing Studies.

4.7.1 Registries. Genzyme shall have the responsibility for conducting the MPS-I registry program as it exists on the Effective Date at Genzyme’s sole expense. In the event that the scope of the registry program is expanded to implement any Post-Marketing Studies required by regulatory authorities to be conducted through or as part of the registry program, such costs above the general cost of maintaining the registry program as currently conducted will be funded by BioMarin/Genzyme LLC pursuant to the terms of the Amended and Restated Collaboration Agreement.

4.7.2 Post-Marketing Studies. With respect to any Post Marketing Studies required by a jurisdiction where Aldurazyme does not have Regulatory Approval as of the Effective Date, Genzyme shall, at its sole expense and in its sole discretion, have the responsibility for conducting any such Post-Marketing Studies that are not funded by BioMarin/Genzyme LLC pursuant to the terms of the Amended and Restated Collaboration Agreement.

4.8 Use of Trademarks. Aldurazyme shall be sold under trademarks determined by Genzyme and owned by or licensed to Genzyme or BioMarin/Genzyme LLC.

4.9 Records. Genzyme shall maintain complete and accurate records of all movements and transactions involving Aldurazyme by an appropriate identifier and by customer so that all such movements and transactions can be traced quickly and effectively. Genzyme shall maintain such records for a minimum period of five (5) years after the relevant movement or transaction contained in such record. The records maintained by Genzyme pursuant to this Section 4.9 shall be Genzyme’s confidential information under Article 8 and subject to BioMarin’s audit rights under Section 6.5.

4.10 Regulatory Inspections; Reports. Genzyme shall advise BioMarin immediately of any visit by an authorized agent of a regulatory authority to, or written or oral inquiries by any such authority about, any Genzyme facilities (or facilities of any subcontractors engaged by Genzyme) used to package, label or store Aldurazyme or procedures for the filling, manufacture, storage, or handling of Aldurazyme, or the packaging, labeling, marketing, distribution, promotion, commercialization for sale and sale of Aldurazyme. Genzyme shall furnish to BioMarin the report and any and all correspondence issued by or provided to such authority in connection with such visit or inquiry to the extent such report or correspondence relates to Aldurazyme, within ten (10) business days after Genzyme’s receipt of such report or correspondence, as the case may be, and BioMarin shall have the right to comment on any response by Genzyme to such inspecting agency. Notwithstanding the prior sentence, Genzyme shall be under no obligation to accept any comments provided by BioMarin on any response by Genzyme to such inspecting agency and all submissions to such agency by Genzyme shall be at its sole and absolute discretion.

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4.11 Access to Genzyme Facilities. BioMarin shall have the right to audit once annually each of those portions of the distribution or storage facilities of Genzyme or its Affiliates where Aldurazyme is being stored, sold or distributed, or any subcontractor or other Third Party who is storing, selling or distributing Aldurazyme for Genzyme, at any time during regular business hours and upon reasonable advance notice to ascertain compliance with cGMP Regulations, as the same may be amended from time to time. Such audit rights shall include the right to review, inspect and/or audit any systems or processes involved or utilized in the storage, selling or distribution of Aldurazyme as well as the right to review, inspect or audit all information or data necessary to be filed with any regulatory authority (including the FDA) or related to the BLA. Genzyme shall furnish to BioMarin any report or correspondence issued by or provided to any governmental authority in connection with any governmental visit or inquiry regarding the facilities at which Genzyme, its Affiliates or any Third Party stores, sells or distributes Aldurazyme or the procedures related thereto. Subject to the terms and conditions of Section 8.1 below, confidential information disclosed to or otherwise gathered by BioMarin during any such audit or provided by Genzyme shall be maintained as confidential.

4.12 Third Party Licenses. Genzyme hereby agrees to pay any and all royalties, sublicense fees and other costs owed by BioMarin/Genzyme LLC with respect to the manufacture or sale of Aldurazyme to any Third Party pursuant to the terms and conditions of the Third Party Licenses. Genzyme further agrees to fulfill any and all of the reporting obligations BioMarin/Genzyme LLC may have to any Third Party related to Aldurazyme by virtue of the Third Party Licenses.

4.13 Suspension of Distribution. Each Party shall notify the other promptly if it becomes aware of a problem with the quality of Aldurazyme distributed in the Territory, or a directive from the FDA, the EMEA or any other applicable regulatory authority related to Aldurazyme distributed in the Territory. Upon receipt of any such notice from BioMarin, Genzyme may suspend sales and distribution of Aldurazyme in the Territory, at its reasonable discretion. After any such suspension, BioMarin and Genzyme shall consult in good faith to determine whether and when to resume sales and distribution of Aldurazyme; provided, however, that no such suspension shall be deemed to be a default by Genzyme hereunder except to the extent that Genzyme does not resume sales and distribution of Aldurazyme within fifteen (15) business days after the Parties agree that such quality problem has been resolved.

5. REGULATORY MATTERS.

5.1 Marketing and Regulatory Approvals.

5.1.1 Marketing Applications. Genzyme shall be responsible, in its sole discretion and at its sole expense, for filing Marketing Applications for Aldurazyme in each country, other than as expressly provided in Sections 3.10, 3.11, 3.12 and 5.1.2, in which Aldurazyme is licensed, marketed or sold, up to and including Marketing Application Approval, and for thereafter maintaining such Marketing Application Approvals. In connection with Genzyme’s filing

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of Marketing Applications, BioMarin shall provide Genzyme with a copy, in English, of all necessary supporting information and data when required, to prepare appropriate regulatory submissions affecting approval and maintenance of market or of product pricing. Nothing in this Article 5 shall be deemed to require Genzyme to file Marketing Applications and obtain Marketing Application Approvals in each country in the Territory; Genzyme shall determine in good faith where and when to file and maintain such applications and approvals in a manner consistent with its obligation to use its commercially reasonable and diligent efforts to commercialize Aldurazyme.

5.1.2 Regulatory Approvals.

(a) Genzyme shall be responsible at its sole expense: (i) for the filing of all reports, documents or other information regarding Aldurazyme required by the EMEA or any other governmental agency or body outside of the United States having jurisdiction related to Aldurazyme and for securing all necessary Regulatory Approvals and for ensuring that Aldurazyme remains in good standing with all such governmental agencies or bodies and all other applicable jurisdictions (other than the United States) for as long as Genzyme determines to market and sell Aldurazyme in such jurisdictions; and (ii) for obtaining and maintaining all permits and licenses necessary to enable Genzyme to distribute Aldurazyme under this Agreement. Genzyme agrees to provide BioMarin with copies of all filings, reports, documents or other information provided by it to any regulatory authority outside of the United States related to Aldurazyme within thirty (30) days of making such filing with such regulatory authority.

(b) BioMarin shall be responsible at its sole expense: (i) for the filing of all reports, documents or other information regarding Aldurazyme required by the FDA or any other governmental agency in the United States having jurisdiction related to Aldurazyme and for securing all necessary Regulatory Approvals and for ensuring that Aldurazyme remains in good standing with the FDA and such other governmental agencies; and (ii) for obtaining and maintaining all permits and licenses to enable BioMarin to produce Aldurazyme for the global market under this Agreement. BioMarin agrees to provide Genzyme with copies of all filings, reports, documents or other information provided by it to any regulatory authority in the United States related to Aldurazyme within thirty (30) days of making such filing with such regulatory authority.

(c) All regulatory filings for Aldurazyme in the United States will be filed by and in the name of BioMarin. BioMarin agrees that: (i) it shall hold the licenses issued in respect of such Regulatory Approval filings, and maintain control over the manufacturing facilities, equipment and personnel, to the extent required by the Regulatory Scheme; (ii) it shall maintain compliance with the applicable Regulatory Scheme; (iii) each of the Parties shall have an irrevocable right of access and reference to such Regulatory Approval filings, licenses and facilities in connection with its exercise of its rights and performance of its obligations under this Agreement, the Amended and Restated Collaboration Agreement and

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the Fill Agreement; and (iv) it shall comply with the provisions of Article 12 hereof with respect to the ownership and/or disposition of such Regulatory Approvals in the event this Agreement is terminated and that it will provide the level of cooperation described in this Agreement in connection therewith.

(d) All regulatory filings for Aldurazyme outside of the United States will be filed by and in the name of Genzyme or its designee. Genzyme agrees that: (i) it shall hold the licenses issued in respect of such Regulatory Approval filings, maintain control over the distribution facilities, equipment and personnel, and engage in pharmacovigilence to the extent required by the Regulatory Scheme; (ii) it shall maintain compliance with the applicable Regulatory Scheme; (iii) each of the Parties shall have an irrevocable right of access and reference to such Regulatory Approval filings, licenses and facilities in connection with its exercise of its rights and performance of its obligations under this Agreement, the Amended and Restated Collaboration Agreement and the Fill Agreement; and (iv) it shall comply with the provisions of Article 12 hereof with respect to the ownership and/or disposition of such Regulatory Approvals in the event this Agreement is terminated and that it will provide the level of cooperation described in this Agreement in connection therewith.

(e) No Party may assign or otherwise transfer a Regulatory Approval for Aldurazyme without the prior written consent of the other Parties; provided, however, that either BioMarin or Genzyme may, without such consent, assign such Regulatory Approvals (i) in connection with a corporate reorganization, to any member of an affiliated group, all or substantially all of the equity interest of which is owned and controlled by such Party or its direct or indirect parent corporation or (ii) in connection with a merger, consolidation or sale of substantially all of such Party’s assets to an unrelated Third Party; provided, however, that such Regulatory Approvals shall not be transferred separate from this Agreement and the Related Agreements and all or substantially all of such Party’s other business assets, including without limitation those business assets that are the subject of this Agreement. Any purported assignment in violation of this Section 5.1.2(e) shall be void.

5.2 Recalls.

5.2.1 BioMarin may, in its sole discretion, determine whether or when to initiate any recalls of Aldurazyme in the United States and Genzyme may, in its sole discretion, determine whether or when to initiate any recalls of Aldurazyme anywhere else in the world. As of the Effective Date and throughout the term of this Agreement, BioMarin and Genzyme shall prepare and maintain a written SOP, to handle any recalls of Aldurazyme. Such SOP shall include, without limitation, prior notice to and consultation with the other Party of any recall; provided, however, that in no event shall such consultation be deemed to limit or supersede the Parties’ ability to make recall decisions in their sole discretion pursuant to the first sentence hereof. Genzyme shall transmit recall decision information to BioMarin to Vice President,

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Regulatory Affairs, by phone at (415) 506-6708 or facsimile at (415) 506-6306. BioMarin shall transmit recall decision information to Genzyme to Regulatory Affairs/QA, attention: Vice President, Regulatory Affairs and Corporate Quality Compliance, by phone at (508) 661-6172 or facsimile at (508) 661-8851. In the event that (i) any regulatory authority or other governmental agency or authority issues a request or directive or orders that Aldurazyme be recalled or retrieved, (ii) a court of competent jurisdiction orders that Aldurazyme be recalled or retrieved or (iii) a Party determines that Aldurazyme should be recalled, retrieved or a “Dear Doctor” letter is required relating to restrictions on use of Aldurazyme in a country for which it is responsible, the Party responsible for the relevant country pursuant to the first sentence hereof shall conduct such activity and the Parties shall take all appropriate corrective actions and shall execute the steps detailed in the SOP. To the extent practicable, the Parties shall coordinate the notices of any such recall to be delivered to regulatory authorities (including the timing thereof). Genzyme and BioMarin shall cooperate fully with one another in conducting such action. Genzyme shall destroy units of Aldurazyme lawfully recalled only upon BioMarin’s (or any regulatory authority’s) written instruction to destroy such units of Aldurazyme, and only then in accordance with BioMarin’s procedures and instructions. Otherwise, Genzyme may return the recalled units of Aldurazyme to BioMarin in accordance with BioMarin’s instructions within thirty (30) days after completion of the action. In the event that either BioMarin or Genzyme becomes aware of circumstances that may necessitate a recall of Aldurazyme in any country for which it is not responsible pursuant to this Section 5.2, it will promptly notify the other Party of such circumstances.

5.2.2 In the event a recall results from the manufacture of Aldurazyme (including without limitation changes made pursuant Sections 3.11 and 3.12 hereof) or BioMarin’s negligence or willful misconduct, BioMarin shall be responsible for the expenses thereof. In the event a recall results from Genzyme’s filling, packaging, labeling or storage of Aldurazyme, or Genzyme’s negligence or willful misconduct (including without limitation any negligence or willful misconduct resulting in adulteration of Aldurazyme), Genzyme shall be responsible for the expenses thereof. Otherwise, the Parties shall share equally the expenses of the action. For purposes of this Agreement, the expenses of the action shall be the expenses of notification and return or destruction (if such destruction is authorized by BioMarin or the applicable regulatory authority) of units of the recalled Aldurazyme, the cost of replacement of the recalled Aldurazyme, and any costs directly associated with the distribution of replacement Aldurazyme. For the avoidance of doubt, amounts payable under Article 6 hereof shall only be payable on Aldurazyme used to replace the recalled Aldurazyme (not on the returned Aldurazyme itself).

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6. PAYMENTS.

6.1 Transfer Royalties.

(a) For the Aldurazyme supplied by BioMarin to Genzyme pursuant to Article 3, Genzyme shall pay to BioMarin the following royalties based upon the Annual Net Sales of Aldurazyme:

Annual Net Sales	Royalty Payment %
of between $0 and $130,000,000	39.5	%
of between $130,000,001 and $140,000,000	40	%
of between $140,000,001 and $155,000,000	42	%
of between $155,000,001 and $170,000,000	44	%
of between $170,000,001 and $185,000,000	46	%
of between $185,000,001 and $200,000,000	48	%
of $200,000,001 and above	50	%

As used herein, “Annual Net Sales” shall mean total aggregate Net Sales of all Aldurazyme sold in the particular calendar year.

(b) It is expressly understood that the royalty payment to be made by Genzyme to BioMarin pursuant to Section 6.1(a) shall be based on a tiered structure. For instance, if total Annual Net Sales are $145,000,000, the royalty payable from Genzyme to BioMarin pursuant to the methodology outlined in Section 6.1(a) would be equal to $57,450,000, calculated as follows: ($130,000,000 x 39.5%) + ($10,000,000 x 40%) + ($5,000,000 x 42%).

(c) In the event that the [****] Aldurazyme in any country in which Aldurazyme has received all necessary Regulatory Approvals and, if applicable, pricing approvals as of the Effective Date (“Existing Markets”) is [****] over any calendar quarter, then [****]. The term [****] for purposes of this clause (c) shall mean a [****] of Aldurazyme.

(d) Notwithstanding the foregoing,

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(i) BioMarin agrees to supply Genzyme’s requirements of Aldurazyme for compassionate use and expanded access programs free of charge, concurrent with delivery of commercial vials, in an amount equal to [****]. Thereafter, BioMarin agrees to supply additional vials to Genzyme during the relevant calendar year for such compassionate use and expanded access programs for [****] until it has provided an additional [****] of Aldurazyme. Thereafter, any additional vials required by Genzyme in the relevant calendar year for such compassionate use and expanded access programs shall be provided by BioMarin at [****]. The term “vial” for purposes of this clause (d)(i) shall mean a 2.9 mg vial of Aldurazyme; and

(ii) BioMarin agrees that Genzyme may use up to [****] vials per Lot of Aldurazyme delivered to Genzyme to supply Genzyme’s requirements of Aldurazyme for appropriate acceptance testing and required in-country release testing and final Lot testing free of charge. Genzyme shall account for any Aldurazyme so used in the quarterly report described in Section 6.4.

6.2 Quarterly Payments. Genzyme shall pay all amounts owed to BioMarin for Aldurazyme pursuant to Section 6.1 on a quarterly basis within forty-five (45) days after the end of each calendar quarter. In computing the royalty payable for any quarter, the Parties shall take into account the aggregate Net Sales to date from the beginning of the relevant calendar year.

6.3 Monthly Reports. Within [****] business days after the end of each calendar month, Genzyme shall provide BioMarin with a preliminary report of Net Sales of Aldurazyme for the immediately proceeding month (a “Flash Report”). As soon as practicable, but in no event later than [****] business days after the end of each calendar month, Genzyme shall provide BioMarin with a final report of Net Sales of Aldurazyme for the immediately proceeding month. Such monthly reports shall not include inventory data.

6.4 Quarterly Reports. Within forty-five (45) business days after the end of each calendar quarter, Genzyme shall provide BioMarin with a true accounting of all payment obligations, if any, owed in accordance with this Article 6, together with a statement setting out all details necessary to calculate the amounts actually due hereunder with respect to Net Sales made in that calendar quarter, including vials of Aldurazyme sold on a country-by-country basis, gross sales of Aldurazyme in that calendar quarter including vials of Aldurazyme sold on a country-by-country basis, Net Sales in that calendar quarter on a country-by-country basis, all relevant deductions, and all relevant exchange rate conversions. Any additional payments owed by Genzyme to BioMarin shall accompany such statement.

6.5 Sales Records; Audit.

6.5.1 Genzyme shall keep complete and accurate books and records of all Net Sales of Aldurazyme on a country-by-country basis. BioMarin shall have the right, at BioMarin’s expense, through a certified independent public accountant, to have reasonable access upon reasonable advance notice and during normal business hours to such books and records for the sole purpose

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of verifying the accuracy of the royalty report and payments under this Article 6 in respect of any calendar quarter ending not more than thirty-six (36) months prior to the date of such notice. BioMarin and Genzyme shall agree in good faith upon reasonable procedures before BioMarin’s auditors begin the audit work pursuant to this Section 6.5.1. Such verifications may be conducted not more than once in each calendar year during the term of this Agreement and once during the three (3) year period following the expiration or termination of this Agreement. The records and royalty reports for any particular calendar quarter may not be examined under this Section 6.5.1 more than once.

6.5.2 In the event such audit concludes that adjustments should be made in BioMarin’s favor, then any appropriate payments (plus accrued interest as determined by Section 6.8) shall be paid by Genzyme within [****] days after the date Genzyme receives BioMarin’s accounting firm’s written report so concluding, unless Genzyme shall have a good faith dispute as to the conclusions set forth in such written report in which case Genzyme shall provide written notice to BioMarin within such [****] day period of the nature of its disagreement with such written report. The Parties shall thereafter, for a period of sixty (60) days, attempt in good faith to resolve such dispute and if they are unable to do so then the matter will be submitted to dispute resolution in accordance with Section 13.8 hereof. Any overpayments by Genzyme will be promptly refunded by BioMarin to Genzyme with interest calculated as provided in Section 6.8 from the date such overpayment was made. If any such examination reveals an underpayment to BioMarin in excess of [****] for the examined period, then Genzyme shall promptly reimburse BioMarin for the costs of such examination within forty-five (45) days after receipt of a reasonably detailed invoice therefor unless Genzyme is disputing such conclusion as provided above.

6.5.3 BioMarin agrees that all information subject to review under this Section 6.5 (other than information directly related to Aldurazyme) is Genzyme’s confidential information and that it shall cause its accounting firm to retain all such information in confidence (even as to BioMarin) subject to the confidentiality restrictions of Article 8 hereof. Notwithstanding the prior sentence, Genzyme acknowledges and agrees that such accounting firm’s obligation to retain all such information in confidence from BioMarin shall not apply in the event that BioMarin and Genzyme are involved in a dispute under Section 13.8 related to this Section 6.5 and such information is necessary for BioMarin’s use in connection with such dispute; provided, however, that BioMarin shall only use such information in connection with such dispute and such information shall remain subject to the confidentiality restrictions of Article 8.

6.6 Taxes. Any taxes, levies or similar governmental charges, now in force or enacted in the future, however designated (“Taxes”) including related penalties and interest, imposed by

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any governmental authority on or measured or incurred by the sale or shipment of Aldurazyme by BioMarin to Genzyme or the sale of Aldurazyme by Genzyme shall be paid by Genzyme. Notwithstanding anything to the contrary herein, each Party shall be solely responsible with respect to its own income Taxes.

6.7 Payment for Unsold Aldurazyme. [****]

6.8 Payment Terms. All sums due under this Agreement shall be payable in United States dollars. Monetary conversion from the currency of a foreign country in which Aldurazyme is sold into United States currency shall be calculated in accordance with GAAP using the average of the relevant daily exchange rates for each month of the calendar quarter based on rates published by Bloomberg. All payments to be made under this Agreement shall be paid by check or wire transfer as selected by paying Party, and shall be delivered to such address or wired to such account or accounts as the Party owned such payment shall designate from time to time in writing to the paying Party. Any such payment shall be deemed to have been paid when received with respect to check payments or when recorded in the proper account with respect to wire transfer payments.

6.9 Late Fees; Collection Costs. If any amounts due under this Agreement are not made when due, the Party from whom such payment was due will be charged a late charge of [****] per month determined on a daily basis from the date due until the date paid. Payment of such late charges alone (i.e., without the late payment itself) will not excuse or cure the breach or default for late payment. If either BioMarin or Genzyme retains a collection agency, attorney or other person or entity to collect overdue payments, all collection costs, including but not limited to reasonable attorneys’ fees and expenses, will be paid by the Party from whom such payment was due.

6.10 No Deductions. No part of any amount payable by a Party may be reduced due to any counterclaim, set-off, adjustment or other right that such Party may have against another Party, except with respect to Aldurazyme that is returned to BioMarin in accordance with Section 3.9 or 5.2.

7. RESEARCH AND DEVELOPMENT

7.1 Independent Research and Development Activities. Except as otherwise provided herein or in the Amended and Restated Collaboration Agreement, to the extent that the Steering Committee (as defined in the Amended and Restated Collaboration Agreement) does not exercise the right of first refusal granted to BioMarin/Genzyme LLC under Section 3.1.5 or Article 5 of the Amended and Restated Collaboration Agreement, each of BioMarin and Genzyme shall have the right to independently conduct, at its own expense, any research or development of Aldurazyme, including without limitation Post-Marketing Studies and through investigator-initiated studies.

7.2 Access to Data. Each Party shall provide the other Party will full access to the data generated in any research and development activities conducted with Aldurazyme, and the other Party shall be free to use such information to perform its obligations under this Agreement or any Related Agreement.

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8. CONFIDENTIALITY.

8.1 Nondisclosure Obligations. Except as otherwise provided in this Article 8, during the term of this Agreement and for a period of five (5) years thereafter, the Parties shall maintain in confidence and use only for purposes specifically authorized under this Agreement any information furnished to it by the other Party hereto pursuant to this Agreement which if disclosed in tangible form is marked “Confidential” or with other similar designation to indicate its confidential or proprietary nature or if disclosed orally or by inspection is indicated orally to be confidential or proprietary by the Party disclosing such information at the time of such disclosure and is confirmed in writing as confidential or proprietary by the disclosing Party (describing in reasonable detail the information to be treated as confidential) within a reasonable time after such disclosure (collectively, “Information”).

To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement, the Amended and Restated Collaboration Agreement or the Fill Agreement, a Party may disclose Information of the other Party it is otherwise obligated under this Section 8.1 not to disclose to its Affiliates, permitted sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis and on the condition that such entities or persons agree to keep the Information confidential for the same time periods and to substantially the same extent as such Party is required to keep such Information confidential; and a Party or its permitted sublicensees may disclose such Information to government or other regulatory authorities to the extent that such disclosure is reasonably necessary to obtain patents or authorizations to conduct clinical trials or to file and maintain Regulatory Approvals with and to market commercially Aldurazyme. The obligation not to disclose Information shall not apply to any part of such Information that: (i) is or becomes patented, published or otherwise becomes publicly known other than by acts of the Party obligated not to disclose such Information or its Affiliates or sublicensees in contravention of this Agreement; (ii) can be shown by written documents to have been disclosed to the receiving Party or its Affiliates or sublicensees by a Third Party, provided that such Information was not obtained by such Third Party directly or indirectly from the disclosing Party under this Agreement; (iii) prior to disclosure under this Agreement was already in the possession of the receiving Party or its Affiliates or sublicensees, provided that such Information was not obtained directly or indirectly from the disclosing Party under this Agreement; (iv) can be shown by written documents to have been independently developed by the receiving Party or its Affiliates without breach of any of the provisions of this Agreement; or (v) is required to be disclosed by the receiving Party to comply with applicable laws or regulations, or with a court or administrative order, provided that the receiving Party notifies the disclosing Party in writing prior to any such disclosure and agrees to use reasonable efforts to secure confidential treatment thereof prior to its disclosure (whether by protective order or otherwise).

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8.2 Terms of this Agreement; Press Releases. The Parties agree to seek confidential treatment for any filing of this Agreement with the Securities and Exchange Commission and shall agree upon the content of the request for confidential treatment made by each Party in respect of such filing. Except as permitted by the foregoing provisions or as otherwise required by law, each of the Parties agrees not to disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other Parties; provided that each of BioMarin and Genzyme shall be entitled to disclose the terms of this Agreement without such consent to its advisors and potential investors or other financing sources on the condition that such entities or persons agree to keep such terms confidential for the same time periods and to the same extent as such Party is required to keep such terms confidential. The Parties agree that all press releases related to Aldurazyme shall be issued jointly by BioMarin and Genzyme and that the Party preparing any such press release shall provide the other Party with a draft thereof reasonably in advance of disclosure so as to permit the other Party to review and comment on such press release. Notwithstanding the foregoing, the Parties shall agree upon a press release to announce the execution of this Agreement, together with a corresponding Question & Answer outline for use in responding to inquiries about the Agreement; thereafter, BioMarin and Genzyme may each disclose to Third Parties the information contained in such press release and Question & Answer outline without the need for further approval by the other.

9. REPRESENTATIONS AND WARRANTIES.

9.1 General Representations and Warranties. Each Party hereby represents and warrants:

9.1.1 Duly Organized. It is a corporation (or limited liability company as the case may be) duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation (or organization as the case may be), is qualified to do business and is in good standing as a foreign corporation (or limited liability company as the case may be) in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and failure to have such would prevent it from performing its obligations under this Agreement and has all requisite corporate power (or limited liability power as the case may be) and authority to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement.

9.1.2 Authorization. It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. The person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action.

9.1.3 No Third Party Approval. No authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority or regulatory body (other than health regulatory authorities) is required for the due execution, delivery or performance by it of this Agreement, except as provided herein.

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9.1.4 Enforceable Agreement. This Agreement has been duly and validly executed and delivered, and assuming it is a legally enforceable agreement of the other Parties hereto, constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws now or hereinafter in effect relating to creditors’ rights generally or to general principles of equity.

9.1.5 No Violation. None of the execution, delivery or performance of this Agreement by such Party, nor the consummation by such Party of the transactions contemplated hereby will (i) result in a violation of any provision of such Party’s charter documents or by-laws; or (ii) with or without the giving of notice or the lapse of time, or both, conflict with, or result in any violation or breach of, or constitute a default under, or result in any right to accelerate or result in the creation of any lien, charge or encumbrance pursuant to, or right of termination under, any provision of any material agreement to which such Party is a party or by which such Party or any of its assets or properties are bound or which is applicable to such Party or any of its assets or properties.

9.1.6 No Debarment. It is not currently debarred, suspended, or otherwise excluded by the FDA or any other regulatory authority from conducting business and shall not knowingly use in connection with this Agreement the services of any person debarred by the FDA.

9.1.7 Accuracy of Data. All laboratory, scientific, technical and/or other data submitted by or on behalf of such Party, as the case may be, relating to Aldurazyme shall, to the best of its knowledge, be true and correct and shall not contain any material falsification, misrepresentations or omissions.

9.2 Additional Representations and Warranties.

9.2.1 Genzyme Warranties. Genzyme warrants that the Aldurazyme sold pursuant to Article 4 hereof will be marketed and sold in all material respects in accordance with the conditions of any applicable Marketing Application Approvals, Regulatory Approvals, any applicable labeling claims and any applicable requirements of the Regulatory Scheme regarding the promotion, sale and marketing of Aldurazyme (except to the extent any of the foregoing is the responsibility of BioMarin as the holder of the BLA).

9.2.2 BioMarin Warranties.

(a) BioMarin warrants that the Aldurazyme delivered by BioMarin pursuant to Article 3 hereof will conform in all material respects to the Specifications, the

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conditions of any applicable Regulatory Approvals regarding the manufacturing process and any applicable requirements of the Regulatory Scheme regarding the manufacturing process.

(b) When each Lot of Aldurazyme leaves BioMarin’s facility, such Lot shall be of good, merchantable and usable quality, free of defects in material and workmanship, suitable for the purposes for which Aldurazyme is to be used, and shall not be adulterated or misbranded due to any defect caused by BioMarin within the meaning of the U.S. Regulatory Scheme and other substantially similar laws and statutes in any country outside the United States in which Aldurazyme is to be sold.

(c) The manufacturing facilities for Aldurazyme shall conform in all material respects to the standards of those Regulatory Authorities with jurisdiction over such facilities, including, but not limited to, those set forth in the cGMP Regulations.

9.2.3 No Representations or Warranties as to Safety of Aldurazyme or Specifications as of the Effective Date.

(a) Each of the Parties acknowledges that none of the other Parties nor their respective personnel are obligated to engage in any refinement or development of Aldurazyme pursuant to the terms of this Agreement other than with respect to BioMarin, the production of Aldurazyme pursuant to the Specifications or as approved by BioMarin and any refinement and development required as a result of any changes to Aldurazyme made pursuant to Section 3.

(b) Each of the Parties acknowledges that the Specifications as they exist as of the Effective Date have been jointly developed by the Parties pursuant to the terms of the Original Collaboration Agreement.

(c) BioMarin/Genzyme LLC and Genzyme acknowledge that other than [****] each Lot of Aldurazyme by BioMarin as required by the Specifications, the applicable Regulatory Approvals and the applicable requirements of the Regulatory Scheme (including without limitation cGMP Regulations) and/or the Technical Agreement, BioMarin shall not be in any way responsible for [****].

9.3 Disclaimer of Representations and Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN A RELATED AGREEMENT, NONE OF BIOMARIN, GENZYME OR BIOMARIN/GENZYME LLC MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND THE NON-INFRINGEMENT OF ANY THIRD-PARTY PATENTS OR PROPRIETARY RIGHTS. ALL UNIFORM COMMERCIAL CODE WARRANTIES ARE EXPRESSLY DISCLAIMED BY THE PARTIES.

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9.4 Limitation of Liability. EXCEPT WITH RESPECT TO CLAIMS FOR INDEMNIFICATION UNDER ARTICLE 11 HEREOF AND AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS AGREED BY THE PARTIES THAT NO PARTY SHALL BE LIABLE TO ANOTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME.

10. LICENSE GRANTS: PATENT PROSECUTION AND LITIGATION.

10.1 License Grants. Pursuant to the terms and conditions of Article 3 of the Amended and Restated Collaboration Agreement, the Parties have granted each other licenses with respect to all Patent Rights, Technology and Manufacturing Know-How owned or Controlled by the Parties related to Collaboration Products in the Field.

10.2 Rights and Obligations of the Parties. The rights and obligation of the Parties with respect to filing, prosecution and maintenance of all Patent Rights, defense of Third Party infringement claims and enforcement of Patent Rights are set forth in Article 9 of the Amended and Restated Collaboration Agreement.

11. INDEMNITY.

11.1 In Favor of BioMarin. Genzyme shall defend, indemnify and hold harmless each of BioMarin, its Affiliates and their respective officers, directors and employees (collectively, the “BioMarin Indemnified Parties”) from and against any and all claims, demands, losses, damages, liabilities, settlement amounts, costs or expenses whatsoever (including reasonable attorneys’ fees and costs) (collectively, “Losses”) (i) arising from or related to any claim, action or proceeding asserted by a Third Party (a “Third Party Claim”) against any BioMarin Indemnified Party arising from Genzyme’s breach of this Agreement or negligence or willful misconduct in connection with its performance of its obligations under this Agreement or (ii) allocated to it in Section 11.3, except to the extent (which shall reduce Genzyme’s indemnification obligation hereunder) in the case of (i) and (ii) such Losses also arise from BioMarin’s breach of any warranty or representation herein, BioMarin’s failure to perform any covenant herein, or any negligent or willful act or omission of BioMarin in performing its obligations under this Agreement.

11.2 In Favor of Genzyme. BioMarin shall defend, indemnify and hold harmless each of Genzyme, its Affiliates and their respective officers, directors and employees (collectively, the “Genzyme Indemnified Parties”) from and against any and all Losses (i) arising from or related to any Third Party Claim against any Genzyme Indemnified Party arising from BioMarin’s breach of this Agreement or negligence or willful misconduct in connection with its performance of its obligations hereunder, (ii)

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arising from or related to any Third Party Claim against any Genzyme Indemnified Party and lost profits of Genzyme, in each case, resulting from an interruption in the supply of Aldurazyme due to changes implemented by BioMarin pursuant to Section 3.10 or 3.11 (other than any change made at the request or direction of any regulatory authority) or (iii) allocated to it in Section 11.3, except to the extent (which shall reduce BioMarin’s indemnification obligation hereunder), in each of case (i), (ii) and (iii) such Losses also arise from Genzyme’s breach of any warranty or representation herein, Genzyme’s failure to perform any covenant herein, or any negligent or willful act or omission of Genzyme in performing its obligations under this Agreement.

11.3 Product Liability. If any Party receives a Third Party Claim or suffers any Losses relating to product liability, the other Party shall contribute to such Losses to the extent set forth in this Section 11.3.

11.3.1 Alleged Design Defect Regarding Aldurazyme. Each of the Parties acknowledge and agree that Aldurazyme produced using the Specifications in effect as of the Effective Date was produced through their joint efforts. To the extent that a Third Party Claim is asserted against any of the Parties or any of their Affiliates related to a design defect in Aldurazyme meeting the Specifications in effect as of the Effective Date, the Parties acknowledge and agree that they shall each be responsible for fifty percent (50%) of all Losses incurred by the Parties and their Affiliates arising from such a Third Party Claim. To the extent that the Specifications are modified after the Effective Date pursuant to Sections 1.50 and 3.11 and any of the Parties is found to be responsible for any claims related to a design defect in the production of Aldurazyme pursuant to such modified Specifications, the Parties acknowledge and agree that BioMarin shall be responsible for one hundred percent (100%) of all Losses incurred by the Parties and their Affiliates arising from such a Third Party Claim except to the extent such Losses also arise from Genzyme’s breach of any warranty or representation herein, Genzyme’s failure to perform any covenant herein, or the negligent or willful act or omission of Genzyme in performing its obligations under this Agreement, in which case liability shall be apportioned between BioMarin and Genzyme as appropriate.

11.3.2 Alleged Manufacturing Defect Regarding Aldurazyme. Notwithstanding Section 11.3.1, the Parties acknowledge and agree that to the extent that a Third Party Claim is asserted against Genzyme or any of its Affiliates related to the manufacturing, storing, handling, delivery, US regulatory compliance of Aldurazyme by BioMarin or its Affiliates or Third Parties engaged by or on behalf of BioMarin (including without limitation Hollister-Stier), any and all Losses incurred by Genzyme or its Affiliates arising from such Third Party Claim shall be the sole responsibility of BioMarin except to the extent such Losses arise from Genzyme’s breach of any warranty or representation herein, Genzyme’s failure to perform any covenant herein, or the negligent or willful act or omission of Genzyme in performing its obligations under this Agreement, in which case liability shall be apportioned between BioMarin and Genzyme as appropriate.

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11.3.3 Alleged Non-Manufacturing Defect Regarding Aldurazyme. Notwithstanding Section 11.3.1, the Parties acknowledge and agree that to the extent that a Third Party Claim is asserted against BioMarin or any of its Affiliates related to the storage, handling, delivery, non-US regulatory compliance, labeling, marketing, distribution or sale of Aldurazyme by Genzyme or its Affiliates or Third Parties engaged by or on behalf of Genzyme, any and all Losses incurred by BioMarin or its Affiliates arising from such Third Party Claim shall be the sole responsibility of Genzyme except to the extent such Losses arise from BioMarin’s breach of any warranty or representation herein, BioMarin’s failure to perform any covenant herein, or the negligent or willful act or omission of BioMarin in performing its obligations under this Agreement, in which case liability shall be apportioned between BioMarin and Genzyme as appropriate.

11.4 Indemnification and Contribution Procedures.

11.4.1 Indemnification Procedure. In a circumstance where one Party is required to indemnify the other Party for one hundred percent (100%) of the Losses arising from any Third Party Claim, a Party or any of its Affiliates or their respective directors, officers, employees or agents (the “Indemnitee”) that intends to claim indemnification under this Article 11 shall promptly notify the other Party (the “Indemnitor”) of any Losses in respect of which the Indemnitee intends to claim such indemnification, and if the Indemnitor confirms in writing that it will indemnify the Indemnitee for one hundred percent (100%) of such Loss, then the Indemnitor shall have the right to assume the defense thereof with counsel of its choice, subject to the consent of the non-Indemnifying Party, which consent will not be unreasonably withheld, delayed or conditioned; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential conflicting interests between such Indemnitee and any other Party represented by such counsel in such proceedings. The Indemnitor shall not be responsible for the fees and expenses of more than one counsel to all Indemnitees. The indemnity in this Article 11 shall not apply to amounts paid in settlement of any Third Party Claim if such settlement is effected without the prior written consent of any Indemnitor, which consent shall not be unreasonably withheld, delayed or conditioned. The failure to deliver notice to an Indemnitor within a reasonable time after the commencement of any such Third Party Claim shall not relieve such Indemnitor of any liability to the Indemnitee under this Article 11 with respect to such action, except to the extent that such failure materially prejudiced the Indemnitor’s ability to defend such action. Each Indemnitee under this Article 11, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any Claim or action covered by this indemnification.

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11.4.2 Contribution Procedure. In a circumstance where responsibility for Losses arising out of any Third Party Claim is to be apportioned between Genzyme and BioMarin pursuant to Sections 11.1, 11.2, and 11.3, a Party that intends to seek partial indemnification or contribution from the other Party for any such Losses must notify the other Party as promptly as practical. The failure to deliver such notice within a reasonable time will not relieve a Party of any obligations for indemnification or contribution hereunder with respect to such Losses, except to the extent that such failure materially prejudiced the Indemnitor’s ability to defend such Third Party Claim. If the Parties agree that one Party will have responsibility for more than fifty percent (50%) of the Losses arising out of a Third Party Claim, such Party shall have the right to assume the defense of the Third Party Claim with counsel of its choice, subject to the consent of the non-Indemnifying Party, which consent will not be unreasonably withheld, delayed or conditioned; provided, however, the Party not defending the Third Party Claim shall have the right to retain its own counsel to participate in the defense of the Third Party Claim at its own expense. In the absence of such agreement, each Party seeking indemnification or contribution may defend the Third Party Claim with counsel of its choosing at its own expense, and each Party’s counsel fees and costs related to the Third Party Claim will be excluded from the Losses to be apportioned in accordance with Section 11.1, 11.2, and 11.3. No Party shall be required to contribute to or indemnify the other Party for any Losses arising out of a Third Party Claim if the claim is settled without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Each Party, its employees and agents, shall cooperate fully with the other Party and its legal representatives in the investigation of any Third Party Claim covered by this Section 11.4.2. The Parties shall negotiate in good faith to enter into a joint defense agreement with respect to the defense of any Third Party Claim covered by this Section 11.4.2.

11.5 Insurance. Each Party shall, during the term of this Agreement, maintain commercially reasonable amounts of insurance or self-insurance given the size, nature and scope of its business from a reputable insurance carrier to cover against liability risks, including product liability insurance and business interruption insurance (for commercial value) for the benefit of the other Party. Each Party shall provide the other Party with evidence of such insurance.

12. TERM AND TERMINATION.

12.1 Term. The term of this Agreement shall be perpetual unless terminated pursuant to Section 12.2 below.

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12.2 Termination. This Agreement may be terminated in the following circumstances:

12.2.1 For Certain Material Breaches. If either BioMarin or Genzyme fails to use commercially reasonable and diligent efforts to perform any material duty imposed upon such Party under this Agreement and such failure to perform is not cured within ninety (90) days of written notice thereof from the non-breaching Party, the non-breaching Party may elect, in its sole discretion, to terminate this Agreement with the consequences set forth in Section 12.3.1 below. Such 90-day period shall be extended to one hundred eighty (180) days if the breaching Party has engaged in good faith efforts to remedy such default within such 90-day period and indicated in writing to the non-breaching Party prior to the expiration of such 90-day period that it believes that it will be able to remedy the default within such 180-day period, but such extension shall apply only so long as the breaching Party is engaging in good faith efforts to remedy such default.

12.2.2 For Convenience. Either BioMarin or Genzyme may elect to terminate this Agreement for any reason upon one (1) year prior written notice to the other Party, during which one-year period the obligations of the Parties shall continue in full force and effect.

12.2.3 Upon Change of Control. Either BioMarin or Genzyme may terminate this Agreement in the event that the other Party is a party to a transaction involving (a) a merger or consolidation in which such Party is not the surviving entity or (b) the sale of all or substantially all of the assets of such Party to a Third Party. Termination of this Agreement pursuant to this Section 12.2.3 shall be effective as of the effective date of such transaction.

12.2.4 Upon Bankruptcy. Either BioMarin or Genzyme may terminate this Agreement if: (a) the other Party fails to meet any material obligation hereunder and (i) applies for or consents to the appointment of a receiver, trustee, liquidation or custodian of itself or of all or a substantial part of its property; (ii) becomes unable, or admits in writing its inability, to pay its debts generally as they mature; (iii) makes a general assignment for the benefit of its or any of its creditors; (iv) is dissolved or liquidated in full or in part; (v) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it; or (vi) takes any action for the purpose of effecting any of the foregoing; or (b) proceedings for the appointment of a receiver, trustee, liquidator or custodian of the other Party or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the other Party or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within sixty (60) calendar days of commencement.

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12.3 Effects of Termination.

12.3.1 For Certain Material Breaches. In addition to the rights and duties set forth in Section 12.4 below, BioMarin and Genzyme shall have the following rights and duties upon termination of this Agreement pursuant to Section 12.2.1 above:

(a) the non-breaching Party shall have an irrevocable right and license, with the right to grant and authorize sublicenses, to develop, make, have made, use, offer for sale, sell, have sold, import and export Aldurazyme and the breaching Party shall execute such documents and take all action as may be necessary or desirable to effect the foregoing; provided, that such license shall be for the same level of exclusivity as the rights granted with respect thereto under Article 3 or Article 4 hereof, as the case may be, immediately prior to such termination; provided further that any license granted hereunder shall be subject to the obligation of the non-breaching Party to use commercially reasonable and diligent efforts to manufacture, develop and market Aldurazyme pursuant to such license;

(b) the breaching Party shall assign and transfer all of its interest in BioMarin/Genzyme LLC to the non-breaching Party, and the non-breaching Party may dissolve BioMarin/Genzyme LLC in its sole discretion; provided that in the event that BioMarin is the breaching Party, it shall also cause BioMarin Genetics to assign and transfer all of its interest in BioMarin/Genzyme LLC to Genzyme.

(c) upon exercise of its license option by the non-breaching party provided in paragraph (a) of this Section 12.3.1: (i) all rights and licenses or rights granted pursuant to Article 3 or Article 4, as the case may be, shall be revoked; (ii) if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory Approvals (other than any Regulatory Approvals filed in the name of an entity other than BioMarin/Genzyme LLC), “Orphan Drug” designations and clinical data owned or licensed by BioMarin/Genzyme LLC and any trademarks owned or licensed by BioMarin/Genzyme LLC (other than any trademarks registered in the name of an entity other than BioMarin/Genzyme LLC pursuant to Section 9.1.2 of the Amended and Restated Collaboration Agreement) shall be assigned or exclusively licensed to the non-breaching Party; and (iii) any Regulatory Approvals filed and any trademarks registered in the name of an entity other than BioMarin/Genzyme LLC shall be (A) exclusively licensed to BioMarin/Genzyme LLC, the non-breaching Party or any Third Party or Affiliate designated by the non-breaching Party until such time as BioMarin/Genzyme LLC, the non-breaching Party or its designee is qualified to hold such Regulatory Approvals or trademarks under the applicable provisions of the Regulatory Scheme and (B) transferred or assigned to BioMarin/Genzyme LLC, the non-breaching Party or its designee, as appropriate, as soon as practicable thereafter;

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(d) the non-breaching Party shall become obligated to pay the breaching Party an amount equal to: [****] (iii) interest thereon at the Base Rate of interest declared from time to time by Bank of America, N.A. in Boston, Massachusetts from the date of termination to the date payment is made (the “Breach Buyout Amount”), payable as follows:

(i) if the non-breaching Party elects to sell or otherwise dispose of all or any portion of its or its Affiliates’ right, title and interest in Aldurazyme, then the non-breaching Party shall, upon any such sale or other disposition, pay the breaching Party an amount equal to [****];

(ii) for as long as the non-breaching Party (together, in the case of BioMarin with BioMarin Genetics) has not sold or otherwise disposed of all or a portion of its (together in the case of BioMarin, with BioMarin Genetics) right, title and interest in Aldurazyme which is equal to or greater than the breaching Party’s (together in the case of BioMarin, with BioMarin Genetics) Percentage Interest as of the date of termination, the non-breaching Party shall pay the breaching Party (and, in the event that BioMarin is the breaching Party, BioMarin Genetics) [****] as described in the preceding paragraph; and

(iii) on the [****] of the date of termination, the non-breaching Party shall pay the breaching Party (and, in the event that BioMarin is the breaching Party, BioMarin Genetics) the difference between the aggregate amounts paid pursuant to clauses (i) and (ii) above and the Breach Buyout Amount; provided, that the aggregate amount of all payments made under clauses (i), (ii) and (iii) shall not exceed the Breach Buyout Amount.

12.3.2 For Convenience. In addition to the rights and duties set forth in Section 12.4 below, BioMarin and Genzyme shall have the following rights and duties upon termination of this Agreement pursuant to Section 12.2.2 above:

(a) the non-terminating Party shall have an option exercisable upon written notice to the terminating Party within the one-year period provided in Section 12.2.2 hereof to obtain from the terminating Party the irrevocable right and license, with the right to grant and authorize sublicenses, to develop, make, have made, use, offer for sale, sell, have sold, import and export Aldurazyme, and the terminating Party shall execute such documents and take all action as may be necessary or desirable to affect the foregoing; provided, that such license shall be for the same level of exclusivity as the rights granted with respect thereto under Article 3 or Article 4 hereof, as the case may be; provided further that any license granted hereunder shall be subject to the obligation of the non-terminating Party to use commercially reasonable and diligent efforts to develop and market Aldurazyme pursuant to such license;

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(b) upon exercise of its license option provided in paragraph (a) of this Section 12.3.2, the terminating Party shall assign and transfer all of its interest in BioMarin/Genzyme LLC to the non-terminating Party, and the non-terminating Party may dissolve BioMarin/Genzyme LLC in its sole discretion;

(c) upon exercise of its license option provided in paragraph (a) of this Section 12.3.2, (i) all licenses granted pursuant to Article 3 or Article 4, as the case may be, shall be revoked, (ii) if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory Approvals (other than any Regulatory Approvals filed in the name of an entity other than BioMarin/Genzyme LLC pursuant to Section 5.3 of the Amended and Restated Collaboration Agreement), “Orphan Drug” designations and clinical data owned or licensed by BioMarin/Genzyme LLC and any trademarks owned or licensed by BioMarin/Genzyme LLC (other than any trademarks registered in the name of an entity other than BioMarin/Genzyme LLC pursuant to Section 9.1.2 of the Amended and Restated Collaboration Agreement) shall be assigned to the non-terminating Party and (iii) any Regulatory Approvals filed and any trademarks registered in the name of an entity other than BioMarin/Genzyme LLC shall be (A) exclusively licensed to BioMarin/Genzyme LLC, the non-terminating-Party or any Third Party or Affiliate designated by such Party until such time as BioMarin/Genzyme LLC, the non-terminating Party or its designee is qualified to hold such Regulatory Approvals or trademarks under the applicable provisions of the Regulatory Scheme and (B) transferred or assigned to BioMarin/Genzyme LLC, the non-terminating Party or its designee, as appropriate, as soon as practicable thereafter;

(d) upon the exercise of its license option provided in paragraph (a) of this Section 12.3.2, the non-terminating Party shall become obligated to pay to the terminating Party an amount equal to: [****] (iii) interest thereon at the Base Rate of interest declared from time to time by Bank of America, N.A. in Boston, Massachusetts from the date of termination to the date payment is made; payable on the terms and conditions and in accordance with the schedule of payments set forth in Section 12.3.1(d), mutatis mutandis; and

(e) if the license option provided in paragraph (a) of this Section 12.3.2 is not exercised, then all right, title and interest in Aldurazyme shall be sold to the highest bidder within eighteen (18) months from the date of termination and the proceeds shall be allocated between the Members in proportion to their Percentage Interests in BioMarin/Genzyme LLC as of the date of termination and BioMarin/Genzyme LLC shall be dissolved.

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12.3.3 Upon a Change of Control. In addition to the rights and duties set forth in Section 12.4 below, BioMarin and Genzyme shall have the following rights and duties upon termination of this Agreement pursuant to Section 12.2.3 above:

(a) the terminating Party shall have the exclusive, irrevocable and, except as provided in Section 12.3.3(d), royalty-free right and license, with the right to grant sublicenses, to develop, make, have made, use, offer for sale, sell, have sold, import and export Aldurazyme, and the non-terminating Party shall execute such documents and take all action as may be necessary or desirable to effect the foregoing; provided, that any license granted hereunder shall be subject to the obligation of the terminating Party to use commercially reasonable and diligent efforts to develop and market Collaboration Products pursuant to such license;

(b) the non-terminating Party shall assign and transfer all of its interest in BioMarin/Genzyme LLC to the terminating Party, and the terminating Party may dissolve BioMarin/Genzyme LLC in its sole discretion; provided that in the event that BioMarin is the non-terminating Party, it shall also cause BioMarin Genetics to assign and transfer all of its interest in BioMarin/Genzyme LLC to Genzyme;

(c) all licenses or rights granted pursuant to Article 3 or Article 4, as the case may be, shall be revoked and, if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory Approval, “Orphan Drug” designations and clinical data owned or licensed by BioMarin/Genzyme LLC and any trademarks owned or licensed by BioMarin/Genzyme LLC shall be assigned or licensed to the terminating Party; and

(d) the terminating Party (the “Offeror”) shall, pursuant to the conditions set forth in this Section 12.3.3(d), give the other Party (Genzyme in the case BioMarin is terminating or the BioMarin Companies in the case Genzyme is terminating, in either case the “Offeree”) at the time of termination written notice of the Offeror’s intention to purchase Offeree’s entire interest in and to (i) Aldurazyme as of the date of termination and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC as of the date of termination (the “Notice of Offer”). The Notice of Offer shall state therein the specific price, terms and conditions under which the Offeror agrees to purchase Offeree’s entire interest in and to (i) Aldurazyme as of the date of termination and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC as of the date of termination; provided, however, that the purchase price shall be paid in cash, publicly-traded and registered securities or as the Parties otherwise agree. The Offeree shall then have ninety (90) days (the “Acceptance Period”) from the receipt of the Notice of Offer to give notice (the “Notice of Acceptance”) of the Offeree’s intention to accept the offer of the Offeror and shall sell Offeree’s entire interest in and to (i) Aldurazyme as of the date of termination and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC as of the date of termination to Offeror for the price and upon such terms and conditions as set forth in the Notice of Offer. In the event the Offeree gives such Notice of

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Acceptance, a closing shall be held within ninety (90) days of the receipt of the Notice of Acceptance by the Offeror. In the event the Offeree elects not to accept the Offeror’s offer to purchase, by giving the Offeror written notice thereof, or by failing to give the appropriate Notice of Acceptance within the Acceptance Period, the Offeree shall thereby automatically be bound to purchase Offeror’s entire interest in and to (i) Aldurazyme as of the date of termination and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC as of the date of termination for the same price (as adjusted for Percentage Interest, if necessary) and upon such terms and conditions as specified in the Notice of Offer. In such event, a closing shall be held within ninety (90) days of the earlier to occur of the expiration of the Acceptance Period and the date of receipt of the written rejection, whichever is the first to occur. In addition to any other remedies provided by this Agreement, in the event the Offeree rejects the offer contained in the Notice of Offer, but thereafter fails for any reason to timely close as provided herein above, the Offeree shall, by such failure to close, be deemed to have accepted the original offer contained in the Notice of Offer, and shall thereafter sell Offeree’s entire interest in and to (i) Aldurazyme as of the date of termination and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC as of the date of termination to the Offeror pursuant to the terms of the Notice of Offer. For purposes of Sections 12.3.3 (a)-(c) above, the Party purchasing the other Party’s interest in (i) Aldurazyme and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC shall be deemed to be the terminating Party and the other Party shall be deemed to be the non-terminating Party.

12.3.4 Upon Bankruptcy. In addition to the rights and duties set forth in Section 12.4 below, BioMarin and Genzyme shall have the following rights and duties upon termination of this Agreement pursuant to Section 12.2.4 above:

(a) the terminating Party shall obtain from the non-terminating Party the irrevocable right and license, with the right to grant sublicenses, under the non-terminating Party’s Patent Rights, Technology and Manufacturing Know-How to develop, make, have made, use, offer for sale, sell, have sold, import and export Aldurazyme in the Field and in the Territory, and the non-terminating Party shall execute such documents and take all action as may be necessary or desirable to affect the foregoing; provided, that such license shall be for the same level of exclusivity as the rights granted with respect thereto under Article 3 or Article 4 hereof, as the case may be; provided further that any license granted hereunder shall be subject to the obligation of the terminating Party to use commercially reasonable and diligent efforts to develop and market Aldurazyme pursuant to such license;

(b) the non-terminating Party shall assign and transfer all of its interest in BioMarin/Genzyme LLC to the terminating Party, and the terminating Party may dissolve BioMarin/Genzyme LLC in its sole discretion; provided that in the event that BioMarin is the non-terminating Party, it shall also cause BioMarin Genetics to assign and transfer all of its interest in BioMarin/Genzyme LLC to Genzyme.

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(c) all licenses granted pursuant to Article 3 or Article 4, as the case may be, shall be revoked and, if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory Approvals (other than any Regulatory Approvals filed in the name of an entity other than BioMarin/Genzyme LLC pursuant to Section 5.3 of the Amended and Restated Collaboration Agreement), “Orphan Drug” designations and clinical data owned or licensed by BioMarin/Genzyme LLC and any trademarks owned or licensed by BioMarin/Genzyme LLC (other than any trademarks registered in the name of an entity other than BioMarin/Genzyme LLC pursuant to Section 9.1.2 of the Amended and Restated Collaboration Agreement) shall be assigned or licensed to the terminating Party and (iii) any Regulatory Approvals filed and any trademarks registered in the name of an entity other than BioMarin/Genzyme LLC shall be (A) exclusively licensed to BioMarin/Genzyme LLC, the terminating Party or any Third Party or Affiliate designated by such Party until such time as BioMarin/Genzyme LLC, the terminating Party or its designee is qualified to hold such Regulatory Approvals or trademarks under the applicable provisions of the Regulatory Scheme and (B) transferred or assigned to BioMarin/Genzyme LLC, the terminating Party or its designee, as appropriate, as soon as practicable thereafter,

(d) the terminating Party shall become obligated to pay to the non-terminating Party an amount equal to [****] from the date of termination to the date payment is made, payable on the terms and conditions and in accordance with the schedule of payments set forth in Section 12.3.1(d), mutatis mutandis.

12.3.5 Fair Value. For purposes of this Section 12.3, the “Fair Value” of a Party’s interest in Aldurazyme shall be [****], the Fair Value shall be determined by an investment, banking firm selected by mutual agreement of BioMarin and Genzyme, and the costs and expenses incurred in connection with the engagement of such investment banking firm shall be shared equally by BioMarin and Genzyme.

12.3.6 Other. In the event that a Party (the “Purchasing Party”) purchases the other Party’s (or in the case of BioMarin, the BioMarin Companies’, in each case the “Selling Party”) entire interest in and to (i) Aldurazyme and (ii) the Percentage Interest of the net asset value of BioMarin/Genzyme LLC pursuant to this Section 12.3, the Purchasing Party shall be deemed to assume all of the liabilities inuring to the Selling Party’s Percentage Interest being acquired. At closing, the Parties shall execute any and all documents necessary to effectuate such transfer, including an assignment of all of the Selling Party’s Percentage Interest and mutual releases which shall have the effect of releasing each Party from all claims or liabilities pertaining to BioMarin/Genzyme LLC (except for any liabilities specifically included in the terms of such sale).

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12.4 Cooperation. If either BioMarin or Genzyme (the “Assuming Party”) shall assume Aldurazyme rights from the other Party (the “Responsible Party”) in accordance with the provisions of this Article 12, the Responsible Party shall promptly provide to the Assuming Party (or any Third Party or Affiliate designated by the Assuming Party) all Technology, Manufacturing Know-How and access to regulatory filings filed hereunder reasonably necessary to allow the Assuming Party to perform the duties assumed and otherwise exercise the rights and licenses granted hereunder. The Responsible Party shall further use its commercially reasonable and diligent efforts to provide reasonable assistance required by the Assuming Party with respect to such transfer so as to permit the Assuming Party to begin to perform such duties as soon as possible to minimize any disruption in the continuity of supply or marketing of Aldurazyme. If the Responsible Party is manufacturing Aldurazyme the Responsible Party shall, at the option of the Assuming Party, supply Aldurazyme until the earlier of [****].

12.5 Survival of Rights and Duties. No termination of this Agreement shall eliminate any rights or duties of the Parties accrued prior to such termination. The provisions of Article 1, Sections 4.9, 5.2.2, 6.5, 6.9, 6.10 and 9.4, Article 8, Article 11, Sections 12.3 through 12.5, 13.2, 13.3, 13.6 through 13.15 and the first sentence of Section 3.15 and the last sentence of Section 3.14 hereof shall survive any termination of this Agreement.

13. MISCELLANEOUS

13.1 Exchange Controls. All payments due hereunder shall be paid in United States dollars. If at any time legal restrictions prevent the prompt remittance of part or all payments with respect to any country in which Aldurazyme is sold, payment shall be made through such lawful means or methods as the Parties may determine in good faith.

13.2 Withholding Taxes. If applicable laws or regulations require that taxes be withheld from payments made hereunder, the Party paying such taxes will (a) deduct such taxes, (b) timely pay such taxes to the proper authority and (c) send written evidence of payment to the Party from whom such taxes were withheld within sixty (60) days after payment. Each Party will assist the other Party or Parties in claiming tax refunds, deductions or credits at such other Party’s request and will cooperate to minimize the withholding tax, if available, under various treaties applicable to any payment made hereunder.

13.3 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including without limitation fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other Party; provided, however, that the Party so affected shall use commercially reasonable and diligent efforts to avoid or remove such causes of non-performance, and shall continue performance hereunder with reasonable dispatch wherever such causes are removed. Each Party shall provide the other Parties with prompt written notice of any delay or failure to perform that occurs by reason of force majeure. The Parties shall mutually seek a resolution of the delay or the failure to perform in good faith.

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13.4 Assignment. This Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Parties; provided, however, that either BioMarin or Genzyme may, without such consent, assign its rights and obligations under this Agreement (a) in connection with a corporate reorganization, to any member of an affiliated group, all or substantially all of the equity interest of which is owned and controlled by such Party or its direct or indirect parent corporation or (b) in connection with a merger, consolidation or sale of substantially all of such Party’s assets to an unrelated Third Party; provided, however, that such Party’s rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not be transferred separate from all or substantially all of its other business assets, including without limitation those business assets that are the subject of this Agreement and the Related Agreements. Any permitted assignee shall assume all obligations of its assignor under this Agreement; accordingly, all references herein to the assigning Party shall be deemed references to the assignee to whom the Agreement is so assigned. Any purported assignment in violation of this Section 13.4 shall be void.

13.5 Severability. Each Party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid provisions. In the event a Party seeks to avoid a material provision of this Agreement upon an assertion that such provision is invalid, illegal or otherwise unenforceable, the other Party shall have the right to terminate this Agreement upon sixty (60) days prior written notice to the asserting Party, unless such assertion is eliminated and cured within such sixty (60) day period. Such a termination shall be deemed a termination by such Party for breach pursuant to Section 12.2.1.

13.6 Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by personal delivery or courier), by a next business day delivery service of a nationally recognized overnight courier service or by courier, postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor in accordance with this Section 13.6 and shall be effective upon receipt by the addressee.

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If to BioMarin:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: Chief Executive Officer Facsimile: (415) 382-7889
with a copy to:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: General Counsel Facsimile: (415) 382-7889
If to Genzyme:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: President, LSD Therapeutics Facsimile: (617) 768-6419
with a copy to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: General Counsel Facsimile: (617) 252-7553
If to BioMarin/Genzyme LLC (if such notice is sent by BioMarin):	BioMarin/Genzyme LLC c/o Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: President, LSD Therapeutics Facsimile: (617) 768-6419
with a copy to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: General Counsel Facsimile: (617) 252-7553
If to BioMarin/Genzyme LLC (if such notice is sent by Genzyme):	BioMarin/Genzyme LLC c/o BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: Chief Executive Officer Facsimile: (415) 382-7889
with a copy to:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: General Counsel Facsimile: (415) 382-7889

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13.7 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any choice of law principle that would dictate the application of the laws of another jurisdiction.

13.8 Arbitrate. Any disputes arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement (a “Dispute”) shall be finally resolved by binding arbitration as herein provided.

13.8.1 General. Except as otherwise provided in this Section 13.8, any arbitration hereunder shall be conducted under the commercial rules of the American Arbitration Association. Each such arbitration shall be conducted in the English language by a single arbitrator appointed in accordance with such rules, provided that if either Party requests the arbitration shall be conducted by a panel of three (3) arbitrators (the “Arbitration Panel”). In the case of three (3) arbitrators, each of BioMarin and Genzyme shall appoint one (1) arbitrator to the Arbitration Panel and the third arbitrator shall be appointed by the two (2) arbitrators appointed by BioMarin and Genzyme. The Arbitration Panel shall be convened upon delivery of the Notice of Arbitration (as herein defined). Any such arbitration shall be held in Chicago, Illinois. The Arbitration Panel shall have the authority to grant specific performance, and to allocate between the Parties the costs of arbitration in such equitable manner as it shall determine. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be.

13.8.2 Procedure.

(a) Whenever a Party (the “Claimant”) shall decide to institute arbitration proceedings, it shall give written notice to that effect (the “Notice of Arbitration”) to the other Party (the “Respondent”). The Notice of Arbitration shall set forth in detail the nature of the Dispute, the facts upon which the Claimant relies and the issues to be arbitrated (collectively, the “Arbitration Issues”). Within fifteen (15) days of its receipt of the Notice of Arbitration, the Respondent shall send the Claimant and the Arbitration Panel a written Response (the “Response”). The Response shall set forth in detail the facts upon which the Respondent relies. In addition, the Response shall contain all counterclaims which the Respondent may have against the Claimant which are within the Arbitration Issues, whether or not such claims have previously been identified. If the Response sets forth a counterclaim, the Claimant may, within fifteen (15) days of the receipt of the Response, deliver to the Respondent and the Arbitration Panel a rejoinder answering such counterclaim.

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(b) Within fifteen (15) days after the later of (i) the expiration of the period provided in Section 13.8.2(a) above for the Claimant to deliver a rejoinder or (ii) the completion of any discovery proceedings authorized by the Arbitration Panel: (A) the Claimant shall send to the Arbitration Panel a proposed resolution of the Arbitration Issues and a proposed resolution of any counterclaims set forth in the Response, including without limitation the amount of monetary damages, if any, or other relief sought (the “Claimant’s Proposal”); and (B) the Respondent shall send to the Arbitration Panel a proposed resolution of the Arbitration Issues, a proposed resolution of any counterclaims set forth in the Response and a proposed resolution of any rejoinder submitted by the Claimant, including without limitation the amount of monetary damages, if any, or other relief sought (the “Respondent’s Proposal”). Once both the Claimant’s Proposal and the Respondent’s Proposal have been submitted, the Arbitration Panel shall deliver to each Party a copy of the other Party’s proposal.

(c) The Arbitration Panel shall issue an opinion with respect to any Dispute, which opinion shall explicitly accept either the Claimant’s Proposal or the Respondent’s Proposal in its entirety (the “Final Decision”). The Arbitration Panel shall not have the authority to reach a Final Decision that provides remedies or requires payments other than those set forth in the Claimant’s Proposal or the Respondent’s Proposal. The concurrence of two (2) arbitrators shall be sufficient for the entry of a Final Decision. The arbitrators shall issue a Final Decision within one (1) month from the later of (i) the last day for submission of proposals under Section 13.8.2(b) above or (ii) the date of the final hearing on any Dispute held by the Arbitration Panel. A Final Decision shall be binding on both Parties.

13.9 Injunctive Relief. The Parties hereby acknowledge that a breach of their respective obligations under Article 8 hereof may cause irreparable harm and that the remedy or remedies at law for any such breach may be inadequate. The Parties hereby agree that, in the event of any such breach, in addition to all other available remedies hereunder, the non-breaching Party or Parties shall have the right to seek equitable relief to enforce Article 8 hereof.

13.10 Entire Agreement. This Agreement, together with the Related Agreements, contains the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties hereto. Each of the Parties hereby acknowledges that this Agreement is the result of mutual negotiation and therefore any ambiguity in their respective terms shall not be construed against the drafting Party.

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13.11 Bankruptcy Provision. All rights and licenses now or hereafter granted under or pursuant to this Agreement, including Sections 12.3 and 12.4, are rights to “intellectual property” (as defined in Section 101(35A) of Title 11 of the United States Code, as amended (such Title 11, the “Bankruptcy Code”)). The licensing Party hereby grants to the licensee Party a right of access and to obtain possession of and to benefit from (i) copies of research data, (ii) laboratory samples, (iii) product samples, (iv) formulas, (v) laboratory notes and notebooks, (vi) data and results related to clinical trials, (vii) regulatory filings and approvals, (viii) rights of reference in respect of regulatory filings and approvals, (ix) manufacturing procedure documentation and manufacturing records, (x) marketing, advertising and promotional materials, and (xi) all other embodiments of such intellectual property, that are in the licensing Party’s possession or control, freely licenseable without further payment or restriction by the licensing Party, and necessary for the licensee Party’s exercise of the rights and licenses to such intellectual property, all of which constitute “embodiments” of intellectual property pursuant to Section 365(n) of the Bankruptcy Code. The licensing Party agrees not to interfere with the licensee’s exercise of rights and licenses to intellectual property licensed under this Agreement and embodiments thereof in accordance with this Agreement and agrees to use commercially reasonable and diligent efforts to assist the licensee Party to obtain such intellectual property and embodiments thereof in the possession or control of Third Parties as reasonably necessary or desirable for the licensee Party to exercise such rights and licenses in accordance with this Agreement. The Parties acknowledge and agree that only the payments due under Section 6.1, as adjusted pursuant to this Agreement, constitute “royalties” within the meaning of Bankruptcy Code §365(n).

13.12 Headings. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof.

13.13 Independent Contractors. It is expressly agreed that BioMarin and Genzyme shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither BioMarin nor Genzyme shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so.

13.14 Waiver. Except as expressly provided herein, the waiver by either Party hereto of any right hereunder or of any failure to perform or any breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other failure to perform or breach by said other Party, whether of a similar nature or otherwise, nor shall any singular or partial exercise of such right preclude any further exercise thereof or the exercise of any other such right.

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13.15 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signature pages may be exchanged by facsimile.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first set forth above.

GENZYME CORPORATION
By:	/s/ David P. Meeker
Print Name:	David P. Meeker
Title:	President LSD Therapeutics
Date:	12/31/07
BIOMARIN PHARMACEUTICAL INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
BIOMARIN/GENZYME LLC
By: BIOMARIN PHARMACEUTICAL INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
By: GENZYME CORPORATION
By:	/s/ David P. Meeker
Print Name:	David P. Meeker
Title:	President LSD Therapeutics
Date:	12/31/07

Schedule 1.56

Third Party Licenses

1.) License Agreement effective as of September 4, 1998 entered into by and between the University of Iowa Research Foundation, an Iowa corporation and BioMarin/Genzyme LLC, a Delaware limited liability company.

2.) License Agreement effective as of September 4, 1998 entered into by and between Research Corporation Technologies, Inc., a Delaware nonprofit corporation and BioMarin/Genzyme LLC, a Delaware limited liability company.

3.) Grant Terms and Conditions Agreement dated April 1, 1997 entered into by and among BioMarin Pharmaceuticals, Harbor-UCLA Research and Education Institute and Emil D. Kakkis, as amended through the Effective Date.

Schedule 3.12

[****]

Exhibit A

[****]

Exhibit B

[****]

EX-10.31

EXHIBIT 10.31

CONFIDENTIAL TREATMENT REQUESTED

Redacted Portions are indicated by [****]

AMENDED AND RESTATED COLLABORATION AGREEMENT

THIS AMENDED AND RESTATED COLLABORATION AGREEMENT effective as of January 1, 2008 (the “Agreement”) is made by and among Genzyme Corporation, a Massachusetts corporation having its principal place of business at 500 Kendall Street, Cambridge, Massachusetts 02142 (“Genzyme”), BioMarin Pharmaceutical, Inc., a Delaware corporation having its principal place of business at 105 Digital Drive, Novato, California 94949 (“BioMarin”) and BioMarin/Genzyme LLC, a Delaware limited liability company having its principal place of business at 500 Kendall Street, Cambridge, Massachusetts 02142 (“BioMarin/Genzyme LLC”). Genzyme, BioMarin and BioMarin/Genzyme LLC are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

RECITALS

A. BioMarin, Genzyme and BioMarin/Genzyme LLC are parties to a Collaboration Agreement dated as of September 4, 1998 (the “Original Collaboration Agreement”) pursuant to which BioMarin and Genzyme through BioMarin/Genzyme LLC develop, manufacture, market and sell Aldurazyme (as defined herein).

B. The Parties no longer desire to develop, manufacture, market and sell Aldurazyme through a joint venture and instead have agreed that: (1) BioMarin will manufacture Aldurazyme and sell finished product to Genzyme; (2) Genzyme will label and commercially distribute, market and sell Aldurazyme globally; (3) each of Genzyme and BioMarin may conduct its own research and development of Aldurazyme and other Collaboration Products (as defined herein) in accordance with the terms of this Agreement and the Manufacturing, Marketing and Sales Agreement (as defined herein); and (4) BioMarin/Genzyme LLC will maintain and provide intellectual property licenses and sublicenses to BioMarin and Genzyme so that they may fulfill their respective obligations under this Agreement, the Manufacturing, Marketing and Sales Agreement and the Fill Agreement (as defined herein).

C. BioMarin and Genzyme are hereby amending and restating the Original Collaboration Agreement so that hereafter BioMarin/Genzyme LLC will no longer engage in commercial activities and will solely (1) hold the intellectual property relating to Aldurazyme and license all such intellectual property on the terms set forth herein to BioMarin and Genzyme on the terms set forth herein and (2) engage in research and development activities that are mutually selected and funded by BioMarin and Genzyme.

NOW THEREFORE, in consideration of the premises and of the covenants herein contained, the Parties mutually agree as follows:

ARTICLE I

DEFINITIONS

For purposes of this Agreement, the terms defined in this Article shall have the meanings specified below. Certain other capitalized terms are defined elsewhere in this Agreement.

1.1 “Affiliate” shall mean any corporation or other entity which controls, is controlled by, or is under common control with a Party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the corporation or other entity.

1.2 “Aldurazyme” shall mean alpha-L-iduronidase meeting the Specifications.

1.3 “alpha-L-iduronidase” shall mean recombinant human alpha-L-iduronidase.

1.4 “BioMarin Companies” shall mean BioMarin and BioMarin Genetics, Inc., a Delaware corporation and a wholly-owned subsidiary of BioMarin (“BioMarin Genetics”).

1.5 “BioMarin/Genzyme Patent Rights” shall mean the Patent Rights that claim Joint Inventions (as such term is defined in Section 9.1.1 hereof) that are discovered, made or conceived during and in connection with the Program jointly by employees or consultants of Genzyme and BioMarin to the extent that such Patent Rights relate to or are useful for the research, development, manufacture or commercialization of Collaboration Products for use in the Field.

1.6 “BioMarin/Genzyme Technology” shall mean all Technology discovered, made or conceived during and in connection with the Program jointly by employees or consultants of Genzyme and BioMarin relating to or useful for the research, development, manufacture or commercialization of Collaboration Products for use in the Field.

1.7 “BioMarin Patent Rights” shall mean all Patent Rights Controlled by BioMarin during the Term to the extent that such Patent Rights relate to or are useful for the research, development, manufacture or commercialization of Collaboration Products for use in the Field.

1.8 “BioMarin Technology” shall mean all Technology Controlled by BioMarin during the Term to the extent that such Technology relates to or is useful for the research, development, manufacture or commercialization of Collaboration Products for use in the Field.

1.9 “BLA” shall mean a Biologics License Application or similar application filed with the FDA after completion of human clinical trials to obtain marketing approval for a Collaboration Product, including without limitation the BLA as approved by the FDA on April 30, 2003 that provides for marketing approval for Aldurazyme in the United States, as the same may be updated or amended from time to time.

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1.10 “Collaboration Product” shall mean any pharmaceutical compositions of alpha-L-iduronidase (including Aldurazyme unless otherwise indicated herein), including without limitation any and all improvements, derivatives, analogs, combination products, delivery systems and dosage forms related thereto.

1.11 “Commercialization Costs” with respect to a Collaboration Product shall mean the variable costs and fixed costs incurred by BioMarin/Genzyme LLC with respect to work performed by the Parties and their Affiliates and subcontractors in connection with the performance of and in accordance with the commercialization plan for such Collaboration Product, including without limitation, sales and marketing costs related to performing market research, advertising, producing promotional literature, sponsoring seminars and symposia, sales training meetings and seminars, originating sales, providing reimbursement and other patient support services. For purposes of this Section 1.11, “variable costs” shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the conduct of the Commercialization Plan and manufacture of Collaboration Product for use in commercialization activities, as well as amounts paid to Third Parties under a Third Party Agreement as a result of performance of the Commercialization Plan, to the extent not included in Development Costs or Fully Absorbed Cost of Goods. For purposes of this Section 1.11, “fixed costs” shall be deemed to be the cost of facilities, utilities, insurance, equipment depreciation and other fixed costs directly related to the conduct of and in accordance with the Commercialization Plan and the manufacture of Collaboration Product for use in commercialization activities, allocated based upon the proportion of such costs directly attributable to support or performance of the Commercialization Plan and the manufacture of Collaboration Product for use in commercialization activities or by such other method of cost allocation as may be approved by the Steering Committee. All cost determinations made hereunder shall be made in accordance with GAAP.

1.12 “Commercialization Party” shall have the meaning set forth in Section 7.1 below.

1.13 “Control” shall mean possession of the ability to grant a license or sublicense as provided for herein without violating the terms of an agreement with a Third Party.

1.14 “Development Costs” with respect to a Collaboration Product shall mean the variable costs and fixed costs incurred by BioMarin/Genzyme LLC with respect to work performed by the Parties and their Affiliates and subcontractors in connection with the conduct of and in accordance with the Development Plan for such Collaboration Product, including without limitation (a) direct, out-of-pocket external costs, including clinical grants, clinical laboratory fees, positive controls and the cost of studies conducted and services provided by contract research organizations and individuals, consultants, toxicology contractors, and manufacturers necessary or useful for the purpose of obtaining Regulatory Approvals for such Collaboration Product, (b) amounts paid to Genzyme and BioMarin by BioMarin/Genzyme LLC with respect to research and development and pre-commercialization sales and marketing efforts as set forth in the Development Plan for such Collaboration Product, including without limitation the efforts of Genzyme and BioMarin to develop and document process methods and procedures for the manufacture of such Collaboration Product and the Fully Absorbed Cost of Goods for batches of such Collaboration Product manufactured and supplied for use in preclinical and clinical trials and pre-commercialization activities, (c) costs related to data management, statistical designs and studies, document preparation and other expenses associated with the clinical testing program for such Collaboration Product, (d) costs for preparing,

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submitting, reviewing or developing data or information for the purpose of submission of applications to obtain Regulatory Approvals for such Collaboration Product, (e) license fees and other amounts paid to a Third Party pursuant to any Third Party Agreement other than those fees and other amounts payable with respect to Aldurazyme under the Third Party Agreements in effect as of the Effective Date, and (f) costs relating to the prosecution and maintenance of Patent Rights which claim, or disclose subject matter relevant to, the manufacture or use of such Collaboration Product. For purposes of this Section 1.14, “variable costs” shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the conduct of and in accordance with the Development Program and the manufacture of the Collaboration Product for use in preclinical and clinical trials and pre-commercialization activities. For purposes of this Section 1.14, “fixed costs” shall be deemed to be the cost of facilities, utilities, insurance, facility and equipment depreciation and other fixed costs directly related to the conduct of the Development Program and the manufacture of the Collaboration Product for use in preclinical and clinical trials and pre-commercialization activities, allocated based upon the proportion of such costs directly attributable to the support or performance of the Development Program and the manufacture of the Collaboration Product for use in preclinical and clinical trials and pre-commercialization activities or by such other method of cost allocation as may be approved by the Steering Committee. All cost determinations made hereunder shall be made in accordance with GAAP.

1.15 “Development Plan” shall mean, with respect to a particular Collaboration Product, the comprehensive three (3) year rolling plan and budget for the development of such Collaboration Product under the Development Program, as more specifically described in Section 5.1.2 hereof.

1.16 “Development Program” shall mean, with respect to a particular Collaboration Product, the preclinical and clinical development of such Collaboration Product including post-marketing studies and the preparation and filing of all applications for Regulatory Approvals for such Collaboration Product, all as determined by the Steering Committee or as otherwise set forth herein.

1.17 “Effective Date” shall mean January 1, 2008.

1.18 “Field” shall mean any and all therapeutic applications of alpha-L-iduronidase for MPS I and other alpha-L-iduronidase deficiencies. Notwithstanding the foregoing, the Field shall not include Gene Therapy for MPS I or other alpha-L-iduronidase deficiencies. For purposes of this Agreement, “Gene Therapy” shall mean treatment or prevention of MPS I or other alpha-L-iduronidase deficiencies by means of ex vivo or in vivo introduction (via viral or nonviral gene transfer systems) of nucleotide sequences (including without limitation, DNA, RNA and complementary and reverse complementary nucleotide sequences thereto, whether coding or noncoding).

1.19 “FDA” shall mean the United States Food and Drug Administration, any successor agency, or the regulatory authority of any country other than the United States with responsibilities comparable to those of the United States Food and Drug Administration.

1.20 “Fully Absorbed Cost of Goods” with respect to units of Collaboration Product shall mean (a) the variable costs and fixed costs incurred by a Party associated with the manufacture (inclusive of finishing processes including filling, packaging, labeling and/or other preparation)

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quality assurance, quality control and other testing, storage and shipping of batches of such units of Collaboration Product or (b) if such units or portions of Collaboration Product are not manufactured by the Parties, the amounts paid to the vendor plus costs associated with acquisition from such vendor. For purposes of this Section 1.20, “variable costs” shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the manufacture, quality assurance, quality control and other testing, storage and shipping of batches of such Collaboration Product. For purposes of this Section 1.20, “fixed costs” shall be deemed to be the cost of facilities, utilities, insurance, facility and equipment depreciation and other fixed costs directly related to the manufacture, quality assurance, quality control and other testing, storage and shipping of batches of such Collaboration Product, as well as amounts paid to Third Parties under a Third Party Agreement as a result of the manufacture, use or sale of such units of Collaboration Products. Fixed costs shall be allocated to such units of Collaboration Product based upon the proportion of such costs directly attributable to support of the manufacturing, quality assurance, quality control and other testing, storage and shipping processes for such Collaboration Product. If a facility is used to manufacture Collaboration Products and has the capacity to manufacture products for other programs of either Genzyme or BioMarin, fixed costs shall be allocated in proportion to the actual use of such facility for the manufacture of Collaboration Products and the capacity to manufacture products for such other programs. For the avoidance of doubt, no idle capacity of a manufacturing facility shall be included in Fully Absorbed Cost of Goods unless such facility is appropriately sized and dedicated solely to the manufacture of Collaboration Products. Fully Absorbed Cost of Goods shall exclude all costs otherwise reimbursed pursuant to this Agreement. In the event that either BioMarin or Genzyme subcontracts with the other Party to perform any work on its behalf in connection with the manufacturing responsibilities assigned to BioMarin or Genzyme, respectively, pursuant to Section 7.1.1 hereof, BioMarin and Genzyme (i) shall each directly charge BioMarin/Genzyme LLC their respective Fully Absorbed Cost of Goods and (ii) shall not include any part of the other Party’s Fully Absorbed Cost of Goods in the amount so charged to BioMarin/Genzyme LLC. Except as otherwise provided in this Agreement, all cost determinations made hereunder shall be made in accordance with GAAP.

1.21 “GAAP” shall mean the then-current United States generally accepted accounting principles, consistently applied, except when different accounting principles are required under the terms of the Operating Agreement, in which case the accounting principles mandated under the Operating Agreement shall control.

1.22 “Genzyme Patent Rights” shall mean all Patent Rights Controlled by Genzyme during the Term to the extent that such Patent Rights relate to or are useful for the research, development, manufacture or commercialization of Collaboration Products for use in the Field.

1.23 “Genzyme Technology” shall mean all Technology Controlled by Genzyme during the Term to the extent such Technology relates to or is useful for the research, development manufacture or commercialization of Collaboration Products for use in the Field.

1.24 “Manufacturing Party” shall have the meaning set forth in Section 7.1.1.

1.25 “Manufacturing Know-How” shall mean all information, techniques, inventions, discoveries, improvements, practices, methods, knowledge, skill, experience and other technology, whether or not patentable or copyrightable, and any copyrights based thereon, relating to or

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necessary or useful for the production, purification, packaging, storage and transportation of Collaboration Products, including without limitation specifications, acceptance criteria, manufacturing batch records, standard operating procedures, engineering plans, installation, operation and process qualification protocols for equipment, validation records, master files submitted to the FDA, process validation reports, environmental monitoring processes, test data including pharmacological, toxicological and clinical test data, cost data and employee training materials.

1.26 “Manufacturing, Marketing and Sales Agreement” shall mean the Manufacturing, Marketing and Sales Agreement of even date herewith by and among the Parties.

1.27 “Member” shall have the meaning set forth in the Operating Agreement.

1.28 “Members Agreement” shall have the meaning set forth in the recitals.

1.29 “MPS-I” shall mean mucopolysaccharidosis I.

1.30 “Operating Agreement” shall mean the Operating Agreement of BioMarin/Genzyme LLC dated as of September 4, 1998 by and among the BioMarin Companies and Genzyme.

1.31 “Original Date of Execution” shall mean September 4, 1998.

1.32 “Patent Rights” shall mean any U.S. and foreign patents and patent applications (including continuations, continuations-in-part, divisionals, reissues, re-examinations, renewals, supplemental protection certificates and extensions).

1.33 “Percentage Interest” shall have the meaning set forth in the Operating Agreement.

1.34 “Program” shall mean the collaboration among BioMarin/Genzyme LLC, BioMarin and Genzyme described in this Agreement.

1.35 “Program Costs” shall mean all Program-related costs, including without limitation Development Costs and Commercialization Costs, in each case as such costs are incurred or accrued by BioMarin/Genzyme LLC on or after the Original Date of Execution. Notwithstanding anything herein to the contrary, it is understood that the Parties shall apply mutually agreed upon cost allocation methods in determining Program Costs hereunder. It is understood and agreed that, with respect to Aldurazyme, “Program Costs” shall be limited to Program Costs incurred (i) on or prior to December 31, 2007 or (ii) solely pursuant to development activities identified in the Development Plan attached hereto as Appendix A and other development activities added pursuant to Section 5.1.4 hereof or agreed to by the Steering Committee on or after the Effective Date, and shall exclude (x) all Commercialization Costs incurred on or after January 1, 2008, (y) all Fully Absorbed Costs incurred on or after January 1, 2008 except with respect to quantities of Collaboration Products required for the activities described in clause (ii) above and (z) all other costs that are allocated between the Parties under the Manufacturing, Marketing and Sales Agreement or the Fill Agreement of even date herewith by and between BioMarin and Genzyme (the “Fill Agreement”). The Parties shall maintain separate records for Program Costs incurred on or prior to December 31, 2007 and for Program Costs incurred on or after the Effective Date.

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1.36 “Program Management Team” shall mean the joint team composed of representatives of Genzyme and BioMarin described in Section 8.1.1 hereof.

1.37 “Regulatory Approvals” shall mean all approvals from regulatory authorities in any country in the Territory required lawfully to manufacture and market Collaboration Products in any such country, including without limitation approval of any BLA, any establishment license application filed with the FDA to obtain approval of the facilities and equipment to be used to manufacture a Collaboration Product, and any product pricing approvals where applicable.

1.38 “Regulatory Scheme” shall mean the United States Public Health Service Act and the regulations, interpretations and guidelines promulgated thereunder by the FDA or the regulatory scheme applicable to the Collaboration Products in any country other than the United States, as such statutes, regulations, interpretations and guidelines or regulatory schemes may be amended from time to time.

1.39 “Related Agreements” shall mean the Manufacturing, Marketing and Sales Agreement, the Members Agreement, the Fill/Finish Manufacturing Agreement and the Operating Agreement.

1.40 “Specifications” with respect to a particular Collaboration Product (other than Aldurazyme) shall mean the written specifications for such Collaboration Product determined by the Program Management Team and approved by the Steering Committee; provided that such specifications shall at all times comply with the relevant Regulatory Scheme in the country of sale and in the country of use. Such Specifications may be amended from time to time by the Program Management Team provided that such amendments are approved by the Steering Committee or the written agreement of the Parties, as the case may be. Copies of the then-current Specifications shall be maintained by both BioMarin and Genzyme and shall become a part of this Agreement as if incorporated herein. The term “Specifications” with respect to Aldurazyme shall have the meaning set forth in the Manufacturing, Marketing and Sales Agreement.

1.41 “Steering Committee” shall mean the governing body of BioMarin/Genzyme LLC composed of representatives of BioMarin and Genzyme appointed as described in Section 8.2.1 hereof.

1.42 “Technology” shall mean inventions, trade secrets, copyrights, know-how, data and other intellectual property of any kind (including without limitation any proprietary biological or other materials, compounds or reagents, but not including Patent Rights).

1.43 “Term” shall mean the period commencing on September 4, 1998 and ending with the effective date of any termination of this Agreement pursuant to Article 13 hereof.

1.44 “Territory” shall mean the world.

1.45 “Third Party” shall mean any entity other than BioMarin/Genzyme LLC, BioMarin or Genzyme and their respective Affiliates.

1.46 “Third Party Agreements” shall mean collectively those Third Party agreements listed on Schedule 1.47 hereto or such other Third Party agreements pursuant to which a Party obtains

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rights applicable to the development, manufacture, sale or use of Collaboration Products hereunder. If after the Effective Date any of BioMarin, Genzyme and/or BioMarin/Genzyme LLC enter into an agreement to license or acquire rights from a Third Party with respect to subject matter to be utilized in connection with Collaboration Products in accordance with Section 3.1.4 below, such agreements shall also be included in the definition of Third Party Agreements for purposes of this Agreement.

ARTICLE II

SCOPE AND STRUCTURE OF THE COLLABORATION

2.1 General. BioMarin/Genzyme LLC will undertake the Development Program, with each of the Parties assuming responsibility for those portions of the Development Program allocated to it under this Agreement in accordance with the Development Plan then in effect. Upon receipt of Regulatory Approval in any country within the Territory, the Manufacturing Party or Parties will manufacture the Collaboration Products and the Commercialization Party will distribute, market and sell the Collaboration Products in such country all on the terms and conditions set forth in the Manufacturing, Marketing and Sales Agreement and such other terms and conditions as the Parties may agree upon. All services provided by or on behalf of BioMarin, Genzyme or their respective Affiliates for BioMarin/Genzyme LLC in connection with the Program shall be provided at cost. For avoidance of doubt, “cost” for services provided by a Third Party on behalf of BioMarin, Genzyme or their respective Affiliates for BioMarin/Genzyme LLC in connection with the Program shall be the amount paid for such services plus costs associated with the acquisition, including quality control, of such services from such Third Party.

2.2 Exclusive Relationship. Except as otherwise expressly provided herein or in any Related Agreement, during the Term, neither BioMarin/Genzyme LLC, Genzyme nor BioMarin, nor any of their respective Affiliates shall independently, or with or through a Third Party, conduct research or development activities regarding, or engage in the manufacture, marketing, sale or distribution of, Collaboration Products in the Field and in the Territory other than as part of the Program. In addition, during the two-year period following termination of this Agreement, neither (a) the breaching Party and its Affiliates in the case of termination pursuant to Section 12.2.1 of the Manufacturing, Marketing and Sales Agreement, (b) (c) the terminating Party and its Affiliates in the case of termination pursuant to Section 12.2.2 of the Manufacturing, Marketing and Sales Agreement or (d) the non-terminating Party and its Affiliates in the case of termination pursuant to Sections 12.2.3 or 12.2.4 of the Manufacturing, Marketing and Sales Agreement shall independently, or with or through a Third Party, conduct research regarding, or engage in the manufacture, marketing, sale or distribution of, Collaboration Products in the Field and in the Territory; provided, however, that in the event that this Agreement is terminated pursuant to Section 12.2.2 of the Manufacturing, Marketing and Sales Agreement and the non-terminating Party does not exercise its option under Section 12.3.2(a) thereof, then the restrictions set forth in this sentence shall not apply. Notwithstanding the foregoing, except as provided in Section 3.1.5 nothing herein is intended to restrict BioMarin, Genzyme or their respective Affiliates from conducting research or development activities regarding, or engaging in the manufacture, marketing, sale or distribution of Gene Therapy products targeted to MPS I and other alpha-L-iduronidase deficiencies.

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ARTICLE III

GRANTS AND RESERVATIONS OF RIGHTS

3.1 Licenses of Rights to BioMarin/Genzyme LLC.

3.1.1 Grants from BioMarin. Except as otherwise expressly provided herein, BioMarin hereby grants to BioMarin/Genzyme LLC a worldwide, exclusive, royalty-free right and license during the term of this Agreement under the BioMarin Patent Rights, BioMarin Technology, BioMarin/Genzyme Patent Rights and the BioMarin/Genzyme Technology and Manufacturing Know-How Controlled by BioMarin to develop, make, have made, use, offer for sale, sell, have sold, import and export Collaboration Products for use in the Field and in the Territory.

3.1.2 Grants from Genzyme. Except as otherwise expressly provided herein, Genzyme hereby grants to BioMarin/Genzyme LLC a worldwide, exclusive, royalty-free right and license during the term of this Agreement under the Genzyme Patent Rights, Genzyme Technology, BioMarin/Genzyme Patent Rights and the BioMarin/Genzyme Technology and Manufacturing Know-How Controlled by Genzyme to develop, make, have made, use, offer for sale, sell, have sold, import and export Collaboration Products for use in the Field and in the Territory.

3.1.3 BioMarin/Genzyme LLC Undertakings; Sublicenses. In consideration of the licenses granted under this Section 3.1, except as provided herein, BioMarin/Genzyme LLC hereby undertakes to pay all royalties, sublicense fees and other costs or expenses payable to Third Parties under a Third Party Agreement associated with the acquisition or exercise of such licenses by or on behalf of BioMarin/Genzyme LLC for use in connection with the Program. The licenses granted or to be granted under Sections 3.1.1 and 3.1.2 above shall include the right to grant and further authorize sublicenses within the scope of such licenses; provided, however, all sublicenses granted by BioMarin/Genzyme LLC (other than those provided in Section 3.2.1 below) shall be subject to prior approval by the Steering Committee. Notwithstanding anything to the contrary herein, pursuant to the Manufacturing, Marketing and Sales Agreement, Genzyme shall be solely responsible for all royalties payable to Third Parties under Third Party Agreements that are payable based on the commercialization of Aldurazyme.

3.1.4 Rights of BioMarin/Genzyme LLC to Patent Rights or Technology Developed Outside the Program. In the event that either BioMarin or Genzyme develops, acquires or otherwise Controls Patent Rights, Technology or Manufacturing Know-How after the Original Date of Execution other than in connection with the Program and such Patent Rights, Technology or Manufacturing Know-How are useful in the Field (“Additional Technology”), the Party Controlling such Additional Technology hereby grants to BioMarin/Genzyme LLC an option exercisable at the discretion of the Steering Committee to obtain an exclusive, irrevocable (during the Term) right and license, with the right to grant sublicenses, to such Additional Technology limited to use in the Field and in the Territory to the extent necessary or appropriate to enable BioMarin/Genzyme LLC to develop, make, have made, use, offer for sale, sell, have sold, import and export Collaboration Products, in each case subject only to BioMarin/Genzyme LLC’s undertaking to pay (a) a commercially reasonable portion of all costs incurred by BioMarin or Genzyme, as the case may be, to acquire or develop such Additional Technology, (b) a commercially reasonable portion of any and

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all development costs relating to the Additional Technology incurred by BioMarin or Genzyme, as the case may be, since the date such Party acquired or developed such Additional Technology and (c) a pro rata share of all royalties, sublicense fees and other costs or expenses payable to Third Parties under a Third Party Agreement associated with the acquisition or exercise of such license by or on behalf of BioMarin/Genzyme LLC, allocated based upon the proportion of such costs attributable to the acquisition or use of such Additional Technology by BioMarin/Genzyme LLC; provided, however, that if BioMarin or Genzyme, as the case may be, has more limited rights to such Additional Technology that those described above, the license subject to BioMarin/Genzyme LLC’s option hereunder shall be consistent with the rights held by BioMarin or Genzyme, as the case may be, with respect to such Additional Technology. Subject to BioMarin/Genzyme LLC agreeing to pay the appropriate amounts due to a Third Party under an agreement with a Party as a result of the acquisition of Additional Technology and/or exercise of the rights therein by or on behalf of BioMarin/Genzyme LLC, the same shall be a “Third Party Agreement” for purposes of this Agreement.

3.1.5 External Products. If at any time during the Term either Genzyme, BioMarin or their respective Affiliates intends to collaborate with a Third Party regarding the development and/or commercialization of a Gene Therapy product for the treatment or prevention of MPS I or other alpha-L-iduronidase deficiencies (an “External Product”), such Party (the “Proposing Party”) shall provide written notice of its intent to the Steering Committee. The Proposing Party and the Steering Committee shall negotiate in good faith the terms and conditions upon which the Proposing Party and BioMarin/Genzyme LLC would be willing to collaborate for such purposes. If the Proposing Party and the Steering Committee are unable to agree upon such terms and conditions within sixty (60) days after receipt by the Steering Committee of the Proposing Party’s notice, the Proposing Party shall have the right to develop or commercialize such External Product with a Third Party.

3.2 Sublicenses of Rights from BioMarin/Genzyme LLC to BioMarin and Genzyme.

3.2.1 General. BioMarin/Genzyme LLC hereby grants to each of BioMarin and Genzyme a worldwide, non-exclusive, royalty-free right and sublicense during the Term under the Patent Rights, Technology and Manufacturing Know-How licenses granted to BioMarin/Genzyme LLC pursuant to Section 3.1 or under the Third Party Agreements solely to the extent required to permit such Party to perform its duties and obligations and exercise its rights under this Agreement and any Related Agreement. BioMarin/Genzyme LLC also hereby agrees to grant to each of BioMarin and Genzyme a worldwide, non-exclusive, royalty-free right and license during the Term under any Additional Technology as to which BioMarin/Genzyme LLC obtains a license pursuant to Section 3.1.4 above solely to the extent required to permit such Party to perform its duties and obligations and exercise its rights under this Agreement and any Related Agreement. BioMarin/Genzyme LLC also hereby grants a worldwide, non-exclusive, royalty-free right and license during the Term to use any and all present and future trademarks Controlled by BioMarin/Genzyme LLC (i) to Genzyme in connection with the commercialization of Aldurazyme in the Territory to the extent required to permit Genzyme to perform its duties and obligations and exercise its rights under this Agreement and any Related Agreement with respect to Aldurazyme and (ii) the Commercialization Party in connection with the commercialization of any other Collaboration Product to the extent required to permit such Commercialization Party to perform its duties and obligations and exercise its rights under this Agreement and any Related Agreement with respect to such Collaboration Product, in each case such licenses are subject to the quality-related requirements for Collaboration Products set forth in this Agreement and the Related Agreements.

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3.2.2 Further Sublicenses. The foregoing licenses granted to Genzyme and BioMarin, respectively, shall include the right to grant and further authorize sublicenses to Third Parties within the scope of such licenses.

3.3 Reservation of Rights.

3.3.1 Reservation by BioMarin. Notwithstanding the license grants set forth in Section 3.1 but subject to the terms and conditions set forth in this Agreement and the Manufacturing, Marketing and Sales Agreement, BioMarin at all times reserves the rights under the BioMarin Patent Rights, the BioMarin Technology, the BioMarin/Genzyme Patent Rights, the BioMarin/Genzyme Technology and the Manufacturing Know-How Controlled by BioMarin (a) to make, have made and use Collaboration Products for research and development purposes only; (b) to develop, make, have made, use, offer for sale, sell, have sold, import and export (i) products outside the Field and (ii) products other than a Collaboration Product; and (c) to grant licenses to Third Parties for the foregoing purposes.

3.3.2 Reservation by Genzyme. Notwithstanding the license grants set forth in Section 3.1 but subject to the terms and conditions set forth in this Agreement and the Manufacturing, Marketing and Sales Agreement, Genzyme at all times reserves the rights under the Genzyme Patent Rights, the Genzyme Technology, the BioMarin/Genzyme Patent Rights, the BioMarin/Genzyme Technology and Manufacturing Know-How Controlled by Genzyme (a) to make, have made and use Collaboration Products for research and development purposes only; (b) to develop, make, have made, use, offer for sale, sell, have sold, import and export (i) products outside the Field and/or outside the Territory and (ii) products other than a Collaboration Product; and (c) to grant licenses to Third Parties for the foregoing purposes.

3.4 Assignment of Orphan Drug Designation. Except to the extent prohibited by the applicable Regulatory Scheme, BioMarin hereby assigns and BioMarin and Genzyme each hereby agree to assign to BioMarin/Genzyme LLC any “Orphan Drug” (or similar designation outside the United States) for any Collaboration Product which BioMarin has received or which BioMarin or Genzyme may receive during the Term in the Territory.

3.5 Third Party Agreements. Each Party shall exercise their rights under the Third Party Agreements in a manner that is as consistent as possible with the terms of this Agreement and the Related Agreements in consultation with and as reasonably requested by the other Parties. Without the prior written consent of the other Parties (which consent shall not be unreasonably withheld, delayed or conditioned), none of the Parties shall voluntarily (i) amend or modify, or consent to any action that may be taken under, any Third Party Agreement, the effect of which would change any financial terms or conditions thereunder or materially adversely affect the Parties’ rights under this Agreement or any Related Agreement, (ii) take or consent to any action taken with respect to any Patent Rights, Technology or Manufacturing Know-How licensed under the Third Party Agreement, the effect of which would materially adversely affect the Party’s rights under this Agreement or any Related Agreement, or (iii) terminate or engage in any act or omission that constitutes or would constitute, with or without the giving of notice or the passage of time, an event that would permit the

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licensor under the Third Party Agreements to terminate the Third Party Agreements. Each Party shall immediately notify the other Parties of any such event or of the receipt any notice of breach or termination of any Third Party Agreement. The Party who is a party to a Third Party Agreement shall take all reasonable actions necessary, or permit such actions to be taken in its name by the other Parties, to maintain and enforce the Parties’ rights under such Third Party Agreement in a manner consistent with the terms of this Agreement and the Related Agreement.

ARTICLE IV

PROGRAM FUNDING

4.1 Program Funding Commitments. Genzyme hereby undertakes to make capital contributions to BioMarin/Genzyme LLC in an amount equal to fifty percent (50%) of all Program Costs and BioMarin, on behalf of the BioMarin Companies, hereby undertakes to make capital contributions to BioMarin/Genzyme LLC in an aggregate amount equal to fifty percent (50%) of all Program Costs. In the event that either BioMarin, on behalf of the BioMarin Companies, or Genzyme fails to make a capital contribution pursuant to this Section 4.1 and Section 4.2 below, and the other Party does not elect to terminate the Development Program pursuant to Article 13 hereof, then the Percentage Interests in BioMarin/Genzyme LLC and the future funding responsibility of the Members shall be adjusted as provided in Section 4.1(b) of the Operating Agreement.

4.2 Program Funding Capital Contributions.

4.2.1 Quarterly Capital Contributions. Genzyme and BioMarin, on behalf of the BioMarin Companies, shall each make capital contributions to BioMarin/Genzyme LLC, quarterly in advance, not later than the fifteenth (15th) day prior to the end of the prior calendar quarter, in an aggregate amount equal to the Program Costs budgeted to be incurred by BioMarin/Genzyme LLC in the then-current Development Plan for such calendar quarter, allocated between such Parties in accordance with the funding responsibility assumed by Genzyme and BioMarin, on behalf of the BioMarin Companies, pursuant to Section 4.1 above. Upon receipt of each such capital contribution from Genzyme or BioMarin, as the case may be, BioMarin/Genzyme LLC shall promptly pay each of the Parties an amount equal to that portion of the budgeted Program Costs to which they are respectively entitled in accordance with this Agreement.

4.2.2 Monthly Statements; Quarterly Reconciliation. As soon as practicable, but in any event prior to the tenth (10th) business day after the end of each calendar month, each of BioMarin and Genzyme shall provide BioMarin/Genzyme LLC with a detailed itemization of Program Costs actually incurred by such Party during the previous month. Within thirty (30) days following receipt of the third monthly statement for each calendar quarter of actual Program Costs provided by each of BioMarin and Genzyme, BioMarin, on behalf of the BioMarin Companies, and Genzyme shall each make an additional capital contribution to BioMarin/Genzyme LLC in the amount of any actual Program Costs shown on the three (3) monthly statements for such calendar quarter, taken in the aggregate, and not yet paid for which such Party has assumed funding responsibility pursuant to Section 4.1 above but only to the extent that such amount, together with all prior capital contributions to date during such year, does not exceed [****] of the total Program

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Costs budgeted year-to-date through the end of the quarter to which such statement relates (except to the extent such excess is approved by the Steering Committee pursuant to Section 5.1.3 hereof). If the aggregate amount stated to be due from BioMarin/Genzyme LLC based on such quarterly reconciliation for actual Program Costs is less than the amount already contributed by the Parties to the capital of BioMarin/Genzyme LLC with respect to budgeted Program Costs for such calendar quarter, such excess shall be credited against the next successive quarterly capital contribution(s) due from Genzyme or BioMarin hereunder.

4.3 Distributions. Distributions to each Member shall be made at such times and in such amounts as determined in accordance with the Operating Agreement.

4.4 Books of Account; Audit. Genzyme shall keep and maintain proper and complete books of account, and shall maintain a bank account, on behalf of BioMarin/Genzyme LLC. In the event that either BioMarin or Genzyme reasonably deems the Program to be material to BioMarin or Genzyme, as the case may be, for financial accounting purposes, then, upon such Party’s request, audited financial statements of BioMarin/Genzyme LLC shall be prepared by an independent accounting firm to be selected by the Steering Committee. Each of BioMarin and Genzyme shall keep and maintain proper and complete records and books of account documenting all Program Costs incurred by such Party. Each of BioMarin/Genzyme LLC, BioMarin and Genzyme shall permit independent accountants retained by BioMarin or Genzyme (the “Auditing Party”) to have access to its records and books for the sole purpose of determining the appropriateness of Program Costs charged by or accrued to the Party being audited hereunder. Such examination shall be conducted during regular business hours and upon reasonable notice, at the Auditing Party’s own expense and no more than once in each calendar year during the Term and once during the three (3) calendar years following the expiration or termination hereof. If such examination reveals that such Program Costs have been misstated, any adjustment shall be promptly refunded or paid, as appropriate. The Auditing Party shall pay the fees and expenses of the accountant engaged to perform the audit, unless such audit reveals an overcharge or accrual of [****] or more for the period examined, in which case the Party who received such overpayment shall pay all reasonable costs and expenses incurred by the Auditing Party in the course of making such determination, including the fees and expenses of the accountant along with interest at the rate set forth in Section 14.4.

4.5 Enforceability of Sections 4.1 and 4.2. The agreements regarding capital contributions set forth in Sections 4.1 and 4.2 hereof are by and between, and for the benefit of, Genzyme and BioMarin only, and are not enforceable by BioMarin/Genzyme LLC or any Third Party.

4.6 General and Administrative Services. Except as provided in this Section 4.6, each of BioMarin and Genzyme shall continue to provide general and administrative services to BioMarin/Genzyme LLC after the Effective Date (in substantially the same manner and to the same extent as such Party has provided such general and administrative services to BioMarin/Genzyme LLC prior to the Effective Date) at no cost to BioMarin/Genzyme LLC. To the extent that there are any Third Party costs (such as legal or accounting costs or insurance premiums), all such costs shall be paid for [****].

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ARTICLE V

THE DEVELOPMENT PROGRAM

5.1 Conduct of the Development Program.

5.1.1 General. The Parties agree to use commercially reasonable and diligent efforts to execute and substantially perform and to cooperate with each other in carrying out the Development Plan for each Collaboration Product. Neither BioMarin nor Genzyme shall be required to undertake activities in furtherance of the Development Plan in the absence of funding from BioMarin/Genzyme LLC pursuant to the provisions of this Agreement. As used in this Agreement, the phrase “commercially reasonable and diligent efforts” will mean that level of effort which, consistent with the exercise of prudent scientific and business judgment, is applied by the Party in question to its other therapeutic products at a similar stage of development and with similar commercial potential.

5.1.2 Development Plan. The Development Program shall be conducted by the Parties for BioMarin/Genzyme LLC in accordance with the then-current Development Plan which shall describe the proposed overall program of development for each Collaboration Product, including preclinical studies, toxicology, formulation, manufacturing, clinical trials and regulatory plans and other key elements. Pursuant to the Development Plan, development work may be subcontracted to Genzyme and BioMarin or their respective Affiliates, at fully absorbed costs determined by GAAP. The respective charges to BioMarin/Genzyme LLC for Development Costs incurred by a Party shall be invoiced following completion of the work, and shall be payable by BioMarin/Genzyme LLC within a commercially reasonable time thereafter (but in no event later than forty-five (45) days of the date of invoice therefor). The Development Plan shall include (i) a summary of estimated Development Costs expected to be incurred by each Party hereunder in performing activities of the Development Program assigned to such Party pursuant to Section 5.1.4 below and (ii) a summary budget for all development projects proposed for the applicable period and for each Collaboration Product.

5.1.3 Initial and Updated Development Plan. The Parties have agreed to an initial three (3) year development plan and budget for the period beginning on the Effective Date and ending on December 31, 2010, which is attached hereto as Appendix A. The rolling three (3) year Development Plan shall be updated annually by the Program Management Team and submitted to the Steering Committee for review and approval not later than sixty (60) days prior to January 1 of each year during the Development Program. Each such updated Development Plan shall include (a) an overall development plan for each Collaboration Product which sets forth all major development tasks and (b) a detailed description and budget for the activities proposed for the covered period. The Project Management Team shall be primarily responsible for preparing the annual updates to the Development Plan and, in connection with the preparation of such updates, shall consult with Genzyme and BioMarin regarding the identification, timing and execution of and budget for the major tasks and detailed activities required to perform the updated Development Plan. Each such updated Development Plan approved by the Steering Committee shall be signed by an authorized representative of each of BioMarin and Genzyme. The members of the Program Management Team shall actively consult with one another throughout the term of the Development Plan so as to adjust

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the specific work performed under the Development Plan to conform to evolving developments in technology and the results of the development work performed. Any changes in the scope or direction of the work and any changes to the total amount budgeted in any calendar year for the Development Program must be approved by the Steering Committee, in the absence of which approval the most recently approved Development Plan shall remain in effect.

5.1.4 Studies Required by Regulatory Authorities.

(a) Existing Markets. In the event that any regulatory authority in any country in which Aldurazyme has received all necessary Regulatory Approvals as of the Effective Date (“Existing Markets”) requires a post-marketing study related to Aldurazyme (other than any registry program existing on the Effective Date or post-marketing studies related to the manufacture of Aldurazyme, each of which shall be governed by the terms and conditions of the Manufacturing, Marketing and Sales Agreement) that is not contemplated by the initial Development Plan described above, then such study shall automatically be added to the Development Program and (i) the Program Management Team shall promptly prepare a plan for the conduct of such required post-marketing study (including without limitation a timeline and reasonably detailed budget) and submit the plan to the Steering Committee for review and approval and (ii) the Steering Committee shall promptly review such plan and, upon approval of such plan by the Steering Committee, the then-current Development Plan shall automatically be updated to include the study and the budget included in the approved plan; provided, however, that in the event that any regulatory authority requires a post-marketing study to be conducted through or as part of the registry program, then, notwithstanding anything to the contrary herein, such study and the incremental costs associated with conducting such study (i.e., such costs above the general cost of maintaining the registry program) shall be added to the Development Plan in accordance with the process set forth in this Section 5.1.4(a).

(b) New Markets. In the event that clinical studies are required to apply for Regulatory Approval for Aldurazyme in any country that is not an Existing Market and/or the regulatory authority in any such country requires a post-marketing study(ies) as a condition to granting or maintaining Regulatory Approval for Aldurazyme, then (i) the Program Management Team shall promptly prepare a plan for the conduct of such study(ies) (including without limitation a timeline and reasonably detailed budget) and submit the plan to the Steering Committee for review and approval and (ii) if the Steering Committee approves the plan, such study(ies) will be added to the Development Program and the then-current Development Plan shall automatically be updated to include such study(ies) and the budget included in the approved plan; provided, however, that in the event that any regulatory authority requires any such post-marketing study to be conducted through or as part of the registry program, then the budget for such study shall reflect the incremental costs associated with conducting such study (i.e., such costs above the general cost of maintaining the registry program).

5.1.5 Other Development Activities. In the event that either BioMarin or Genzyme desires to engage in any research or development activities related to Aldurazyme or other Collaboration Products that are not contemplated by an existing Development Plan or covered by Section 5.1.4 above (including without limitation through investigator sponsored studies), then such Party shall submit a proposal to the Steering Committee for such activities (including a reasonably detailed budget therefore), and the Steering Committee shall decide within ninety (90) days after

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receipt thereof whether such activities will be added to the Development Program. If the Steering Committee elects to add such activities to the Development Program, then it shall promptly amend the then-current Development Plan to include such activities and the related budget. If the Steering Committee declines or fails to make such election, then the Party who submitted the proposal shall be free to conduct such research or development activities independently at its own expense subject to the terms of the Manufacturing, Marketing and Sales Agreement ; provided, however, that any and all Patent Rights, Technology and Manufacturing Know-How developed as a result of those activities shall be subject to the rights and licenses granted to the Parties pursuant to Article 3 of this Agreement.

5.1.6 Execution and Performance. The Development Program shall allocate among the Parties responsibility for each of the activities described therein. The Parties shall use commercially reasonable and diligent efforts to conduct the activities described in the Development Plan. The Development Plan shall be supervised by the Program Management Team. The Program Management Team will coordinate preclinical and clinical testing of the Collaboration Products in the Territory and work with designated individuals at BioMarin and Genzyme in the preparation of Regulatory Approval filings for the Collaboration Products and filing the same with regulatory agencies designated by the Steering Committee.

5.1.7 Attendance at Regulatory Meetings; Correspondence. Each Party shall provide the others with prior notice of all meetings and teleconferences between representatives of the notifying Party and regulatory authorities regarding any Collaboration Product for use in the Territory. Except as otherwise provided herein, the Party receiving such notice shall have the right to have representatives participate in all such meetings and teleconferences. Each Party shall use reasonable efforts to provide the other Party with a reasonable opportunity to review and comment upon submissions to, and correspondence with, any regulatory agency in the Territory with respect to Collaboration Products prior to the filing or delivery of such submissions or correspondence. Without limiting the foregoing, each Party shall use reasonable efforts to confirm in writing to the other Party all communications with a regulatory authority with respect to a Regulatory Approval (including filings therefor) and to provide to the other Party copies of all documents sent to or received from such regulatory authority regarding such Regulatory Approvals.

5.2 Development Information.

5.2.1 Reports and Information Exchange. As between the Parties hereto, (a) BioMarin/Genzyme LLC shall own all clinical trial data accumulated from all clinical trials of Collaboration Products conducted as part of the Program or otherwise funded or partially funded by BioMarin/Genzyme LLC and (b) subject to the license granted pursuant to Section 3.1 above, BioMarin or Genzyme, as the case may be, shall own all clinical trial data accumulated from all clinical trials of Collaboration Products that are not conducted as part of the Program. Each of BioMarin and Genzyme shall use commercially reasonable and diligent efforts to disclose to BioMarin/Genzyme LLC and to the other Party all material information relating to any Collaboration Product promptly after it is learned or its materiality is appreciated. The Party performing or supervising clinical trials of Collaboration Products in accordance with the Development Plan shall, on behalf and in the name of BioMarin/Genzyme LLC, maintain the database of clinical trial data accumulated from all clinical trials of Collaboration Products and of adverse reaction information for all such Collaboration Products. Each Party shall also keep the

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Program Management Team informed as to its progress in the Development Plan. All protocols for clinical trials to be conducted, and all product registration plans, for Collaboration Products for applications within the Field in the Territory shall be submitted to the Program Management Team for review and comment by the Program Management Team prior to filing of such protocols or registrations with any regulatory agency. Within sixty (60) days following the end of each calendar quarter during the Development Program, each of BioMarin and Genzyme shall provide the other Parties with a reasonably detailed written report describing the progress to date of all activities for which such Party was allocated responsibility during such quarter under the Development Plan.

5.2.2 Adverse Reaction Reporting. Each of BioMarin and Genzyme shall notify the other Parties of any Adverse Reaction Information relating to any Collaboration Product within twenty-four (24) hours of the receipt of such information and as necessary for compliance with regulatory requirements. “Adverse Reaction Information” includes without limitation information relating to any experience that (a) suggests a significant hazard, contraindication, side effect or precaution, (b) is fatal or life threatening, (c) is permanently disabling, (d) requires or prolongs inpatient hospitalization, (e) involves a congenital anomaly, cancer or overdose or (f) is one not identified in nature, specificity, severity or frequency in the current investigator brochure or the United States labeling for the Collaboration Product.

5.2.3 Clinical and Regulatory Audits. Each of BioMarin and Genzyme shall permit BioMarin/Genzyme LLC and the other Party or the representatives of BioMarin/Genzyme LLC or the other Party to have access during regular business hours and upon reasonable advance notice, at the auditing Party’s own expense and no more than once in each calendar year during the Term, to the non-auditing Party’s records and facilities relating to the Development Program for the purpose of monitoring compliance with Good Clinical Practice and other applicable requirements of the Regulatory Scheme in connection with such Party’s performance of its obligations hereunder.

5.3 Regulatory Approval Filings. Except as set forth in the Manufacturing, Marketing and Sales Agreement, Regulatory Approval filings in the Territory for the Collaboration Products and for the facilities used to manufacture such Collaboration Products shall be filed in the name of BioMarin/Genzyme LLC or, if required with respect to filings to be made with governmental authorities or deemed to be in the best interest of the Parties by the Steering Committee, in the name of such other entity as may be agreed upon by the Steering Committee (such as filings with European regulatory authorities). Prior to submission to the FDA, the Parties, through the Program Management Team, shall consult, cooperate in preparing and mutually agree on the content and scope of such Regulatory Approval filings. In the event that Regulatory Approvals are required to be filed in the name of an entity other than BioMarin/Genzyme LLC, the Steering Committee shall ensure that a duly authorized officer of such entity agrees in writing that (a) such entity shall hold the licenses issued in respect of such Regulatory Approval filings, maintain control over the manufacturing facilities, equipment and personnel, and engage in pharmacovigilence to the extent required by the Regulatory Scheme, (b) such entity shall maintain compliance with applicable Regulatory Schemes, (c) such entity shall provide manufacturing and supply services to BioMarin/Genzyme LLC at the Fully Absorbed Cost of Goods of Collaboration Products so manufactured and supplied, (d) the Parties shall have an irrevocable right of access and reference to such Regulatory Approval filings, licenses and facilities and (e) such entity agrees to comply with the provisions of Article 12 of the Manufacturing, Marketing and Sales Agreement with respect to the ownership and/or disposition of such Regulatory Approvals in the event this Agreement is terminated and to provide the level of cooperation described in Section 14.1 hereof in connection therewith.

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5.4 Clinical Data. In all agreements with Third Parties or Affiliates involving the development of preclinical or clinical data for a Collaboration Product, Genzyme and BioMarin shall require that such Third Parties and Affiliates provide BioMarin/Genzyme LLC and the other Party access to all such data, to the extent such data is required to be obtained from such Third Parties by the Japanese Ministry of Health and Welfare, the U.S. FDA, the Commission of Proprietary Medicines of the European Community, the European Medicines Evaluation Agency or other regulatory agency, in each case with respect to Regulatory Approvals.

5.5 Facilities Visit. Representatives of BioMarin and Genzyme may visit all manufacturing sites and the sites of any clinical trials or other experiments being conducted by the other Party or BioMarin/Genzyme LLC in connection with the Development Program. If requested by the other Party, BioMarin and Genzyme shall cause appropriate individuals working on the Development Program to be available for meetings at the location of the facilities where such individuals are employed at times reasonably convenient to the Party responding to such request.

ARTICLE VI

[RESERVED]

ARTICLE VII

MANUFACTURE AND SUPPLY; SALES AND MARKETING

Subject to the terms and conditions of this Agreement, Collaboration Products shall be manufactured and supplied for preclinical and clinical testing and for commercial sale upon the following terms and conditions. For purposes of this Article 7, the term “Collaboration Products” shall be deemed to exclude Aldurazyme except as explicitly provided below.

7.1 General. For any Collaboration Product that may be commercialized, the Parties shall negotiate in good faith to include the additional Collaboration Product to the Manufacturing Marketing and Sales Agreement to allow for BioMarin to manufacture such Collaboration Product and for Genzyme to commercialize such Collaboration Product (the “Commercializing Party”) on financial terms and such other terms and conditions appropriate for such Collaboration Product as may be mutually agreed upon by the Parties.

7.2 Manufacture and Supply of Collaboration Products. BioMarin/Genzyme LLC shall manufacture (or, subject to Section 7.2.1, have manufactured) and supply Collaboration Products for preclinical and clinical activities upon the following terms and conditions (and such other terms and conditions established by the Steering Committee consistent with the provisions of this Agreement):

7.2.1 General. All decisions relating to the manufacture of Collaboration Products shall be subject to the approval of, or modification by, the Steering Committee.

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7.2.2 Facilities. Notwithstanding any provision of this Agreement to the contrary, the Parties acknowledge and agree that BioMarin/Genzyme LLC shall not bear any costs relating to the construction of manufacturing facilities for a Collaboration Product (other than through normal depreciation and amortization included in Fully Absorbed Cost of Goods).

7.3 Manufacture and Supply of Aldurazyme for the Development Program. BioMarin shall use commercially reasonable and diligent efforts to manufacture and supply Aldurazyme (either itself or through Third Parties) for activities undertaken pursuant to the Development Plan in quantities and within a time period sufficient to conduct the activities set forth in the Development Plan and BioMarin/Genzyme LLC and the Fully Absorbed Cost of Goods of such Aldurazyme shall be included as Development Costs.

7.4 Certificates of Analysis. The Manufacturing Party shall perform, or cause its contract manufacturer(s) to perform, quality assurance and control tests on each lot of Collaboration Products before delivery and shall prepare, or cause its contract manufacturer(s) to prepare and deliver, a written report of the results of such tests (for purposes of Sections 7.2, 7.3 and 7.4, such contract manufacturer(s) shall be included in the definition of the term “Manufacturing Party”). Each test report shall set forth for each lot delivered the items tested, specifications and results in a certificate of analysis containing the types of information which shall have been approved by the Program Management Team or required by the FDA or other applicable regulatory authority. The Manufacturing Party shall maintain such certificates for a period of not less than five (5) years from the date of manufacture or for such longer period as required under applicable requirements of the FDA or other applicable regulatory authority.

7.5 Certificates of Manufacturing Compliance. The Manufacturing Party shall prepare, or cause to be prepared and delivered, and maintain for a period of not less than five (5) years or for such longer period as required under applicable requirements of the FDA or other applicable regulatory authority for each lot of Collaboration Products manufactured a certificate of manufacturing compliance containing the types of information which shall have been approved by the Program Management Team or required by the FDA or other applicable regulatory authority, which certificate will certify that the lot of Collaboration Products was manufactured in accordance with the Specifications and the Good Manufacturing Practices of the FDA or other applicable regulatory authority as the same may be amended from time to time. The Manufacturing Party shall advise the other Parties immediately if an authorized agent of the FDA or other regulatory authority visits any of the Manufacturing Party’s manufacturing facilities, or the facilities where the Collaboration Products are being manufactured, for an inspection with respect to the Collaboration Products. The Manufacturing Party shall furnish to the other Parties the report by such agency of such visit, to the extent that such report relates to Collaboration Products, within ten (10) business days of the Manufacturing Party’s receipt of such report, and the other Parties shall have the right to comment on any response by the Manufacturing Party to such inspecting agency.

7.6 Access to Facilities. Each Party shall have the right to audit annually those portions of the manufacturing, finish processing or storage facilities of the Manufacturing Party where Collaboration Products are being manufactured, finished or stored, or any subcontractor who is manufacturing, finishing or storing Collaboration Products for the Manufacturing Party, at any time during regular business hours and upon reasonable advance notice to ascertain compliance with the Good Manufacturing Practices of the FDA or other applicable regulatory authority, as the same may be amended from time to time. Subject to the terms and conditions of Section 10.1 below, confidential information disclosed to or otherwise gathered by the Party conducting such inspection during any such inspection shall be maintained as confidential.

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7.7 Responsibilities of the Other Parties. No Party other than the Commercialization Party shall actively solicit for its own account sales of Collaboration Products in the Territory. Any solicitations or requests to purchase Collaboration Products received by a Party other than the Commercialization Party from any customer or prospective shall be immediately referred to the Commercialization Party.

ARTICLE VIII

MANAGEMENT

8.1 Program Management Team.

8.1.1 General. The Parties have established a Program Management Team to oversee and control development of Collaboration Products. The Program Management Team is and shall continue to be composed of four (4) representatives appointed by BioMarin and four (4) representatives appointed by Genzyme. Such representatives will include individuals with expertise and responsibilities in such areas as preclinical development, clinical development, manufacturing, and regulatory affairs. The Program Management Team shall meet as needed but not less than monthly. The Program Management Team shall appoint one of its members to act as Secretary. Such meetings shall be at times and places or in such form (e.g., telephone or video conference) as the members of the Program Management Team shall agree. A Party may change one or more of its representatives to the Program Management Team at any time. Members of the Program Management Team may be represented at any meeting by another member of the Program Management Team or by a deputy. Any approval, determination or other action agreed to by a majority of the members of the Program Management Team appointed by each of BioMarin and Genzyme or their deputies present at the relevant Team meeting shall be the approval, determination or other action of the Program Management Team, provided at least two (2) representatives of each of BioMarin and Genzyme are present at such meeting. Representatives of either BioMarin and Genzyme who are not members of the Program Management Team may attend meetings of the Program Management Team as agreed to by the representative members of the other Party. The Program Management Team may designate project leaders to the extent it deems it necessary or advisable. The Parties specifically agree that the Product Management Team has no authority to oversee or control the manufacture or commercialization of Aldurazyme and that all such activities shall be governed by the Manufacturing, Marketing and Sales Agreement.

8.1.2 Development Program Functions. During the term of the Development Program, the Program Management Team shall coordinate, expedite and control the development of Collaboration Products. The Program Management Team will (a) develop and recommend to the Steering Committee Development Plans (including annual development budgets), (b) facilitate the flow of information with respect to development work being conducted for each Collaboration Product throughout the Territory and (c) discuss and cooperate regarding the conduct of such development work.

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8.1.3 Minutes. The Program Management Team shall keep accurate minutes of its deliberations which shall record all proposed decisions and all actions recommended or taken. The Secretary shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the Program Management Team within five (5) working days after each meeting and shall be approved, if appropriate, at the next meeting. All records of the Program Management Team shall at all times be available to all of the Parties.

8.2 Steering Committee.

8.2.1 General. The Parties have established a Steering Committee to oversee and manage the collaboration contemplated by this Agreement. The Steering Committee is and shall continue to be composed of three (3) representatives appointed by BioMarin and three (3) representatives appointed by Genzyme. Such representatives will be senior officers and/or managers of their respective companies. Genzyme and BioMarin shall each designate one (1) of their respective representatives on the Steering Committee to act as Co-Chairman. The Steering Committee shall appoint one (1) of its members to act as Secretary. The Steering Committee will meet as needed but not less than once each calendar quarter. Such meetings shall be at times and places or in such form (e.g., telephone or video conference) as the members of the Steering Committee shall agree. A Party may change one or more of its representatives to the Steering Committee at any time. Members of the Steering Committee may be represented at any meeting by another member of the Steering Committee or by a deputy. Any approval, determination or other action agreed to by unanimous consent of the members of the Steering Committee or their deputies present at the relevant Steering Committee meeting shall be the approval, determination or other action of the Steering Committee, provided at least two (2) representatives of each of BioMarin and Genzyme are present at such meeting. Representatives of either BioMarin and Genzyme who are not members of the Steering Committee may attend meetings of the Steering Committee as agreed to by the representative members of the other Party. Each Party shall bear its own personnel and travel costs and expenses relating to Steering Committee meetings, which costs and expenses shall not be included in the Program Costs. The Parties specifically agree that the Steering Committee has no authority to oversee or control the manufacture or commercialization of Aldurazyme and that all such activities shall be governed by the Manufacturing, Marketing and Sales Agreement.

8.2.2 Functions. The Steering Committee shall perform the following functions: (a) determine the overall strategy for the Program in the manner contemplated by this Agreement; (b) coordinate the activities of the Parties hereunder; (c) settle disputes or disagreements that are unresolved by the Program Management Team; (d) approve any agreements with Third Parties regarding a Collaboration Product or which involve the grant of any rights related to the development of a Collaboration Product or manufacturing of a Collaboration Product other than Aldurazyme; (e) review and approve each Development Plan, including each change and annual update thereto, submitted to it pursuant to Section 5.1.3 hereof; (f) serve as the governing body of BioMarin/Genzyme LLC; and (g) perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties.

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8.2.3 Minutes. The Steering Committee shall keep accurate minutes of its deliberations which shall record all proposed decisions and all actions recommended or taken. The Secretary shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the Steering Committee within ten (10) working days after each meeting and shall be approved, if appropriate, at the next meeting. All records of the Steering Committee shall at all times be available to both BioMarin and Genzyme.

8.3 General Disagreements. All disagreements within the Program Management Team or the Steering Committee shall be subject to the following:

(a) The representatives to the Program Management Team or Steering Committee (as the case may be) will negotiate in good faith for a period of not less than thirty (30) days to attempt to resolve the dispute. In the case of the Program Management Team, any unresolved dispute shall be referred to the Steering Committee for good faith negotiations for an additional period of not less than thirty (30) days to attempt to resolve the dispute.

(b) In the event that the dispute is not resolved after the period specified in clause (a), the representatives shall promptly present the disagreement to the Chief Executive Officers of BioMarin and Genzyme or a designee of such Chief Executive Officer reasonably acceptable to the other Party.

(c) Such executives shall meet or discuss in a telephone or video conference each of BioMarin and Genzyme’s views and explain the basis for such dispute.

(d) If such executives cannot resolve such disagreement within thirty (30) days after such issue has been referred to them, then such dispute shall be referred to arbitration as described in Section 14.10 hereof.

ARTICLE IX

INTELLECTUAL PROPERTY RIGHTS

9.1 Ownership. The Parties acknowledge that the ownership rights set forth herein (a) shall not be affected by the participation in the discovery or development of an Invention (as defined below) by the Program Management Team or the Steering Committee in the course of discharging their duties hereunder and (b) are subject to the license grants set forth in Article 3 above.

9.1.1 Ownership and Assignment of Discoveries and Improvements. All right, title and interest in all writings, inventions, discoveries, improvements and other technology, whether or not patentable or copyrightable, and any patent applications, patents or copyrights based thereon (collectively, the “Inventions”) that are discovered, made or conceived during and in connection with the Program solely by employees of BioMarin or others acting on behalf of BioMarin (“BioMarin Inventions”) shall be owned by BioMarin. All right, title and interest in all Inventions that are discovered, made or conceived during and in connection with the Program solely by employees of Genzyme or others acting on behalf of Genzyme (“Genzyme Inventions”) shall be owned by Genzyme. All right, title and interest in all Inventions that are discovered, made or conceived during

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and in connection with the Program jointly by employees of BioMarin and Genzyme (“Joint Inventions”) shall be jointly owned by Genzyme and BioMarin. Each of BioMarin and Genzyme shall promptly disclose to BioMarin/Genzyme LLC and the other Party the making, conception or reduction to practice of Inventions by employees or others acting on behalf of such Party. All BioMarin Inventions, Genzyme Inventions and Joint Inventions shall be automatically licensed to BioMarin/Genzyme LLC pursuant to Section 3.1 hereof. Except as expressly provided in this Agreement, it is understood that neither BioMarin nor Genzyme shall have any obligation to account to the other Party for profits, or obtain any approval of the other to grant a license or exploit a Joint Invention outside of the Field by reason of joint ownership of such Invention or other intellectual property. For avoidance of doubt, in any jurisdiction where consent of all owners of a Joint Invention is required in order to grant a license to such Invention, BioMarin and Genzyme each grants the other Party consent to grant a non-exclusive license to Joint Invention outside the Field.

9.1.2 Ownership of Trademarks. The Steering Committee shall select and as between the Parties hereto BioMarin/Genzyme LLC shall own all trademarks for the sale and use of Collaboration Products in the Territory (collectively, “Product Marks”) and all goodwill therein shall inure to the benefit of BioMarin/Genzyme LLC, and all expenses incurred by a Party with respect thereto shall be considered Program Costs. All Product Marks shall be registered in the name of BioMarin/Genzyme LLC if and when registered. In the event that the applicable laws and regulations of any country in which the Steering Committee elects to register any Product Marks require that such trademark(s) be registered in the name of an entity other than BioMarin/Genzyme LLC, or if the Steering Committee determines that it is in the best interests of the Parties, then the Steering Committee shall select such entity and ensure that a duly authorized officer of such entity agrees in writing that such entity shall (a) grant BioMarin/Genzyme LLC a worldwide, exclusive, fully-paid, royalty-free, irrevocable right and license (with the right to grant and authorize sublicenses) to use such Product Marks and (b) comply with the provisions of Article 12 of the Manufacturing, Marketing and Sales Agreement with respect to the ownership and/or disposition of such Product Marks in the event this Agreement is terminated and provide the level of cooperation described in Section 14.1 hereof in connection therewith. Each Party hereby acknowledges agrees that at no time during of this Agreement to challenge or assist others to challenge the Product Marks or the registration thereof or attempt to register any trademarks, marks or trade names confusingly similar to such Product Marks.

9.1.3 Cooperation of Employees. Each of BioMarin and Genzyme represents and agrees that all employees or others acting on its behalf in performing its obligations under this Agreement shall be obligated under a binding written agreement to assign to such Party, or as such Party shall direct, all Inventions made or conceived by such employee or other person. In the case of non-employees working for other companies or institutions on behalf of BioMarin or Genzyme, BioMarin or Genzyme, as applicable, shall have the right to obtain licenses for all Inventions made by such non-employees on behalf of BioMarin or Genzyme, as applicable, in accordance with the policies of said company or institution. BioMarin and Genzyme agree to undertake to enforce such agreements (including, where appropriate, by legal action) considering, among other things, the commercial value of such Inventions.

9.2 Filing, Prosecution and Maintenance of Patent Rights. BioMarin shall be responsible, at BioMarin’s expense, for the filing, prosecution and maintenance of Patent Rights within the BioMarin Patent Rights and BioMarin/Genzyme Patent Rights, and Genzyme shall be responsible, at

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Genzyme’s expense, for the filing, prosecution and maintenance of Patent Rights within the Genzyme Patent Rights. For so long as any of the license grants set forth in Article 3 hereof remain in effect and upon request of the other Party, each of BioMarin and Genzyme agrees to file and prosecute patent applications and maintain the Patent Rights for which it is responsible in all countries in the Territory selected by the Steering Committee. Each of BioMarin and Genzyme shall consult with and keep the other Party fully informed of important issues relating to the preparation and filing (if time permits), prosecution and maintenance of such patent applications and patents, and shall furnish to the other Party copies of documents relevant to such preparation, filing, prosecution or maintenance in sufficient time prior to filing such document or making any payment due thereunder to allow for review and comment by the other Party and, to the extent possible in the reasonable exercise of its discretion, the responsible Party shall incorporate all such comments.

9.3 Cooperation. Each of BioMarin and Genzyme shall make available to the other Party (or to the other Party’s authorized attorneys, agents or representatives) its employees, agents or consultants to the extent necessary or appropriate to enable BioMarin to file, prosecute and maintain patent applications and resulting patents with respect to inventions owned by a Party and for periods of time sufficient for such Party to obtain the assistance it needs from such personnel. Where appropriate, each of BioMarin and Genzyme shall sign or cause to have signed all documents relating to said patent applications or patents at no charge to the other Party.

9.4 Notification of Patent Term Restoration. BioMarin shall notify Genzyme of (a) the issuance of each patent included within the Patent Rights, giving the date of issue and patent number for each such patent, and (b) each notice pertaining to any patent included within the Patent Rights which it receives as patent owner pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, including notices pursuant to §§101 and 103 of such Act from persons who have filed an abbreviated NDA. Such notices shall be given promptly, but in any event within ten (10) business days after receipt of each such notice pursuant to such Act. BioMarin shall notify Genzyme of each filing for patent term restoration under such Act, any allegations of failure to show due diligence and all awards of patent term restoration (extensions) with respect to the Patent Rights.

9.5 No Other Technology Rights. Except as otherwise expressly provided in this Agreement and the Related Agreements, under no circumstances shall a Party hereto, as a result of this Agreement, obtain any ownership interest in or other right to the Patent Rights, Technology or Manufacturing Know-How of the other Party, including items owned, controlled or developed by the other Party, or transferred by the other Party to said Party at any time pursuant to this Agreement. It is understood and agreed that this Agreement does not grant either Party any license or other right in the Patent Rights of the other Party except as expressly provided in Article 3 hereof and this Article 9.

9.6 Defense of Third Party Infringement Claims. If the manufacture, production, sale or use of any Collaboration Product pursuant to this Agreement results in a claim, suit or proceeding (collectively, “Actions”) alleging patent infringement against BioMarin or Genzyme (or their respective Affiliates), such Party shall promptly notify the other Party hereto in writing. The Party subject to such Action (for purposes of this Section 9.6, the “Controlling Party”) shall have the exclusive right to defend and control the defense of any such Action using counsel of its own choice; provided, however, that if such Action is directed to the subject of the Patent Rights of the other Party (i.e., the BioMarin Patent Rights or the Genzyme Patent Rights), such other Party may

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participate in the defense and/or settlement thereof at its own expense with counsel of its choice. Except as agreed in writing by Genzyme and BioMarin, the Controlling Party shall not enter into any settlement relating to a Collaboration Product, if such settlement admits the invalidity or unenforceability of any Patent Rights within the BioMarin Patent Rights or the Genzyme Patent Rights, as applicable, of the other Party. The Controlling Party agrees to keep the other Party hereto reasonably informed of all material developments in connection with any such Action. Any cost, liability or expense (including amounts paid in settlement) incurred by the Controlling Party as a result of such Action shall be included in Development Costs for the Collaboration Product(s) that are the subject of such Action and shall not be subject to the limitations of Sections 1.11, 4.2 and 5.1.3 above provided that the other Party consents to incurrence of such cost, liability or expense, with such consent not to be unreasonably withheld, delayed or conditioned.

9.7 Enforcement of Patent Rights.

9.7.1 Enforcement. Subject to the provisions of this Section 9.7, in the event that BioMarin or Genzyme reasonably believes that any BioMarin Patent Rights, BioMarin Technology, Genzyme Patent Rights, Genzyme Technology, BioMarin/Genzyme Patent Rights or BioMarin/Genzyme Technology necessary for the manufacture, use or sale of a Collaboration Product in the Field is infringed or misappropriated by a Third Party or is subject to a declaratory judgment action arising from such infringement in a country, in each case with respect to the manufacture, sale or use of a product potentially competitive with a Collaboration Product within the Field, Genzyme or BioMarin (respectively) shall promptly notify the other Party hereto. Promptly after such notice the Parties shall meet to discuss the course of action to be taken with respect to an Enforcement Action (as defined below) with respect to such infringement or misappropriation, including the control thereof and sharing of costs and expenses related thereto, for the purposes of entering into a litigation agreement setting forth the same (“Litigation Agreement”). If the Parties do not enter such Litigation Agreement, the Party whose Patent Rights or Technology is so allegedly infringed or misappropriated, or is subject to such declaratory judgment action, (for purposes of this Section 9.7, the “Owner”) shall have the initial right (but not the obligation) to enforce the intellectual property rights within such Patent Rights or Technology, or defend any declaratory judgment action with respect thereto (for purposes of this Section 9.7, an “Enforcement Action”); provided that the Owner agrees to indemnify the other Party for any and all liabilities and expenses (including, without limitation, reasonable attorneys’ fees and other expenses of litigation) incurred by such other Party as a result of such Enforcement Action.

9.7.2 Information. Absent a Litigation Agreement, the Party initiating or defending any such Enforcement Action shall keep the other Party hereto reasonably informed of the progress of any such Enforcement Action, and such other Party shall have the right to participate with counsel of its own choice at its own expense.

9.7.3 Enforcement Costs; Recoveries. Unless otherwise agreed, the Party initiating an Enforcement Action shall, at the option of such Party, have the right to either: (i) assume responsibility for all costs and expenses of such Enforcement Action, in which case all amounts recovered in the Enforcement Action (including without limitation amounts resulting from a settlement thereof) shall be retained by such Party; or (ii) include such costs and expenses within the Development Costs, in which case all amounts recovered in the Enforcement Action, after reimbursing the Party initiating the Action for any costs and expenses not previously so offset, shall be shared by BioMarin and Genzyme in accordance with their respective Percentage Interests.

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9.8 Third Party Rights. The foregoing provisions of this Article 9 shall be subject to and limited by any agreements pursuant to which BioMarin and Genzyme, as the case may be, acquired any particular BioMarin Patent Rights, BioMarin Technology or Genzyme Patent Rights or Genzyme Technology.

9.9 Third Party Agreements—Reports. To the extent that a Party is obligated to provide reports to a Third Party pursuant to a Third Party Agreement as a result of or reporting on the status of activities of the other Party hereunder, the other Party hereto shall reasonably assist the reporting Party by providing information in its possession or control and in sufficient detail to complete and submit such reports as required.

ARTICLE X

CONFIDENTIALITY

10.1 Nondisclosure Obligations. Except as otherwise provided in this Article 10, during the Term and for a period of five (5) years thereafter, the Parties shall, and BioMarin shall cause BioMarin Genetics to, maintain in confidence and use only for purposes specifically authorized under this Agreement any information furnished to it by the other Party hereto pursuant to this Agreement which if disclosed in tangible form is marked “Confidential” or with other similar designation to indicate its confidential or proprietary nature or if disclosed orally or by inspection is indicated orally to be confidential or proprietary by the Party disclosing such information at the time of such disclosure and is confirmed in writing as confidential or proprietary by the disclosing Party (describing in reasonable detail the information to be treated as confidential) within a reasonable time after such disclosure (collectively, “Information”).

To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement or a Related Agreement, a Party may disclose Information of the other Party it is otherwise obligated under this Section 10.1 not to disclose to its Affiliates, permitted sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis and on the condition that such entities or persons agree to keep the Information confidential for the same time periods and to substantially the same extent as such Party is required to keep such Information confidential; and a Party or its permitted sublicensees may disclose such Information to government or other regulatory authorities to the extent that such disclosure is reasonably necessary to obtain patents or authorizations to conduct clinical trials or to file and maintain Regulatory Approvals with and to market commercially Collaboration Products. The obligation not to disclose Information shall not apply to any part of such Information that: (i) is or becomes patented, published or otherwise becomes publicly known other than by acts of the Party obligated not to disclose such Information or its Affiliates or sublicensees in contravention of this Agreement; (ii) can be shown by written documents to have been disclosed to the receiving Party or its Affiliates or sublicensees by a Third Party, provided that such Information was not obtained by such Third Party directly or indirectly from the disclosing Party under this Agreement; (iii) prior to disclosure under this

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Agreement, was already in the possession of the receiving Party or its Affiliates or sublicensees, provided that such Information was not obtained directly or indirectly from the disclosing Party under this Agreement; (iv) can be shown by written documents to have been independently developed by the receiving Party or its Affiliates without breach of any of the provisions of this Agreement; or (v) is required to be disclosed by the receiving Party to comply with applicable laws or regulations, or with a court or administrative order, provided that the receiving Party notifies the disclosing Party in writing prior to any such disclosure and agrees to use reasonable efforts to secure confidential treatment thereof prior to its disclosure (whether by protective order or otherwise).

10.2 Terms of this Agreement; Press Releases. The Parties agree to seek confidential treatment for any filing of this Agreement with the Securities and Exchange Commission and shall agree upon the content of the request for confidential treatment made by each Party in respect of such filing. Except as permitted by the foregoing provisions or as otherwise required by law, BioMarin and Genzyme each agree not to disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other Party; provided that each Party shall be entitled to disclose the terms of this Agreement without such consent to its advisors and potential investors or other financing sources on the condition that such entities or persons agree to keep such terms confidential for the same time periods and to the same extent as such Party is required to keep such terms confidential. The Parties agree that all press releases related to the Program shall be issued jointly by BioMarin and Genzyme and that the Party preparing any such press release shall provide the other Party with a draft thereof reasonably in advance of disclosure so as to permit the other Party to review and comment on such press release. Notwithstanding the foregoing, the Parties shall agree upon a press release to announce the execution of this Agreement, together with a corresponding Question & Answer outline for use in responding to inquiries about the Agreement; thereafter, BioMarin and Genzyme may each disclose to Third Parties the information contained in such press release and Question & Answer outline without the need for further approval by the other.

10.3 Publications. Each Party recognizes the mutual interest in obtaining valid patent protection. Consequently, any Party, its employees or consultants wishing to make a publication (including any oral disclosure made without obligation of confidentiality) relating to work performed by such Party as part of the Program (the “Publishing Party”) shall transmit to the other Party (the “Reviewing Party”) a copy of the proposed written publication at least forty-five (45) days prior to submission for publication, or an abstract of such oral disclosure at least fifteen (15) days prior to submission of the abstract or the oral disclosure, whichever is earlier. The Reviewing Party shall have the right to (a) request a delay in publication or presentation in order to protect patentable information, (b) propose modifications to the publication for patent reasons or (c) request that the information be maintained as a trade secret. With respect to publications or disclosures by investigators or other Third Parties, such publications and disclosures shall be subject to review by the Reviewing Party under this Section 10.3 only to the extent that the submitting Party has the right to do so.

10.3.1 Patents. If the Reviewing Party requests a delay as described in clause (a) above, the Publishing Party shall delay submission or presentation of the publication for a period of ninety (90) days to enable patent applications protecting each Party’s rights in such information to be filed. Upon the expiration of forty-five (45) days, in the case of proposed written disclosures, or fifteen (15) days, in the case of an abstract of proposed oral disclosures, from transmission of such proposed disclosures to the Reviewing Party, the Publishing Party shall be free to proceed with the written publication or the oral presentation, respectively, unless the Reviewing Party has requested the delay described above.

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10.3.2 Other. To the extent possible in the reasonable exercise of its discretion, the Publishing Party shall incorporate all modifications proposed under clause (b) above. If a trade secret that is the subject of a request made under clause (c) above cannot be otherwise protected without unreasonable expense to the Reviewing Party, such information shall be omitted from the publication.

ARTICLE XI

REPRESENTATIONS AND WARRANTIES

11.1 Authorization. Each Party warrants and represents to the other Parties that (a) it has the legal right and power to enter into this Agreement, to extend the rights and licenses granted to the other in this Agreement, and to perform fully its obligations hereunder, (b) this Agreement has been duly executed and delivered and is a valid and binding agreement of such Party, enforceable in accordance with its terms, (c) such Party has obtained all necessary approvals to the transactions contemplated hereby and (d) such Party has not made and will not make any commitments to others in conflict with or in derogation of such rights or this Agreement.

11.2 Intellectual Property Rights.

11.2.1 BioMarin hereby represents and warrants that that as of the Effective Date (a) it possesses an exclusive right, title and interest in or to, the BioMarin Patent Rights and the BioMarin Technology, (b) the BioMarin Patent Rights and the BioMarin Technology are free and clear of any lien or other encumbrance and (c) it has the right to (i) enter into the obligations set forth in this Agreement and (ii) grant the rights and licenses set forth in Article 3 hereof.

11.2.2 Each of the Parties hereby represents and warrants that it is not aware of any issued patent that would be infringed by the manufacture and sale of Collaboration Products as contemplated by this Agreement.

11.2.3 Genzyme hereby represents and warrants that as of the Effective Date (a) it possesses an exclusive right, title and interest in the Genzyme Patent Rights and the Genzyme Technology, (b) the Genzyme Patent Rights and the Genzyme Technology are free and clear of any lien or other encumbrance and (c) it has the right to (i) enter into the obligations set forth in this Agreement and (ii) grant the rights and licenses set forth in Article 3 hereof.

11.3 Warranties.

11.3.1 Genzyme Warranties. Genzyme warrants that the Collaboration Products delivered by Genzyme pursuant to Section 7.1 hereof, if any, will conform in all material respects to the Specifications, the conditions of any applicable Regulatory Approvals regarding the manufacturing process and any applicable requirements of the Regulatory Scheme regarding the manufacturing process.

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11.3.2 BioMarin Warranties. BioMarin warrants that the Collaboration Products delivered by BioMarin pursuant to Section 7.1 hereof will conform in all material respects to the Specifications, the conditions of any applicable Regulatory Approvals regarding the manufacturing process and any applicable requirements of the Regulatory Scheme regarding the manufacturing process.

11.4 Disclaimer of Representations and Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN A RELATED AGREEMENT, NONE OF BIOMARIN, GENZYME OR BIOMARIN/GENZYME LLC MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND THE NON-INFRINGEMENT OF ANY THIRD-PARTY PATENTS OR PROPRIETARY RIGHTS. ALL UNIFORM COMMERCIAL CODE WARRANTIES ARE EXPRESSLY DISCLAIMED BY THE PARTIES.

11.5 Limitation of Liability. EXCEPT WITH RESPECT TO CLAIMS FOR INDEMNIFICATION UNDER ARTICLE 12 HEREOF AND AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY RELATED AGREEMENT, IT IS AGREED BY THE PARTIES THAT NO PARTY SHALL BE LIABLE TO ANOTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT OR THE RELATED AGREEMENTS, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME.

ARTICLE XII

INDEMNITY

12.1 BioMarin/Genzyme LLC Indemnity Obligations. The Operating Agreement shall provide that BioMarin/Genzyme LLC shall indemnify each of the Members and its Affiliates, employees and agents (each an “Indemnified Person”) for any act performed by such Indemnified Person within the scope of the authority conferred upon such Indemnified Person under this Agreement; provided that it shall be a condition to such indemnity that (a) the Indemnified Person seeking indemnification acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of BioMarin/Genzyme LLC, (b) the act for which indemnification is sought did not constitute gross negligence or willful misconduct by such Indemnified Person and (c) payment and indemnification of any matter disposed of by a compromise payment by such Indemnified Person, pursuant to consent decree or otherwise, shall have been approved by the Members, which approval shall not be unreasonably withheld or delayed, or by a court of competent jurisdiction. For the avoidance of doubt, such indemnification of the Indemnified Persons shall include indemnification for acts performed by such Indemnified Person since the Original Date of Execution, [****].

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12.2 Insurance. BioMarin/Genzyme LLC shall maintain clinical trial and product liability insurance with respect to development, manufacture and sales of Collaboration Products in an amount reasonably believed by Genzyme and BioMarin to be adequate and customary for the development, manufacture and sale of novel therapeutic products. Genzyme and BioMarin shall be named as additional insureds on any such policy. Genzyme and BioMarin shall each maintain similar clinical trial and product liability insurance coverage in amounts reasonably determined by the Steering Committee from time to time.

ARTICLE XIII

TERM AND TERMINATION

13.1 Term. The term of this Agreement shall be perpetual unless terminated pursuant to Section 13.3 below.

13.2 Termination of the Development Program Only.

13.2.1 By Mutual Agreement. The Parties may terminate the Development Program (but not this Agreement) at any time by mutual written consent.

13.2.2 For Default. If either BioMarin or Genzyme (a) fails to use commercially reasonable and diligent efforts to perform any material duty imposed upon such Party under this Agreement or the Development Plan or (b) fails to make [****] or more capital contributions in accordance with Section 4.2 hereof, and such failure to perform is not cured within ninety (90) days of written notice thereof from the non-breaching Party, the non-breaching Party may elect, in its sole discretion, to (i) in the case of clause (b) above, waive the terms of Article 4 hereof with respect to any one or more required capital contributions and cause the respective Percentage Interests and future funding responsibilities of the Parties to be adjusted in accordance with Section 4.1 of the Operating Agreement or (ii) terminate the Development Program. Such 90-day period shall be extended to one hundred eighty (180) days if the breaching Party has engaged in good faith efforts to remedy such default within such 90-day period and indicated in writing to the non-breaching Party prior to the expiration of such 90-day period that it believes that it will be able to remedy the default within such 180-day period, but such extension shall apply only so long as the breaching Party is engaging in good faith efforts to remedy such default.

13.3 Termination of this Agreement in its Entirety. This Agreement shall automatically terminate upon the effective date of the termination of the Manufacturing, Marketing and Sales Agreement. This Agreement may not be terminated independently from the Manufacturing, Marketing and Sales Agreement.

13.4 Effects of Termination of this Agreement. Upon any termination of this Agreement in its entirety, Parties shall have the respective rights and duties set forth under Article 12 of Manufacturing, Marketing and Sales Agreement.

13.5 Survival of Rights and Duties. No termination of this Agreement shall eliminate any rights or duties of the Parties accrued prior to such termination. The provisions of Article 1,

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Sections 3.3, 4.3 through 4.5, 9.1.1, 9.3, 9.5, Article 10, Section 11.5, Article 12, Sections 13.3 through 13.5, 14.1, 14.3 through 14.5, and 14.8 through 14.17 and the first sentence of Section 7.5, the second to last sentence of Section 2.2 and the last sentences of Sections 2.2, 7.4 and 9.1.3 hereof shall survive any termination of this Agreement.

ARTICLE XIV

MISCELLANEOUS

14.1 Cooperation. If either BioMarin or Genzyme (the “Assuming Party”) shall assume the Program rights from the other Party (the “Responsible Party”) in accordance with the provisions of Article 12 of the Manufacturing, Marketing and Sales Agreement, the Responsible Party shall promptly provide to the Assuming Party (or any Third Party or Affiliate designated by the Assuming Party) all Technology, Manufacturing Know-How and access to regulatory filings filed hereunder reasonably necessary to allow the Assuming Party to perform the duties assumed and otherwise exercise the rights and licenses granted hereunder. The Responsible Party shall further use its best efforts to provide reasonable assistance required by the Assuming Party with respect to such transfer so as to permit the Assuming Party to begin to perform such duties as soon as possible to minimize any disruption in the continuity of supply or marketing of Collaboration Products. If the Responsible Party is the Manufacturing Party for a Collaboration Product, the Responsible Party shall, at the option of the Assuming Party, supply such Collaboration Product until the earlier of [****]. In addition, if upon the date this Agreement is terminated Collaboration Products are being manufactured in facilities owned or leased by the Responsible Party (including facilities subleased by BioMarin/Genzyme LLC from the Responsible Party), the Responsible Party agrees to lease such facilities to the Assuming Party on commercially reasonable terms for a period of up to [****] at the option of the Assuming Party.

14.2 Exchange Controls. All payments due hereunder shall be paid in United States dollars. If at any time legal restrictions prevent the prompt remittance of part or all payments with respect to any country in which Collaboration Products (other than Aldurazyme) are sold, payment shall be made through such lawful means or methods as the Parties may determine in good faith.

14.3 Withholding Taxes. If applicable laws or regulations require that taxes be withheld from payments made hereunder, the Party paying such taxes will (a) deduct such taxes, (b) timely pay such taxes to the proper authority and (c) send written evidence of payment to the Party from whom such taxes were withheld within sixty (60) days after payment. Each Party will assist the other Party or Parties in claiming tax refunds, deductions or credits at such other Party’s request and will cooperate to minimize the withholding tax, if available, under various treaties applicable to any payment made hereunder.

14.4 Interest on Late Payments. Any payments to be made hereunder that are not paid on or before the date such payments are due under this Agreement shall bear interest, to the extent permitted by applicable law, at the Base Rate of interest declared from time to time by Bank of America, N.A. in Boston, Massachusetts, calculated on the number of days payment is delinquent.

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14.5 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including without limitation fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other Party; provided, however, that the Party so affected shall use commercially reasonable and diligent efforts to avoid or remove such causes of non-performance, and shall continue performance hereunder with reasonable dispatch wherever such causes are removed. Each Party shall provide the other Parties with prompt written notice of any delay or failure to perform that occurs by reason of force majeure. The Parties shall mutually seek a resolution of the delay or the failure to perform in good faith.

14.6 Assignment. This Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Parties; provided, however, that either BioMarin or Genzyme may, without such consent, assign its rights and obligations under this Agreement (a) in connection with a corporate reorganization, to any member of an affiliated group, all or substantially all of the equity interest of which is owned and controlled by such Party or its direct or indirect parent corporation or (b) in connection with a merger, consolidation or sale of substantially all of such Party’s assets to an unrelated Third Party; provided, however, that such Party’s rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not be transferred separate from all or substantially all of its other business assets, including without limitation those business assets that are the subject of this Agreement and the Manufacturing, Marketing and Sales Agreement. Any permitted assignee shall assume all obligations of its assignor under this Agreement; accordingly, all references herein to the assigning Party shall be deemed references to the assignee to whom the Agreement is so assigned. Any purported assignment in violation of this Section 14.6 shall be void.

14.7 Severability. Each Party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid provisions.

14.8 Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by personal delivery or courier), by a next business day delivery service of a nationally recognized overnight courier service or by courier, postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor in accordance with this Section 14.8 and shall be effective upon receipt by the addressee.

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If to BioMarin:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: Chief Executive Officer Facsimile: (415) 382-7889
with a copy to:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: General Counsel Facsimile: (415) 382-7889
If to Genzyme:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: President, LSD Therapeutics Facsimile: (617) 768-6419
with a copy to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: General Counsel Facsimile: (617) 252-7553
If to BioMarin/Genzyme LLC (if such notice is sent by BioMarin):	BioMarin/Genzyme LLC c/o Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: President, LSD Therapeutics Facsimile: (617) 768-6419
with a copy to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: General Counsel Facsimile: (617) 252-7553

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If to BioMarin/Genzyme LLC (if such notice is sent by Genzyme):	BioMarin/Genzyme LLC c/o BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: Chief Executive Officer Facsimile: (415) 382-7889
with a copy to:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: General Counsel Facsimile: (415) 382-7889

14.9 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any choice of law principle that would dictate the application of the laws of another jurisdiction.

14.10 Arbitrate. Any disputes arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement (a “Dispute”), which has not resolved in accordance with the provisions of Section 8.3 hereof, shall be finally resolved by binding arbitration as herein provided.

14.10.1 General. Except as otherwise provided in this Section 14.10, any arbitration hereunder shall be conducted under the commercial rules of the American Arbitration Association. Each such arbitration shall be conducted in the English language by a single arbitrator appointed in accordance with such rules, provided that if either Party requests the arbitration shall be conducted by a panel of three (3) arbitrators (the “Arbitration Panel”). In the case of three (3) arbitrators, each of BioMarin and Genzyme shall appoint one (1) arbitrator to the Arbitration Panel and the third arbitrator shall be appointed by the two (2) arbitrators appointed by BioMarin and Genzyme. The Arbitration Panel shall be convened upon delivery of the Notice of Arbitration (as herein defined). Any such arbitration shall be held in Chicago, Illinois. The Arbitration Panel shall have the authority to grant specific performance, and to allocate between the Parties the costs of arbitration in such equitable manner as it shall determine. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be.

14.10.2 Procedure.

(a) Whenever a Party (the “Claimant”) shall decide to institute arbitration proceedings, it shall give written notice to that effect (the “Notice of Arbitration”) to the other Party (the “Respondent”). The Notice of Arbitration shall set forth in detail the nature of the Dispute, the facts upon which the Claimant relies and the issues to be arbitrated (collectively, the “Arbitration Issues”). Within fifteen (15) days of its receipt of the Notice of Arbitration, the Respondent shall

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send the Claimant and the Arbitration Panel a written Response (the “Response”). The Response shall set forth in detail the facts upon which the Respondent relies. In addition, the Response shall contain all counterclaims which the Respondent may have against the Claimant which are within the Arbitration Issues, whether or not such claims have previously been identified. If the Response sets forth a counterclaim, the Claimant may, within fifteen (15) days of the receipt of the Response, deliver to the Respondent and the Arbitration Panel a rejoinder answering such counterclaim.

(b) Within fifteen (15) days after the later of (i) the expiration of the period provided in Section 14.10.2(a) above for the Claimant to deliver a rejoinder or (ii) the completion of any discovery proceedings authorized by the Arbitration Panel: (A) the Claimant shall send to the Arbitration Panel a proposed resolution of the Arbitration Issues and a proposed resolution of any counterclaims set forth in the Response, including without limitation the amount of monetary damages, if any, or other relief sought (the “Claimant’s Proposal”); and (B) the Respondent shall send to the Arbitration Panel a proposed resolution of the Arbitration Issues, a proposed resolution of any counterclaims set forth in the Response and a proposed resolution of any rejoinder submitted by the Claimant, including without limitation the amount of monetary damages, if any, or other relief sought (the “Respondent’s Proposal”). Once both the Claimant’s Proposal and the Respondent’s Proposal have been submitted, the Arbitration Panel shall deliver to each Party a copy of the other Party’s proposal.

(c) The Arbitration Panel shall issue an opinion with respect to any Dispute, which opinion shall explicitly accept either the Claimant’s Proposal or the Respondent’s Proposal in its entirety (the “Final Decision”). The Arbitration Panel shall not have the authority to reach a Final Decision that provides remedies or requires payments other than those set forth in the Claimant’s Proposal or the Respondent’s Proposal. The concurrence of two (2) arbitrators shall be sufficient for the entry of a Final Decision. The arbitrators shall issue a Final Decision within one (1) month from the later of (i) the last day for submission of proposals under Section 14.10.2(b) above or (ii) the date of the final hearing on any Dispute held by the Arbitration Panel. A Final Decision shall be binding on both Parties.

14.11 Injunctive Relief. The Parties hereby acknowledge that a breach of their respective obligations under Article 10 hereof may cause irreparable harm and that the remedy or remedies at law for any such breach may be inadequate. The Parties hereby agree that, in the event of any such breach, in addition to all other available remedies hereunder, the non-breaching Party or Parties shall have the right to seek equitable relief to enforce Article 10 hereof.

14.12 Entire Agreement. This Agreement, together with the Related Agreements, contain the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties hereto. Each of the Parties hereby acknowledges that this Agreement and the Related Agreements are all the result of mutual negotiation and therefore any ambiguity in their respective terms shall not be construed against the drafting Party.

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14.13 Section 365(n) of the Bankruptcy Code. All rights and licenses now or hereafter granted under or pursuant to this Agreement, including in the event of termination pursuant to Article 12 of the Manufacturing, Marketing and Sales Agreement, are rights to “intellectual property” (as defined in Section 101(35A) of Title 11 of the United States Code, as amended (such Title 11, the “Bankruptcy Code”)). The licensing Party hereby grants to the licensee Party a right of access and to obtain possession of and to benefit from (i) copies of research data, (ii) laboratory samples, (iii) product samples, (iv) formulas, (v) laboratory notes and notebooks, (vi) data and results related to clinical trials, (vii) regulatory filings and approvals, (viii) rights of reference in respect of regulatory filings and approvals, (ix) manufacturing procedure documentation and manufacturing records, (x) marketing, advertising and promotional materials, and (xi) all other embodiments of such intellectual property, that are in the licensing Party’s possession or control, freely licenseable without further payment or restriction by the licensing Party, and necessary for the licensee Party’s exercise of the rights and licenses to such intellectual property, all of which constitute “embodiments” of intellectual property pursuant to Section 365(n) of the Bankruptcy Code. The licensing Party agrees not to interfere with the licensee’s exercise of rights and licenses to intellectual property licensed under this Agreement and embodiments thereof in accordance with this Agreement and agrees to use commercially reasonable efforts to assist the licensee Party to obtain such intellectual property and embodiments thereof in the possession or control of Third Parties as reasonably necessary or desirable for the licensee Party to exercise such rights and licenses in accordance with this Agreement.

14.14 Headings. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof.

14.15 Independent Contractors. It is expressly agreed that BioMarin and Genzyme shall be independent contractors and that, except as Members of BioMarin/Genzyme LLC, the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither BioMarin nor Genzyme shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so.

14.16 Waiver. Except as expressly provided herein, the waiver by either Party hereto of any right hereunder or of any failure to perform or any breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other failure to perform or breach by said other Party, whether of a similar nature or otherwise, nor shall any singular or partial exercise of such right preclude any further exercise thereof or the exercise of any other such right.

14.17 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signature pages may be exchanged by facsimile.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

GENZYME CORPORATION
By:	/s/ David P. Meeker
Print Name:	David P. Meeker
Title:	President LSD Therapeutics
Date:	12/31/07
BIOMARIN PHARMACEUTICAL INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
BIOMARIN/GENZYME LLC
By: BIOMARIN PHARMACEUTICAL INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
By: GENZYME CORPORATION
By:	/s/ David P. Meeker
Print Name:	David P. Meeker
Title:	President LSD Therapeutics
Date:	12/31/07

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SCHEDULE 1.47

THIRD PARTY AGREEMENTS

1.) License Agreement effective as of September 4, 1998 entered into by and between the University of Iowa Research Foundation, an Iowa corporation and BioMarin/Genzyme LLC, a Delaware limited liability company.

2.) License Agreement effective as of September 4, 1998 entered into by and between Research Corporation Technologies, Inc., a Delaware nonprofit corporation and BioMarin/Genzyme LLC, a Delaware limited liability company.

3.) Grant Terms and Conditions Agreement dated April 1, 1997 entered into by and among BioMarin Pharmaceuticals, Harbor-UCLA Research and Education Institute and Emil D. Kakkis, as amended.

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APPENDIX A

[****]

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EX-10.32

EXHIBIT 10.32

CONFIDENTIAL TREATMENT REQUESTED

Redacted Portions are indicated by [****]

MEMBERS AGREEMENT

This Members Agreement (this “Agreement”) is made effective as of the 1^st day of January, 2008, by and among Genzyme Corporation, a Massachusetts corporation having its principal place of business at 500 Kendall Square, Cambridge, Massachusetts 02142 (“Genzyme”); BioMarin Pharmaceutical Inc., a Delaware corporation having its principal place of business at 105 Digital Drive, Novato, California 94949 (“BioMarin”); BioMarin Genetics, Inc., a Delaware corporation and a wholly-owned subsidiary of BioMarin having its principal place of business at 105 Digital Drive, Novato, California 94949 (“BioMarin Subsidiary”); and BioMarin/Genzyme LLC, a Delaware limited liability company having its principal place of business at 500 Kendall Street, Cambridge, Massachusetts 02142 (the “Company”), of which BioMarin, BioMarin Subsidiary and Genzyme are the only members. Genzyme, BioMarin, BioMarin Subsidiary and the Company are sometimes referred to herein individually as a “Party” and collectively as the “Parties”. BioMarin, BioMarin Subsidiary and Genzyme are sometimes referred to herein individually as a “Member” and collectively as the “Members”.

RECITALS

WHEREAS, BioMarin, Genzyme and the Company are parties to a Collaboration Agreement dated as of September 4, 1998 (the “Original Collaboration Agreement”) pursuant to which BioMarin and Genzyme, through the Company, develop, manufacture, market and sell Aldurazyme;

WHEREAS, the Parties no longer desire to develop, manufacture, market and sell Aldurazyme through a joint venture and instead have agreed that: (1) BioMarin will manufacture Aldurazyme and sell finished product to Genzyme; (2) Genzyme will label and commercially distribute, market and sell Aldurazyme globally; (3) each of Genzyme and BioMarin may conduct its own research and development of Aldurazyme and other Collaboration Products in accordance with the terms of the Amended and Restated Collaboration Agreement (as defined below) and the Manufacturing, Marketing and Sales Agreement among BioMarin, Genzyme and the Company of even date herewith (the “Manufacturing, Marketing and Sales Agreement”); and (4) the Company will maintain and provide intellectual property licenses and sublicenses to BioMarin and Genzyme so that they may fulfill their respective obligations under the Amended and Restated Collaboration Agreement, the Manufacturing, Marketing and Sales Agreement, and the Fill Agreement among BioMarin and Genzyme of even date herewith (the “Fill Agreement”);

WHEREAS, BioMarin, Genzyme and the Company have entered into an amendment and restatement of the Original Collaboration Agreement of even date herewith (the “Amended and Restated Collaboration Agreement”) so that hereafter the Company will no longer engage in commercial activities and will solely (1) hold the intellectual property relating to Aldurazyme and

license all such intellectual property on the terms set forth in the Amended and Restated Collaboration Agreement and the Manufacturing, Marketing and Sales Agreement to BioMarin and Genzyme and (2) engage in research and development activities that are mutually selected and funded by BioMarin and Genzyme; and

WHEREAS, to effect the foregoing, the Members desire to acquire and assume from the Company, and the Company desires to transfer and assign to the Members, certain assets and Liabilities of the Company and its subsidiaries, on the terms and subject to the conditions described below in this Agreement.

AGREEMENT

NOW THEREFORE, in consideration of the premises and of the covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties mutually agree as follows:

1. DEFINITIONS. For purposes of this Agreement, the terms defined in this Section 1 will have the meanings specified below. Certain other capitalized terms are defined elsewhere in this Agreement.

1.1. “Acquired Assets” means the BioMarin Acquired Assets, the BioMarin Subsidiary Acquired Assets, and the Genzyme Acquired Assets.

1.2. “Aldurazyme” has the meaning set forth in the Amended and Restated Collaboration Agreement.

1.3. “BioMarin Acquired Assets” means all of the Company’s right, title and interest in and to the following assets, properties and rights as of the Calculation Date, but no others:

1.3.1 all of the inventory held by the Company or to which it otherwise has rights; and

1.3.2 the BioMarin Cash Distribution, as defined in Section 2.9.1.

1.4. “BioMarin Assumed Liabilities” means the following specified Liabilities of the Company as of the Calculation Date, but no others:

1.4.1 amounts payable to BioMarin or any subsidiary.

1.5. “BioMarin Subsidiary Acquired Assets” means all of the Company’s right, title and interest in and to the following assets, properties and rights as of the Calculation Date, but no others:

1.5.1 the BioMarin Subsidiary Cash Distribution, as defined in Section 2.9.1.

1.6. “Business Day” means any weekday other than a weekday on which banks in New York, NY are authorized or required to be closed.

1.7. “Calculation Date” means December 31, 2007.

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1.8. “Collaboration Products” has the meaning set forth in the Amended and Restated Collaboration Agreement.

1.9. “Encumbrance” means any charge, claim, condition, equitable interest, lien, license, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first offer or first refusal, buy/sell agreement and any other restriction or covenant with respect to, or condition governing the use, construction, transfer, receipt of income or exercise of, any other attribute of ownership.

1.10. “GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

1.11. “Genzyme Acquired Assets” means all of the Company’s right, title and interest in and to the following assets, properties and rights as of the Calculation Date, but no others:

1.11.1 all of the accounts receivable held by the Company;

1.11.2 all of the Company’s pre-paid value-added taxes (VAT); and

1.11.3 the Genzyme Cash Distribution, as defined in Section 2.9.1.

1.12. “Genzyme Assumed Liabilities” means the following specified Liabilities of the Company as of the Calculation Date, but no others:

1.12.1 amounts payable to Genzyme or any subsidiary;

1.12.2 all of the Company’s accrued expenses, including accrued royalty expenses and Medicaid-related accrued expenses; and

1.12.3 all of the Company’s Liabilities in respect of deferred revenue.

1.13. “Liability” means, with respect to any person or entity, any liability or obligation, including any liability for tax, or assessment against such person or entity whether known or unknown, whether asserted or unasserted, whether determined, determinable or otherwise, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential, whether due or to become due and whether or not required under GAAP to be accrued on the financial statements of such person or entity.

1.14. “Operating Agreement” means the Operating Agreement of the Company dated as of September 4, 1998 by and among BioMarin, BioMarin Subsidiary and Genzyme.

1.15. “Percentage Interest” has the meaning set forth in the Operating Agreement.

1.16. “Related Agreements” means the Amended and Restated Collaboration Agreement, the Manufacturing, Marketing and Sales Agreement, the Fill Agreement and the Operating Agreement.

1.17. “Retained Cash” means two million five hundred thousand dollars (US$2,500,000.00).

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2. DISTRIBUTION OF ASSETS.

2.1. Distribution of Assets to Genzyme. The Company hereby distributes, conveys, transfers and delivers to Genzyme, and Genzyme hereby acquires from the Company, subject to the terms and conditions of this Agreement, free and clear of any Encumbrance, the Genzyme Acquired Assets.

2.2. Distribution of Assets to BioMarin and BioMarin Subsidiary.

2.2.1 The Company hereby distributes, conveys, transfers and delivers to BioMarin, and BioMarin hereby acquires from the Company, subject to the terms and conditions of this Agreement, free and clear of any Encumbrance, the BioMarin Acquired Assets.

2.2.2 The Company hereby distributes, conveys, transfers and delivers to BioMarin Subsidiary, and BioMarin Subsidiary hereby acquires from the Company, subject to the terms and conditions of this Agreement, free and clear of any Encumbrance, the BioMarin Subsidiary Acquired Assets.

2.3. Assets Held by the Company’s Subsidiaries. To the extent that any of the Acquired Assets are held by a subsidiary of the Company, the Company hereby causes its subsidiaries to transfer all Acquired Assets to the Company so that the Company may simultaneously transfer the Acquired Assets to the Members in accordance with Sections 2.1 and 2.2 of this Agreement.

2.4. Retained Assets. The Company retains all of the Company’s right, title and interest in and to all of the Company’s assets, properties and rights, other than the Acquired Assets.

2.5. Assumption of Certain Liabilities by Genzyme. Subject to the terms and conditions of this Agreement, Genzyme hereby assumes and the Company hereby assigns to Genzyme the Genzyme Assumed Liabilities. Notwithstanding any provision in this Agreement to the contrary, Genzyme is not assuming, and will not be deemed to have assumed, any Liability of the Company of any nature other than the Genzyme Assumed Liabilities.

2.6. Assumption of Certain Liabilities by BioMarin. Subject to the terms and conditions of this Agreement, BioMarin hereby assumes and the Company hereby assigns to BioMarin the BioMarin Assumed Liabilities. Notwithstanding any provision in this Agreement to the contrary, BioMarin is not assuming, and will not be deemed to have assumed, any Liability of the Company of any nature other than the BioMarin Assumed Liabilities.

2.7. Assumption of No Liabilities by BioMarin Subsidiary. Notwithstanding any provision in this Agreement to the contrary, BioMarin Subsidiary is not assuming and will not be deemed to have assumed, any Liability of the Company.

2.8. Additional Documentation. The transfer of the BioMarin Acquired Assets and the BioMarin Subsidiary Acquired Assets by the Company to BioMarin and BioMarin Subsidiary in accordance with this Agreement will be further evidenced by a Distribution and Assignment Agreement in the form attached hereto as Exhibit 1. The transfer of the Genzyme Acquired Assets and Genzyme Assumed Liabilities by the Company to Genzyme in accordance with this Agreement will be further evidenced by an Assignment and Assumption Agreement in the form attached hereto as Exhibit 2. The Company will execute and deliver to each Member such other instruments and documents of conveyance and assignment as are reasonably requested by such Member to vest in the Member title to the Member’s Acquired Assets.

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2.9. Final Distribution.

2.9.1 Calculation. All of the Company’s cash other than the Retained Cash will be distributed to one or more Members in such amounts as to cause the fair value of the net assets distributed to the Members under this Agreement to be in proportion to the Members’ respective Percentage Interests (or in a circumstance where such proportion cannot be achieved, as nearly equal to the Members’ respective Percentage Interests as possible). The amount of cash, if any, distributed to each Member in accordance with this Section 2.9 is hereinafter referred to as the “Genzyme Cash Distribution”, the “BioMarin Cash Distribution” or the “BioMarin Subsidiary Cash Distribution”, as applicable (collectively, the “Cash Distribution”). The Parties agree that for purposes of calculating the fair value of the assets and Liabilities to be distributed and/or assigned to and assumed by the Members in accordance with this Section 2 (the “Final Distribution”), the book value of the Company’s balance sheet assets and liabilities determined in accordance with GAAP approximate their fair value.

2.9.2 Final Balance Sheet. As soon as practicable following the date hereof (but in no event later than the tenth (10^th) Business Days after the Company’s independent auditors complete the Company’s 2007 year end audit), Genzyme will prepare or cause to be prepared, and will provide to BioMarin, a balance sheet of the Company as of the Calculation Date prepared in good faith and in accordance with GAAP (the “Final Balance Sheet”), together with a written statement setting forth in reasonable detail its calculation of the Final Distribution in accordance with Section 2.9.1, based on the Final Balance Sheet (the “Distribution Statement”). Genzyme shall afford BioMarin reasonable access to the work papers used by Genzyme in the preparation of the Final Balance Sheet and the Distribution Statement. For illustrative purposes only, the attached Exhibit 3 is a model Final Balance Sheet and Distribution Statement, prepared as if the Calculation Date was November 30, 2007.

2.9.3 Dispute Notice. The Final Balance Sheet and the Distribution Statement will be final, conclusive and binding on the Parties unless BioMarin (on behalf of itself and BioMarin Subsidiary) provides a written notice (a “Dispute Notice”) to Genzyme setting forth in reasonable detail (a) any item on the Final Balance Sheet and/or the Distribution Statement that BioMarin believes is not the correct amount in accordance with GAAP (each, a “Disputed Item”), (b) the correct amount of such item in accordance with GAAP and (c) the correct calculation of the Final Distribution based solely on the correct amount of each Disputed Item. BioMarin shall deliver the Dispute Notice by the tenth (10^th) Business Day after Genzyme delivers the Final Balance Sheet and Distribution Statement; provided, however, that if Genzyme delivers the Final Balance Sheet and Distribution Statement before the Company’s independent auditors complete the Company’s 2007 year end audit, such ten (10) Business Day period shall not start until the date the Company’s independent auditors deliver their report. Any item or amount to which no dispute is raised in the Dispute Notice will be final, conclusive and binding on the Parties.

2.9.4 Resolution of Disputes.

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(a) The Members will attempt to resolve the matters raised in a Dispute Notice in good faith. Twenty (20) Business Days after delivery of the Dispute Notice, either Genzyme or BioMarin may provide written notice (an “Arbitration Notice”) to the other that it elects to submit the disputed items to a mutually agreeable nationally recognized accounting firm which does not have a conflict serving in such capacity with respect to either BioMarin or Genzyme (the “Arbitrator”). On the fifth (5th) Business Day following appointment of an Arbitrator, Genzyme will submit the Final Balance Sheet and Distribution Statement to the Arbitrator (if applicable, as amended following discussions with BioMarin) and BioMarin will submit the Dispute Notice (if applicable, as amended following discussions with Genzyme) to the Arbitrator. Promptly following receipt of both submissions, the Arbitrator will provide copies of the opposing Member’s submission to Genzyme and to BioMarin.

(b) The Arbitrator will promptly review only those items and amounts specifically set forth and objected to in the Dispute Notice submitted to it and resolve the dispute by selecting either the Final Distribution reflected on the Distribution Statement, as submitted to it, or the Final Distribution reflected on the Dispute Notice, as submitted to it as the calculation that is closest to the correct determination in accordance with GAAP. The Arbitrator will resolve the dispute pursuant to such procedures that it establishes and deems fair and equitable, provided that Genzyme and BioMarin must each be afforded an opportunity to provide a written submission in support of its position and to advocate for its position personally before the Arbitrator. Each of Genzyme and BioMarin agrees to use its commercially reasonable efforts to cooperate with the Arbitrator and to cause the Arbitrator to resolve any dispute no later than thirty (30) Business Days after selection of the Arbitrator. The decision of the Arbitrator with respect to any such dispute will be final, conclusive and binding on the Parties.

(c) The fees and expenses of the Arbitrator will be borne by (a) BioMarin, if the Arbitrator selects the Final Distribution reflected on the Distribution Statement submitted to it, or (b) Genzyme, if the Arbitrator selects the Final Distribution reflected on the Dispute Notice submitted to it.

2.9.5 Cash Distribution and Insufficient Cash. Promptly after the final determination of the Final Distribution in accordance with this Section 2.9 (the “Final Determination”), the Company shall distribute the Cash Distribution to the applicable Member(s). If the Company’s available cash less the Retained Cash is less than the amount required for the Cash Distribution, then the Company will establish on its books an amount payable to Genzyme, BioMarin and/or BioMarin Subsidiary, as applicable (each, a “Payee”), equal to the difference. The Members shall each make a capital contribution to the Company within thirty (30) days after the Final Determination, in proportion to the Members’ respective Percentage Interests and in accordance with the terms of the Operating Agreement, such that the total capital contribution is sufficient to discharge the payable described above in this Section 2.9.5; provided that, a Payee may offset its capital contribution obligation under this Section 2.9.5 against the amount of any such payable.

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3. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to each other Party as follows (except with respect to Sections 3.6 and 3.7 below in which case only the Company is making such representations and warranties to the other Parties):

3.1. Organization. It is a corporation (or limited liability company as the case may be) duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation (or organization as the case may be), is qualified to do business and is in good standing as a foreign corporation (or limited liability company as the case may be) in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and failure to have such would prevent it from performing its obligations under this Agreement and has all requisite corporate power (or limited liability power as the case may be) and authority to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement.

3.2. Authorization. It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. It has taken all action (corporate or otherwise) necessary to execute, deliver and perform its obligations under this Agreement. The person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action.

3.3. No Third Party Approval. No authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority or regulatory body (other than health regulatory authorities) is required for the due execution, delivery or performance by it of this Agreement.

3.4. Enforceable Agreement. This Agreement has been duly and validly executed and delivered, and assuming it is a legally enforceable agreement of the other Parties hereto, constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect relating to creditors’ rights generally or to general principles of equity.

3.5. No Violation. None of the execution, delivery or performance of this Agreement by such Party, nor the consummation by such Party of the transactions contemplated hereby will (i) result in a violation of any provision of such Party’s charter documents, by-laws or operating agreement; or (ii) with or without the giving of notice or the lapse of time, or both, result in any violation or breach of, or constitute a default under, or result in any right to accelerate or result in the creation of any lien, charge or encumbrance pursuant to, or right of termination under, any provision of any material agreement to which such Party is a party or by which such Party or any of its assets or properties are bound or which is applicable to such Party or any of its assets or properties, other than any of the foregoing which does not materially impair the ability of the Party to perform its obligations hereunder.

3.6. Title to Acquired Assets. The Company owns all right, title and interest in the Acquired Assets free and clear of all liens, claims, licenses, pledges and encumbrances.

3.7. Solvency. After consummation of the transactions contemplated by this Agreement, the Company will be solvent and able to pay its debts as they become due.

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4. COVENANTS.

4.1. Payment of Amounts Due from Genzyme. Promptly after the Final Determination, and concurrently with the making of the Cash Distribution pursuant to Section 2.9.5, Genzyme will pay to the Company (netted against the Genzyme Cash Distribution, if applicable) the amounts identified on the Final Balance Sheet (as finally determined pursuant to Section 2.9), if any, as due from Genzyme or any Genzyme subsidiary.

4.2. Payment of Amounts Due from BioMarin and BioMarin Subsidiary. Promptly after the Final Determination, and concurrently with the making of the Cash Distribution pursuant to Section 2.9.5, BioMarin will pay to the Company (netted against the BioMarin Cash Distribution or BioMarin Subsidiary Cash Distribution, if applicable) the amounts identified on the Final Balance Sheet (as finally determined pursuant to Section 2.9), if any, as due from BioMarin or any BioMarin subsidiary.

4.3. Transfer of Certain Funds Received Post-Closing. With respect to any and all amounts received or collected by the Company from and after the date hereof attributable to, or in respect of, any Genzyme Acquired Asset, the Company will provide notice of such receipt or collection to Genzyme and pay promptly (and in any event within five (5) Business Days of its receipt or collection) to Genzyme any and all such amounts so received or collected by wire transfer of immediately available funds to an account specified by Genzyme or by other means acceptable to Genzyme.

4.4. Indemnification. Each Party hereby agrees to indemnify, defend and hold each other Party harmless from and against any expenses, Liabilities or losses of any kind or nature (including reasonable attorney’s fees incurred in the investigation or defense thereof) suffered by such other Party arising out of or directly or indirectly related to (a) a breach of or inaccuracy in such Party’s representations and warranties contained in this Agreement or (b) any failure of such Party to discharge any Liability assumed or retained (as applicable) by such Party hereunder.

4.5. Further Assurances. From and after the date hereof, upon the request of any Party, each of the Parties hereto will do, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as may be reasonably required or appropriate to carry out the transactions contemplated by this Agreement. The Company will provide all cooperation reasonably requested by any Member in connection with any effort by the Member to establish, perfect, defend, or enforce its rights in or to the Acquired Assets.

4.6. Continuation of Operating Agreement, Amendment to Operating Agreement. The Parties hereby acknowledge and agree that the transactions contemplated by this Agreement do not constitute the sale or disposition of all or substantially all of the Company’s property for the purposes of Section 9.1(a) of the Operating Agreement and accordingly shall not be an event of dissolution of the Company for the purposes of Section 9.1 of the Operating Agreement, and that the Parties intend that the Company will continue in existence hereafter until an event of dissolution described in Section 9.1 of the Operating Agreement occurs. Further, to the extent that the Operating Agreement or any of the Related Agreements prohibits or is inconsistent with the transactions contemplated hereby, each such agreement is hereby amended to permit the

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transactions contemplated hereby. Section 1.3 of the Operating Agreement is hereby amended to provide that the transactions contemplated by this Agreement may be approved by the Members rather than the Steering Committee, and each Member hereby approves the transactions contemplated by this Agreement. In compliance with Section 18-607 of the Delaware Limited Liability Company Act, the Parties acknowledge and agree that upon the completion of the transactions contemplated by this Agreement, the fair market value of the Company’s right, title and interest in and to all of the Company’s assets, properties and rights (including the Retained Cash) shall exceed the value of all of the liabilities of the Company.

5. MISCELLANEOUS.

5.1. Assignment. This Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Parties other than to an assignee of a Member’s membership interest in the Company effected in compliance with the Related Agreements. Any permitted assignee shall assume all obligations of its assignor under this Agreement; accordingly, all references herein to the assigning Party shall be deemed references to the assignee to whom the Agreement is so assigned. Any purported assignment in violation of this Section 5.1 shall be void.

5.2. Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to any other Party shall be in writing, delivered personally or by facsimile (and promptly confirmed by personal delivery or courier), by a next Business Day delivery service of a nationally recognized overnight courier service or by courier, return receipt requested and postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor in accordance with this Section 5.2 and shall be effective upon receipt by the addressee.

If to BioMarin, BioMarin Subsidiary or the Company (if such notice is sent by Genzyme):	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: Chief Executive Officer Facsimile: (415) 382-7889
with a copy to:	BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, California 94949 Attention: General Counsel Facsimile: (415) 382-7889
If to Genzyme or to the Company (if such notice is sent by BioMarin or BioMarin Subsidiary):	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: President, LSD Therapeutics Facsimile: (617) 768-6419
with a copy to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: General Counsel Facsimile: (617) 252-7553

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5.3. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any choice of law principle that would dictate the application of the laws of another jurisdiction.

5.4. Entire Agreement. This Agreement, together with the Related Agreements, contains the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by all Parties hereto. Each of the Parties hereby acknowledges that this Agreement is the result of mutual negotiation and therefore any ambiguity in its terms shall not be construed against the drafting Party.

5.5. Headings. The headings contained in this Agreement are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Sections hereof.

5.6. Waiver. Except as expressly provided herein, the waiver by any Party hereto of any right hereunder or of any failure to perform or any breach by any other Party shall not be deemed a waiver of any other right hereunder or of any other failure to perform or breach by said other Party, whether of a similar nature or otherwise, nor shall any singular or partial exercise of such right preclude any further exercise thereof or the exercise of any other such right.

5.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signature pages may be exchanged by facsimile.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first set forth above.

GENZYME CORPORATION
By:	/s/ David P. Meeker
Print Name:	David P. Meeker
Title:	President LSD Therapeutics
Date:	12/31/07
BIOMARIN PHARMACEUTICAL INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
BIOMARIN GENETICS, INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07

[SIGNATURE PAGE TO MEMBERS AGREEMENT]

BIOMARIN/GENZYME LLC
By: BIOMARIN PHARMACEUTICAL INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
By: BIOMARIN GENETICS, INC.
By:	/s/ G. Eric Davis
Print Name:	G. Eric Davis
Title:	Vice President, General Counsel
Date:	12/31/07
By: GENZYME CORPORATION
By:	/s/ David P. Meeker
Print Name:	David P. Meeker
Title:	President LSD Therapeutics
Date:	12/31/07

[SIGNATURE PAGE TO MEMBERS AGREEMENT]

Exhibit 1

Distribution and Assignment Agreement

Distribution and Assignment Agreement

This Distribution and Assignment Agreement (the “Agreement”) is made, executed and delivered as of January 1, 2008, by and between BioMarin/Genzyme LLC, a Delaware limited liability company (the “LLC”), on the one hand, and BioMarin Pharmaceutical Inc., a Delaware corporation and member of the LLC (“BioMarin”), and BioMarin Genetics, Inc., a Delaware corporation, subsidiary of BioMarin and a member of the LLC (“BioMarin Genetics” and together with BioMarin and the LLC, the “Parties”).

WITNESSETH:

WHEREAS, the LLC and BioMarin are parties to that certain Members Agreement, dated January 1, 2008, by and among the LLC, BioMarin, Genzyme Corporation and BioMarin Genetics, Inc. (the “Members Agreement”), providing for, among other things, the distribution and assignment of specified assets of the LLC to BioMarin and BioMarin Genetics, Inc, on the one hand, and Genzyme, on the other hand.

NOW, THEREFORE, in connection with the Members Agreement, for and in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt, adequacy, and legal sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:

1. Definitions. Capitalized terms used but not defined herein shall have the meanings for such terms that are set forth in the Members Agreement.

2. Distribution and Assignment.

(a) The LLC hereby distributes, conveys, transfers, assigns and delivers to BioMarin and its successors and assigns forever all right, title and interest in and to the BioMarin Acquired Assets free and clear of all liens, claims, licenses, pledges and encumbrances other than those created by BioMarin. All transfers to BioMarin’s custody and control of the BioMarin Acquired Assets shall be effected in compliance with all applicable laws.

(b) The LLC hereby distributes, conveys, transfers, assigns and delivers to BioMarin Genetics and its successors and assigns forever all right, title and interest in and to the BioMarin Subsidiary Acquired Assets free and clear of all liens, claims, licenses, pledges and encumbrances other than those created by BioMarin Genetics.

3. Representations and Warranties. Each Party represents and warrants to each other Party as follows (except with respect to Sections 3(f) and 3(g) below in which case only the LLC is making such representations and warranties to the other Parties):

(a) Organization. It is a corporation (or limited liability company as the case may be) duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation (or organization as the case may be), is qualified to do business and is in good standing as a foreign corporation (or limited liability company as the case may be) in each jurisdiction in which the conduct of its business or the

ownership of its properties requires such qualification and failure to have such would prevent it from performing its obligations under this Agreement and has all requisite corporate power (or limited liability power as the case may be) and authority to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement.

(b) Authorization. It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. It has taken all action (corporate or otherwise) necessary to execute, deliver and perform its obligations under this Agreement. The person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action.

(c) No Third Party Approval. No authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority or regulatory body (other than health regulatory authorities) is required for the due execution, delivery or performance by it of this Agreement.

(d) Enforceable Agreement. This Agreement has been duly and validly executed and delivered, and assuming it is a legally enforceable agreement of the other Parties hereto, constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect relating to creditors’ rights generally or to general principles of equity.

(e) No Violation. None of the execution, delivery or performance of this Agreement by such Party, nor the consummation by such Party of the transactions contemplated hereby will (i) result in a violation of any provision of such Party’s charter documents, by-laws or operating agreement; or (ii) with or without the giving of notice or the lapse of time, or both, result in any violation or breach of, or constitute a default under, or result in any right to accelerate or result in the creation of any lien, charge or encumbrance pursuant to, or right of termination under, any provision of any material agreement to which such Party is a party or by which such Party or any of its assets or properties are bound or which is applicable to such Party or any of its assets or properties, other than any of the foregoing which does not materially impair the ability of the Party to perform its obligations hereunder.

(f) Title to Acquired Assets. The LLC owns all right, title and interest in the BioMarin Acquired Assets and the BioMarin Subsidiary Acquired Assets free and clear of all liens, claims, licenses, pledges and encumbrances and upon receipt of the BioMarin Acquired Assets from the LLC BioMarin will receive good and marketable title to such assets.

(g) Solvency. After consummation of the transactions contemplated by this Agreement, the LLC will be solvent and able to pay its debts as they become due.

4. Entire Agreement. This Agreement, together with the Members Agreement and the Related Agreements, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof and is not intended to and shall not be construed to confer upon any persons other than the Parties any rights or remedies hereunder.

5. Amendment and Modification. This Agreement and any of the terms contained herein may be amended or modified by the Parties only in writing signed by each Party.

6. Succession and Assignment. This Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Parties hereto other than by BioMarin or BioMarin Genetics to an assignee of its respective membership interest in the LLC effected in compliance with the Members Agreement and Related Agreements or any successor of all or substantially all of its business whether by merger, acquisition of stock or assets or otherwise. Any purported assignment in violation of this Section 6 shall be void.

7. Further Assurances. The LLC shall enter into such other documents, instruments or agreements as may be necessary or appropriate to further evidence the transfer of the BioMarin Acquired Assets to BioMarin and the BioMarin Subsidiary Acquired Assets to BioMarin Genetics as may reasonably be requested by BioMarin or BioMarin Genetics.

8. Notices. All notices shall be given as provided in the Members Agreement.

9. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to its principles of conflicts of laws that would result in the application of the law of any other jurisdiction.

10. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank.]

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be signed by its duly authorized officer as of the date first written above.

BIOMARIN/GENZYME LLC

By: BIOMARIN PHARMACEUTICAL INC.

By:

Print Name:

Title:

Date:

By: BIOMARIN GENETICS, INC.

By:

Print Name:

Title:

Date:

By: GENZYME CORPORATION

By:

Print Name:

Title:

Date:

BIOMARIN PHARMACEUTICAL INC.

By:

Print Name:

Title:

Date:

BIOMARIN GENETICS, INC.

By:

Print Name:

Title:

Date:

Execution Version

Exhibit 2

Assignment and Assumption Agreement

19

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (the “Agreement”) is made, executed and delivered as of January 1, 2008, by and among BioMarin/Genzyme LLC, a Delaware limited liability company (“Assignor”) and Genzyme Corporation, a Massachusetts corporation (“Assignee”, and together with Assignor, the “Parties”).

WITNESSETH:

WHEREAS, Assignor and Assignee are parties to a Members Agreement, dated January 1, 2008, by and among Assignor, Assignee, BioMarin Pharmaceutical Inc. and BioMarin Genetics, Inc. (the “Members Agreement”), providing for, among other things, the assignment by Assignor and the assumption by Assignee of certain rights, liabilities, and obligations of Assignor, all as more fully described in the Members Agreement, on the terms and conditions provided in the Members Agreement;

NOW, THEREFORE, in connection with the Members Agreement, for and in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt, adequacy, and legal sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:

1. Definitions. Capitalized terms used but not defined herein shall have the meanings for such terms that are set forth in the Members Agreement.

2. Assignment and Assumption. Assignor hereby assigns, distributes, transfers, and sets over to Assignee all of such Assignor’s right, title, benefit, privileges, and interest in and to, and all of such Assignor’s burdens, obligations, and liabilities in connection with, the Genzyme Acquired Assets and the Genzyme Assumed Liabilities, free and clear of all liens, claims, licenses, pledges and encumbrances (other than those created by Assignee) in the case of the Genzyme Acquired Assets. Assignee hereby accepts and assumes and agrees to observe and perform all of the duties, obligations, terms, provisions, and covenants of the Genzyme Acquired Assets and the Genzyme Assumed Liabilities, and to pay and discharge all of the Genzyme Assumed Liabilities. All transfers to Assignee’s custody and control of the Genzyme Acquired Assets shall be effected in compliance with all applicable laws.

3. Representations and Warranties. Each Party represents and warrants to the other Party as follows (except with respect to Sections 3(f) and 3(g) below in which case only Assignor is making such representations and warranties to Assignee):

(a) Organization. It is a corporation (or limited liability company as the case may be) duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation (or organization as the case may be), is qualified to do business and is in good standing as a foreign corporation (or limited liability company as the case may be) in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and failure to have such would prevent it from performing its

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obligations under this Agreement and has all requisite corporate power (or limited liability power as the case may be) and authority to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement.

(b) Authorization. It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. It has taken all action (corporate or otherwise) necessary to execute, deliver and perform its obligations under this Agreement. The person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action.

(c) No Third Party Approval. No authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority or regulatory body (other than health regulatory authorities) is required for the due execution, delivery or performance by it of this Agreement.

(d) Enforceable Agreement. This Agreement has been duly and validly executed and delivered, and assuming it is a legally enforceable agreement of the other Party hereto, constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect relating to creditors’ rights generally or to general principles of equity.

(e) No Violation. None of the execution, delivery or performance of this Agreement by such Party, nor the consummation by such Party of the transactions contemplated hereby will (i) result in a violation of any provision of such Party’s charter documents, by-laws or operating agreement; or (ii) with or without the giving of notice or the lapse of time, or both, result in any violation or breach of, or constitute a default under, or result in any right to accelerate or result in the creation of any lien, charge or encumbrance pursuant to, or right of termination under, any provision of any material agreement to which such Party is a party or by which such Party or any of its assets or properties are bound or which is applicable to such Party or any of its assets or properties, other than any of the foregoing which does not materially impair the ability of the Party to perform its obligations hereunder.

(f) Title to Acquired Assets. Assignor owns all right, title and interest in the Genzyme Acquired Assets free and clear of all liens, claims, licenses, pledges and encumbrances and upon receipt of the Genzyme Acquired Assets from Assignor, Assignee will receive good and marketable title to such assets.

(g) Solvency. After consummation of the transactions contemplated by this Agreement, Assignor will be solvent and able to pay its debts as they become due.

-9-

4. Entire Agreement. This Agreement, together with the Members Agreement and the Related Agreements, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof and is not intended to and shall not be construed to confer upon any persons other than the Parties any rights or remedies hereunder.

5. Amendment and Modification. This Agreement and any of the terms contained herein may be amended or modified by the Parties only in writing signed by each Party.

6. Succession and Assignment. This Agreement may not be assigned or otherwise transferred by either Party without the consent of the other Party other than by Assignee to an assignee of its membership interest in Assignor effected in compliance with the Members Agreement and Related Agreements or any successor of all or substantially all of its business whether by merger, acquisition of stock or assets or otherwise. Any permitted assignee shall assume all obligations of its assignor under this Agreement; accordingly, all references herein to the assigning Party shall be deemed references to the assignee to whom the Agreement is so assigned. Any purported assignment in violation of this Section 6 shall be void.

7. Further Assurances. Assignor shall enter into such other documents, instruments or agreements as may be necessary or appropriate to further evidence the transfer of the Genzyme Acquired Assets to Assignee as may reasonably be requested by Assignee.

8. Notices. All notices shall be given as provided in the Members Agreement.

9. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to its principles of conflicts of laws that would result in the application of the law of any other jurisdiction.

10. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank.]

-10-

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be signed by its duly authorized officer as of the date first written above.

BIOMARIN/GENZYME LLC

By: BIOMARIN PHARMACEUTICAL INC.

By:

Print Name:

Title:

Date:

By: BIOMARIN GENETICS, INC.

By:

Print Name:

Title:

Date:

By: GENZYME CORPORATION

By:

Print Name:

Title:

Date:

GENZYME CORPORATION

By:

Print Name:

Title:

Date:

Exhibit 3

Final Balance Sheet and Distribution Statement (as of November 30, 2007)

[****]

EX-21.1

Exhibit 21.1

Subsidiaries of BioMarin Pharmaceutical Inc. as of December 31, 2007

Name	Jurisdiction of Incorporation
BioMarin Brasil Farmaceutica Ltda.	Brazil
BioMarin Holding Ltd.	Ireland
BioMarin Holding (Lux) S.a.r.l	Luxembourg
BioMarin Europe Ltd.	Ireland

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

BioMarin Pharmaceutical Inc.:

We consent to the incorporation by reference in (i) the registration statements (Nos. 333-136963, 333-84787 and 333-85368) on Form S-8 and (ii) the registration statement (No. 333-132566) on Form S-3 of BioMarin Pharmaceutical Inc. and subsidiaries of our reports dated February 27, 2008, with respect to the consolidated balance sheets of BioMarin Pharmaceutical, Inc and subsidiaries as of December 31, 2007 and 2006 and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and comprehensive income (loss) and cash flows, for each of the years in the three-year period ended December 31, 2007, and financial statement schedule II, and the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of BioMarin Pharmaceutical Inc.

Effective January 1, 2006, the Company adopted the provisions of statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment.

Our reports were based on our audits and the report of other auditors.

(Signed) KPMG LLP

San Francisco, California

February 27, 2008

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-132566) and Form S-8 (Nos. 333-136963, 333-85368, 333-84787) of BioMarin Pharmaceutical Inc. of our report dated February 25, 2008 relating to the financial statements of BioMarin/Genzyme LLC, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 25, 2008

EX-31.1

Exhibit 31.1

CERTIFICATION

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

1. I have reviewed this Annual Report on Form 10-K 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: February 27, 2008

/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 Annual Report on Form 10-K 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: February 27, 2008

/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 Annual Report on Form 10-K of BioMarin Pharmaceutical Inc. (the “Company”) for the year ended December 31, 2007, 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

February 27, 2008

/s/ Jeffrey H. Cooper

Jeffrey H. Cooper

Chief Financial Officer

February 27, 2008

EX-99.1

Exhibit 99.1

BioMarin/Genzyme LLC

Index to Consolidated Financial Statements

	Page(s)
Report of Independent Registered Public Accounting Firm	1
Consolidated Balance Sheets as of December 31, 2007 and 2006	2
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005	3
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005	4
Consolidated Statements of Changes in Venturers’ Capital for each of the Years Ended December 31, 2005, 2006 and 2007	5
Notes to Consolidated Financial Statements	6-12

Report of Independent Registered Public Accounting Firm

To the Steering Committee of BioMarin/Genzyme LLC:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of cash flows and of changes in Venturers’ capital present fairly, in all material respects, the financial position of BioMarin/Genzyme LLC and its subsidiaries (the “Joint Venture”) at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Joint Venture’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

    February 25, 2008

BioMarin/Genzyme LLC

Consolidated Balance Sheets

(Amounts in thousands)

	December 31,
	2007		2006
ASSETS
Current assets:
Cash and cash equivalents	$	27,865	$	12,778
Restricted cash		—		340
Accounts receivable		32,524		25,377
Due from Genzyme Corporation		9,931		6,852
Inventories		26,981		25,564
Prepaid expenses and other current assets		1,147		545
Total current assets		98,448		71,456
Technology license fees, net		138		211
Total assets	$	98,586	$	71,667
LIABILITIES AND VENTURERS’ CAPITAL
Current liabilities:
Due to BioMarin Companies	$	2,087	$	1,596
Accrued expenses		6,392		6,592
Deferred revenue		98		90
Total liabilities		8,577		8,278
Commitments and contingencies (Note J)
Venturers’ capital:
Venturers’ capital—BioMarin Companies		45,005		31,695
Venturers’ capital—Genzyme Corporation		45,004		31,694
Total Venturers’ capital		90,009		63,389
Total liabilities and Venturers’ capital	$	98,586	$	71,667

The accompanying notes are an integral part of these consolidated financial statements.

2

BioMarin/Genzyme LLC

Consolidated Statements of Operations

(Amounts in thousands)

	For the Years Ended December 31,
	2007		2006		2005
Revenues:
Net product sales	$	123,671	$	96,291	$	76,417
Operating costs and expenses:
Cost of products sold		27,110		24,417		24,513
Selling, general and administrative		24,682		22,178		22,019
Research and development		11,825		13,318		16,156
Total operating costs and expenses		63,617		59,913		62,688
Income from operations		60,054		36,378		13,729
Interest income		766		692		254
Net income	$	60,820	$	37,070	$	13,983
Net income attributable to each Venturer:
BioMarin Companies	$	30,410	$	18,535	$	6,992
Genzyme Corporation	$	30,410	$	18,535	$	6,991

The accompanying notes are an integral part of these consolidated financial statements.

3

BioMarin/Genzyme LLC

Consolidated Statements of Cash Flows

(Amounts in thousands)

	For the Years Ended December 31,
	2007			2006			2005
Cash Flows from Operating Activities:
Net income	$	60,820		$	37,070		$	13,983
Reconciliation of net income to cash flows from operating activities:
Amortization expense		73			74			73
Noncash charge for inventory write down		—			185			—
Increase (decrease) in cash from working capital changes:
Accounts receivable		(7,147	)		(4,652	)		(4,015	)
Inventories		(1,417	)		4,537			8,340
Prepaid expenses and other current assets		(602	)		(325	)		(220	)
Due from (to) BioMarin Companies		491			526			(1,090	)
Due from (to) Genzyme Corporation		(3,079	)		5,894			(18,958	)
Accrued expenses		(200	)		1,765			1,906
Deferred revenue		8			(483	)		115
Cash flows from operating activities		48,947			44,591			134
Cash Flows from Investing Activities:
Change in restricted cash		340			(340	)		—
Purchase of technology licenses		—			—			(358	)
Cash flows from investing activities		340			(340	)		(358	)
Cash Flows from Financing Activities:
Capital distribution to BioMarin Companies		(17,100	)		(19,800	)		(3,000	)
Capital distribution to Genzyme Corporation		(17,100	)		(19,800	)		(3,000	)
Cash flows from financing activities		(34,200	)		(39,600	)		(6,000	)
Increase (decrease) in cash and cash equivalents		15,087			4,651			(6,224	)
Cash and cash equivalents at beginning of period		12,778			8,127			14,351
Cash and cash equivalents at end of period	$	27,865		$	12,778		$	8,127

The accompanying notes are an integral part of these consolidated financial statements.

4

BioMarin/Genzyme LLC

Consolidated Statements of Changes in Venturers’ Capital

(Amounts in thousands)

	Venturers’ Capital
	BioMarin Companies			Genzyme Corporation			Total Venturers’ Capital
Balance at December 31, 2004 (unaudited)	$	28,968		$	28,968		$	57,936
2005 capital distributions		(3,000	)		(3,000	)		(6,000	)
2005 net income		6,992			6,991			13,983
Balance at December 31, 2005		32,960			32,959			65,919
2006 capital distributions		(19,800	)		(19,800	)		(39,600	)
2006 net income		18,535			18,535			37,070
Balance at December 31, 2006		31,695			31,694			63,389
2007 capital distributions		(17,100	)		(17,100	)		(34,200	)
2007 net income		30,410			30,410			60,820
Balance at December 31, 2007	$	45,005		$	45,004		$	90,009

The accompanying notes are an integral part of these consolidated financial statements.

5

BioMarin/Genzyme LLC

Notes to Consolidated Financial Statements

A. Nature of Business and Organization

BioMarin/Genzyme LLC, or the Joint Venture, is a limited liability company organized under the laws of the State of Delaware. The Joint Venture is owned:

• 50% by BioMarin Pharmaceutical Inc., which is referred to as BioMarin, and BioMarin Genetics, Inc., a wholly-owned subsidiary of BioMarin. BioMarin and its subsidiary are referred to as the BioMarin Companies; and

• 50% by Genzyme Corporation, which is referred to as Genzyme.

The BioMarin Companies and Genzyme are collectively referred to as the Venturers and individually as a Venturer. The Joint Venture was organized in September 1998 to develop and commercialize Aldurazyme^®, a recombinant form of the human enzyme alpha-L-iduronidase, used to treat a lysosomal storage disorder known as mucopolysaccharidosis I, or MPS I. The Joint Venture commenced operations as of September 4, 1998.

The Joint Venture, BioMarin Companies and Genzyme entered into a Collaboration Agreement dated as of September 4, 1998. Under the terms of the Collaboration Agreement, Genzyme and the BioMarin Companies granted to the Joint Venture a world-wide, exclusive, irrevocable, royalty-free right and license or sublicense to develop, manufacture and market Aldurazyme for the treatment of MPS I and other alpha-L-iduronidase deficiencies. All program-related costs are equally funded by BioMarin, on behalf of the BioMarin Companies, and Genzyme. BioMarin and Genzyme are required to make monthly capital contributions to the Joint Venture to fund budgeted operating costs, as necessary. If either BioMarin or Genzyme fails to make two or more of the monthly capital contributions, and the other party does not exercise its right to terminate the Collaboration Agreement or compel performance of the funding obligation, the defaulting party’s (or, in the case of default by BioMarin, the BioMarin Companies’) percentage interest in the Joint Venture and future funding responsibility will be adjusted proportionately. No contributions were made in 2007, 2006 and 2005 because the Joint Venture was profitable in all periods presented.

The Steering Committee of the Joint Venture serves as the governing body of the Joint Venture and is responsible for determining the overall strategy for the program, coordinating activities of the Venturers as well as performing other such functions as appropriate. The Steering Committee is comprised of an equal number of representatives of each Venturer.

On April 30, 2003, the United States Food and Drug Administration, commonly referred to as the FDA, granted marketing approval for Aldurazyme as an enzyme replacement therapy for patients with the Hurler and Hurler-Scheie forms of MPS I, and Scheie patients with moderate to severe symptoms. Aldurazyme has been granted orphan drug status in the United States, which generally provides seven years of market exclusivity. On June 11, 2003, the European Commission granted marketing approval for Aldurazyme to treat the non-neurological manifestations of MPS I in patients with a confirmed diagnosis of the disease. Aldurazyme has been granted orphan drug status in the European Union, which generally provides ten years of market exclusivity. In October 2006, Japan’s Health, Labor and Welfare Ministry granted marketing approval for Aldurazyme, the first specific treatment approved in Japan for patients with MPS I. Aldurazyme has been granted orphan drug status in Japan, which generally provides ten years of market exclusivity.

Aldurazyme is manufactured at BioMarin’s facility in Novato, California and is sent to either Genzyme’s manufacturing facility in Allston, Massachusetts or to a third-party facility for the fill-finish process. Prior to January 1, 2008, on behalf of the Joint Venture, Genzyme was commercializing Aldurazyme in the United States, Canada, the European Union, Latin America and the Asia-Pacific regions and continuing to launch Aldurazyme on a country-by-country basis as pricing and reimbursement approvals were obtained. Genzyme has applications for marketing approval for Aldurazyme currently pending in several countries in Latin America, Central and Eastern Europe and the Asia-Pacific regions.

Effective January 1, 2008, the BioMarin Companies, Genzyme and the Joint Venture amended and restated the Collaboration Agreement and restructured the relationship regarding the manufacturing and commercialization of Aldurazyme by entering into several new agreements (the “Restructuring Agreements”). The Joint Venture will no longer engage in commercial activities related to Aldurazyme and will solely:

• hold the intellectual property relating to Aldurazyme and other collaboration products, as defined in the amended and restated Collaboration Agreement; and

6

• engage in research and development activities that are mutually selected and funded by the BioMarin Companies and Genyzme, as the Venturers, the costs of which will be shared equally by the Venturers.

Under the Restructuring Agreements, the Joint Venture will license all intellectual property relating to Aldurazyme and other collaboration products on a royalty-free basis to the BioMarin Companies and Genzyme. The BioMarin Companies will hold the manufacturing rights and Genyzme will hold the global marketing rights and Genzyme will pay BioMarin a tiered payment ranging from 39.5% to 50% of worldwide net product sales of Aldurazyme. As a result of the restructuring, the Joint Venture will no longer record any revenues or operating costs and expenses related to the commercialization of Aldurazyme, and will distribute substantially all of its assets and liabilities to the Venturers during the first quarter of 2008.

B. Summary of Significant Accounting Policies

Basis of Presentation

The Joint Venture is considered a partnership for federal and state income tax purposes. As such, items of income, loss, deductions and credits flow through to the Venturers. The Venturers have responsibility for the payment of any income taxes on their proportionate share of the taxable income of the Joint Venture.

Accounting Method

The consolidated financial statements have been prepared under the accrual method of accounting in conformity with accounting principles generally accepted in the United States of America.

Fiscal Year End

The Venturers have determined that the fiscal year end of the Joint Venture is December 31.

Uncertainties

Prior to January 1, 2008, the Joint Venture was subject to risks common to companies in the biotechnology industry, including:

• the ability of the Joint Venture to manufacture sufficient amounts of its products for development and commercialization activities and to do so in a timely and cost-effective manner;

• the accuracy of the Joint Venture’s estimates of the size and characteristics of markets to be addressed by the Joint Venture’s products including growth projections;

• market acceptance of the Joint Venture’s products in expanded areas of use and new markets;

• the Joint Venture’s ability to obtain reimbursement for its products from third-party payors, where appropriate, the extent of such coverage and the accuracy of the Joint Venture’s estimates of the payor mix for its products;

• the Joint Venture’s ability to successfully obtain timely additional regulatory approvals and adequate patent and other proprietary rights protection for its products; and

• the content and timing of decisions made by the FDA and other regulatory agencies regarding the Joint Venture’s products and manufacturing facilities.

Use of Estimates

Under accounting principles generally accepted in the United States of America, the Joint Venture is required to make certain estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities in its consolidated financial statements. The Joint Venture’s actual results could differ from these estimates.

7

Cash and Cash Equivalents

Cash and cash equivalents, consisting principally of money market funds with initial maturities of three months or less, are valued at cost plus accrued interest, which the Joint Venture believes approximates their fair market value. All of the Joint Venture’s cash, excluding its restricted cash, is held on deposit at one financial institution.

Inventories

Inventories are valued at cost or, if lower, fair value. The Venturers analyze the Joint Venture’s inventory levels quarterly and write down to its net realizable value:

• inventory that has become obsolete;

• inventory that has a cost basis in excess of its expected net realizable value;

• inventory in excess of expected requirements; and

• expired inventory.

Comprehensive Income

The Joint Venture reports comprehensive income in accordance with Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards No., or FAS, 130, “Reporting Comprehensive Income.” Comprehensive income for the years ended December 31, 2007, 2006 and 2005 does not differ from the reported net income.

Transactions with Affiliates

Prior to January 1, 2008, on behalf of the Joint Venture, Genzyme was commercializing Aldurazyme in the United States, Canada, the European Union, Latin America and the Asia-Pacific regions and, as a result, executed sales and collected cash from product sales in those territories on behalf of the Joint Venture.

The majority of the Joint Venture’s operating expenses consist of expenses incurred by the Venturers, either for internal operating costs or for third-party obligations incurred by the Venturers on behalf of the Joint Venture which are then charged to the Joint Venture. All charges to the Joint Venture are subject to approval by the Steering Committee. The determination of the amount of internal operating costs incurred by each Venturer on behalf of the Joint Venture requires significant judgment by each Venturer. As a result, the consolidated financial statements for the Joint Venture may not be indicative of the results that would have occurred had the Joint Venture obtained all of its manufacturing, commercialization and research and development services from third-party entities. Genzyme owed the Joint Venture $9.9 million at December 31, 2007 and $6.9 million at December 31, 2006 consisting of cash received on behalf of the Joint Venture for net product sales, net of expenses and other liabilities incurred on behalf of the Joint Venture. The Joint Venture owed BioMarin Companies a total of $2.1 million at December 31, 2007 and $1.6 million at December 31, 2006 for project expenses incurred on behalf of the Joint Venture.

Translation of Foreign Currencies

The Joint Venture translates the financial transactions performed by Genzyme’s foreign subsidiaries on behalf of the Joint Venture from local currency into U.S. dollars using the current exchange rate at each balance sheet date for assets and liabilities, and the average exchange rate prevailing during each period for revenues and expenses. The Joint Venture includes any gains and losses on these transactions in selling, general and administrative expenses in its results of operations. Selling, general and administrative expenses includes foreign currency transaction net gains of $2.0 million in 2007 and $1.6 million in 2006, and net losses of $2.4 million in 2005.

Derivative Instruments

In accordance with FAS 133, “Accounting for Derivative Instruments and Hedging Activities,” the Joint Venture recognizes all derivative instruments as either assets or liabilities in its balance sheet and measures those instruments at fair value. Subsequent changes in fair value are reflected in current earnings or other comprehensive income (loss), depending on whether the derivative instrument is designated as part of a hedge relationship and, if it is, the type of hedge relationship.

8

Revenue Recognition

The Joint Venture 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 pass 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 related shipping documents.

The Joint Venture records reserves for rebates payable under Medicaid and payor contracts, such as managed care organizations, as a reduction of revenue at the time product sales are recorded. The Joint Venture’s Medicaid and payor rebate reserves have two components:

• an estimate of outstanding claims for end-user sales that have occurred, but for which related claim submissions have not been received; and

• an estimate of future claims that will be made when inventory in the distribution channel is sold to end-users.

Accrued expenses for the Joint Venture includes a reserve for Medicaid and payor rebates payable of $0.9 million at December 31, 2007 and $2.3 million at December 31, 2006.

Due to the nature, purpose and means of use of Aldurazyme, customers do not have the right to return the product in the ordinary course of business, other than for defects. Because of these limited rights of return and the Joint Venture and Genzyme’s experience of returns for similar products, the Joint Venture has concluded that product returns will be minimal and therefore, an allowance for product returns for Aldurazyme is not necessary as of December 31, 2007 or 2006. In the future, if any of these factors and/or history of product returns changes, an allowance for product returns may be required.

Emerging Issues Task Force, or EITF, Issue No. 01-9, “Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products,” specifies that cash consideration (including a sales incentive) given by a vendor to a customer is presumed to be a reduction of the selling prices of the vendor’s products or services and, therefore, should be characterized as a reduction of revenue. That presumption is overcome and the consideration should be characterized as a cost incurred if, and to the extent that, both of the following conditions are met:

• the vendor receives, or will receive, an identifiable benefit (goods or services) in exchange for the consideration; and

• the vendor can reasonably estimate the fair value of the benefit received.

The Joint Venture records certain fees paid to its distributors for services as operating expense where the criteria set forth above are met. The fees incurred for these services were $0.7 million in 2007 and 2006 and $0.8 million in 2005.

Research and Development

Research and development costs are expensed in the period incurred. These costs are primarily comprised of development efforts performed by the Venturers or payments to third parties made by the Venturers, both on behalf of the Joint Venture, during the respective periods.

Income Taxes

The Joint Venture is organized as a pass-through entity and accordingly, the consolidated financial statements do not include a provision for income taxes. Taxes, if any, are the liability of the BioMarin Companies and Genzyme, as Venturers.

Accounting for Stock-Based Compensation

FAS 123R, “Share-Based Payment, an amendment of FASB Statement Nos. 123 and 95,” was effective January 1, 2006 and required companies to recognize stock-based compensation expense in their financial statements for all share- based payment awards made to employees and directors based upon grant date fair value of those awards. The Joint Venture currently has no employees and, as a result, is not currently subject to the provisions of FAS 123R or Staff Accounting Bulletin No., or SAB, 107, “Share-Based Payment.” In addition, the Steering Committee has determined that the stock-based compensation expenses do not currently qualify as expenses related to the operation of the Joint Venture and, therefore, the Venturers are not permitted to charge any portion of their respective stock-based compensation expenses to the Joint Venture.

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In the future, if the Joint Venture has its own employees or if the Steering Committee determines that stock-based compensation expenses should be included in the operating costs of the Joint Venture, then the Joint Venture will become subject to the provisions of FAS 123R.

Recent Accounting Pronouncements

FAS 157, “Fair Value Measurements.” In September 2006, the FASB issued FAS 157, “Fair Value Measurements,” which provides enhanced guidance for using fair value to measure assets and liabilities. FAS 157 establishes a common definition of fair value, provides a framework for measuring fair value under accounting principles generally accepted in the United States and expands disclosure requirements about fair value measurements. FAS 157 is effective for the Joint Venture as of January 1, 2008. The Joint Venture does not believe the adoption of FAS 157 will have a material impact on its financial position and results of operations.

FAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115.” In February 2007, the FASB issued FAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115,” which permits, but does not require, entities to measure certain financial instruments and other assets and liabilities at fair value on an instrument-by-instrument basis. Unrealized gains and losses on items for which the fair value option has been elected should be recognized in earnings at each subsequent reporting date. FAS 159 will be effective for the Joint Venture as of January 1, 2008 and cannot be adopted early unless FAS 157 is also adopted. The Joint Venture does not believe the adoption of FAS 159 will have a material impact on its financial position and results of operations.

EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities.” In June 2007, the FASB ratified the EITF consensus reached in EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities,” which provides guidance for nonrefundable prepayments for goods or services that will be used or rendered for future research and development activities and directs that such payments should be deferred and capitalized. Such amounts should be recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. EITF Issue No. 07-3 is effective for the Joint Venture as of January 1, 2008 and will be applied prospectively to new contracts the Joint Venture enters into on or after that date. Earlier application is not permitted. The Joint Venture does not believe the adoption of EITF Issue No. 07-3 will have a material effect on its financial position, results of operations or cash flows.

C. Derivative Financial Instruments

The Joint Venture periodically enters into foreign currency forward contracts, all of which have a maturity of less than 45 days. These contracts have not been designated as hedges and accordingly, unrealized gains or losses on these contracts are reported in current earnings. The notional settlement value of foreign currency forward contracts outstanding at December 31, 2006 was $12.8 million. At December 31, 2006, those contracts had a fair value of approximately $15,000, representing an unrealized loss, which was recorded in selling, general and administrative expenses in the Joint Venture’s consolidated statement of operations for the year ended December 31, 2006 and in accrued expenses in its consolidated balance sheet as of December 31, 2006. The Joint Venture did not enter into any foreign currency forward contracts at the end of 2007.

D. Accounts Receivable

The Joint Venture’s trade receivables primarily represent amounts due from distributors and healthcare service providers. The Joint Venture states accounts receivable at fair value, after reflecting an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make payments. The Joint Venture believes that its credit risk associated with trade receivables is mitigated by the following factors:

• the product is sold to a number of customers over a broad geographic range;

• the Joint Venture performs credit evaluations of its customers on an ongoing basis; and

• the Joint Venture performs a detailed, monthly review of the receivable aging and specific customer balances.

The Joint Venture did not record an allowance for doubtful accounts at either December 31, 2007 or 2006. To date, due to the customers’ credit worthiness, the monthly review of the receivable balances and the customers’ need to maintain a supply of Aldurazyme and Genzyme’s similar products, the Joint Venture has not written off any receivables and no allowance for doubtful accounts has been necessary.

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E. Inventories (amounts in thousands)

	December 31,
	2007		2006
Raw materials	$	2,294	$	410
Work-in-process—bulk material		11,646		11,025
Finished products		13,041		14,129
Total	$	26,981	$	25,564

The Joint Venture recorded a charge of $0.2 million in 2006 to write off expired inventory. There were no similar charges in 2007 or 2005.

F. Restricted Cash

In 2007 and 2006, the Joint Venture entered into a series of foreign currency forward contracts all of which have a maturity of less than 45 days. In connection with these contracts, the Joint Venture was obligated to deposit cash based on the outstanding amount of the hedge contract and foreign exchange movement during the length of the contract in a restricted cash account with the financial institution issuing the contracts. The amount of restricted cash on deposit will be adjusted ratably, from time to time, in accordance with any changes in the amount outstanding under these contracts. As of December 31, 2007 the Joint Venture had no outstanding hedge contracts and no restricted cash. As of December 31, 2006, the Joint Venture had $0.3 million of restricted cash related to these contracts.

G. Technology License Fees

In 2005, the Joint Venture paid $0.4 million for technology license fees, which will be amortized over their estimated useful lives, which range from approximately four to five years. Total amortization expense for the Joint Venture’s technology license fees was approximately $73,000 for the year ended December 31, 2007, $74,000 for the year ended December 31, 2006 and $73,000 for the year ended December 31, 2005.

The estimated future amortization expense for the Joint Venture’s technology license fees for the remaining two succeeding fiscal years is as follows (amounts in thousands):

Year Ended December 31,	Estimated Amortization Expense
2008	$	74
2009		64

H. Accrued Expenses:

Accrued expenses consist of the following (amounts in thousands):

	December 31,
	2007		2006
Royalties	$	4,911	$	3,676
Rebates		908		2,348
Other		573		568
Total	$	6,392	$	6,592

I. Venturers’ Capital

The Joint Venture distributed a total of $17.1 million in 2007 and $19.8 million in 2006 of cash to each Venturer in accordance with the terms of the Collaboration Agreement.

As of December 31, 2007, Venturers’ capital is comprised of capital contributions made by the Venturers to fund budgeted costs and expenses of the Joint Venture in accordance with the Collaboration Agreement and income (losses)

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allocated to the Venturers, net of cash distributions to the Venturers. All funding is shared equally by the two Venturers. As of December 31, 2007, the BioMarin Companies and Genzyme have each provided a total of $67.3 million of funding to the Joint Venture, net of $39.9 million of cash distributed by the Joint Venture to each Venturer. The Venturers did not make any capital contributions to the Joint Venture in 2007, 2006 and 2005 because the Joint Venture had sufficient cash to meet its financial obligations.

J. Commitments and Contingencies

There have been several lawsuits filed in Brazil alleging that the Joint Venture and/or its affiliates are contractually obligated to provide drug at no cost to several patients. The Joint Venture and/or its affiliates are vigorously defending against these actions. Management of the Joint Venture is not able to predict the outcome of these cases or estimate with certainty the amount or range of any possible loss the Joint Venture might incur if the Joint Venture and/or its affiliates do not prevail in the final, non-appealable determination of these matters.

The Joint Venture periodically becomes subject to legal proceedings and claims arising in connection with its business. The Joint Venture is not able to predict the outcome of any legal proceedings, to which it may become subject in the normal course of business, or estimate the amount or range of any reasonably possible loss the Joint Venture might incur if it does not prevail in the final, non-appealable determinations of such matters. Therefore, the Joint Venture has no current accruals for these potential contingencies. The Joint Venture cannot provide you with assurance that legal proceedings will not have a material adverse impact on its financial condition or results of operations.

K. Segment Information

The Joint Venture operates in one business segment—human therapeutics. Disclosures about revenues by geographic area and revenues from major customers are presented below.

The following table contains revenue information by geographic area (amounts in thousands):

	For the Years Ended December 31,
	2007		2006		2005
Revenues:
United States	$	28,994	$	24,795	$	20,408
Europe		69,335		58,123		49,189
Other		25,342		13,373		6,820
Total	$	123,671	$	96,291	$	76,417

The Joint Venture’s results of operations are solely dependent on sales of Aldurazyme. BioMarin manufactures Aldurazyme at a single manufacturing facility in Novato, California. The fill-finish process is completed at either Genzyme’s manufacturing facility in Allston, Massachusetts or at a third party. The percentage of sales of Aldurazyme to distributors, as compared to total revenues in 2007, 2006 and 2005, were as follows:

	% of Total Revenues
	2007		2006		2005
Sales to Distributors:
U.S. distributors	9	%	11	%	11	%
European distributors	7	%	8	%	6	%
Other distributors	3	%	3	%	3	%
Total sales to distributors	19	%	22	%	20	%

The percentage of sales of Aldurazyme to two U.S. distributors, as compared to total revenues in 2007, 2006 and 2005, were as follows:

	% of Total Revenues
	2007		2006		2005
Sales to U.S. Distributors:
Distributor A	3	%	4	%	6	%
Distributor B	6	%	7	%	5	%
Total sales to U.S. distributors	9	%	11	%	11	%

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